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28–270 PDF 2006

FOREIGN OPERATION OF U.S. PORT

FACILITIES

(109–55)

HEARING

BEFORE THE

SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MARCH 9, 2006

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

JEAN SCHMIDT, Ohio

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

JOHN BARROW, Georgia

(II)
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO, New Jersey, Chairman

HOWARD COBLE, North Carolina

WAYNE T. GILCHREST, Maryland

PETER HOEKSTRA, Michigan

ROB SIMMONS, Connecticut

MARIO DIAZ-BALART, Florida

DAVID G. REICHERT, Washington,ViceChair

CONNIE MACK, Florida

LUIS G. FORTUN ̃ O, Puerto Rico

CHARLES W. BOUSTANY, JR., Louisiana

DON YOUNG, Alaska

(Ex Officio)

BOB FILNER, California, Ranking Democrat

CORRINE BROWN, Florida

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

MICHAEL M. HONDA, California

ANTHONY D. WEINER, New York

BRIAN HIGGINS, New York

BRIAN BAIRD, Washington

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

(III)

(V)

CONTENTS

TESTIMONY

Page

Ahern, Jay, Assistant Commissioner for Field Operations, Customs and Border Patrol .............................................................................................................. 3

Baker, Stewart A., Assistant Secretary for Policy, U.S. Department of Homeland Security, accompanied by Rdml Craig E. Bone, Director, Inspections

and Compliance Directorate, U.S. Coast Guard ................................................ 3

Brown, Gary L., Union Security Liaison, International Longshore and Warehouse Union .......................................................................................................... 38

Carafano, Dr. James Jay, Ph.D, Senior Research Fellow for Defense and

Homeland Security, the Heritage Foundation ................................................... 38

Flynn, Dr. Stephen E., Jeane J. Kirkpatrick Senior Fellow for National Security Studies, Council on Foreign Relations ........................................................ 38

Nagle, Kurt J., President, American Association of Port Authorities ................. 38

Scavone, Robert, Executive Vice President, Strategic Planning & Development, P&O Ports North America, Inc. ............................................................... 38

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Filner, Hon. Bob. of California ............................................................................... 98

Johnson, Hon. Eddie Bernice, of Texas .................................................................. 109

Kennedy, Hon. Mark, of Minnesota ....................................................................... 113

Oberstar, Hon. James L., of Minnesota ................................................................. 121

Young, Hon. Don, of Alaska .................................................................................... 179

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Baker, Stewart A ..................................................................................................... 70

Brown, Gary L ......................................................................................................... 84

Carafano, Dr. James Jay ......................................................................................... 91

Flynn, Dr. Stephen E .............................................................................................. 100

Nagle, Kurt J ........................................................................................................... 114

Scavone, Robert ........................................................................................................ 125

ADDITION TO THE RECORD

Yoshitani, Tay, Senior Policy Advisor, National Association of Waterfront

Employees (NAWE), statement ........................................................................... 183

(1)

FOREIGN OPERATION OF U.S. PORT

FACILITIES

Thursday, March 9, 2006

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION, WASHINGTON, D.C.

The subcommittee met, pursuant to call, at 9:30 a.m., in room

2167, Rayburn House Office Building, Hon. Frank A. LoBiondo

[chairman of the committee] presiding.

Mr. LOBIONDO. Good morning. The Subcommittee will come to

order. Before starting, I would like to ask unanimous consent that

members of the Committee who are not on the Coast Guard Subcommittee may participate in the hearing today. We want to open

this up. Do we hear any objection to that?

[No response.]

Mr. LOBIONDO. I don’t think so. OK.

We welcome members of the full Committee.

Mr. Filner and Mr. Oberstar are on their way. On both of our

panels, we have folks who have critical schedules, and I know the

most important part of this will be coming to the questions. We

talked to Mr. Filner’s office, and I am going to start with my opening statement and ask Mr. Filner and Mr. Oberstar and Mr.

Young, if they are here, for their statements; ask the other members to please forego opening statements. We will get into the testimony of the panel members and then get right into questions.

So, without further ado, the Subcommittee is meeting this morning to review foreign operation of terminal facilities at U.S. ports

and to review the Federal Government’s process in implementing

effective port security measures.

Given the high level of foreign operations at U.S. ports, the complete implementation of the Maritime Transportation Security Act

is vital to protect our security without dampening the international

trade that is the lynchpin of our economy.

I still remain very concerned and opposed to the pending transfer

of operational control over several U.S. port facilities to Dubai

Ports World. A number of us still have many questions about this

proposed deal, and hope that the witnesses’ testimony will be able

to address these complex issues.

Specifically, I am interested in learning to what level was the

Coast Guard, Customs, and Department of Homeland Security involved with the initial review of the proposed sale and what level

of participation each will have in the more stringent second review.
2

Secondly, what are the concerns that were raised by the Coast

Guard and the Department, and how were those concerns addressed?

Also, does the fact that DP World is a foreign state-owned entity

affect the Coast Guard’s ability to share sensitive information with

security officers who, by nature of their employment, could be considered agents of a foreign government?

I believe that these questions clearly demonstrate that we need

to do a great deal more, and we have to give very serious thought

and investigation before this sale is approved.

Along with my opposition to this specific transaction, I am extremely concerned with the Administration’s lack of progress in implementing the broader port security measures this Congress

passed as part of the Maritime Transportation Security Act of 2002

and successive legislation. It is now more than three years after

the passage of the Maritime Transportation Security Act, and I am

very frustrated to hear that many of these programs have not been

implemented and, in fact, on some of them we have no idea when

they might be.

Under MTSA, the Department of Homeland Security is required

to develop the Transportation Worker Identification Credentials,

known as the TWIC program, that will issue biometrically embedded security cards to maritime workers that can be used interchangeably at any U.S. port. To this date, we have not progressed

beyond the prototype stage for this critical program, and without

any creditable explanation.

The Department has not developed a format for the card or the

readers that will be used to restrict access to secure areas in our

ports. They have not developed a procedure to carry out the background checks for individuals who are applying for the card, or for

the statutorily required biometric information that will be required

on this card.

I find it totally unacceptable that the Department has allowed

this program to be delayed for this long, clearly not giving it any

priority. The TWIC card will be one of the primary means of keeping unauthorized personnel out of our ports, and I hope that the

witnesses will be able to take back with them the very strong message that we expect this program to be moving forward and that

we are tired of the delays that have incurred.

Likewise, MTSA requires the Coast Guard to develop and implement a system to track vessels up to 2,000 nautical miles from

shore that will complement the near-shore tracking capabilities

under the Automatic Identification System. The Coast Guard has

previously testified that they are working through the International Maritime Organization to develop the components of a

global system, rather than implementing a long-range vessel tracking system domestically.

While I guess I understand and somewhat agree that we should

work with our international partners to develop a standardized system, again, I am very concerned and very frustrated by the Administration’s apparent decision to delay the implementation of this

system here at home. Excuses and delays for critical maritime security measures such as the TWIC card and the tracking system

are unacceptable.
3

Finally, the Department is required to establish a secure systems

of transportation program. That is protecting our supply chain to

establish standards and procedures to secure the maritime cargo

supply chain from the point of loading to arrival in the U.S. And

of all the things that we are doing, making sure that these containers are protected before they get here is one of the most important.

This program will include standards for screening of cargo in foreign ports, standards for locks and seals to maintain security while

in transit, and procedures for the Federal Government to ensure

and validate compliance with this program. It is imperative that

we develop robust measures to assure that this and other maritime

security programs are being complied with. And I do not understand why the Department has absolutely disregarded this statutory requirement.

Integrity of our containers is essential and crucial if we are able

to affect any measure of maritime antiterrorism and port security.

We have taken steps to enhance security at our ports, but I believe

we must do much more. The proposed transfer of the port terminal

facilities to a foreign state-owned entity only highlights the need

for the Administration to fully implement the full extent of the

maritime security programs required under the Maritime Transportation Security Act and other laws to work with Congress to develop any further requirements. The American people expect us to

take the necessary actions to secure our ports, and this Subcommittee will continue to work with the entire Congress to develop legislation to enhance our maritime homeland security.

I thank the witnesses for appearing today.

OK, we will break from the witnesses’ testimony when Mr. Filner

and Mr. Oberstar come in to see if they still wish to make any

opening statements, but I would first like now to welcome our first

panel: Mr. Stewart Baker, Assistant Secretary for Policy for U.S.

Department of Homeland Security, accompanied by Rear Admiral

Craig E. Bone, who is the Director of Inspections and Compliance

Directorate with the United States Coast Guard, and Mr. Jay

Ahern, Assistant Commissioner of Field Operations for Customs

and Border Patrol.

Mr. Baker, please proceed.

TESTIMONY OF STEWART A. BAKER, ASSISTANT SECRETARY

FOR POLICY, U.S. DEPARTMENT OF HOMELAND SECURITY;

ACCOMPANIED BY RDML CRAIG E. BONE, DIRECTOR, INSPECTIONS AND COMPLIANCE DIRECTORATE, UNITED

STATES COAST GUARD; AND JAY AHERN, ASSISTANT COMMISSIONER FOR FIELD OPERATIONS, CUSTOMS AND BORDER PATROL

Mr. BAKER. Thank you, Chairman LoBiondo and members of the

Subcommittee and the Committee. I will be brief. You have our

prepared testimony. I will not be discussing port security, which

Admiral Bone will discuss, or cargo security, which Mr. Ahern will

discuss.

What I thought I would do is simply address some of the questions about the CFIUS process that may have arisen in connection

with this transaction.
4

First, as the Chairman asked, what was the involvement of

Coast Guard and CBP and the Department of Homeland Security

in the process? The short answer is that both Coast Guard and

CBP were closely consulted about this transaction, and DHS, actually within the Department, took the lead in addressing some of

the security concerns that we in fact had raised.

As a result of DHS’s efforts, rather than simply approving this

transaction, it was approved only with a letter of assurances from

the company, from both companies. That letter of assurances had

two principal safeguards. First, it took several programs that are

voluntary for other companies and made them mandatory, a best

security practices program called the Customs-Trade Partnership

Against Terrorism.

For every other company that is a voluntary program; you enter

it in order to get certain benefits in processing. For P&O, Ports

North America, and for DPW, those programs are not voluntary,

they are mandatory. That requires a lot of recordkeeping and a lot

of specific best security practices across the board.

They also assured us that we could have access to any data

about their U.S. operations without a subpoena, without a warrant,

we simply have to give them a written request for that data. That

will allow us, among other things, to do background to obtain a list

of all their current employees and to do background checks, run

them against security watch lists and the like. And we will be exercising that authority as soon as the letter takes effect.

So we do have substantial protections that were at the instance

[sic] of DHS and run to the benefit of both CBP and the Coast

Guard.

That is a very brief overview of the process. We will be glad to

take questions. I do want to emphasize that we certainly agree that

the focus on port security and the many measures that the Chairman mentioned are appropriate areas of concern. We will be glad

to work with the members of the Subcommittee and the Committee

with respect to how to improve port security, and we look forward

to discussing those ideas in the course of this hearing.

Thank you.

Mr. LOBIONDO. OK, thank you, Mr. Baker.

Admiral Bone?

Admiral BONE. Good morning, Chairman LoBiondo, Congressman Filner, and distinguished members of the Committee. I am

Rear Admiral Craig Bone, Director of Inspection and Compliance

for the Coast Guard, with responsibility for maritime ports, vessels,

facilities, both their safety and security operations.

As Assistant Secretary Baker stated, I will be responsible for the

security portion of this hearing, and we have undertaken and completed numerous improvements in our port, vessel, and facility security since Congress enacted the Marine Transportation Security

Act and IMO established the International Ship and Port Security

Code, which parallels MTSA.

Key to our efforts has been the Federal interagency cooperation,

coupled with the engagement of the maritime industry and State

and local officials, as well as law enforcement agencies. This was

accomplished not just at the national level and through the regulatory process, but also carried out in our daily operation through
5

establishment of area maritime security committees with full interagency maritime stakeholders and State and local agency involvement.

All U.S. 3200 MTSA facilities in over 11,000 U.S. flag commercial

vessel security plans have been completed by the operators and reviewed satisfactorily by the Coast Guard. Annual compliance examinations are conducted, as well as unscheduled targeted vessel

boardings of U.S. and foreign flag vessels. Sixteen hundred

boardings since July 2004 have resulted in 143 major control actions, including, in some cases, actually expelling the vessel from

the port or not allowing it to come to the U.S. at all.

Annual compliance examination and random assessments of port

facilities have been conducted, with 700 violations and 44 major

control actions taken since July 2004. Those 44 would either stop

cargo operations or even shut down the facility.

We truly appreciate the Congressional support which has provided additional assets in the way of MSSTs, small boats and

crews, armed helicopters, increased inspectors, escorts and sea

marshals to protect high-risk vessels, command center improvements to integrate operations, AIS receivers, improved traffic management system, intelligence personnel, and many more.

We have also conducted national level exercise, as well as local

area exercises to test our response capability to threats or to an actual incident occurring to make sure there is better coordination.

Now, as I have said that, we know that there is much more to

do. Some examples include implementing home port, which is a

web-based system to improve communications within the ports and

the stakeholders within the maritime community and the law enforcement agencies. We are conducting studies on the use of barrier

booms to improve high-risk vessels and critical infrastructure; developing a marine security response team deployable 24/7 as a

counterterrorism capability.

We are working to improve screening technologies and training

for our passenger screening at both ferry and large passenger facilities; expanding AIS and LRIT, as you mentioned, through IMO;

and improving our maritime domain awareness, as well as continuing replacement of our deep water assets, our aircraft, our command centers and systems in order to support offshore operations

so we don’t wait until the threat arrives here, but we address it

as far offshore as possible; and, finally, working with TSA to implement the TWIC card, which you mentioned, which is a critical element to port security in our environment.

And while much has been done, I don’t want in any way for the

members here to think that we are complacent or feel that we have

closed the vulnerabilities in our ports and our waterways or our

maritime commerce that it supports. We look forward to working

within DHS and across all the Federal, State, and local agencies

and with the members of Congress as we continue to pursue security in the maritime environment.

Thank you, sir.

Mr. LOBIONDO. Thank you, Admiral Bone.

Mr. Ahern?

Mr. AHERN. Yes. Good morning, Chairman and members of the

Committee and the Subcommittee this morning. My name is Jay
6

Ahern, and I am the Assistant Commissioner for United States

Customs and Border Protection, and my responsibility is for our

field operations, to include our ports here within the United States.

It is important, I believe, today for us to have the opportunity

to discuss what role that we are playing in not only the CFIUS

process, but also in securing the United States, particularly at our

ports of entry. I think it is also important to have this Committee

and Subcommittee have a full understanding of what our roles and

responsibilities are, and I hope to outline some of those for you

with our layered defense and our mechanisms that we have in

place for protecting containers coming into this Country.

Our priority mission within CBP is homeland security, and we

don’t take that lightly at all, and we believe we are America’s front

line at our ports of entry for protecting against the entry of terrorist, terrorist weapons, weapons of mass destruction or effect from

coming into this Country. And certainly I think it is also important

to realize that America’s seaports, the trading system is a global

one, and it is important to continue to understand that process.

And as we secure our seaports, we take that into consideration,

and it is certainly a work in progress as we craft an efficient system for providing security that is necessary for that supply chain,

but also making sure at the same time we don’t stifle legitimate

trade coming into this Country that our economy and the global

economy so much counts on.

I will tell you also that I believe very strongly that our 322 ports

of entry in the United States are far safer today than they were

previous to 9/11. And I believe since 9/11 our Country, as well as

our organization, has made great strides in protecting supply chain

and promoting trade and travel into this Country, while, again,

maintaining the vitality of our economy, but never once taking our

eye off our security responsibility.

Our Government responsibility and our private sector partners

have instituted unprecedented programs to secure our seaports and

the cargo moving through those seaports, and I think it is important that I state that none of these programs existed previous to

9/11. Before 9/11, also, we had four different agencies responsible,

in three different Departments of Government, for protecting our

borders at ports of entry, and today we have one unified border

agency for that responsibility under the creation of the Department

of Homeland Security and Customs and Border Protection that responsibility rests within this Department and this organization.

After 9/11, Customs, now Customs and Border Protection, developed a layered defense to secure the movement of cargo and, particularly for this discussion, containerized cargo coming into this

Country, again, beginning security of the supply chain as deeply as

we can in that supply chain, taking our officers and our strategies

overseas to employ a defense and depth strategy, not making our

ports of entry here in the United States the first opportunity to intervene or interdict, but to focus on prevention and getting as deep

as we can in the support chain.

The first part of that five interrelated strategies I would like to

briefly talk about is the 24-hour rule in the Trade Act. It required

advanced electronic information on 100 percent of the cargo coming

to the United States. One hundred percent of the cargo is sent elec-
7

tronically under the Trade Act 24 hours prior to lading in a foreign

environment to the National Targeting Center here in Northern

Virginia. The National Targeting Center then deploys a risk-based

system called the Automated Targeting System, which is based on

intelligence information, as well as a rule-based algorithm set of

rules to target containers for risk coming into this Country. So it

is important to know that that did not exist prior to 9/11.

At the National Targeting Center, we have representatives from

the Coast Guard linking to the Intelligence Coordination Center, as

well as to the FBI, Immigration and Customs Enforcement, Joint

Terrorism Task Force. Many other agencies have representatives at

this Center as well.

The third component is the cutting technology, cutting-edge technology we have deployed as well. At our seaports and also overseas

we are deploying radiation portal monitors and large x-ray systems

to have the ability to look inside the containers and also scan for

radiation. Before 9/11, there were no radiation portal monitors deployed in our Country; today we have 181 at seaports around the

Country, and we continue to deploy in a very rapid pattern.

Those 181 radiation portal monitors have the ability to screen 37

percent of the 11 million containers that come into this Country as

they are departing terminals and ports within this Country to

enter into the commerce of the United States. By the end of this

calendar year, we will have 65 percent of the containers, throughout continued deployment of the radiation portal monitors. That is

a very key link and a key component of our strategy as we go forward.

A fourth initiative that is very critical in pushing our borders out

is the container security initiative. Again, this did not exist before

9/11. Currently, we have 43 ports. And that has changed from testimony in the last week and the week before from 42, because just

yesterday we opened up in the Port of Salalah, Oman. So we now

have 43 ports, accounting for about 75 percent of the containers

coming into this Country originate in ports where we have United

States Customs or Border Protection officers working with host

country counterparts using large-scale imaging technology, as well

as radiation detection capabilities to look at those containers that

have scored for risk that we receive 24 hours prior to lading. Again,

we did not have officers overseas before 9/11. As we move forward

through the rest of this year, we will be at 50 ports and account

for about 85 percent of the cargo coming through those ports.

The fifth initiative is the Customs-Trade Partnership Against

Terrorism, and as the Assistant Secretary mentioned, it is a key

component, it is one of the things that we did put forward as one

of the assurances process. Fifty-eight hundred certified members

are part of this program. These are some of the largest importers

in the United States that are joined in partnership. I believe it is

one of the largest and most successful public and private sector

partnerships since 9/11 working together to ensure supply chain security.

Together, when you take each one of these five components and

aggregate them together, I believe there is a very good layered

strategy that is in place. Certainly every one of those programs is

under a path of continuous improvement, and our goal is to con-
8

tinue to do that. But when you aggregate these five initiatives together, I believe it provides a greater protection against the introduction of the threat of terrorist attacks in this Country through

the maritime supply chain.

I will conclude there, Mr. Chairman, and look forward to taking

any questions on any of the layered defenses I have spoken about.

Mr. LOBIONDO. Thank you, Mr. Ahern.

I am now going to thank the Ranking Member, Mr. Oberstar, for

joining us and ask Mr. Oberstar for his opening thoughts.

Mr. OBERSTAR. Thank you very much, Mr. Chairman, for moving

out so vigorously and so forthright manner on this legislation, and

for your quick response on the aviation NPRM that involves a similar issue of national security with our commercial airlines and the

civil reserve air fleet issues that are associated with a proposed

regulation change that would subject our airlines to foreign ownership and endanger our national security with the commercial air

lift that was critical to Gulf War I and Gulf War II, moving personnel and equipment to the front lines aboard U.S. carriers.

For the past four years, since we enacted the port security legislation from this Committee—and it was this Committee that was

the driving force in the House-Senate conference on that legislation, we have been trying to get the rest of the Congress and the

Administration to pay attention to port security. It has taken this

Dubai ports issue, rather badly understood by the public and not

so well presented by the news media, to mobilize the Country into

an outrage over the proposed sale of terminals at critical U.S. ports

to a foreign interest which apparently a great body of the American

public do not trust.

I would separate the issue that is before us today, Mr. Chairman,

into two parts: the ownership issue and the capital flows associated

with it, and the underlying but more important, far more overshadowing, port security issue. The question of capital flows is one

that we have to think about as we look to ways of financing our

ports, and to understand that, you have to put it in some context,

that 20 percent of the world trade tonnage comes to the United

States. Ninety-five percent of non-land trade, that is, from Canada

or from Mexico, 95 percent comes by ship into the United States.

Seventy-five percent of the value comes by ship into the United

States.

We have 95,000 miles of shore line, 361 U.S. ports. Eighty percent of our port terminals are operated by foreign companies. Ninety-eight percent of the cargo that we import or export goes on foreign flag vessels. And that is an issue that has been going in the

wrong direction for the last 32 years, since I have served in Congress, despite all of our efforts to build a U.S. flag maritime fleet.

So now we have in the range of 13 million containers coming into

the United States, and the question is, where should they be

screened. Our Port Security Act had the basic principle of pushing

the border out. The further you go out with that border, the more

secure, the safer the United States is. While a witness just said

that we are going to have radiation portal monitors soon checking

65 percent of cargo, once it is here, it is too late.

We need—and the point of the Port Security Act was to screen

those containers and that cargo oversees, before it gets into our
9

zone, our 200 mile economic zone. And that is the really significant

failure of the last four years, a failure to enforce and carry out the

provisions of the law, the key five provisions. Our port security grants, the Coast Guard said that we need $5.4

billion to address the security needs at home and abroad. Congress

has appropriated $883 million; the Administration has invested

$700 and some million. We are short by any yardstick of measurement.

Background checks. The law requires that the Department of

Homeland Security set standards for background checks for persons who have access to the secure area of ports. No background

checks are required; no standards set for background checks.

Foreign flag security plans. The Coast Guard went to the international negotiations two years ago and settled on a plan that

stops the Coast Guard from hands-on investigation of, an assessment of the security plans in ports and of vessels and vessel owners, and satisfies itself with the overall scheme of the country that

says we have a security plan; they look at the plans and say, OK,

that is good enough for us. That is wrong. That is wrong. And we,

in 2004, tried to set the record straight and give the Coast Guard

greater authority to go into those plans.

Foreign port security plans. The law requires the Coast Guard to

conduct foreign port assessments on screening of cargo, access controls, authorized personnel, security management of those ports.

Those assessments have not been completed for our largest trading

partners.

Container seals, fifth point of the Security Act. We, in the law,

require Department of Homeland Security to establish standards

and procedures to secure cargo and monitoring the security while

in transit, including standards for tamper-resistant seals. None of

that has been done.

If those provisions had been put in place, Mr. Chairman, they

would have greatly mitigated the concerns and fears of some foreign country or foreign company taking over management of the

terminals at major U.S. ports. It still raises the question of whether the security review under the Florio Act has been carried out

property, and there has been a 45-day extension.

But the President said, my position hasn’t changed. If there was

any doubt in mind or the people in my Administration that our

ports would be less secure and the American people endangered,

this deal wouldn’t go forward, he said. Well, he is giving another

review. It seems he has made up his mind.

Well, we are going to, in this hearing, get to the bottom of some

of those issues and questions, and I appreciate very much that you

have called this hearing, and I expect that we will have a good, indepth look at the issue. Thank you, Mr. Chairman.

Mr. LOBIONDO. I thank Mr. Oberstar for his leadership on these

issues and, again, one of the things Mr. Oberstar referred to which

is disturbing for a number of us is that this proposal comes on the

heels of what we found out sort of through the back door in November, I guess, that for the first time in our history we are proposing

to allow foreign ownership of U.S. airlines. And there are many of

us who feel that any foreign ownership of critical infrastructure is

wrong.
10

That having been said, Mr. Baker, can you tell us—we understand that Secretary Chertoff was not made aware of the review

that as ongoing in this process. Is that your understanding, that

he was not made aware?

Mr. BAKER. That is correct.

Mr. LOBIONDO. Can you tell us why not?

Mr. BAKER. Yes. This process is run at the policy level, ordinarily, by the Treasury Department. The Treasury Department has

a set of escalating committees so that disputes can be resolved, as

they ordinarily are in the interagency process. The usual process

is that if a transaction can be agreed on at the assistant secretary

or staff level, then it is not raised to higher levels for discussion

by the deputy secretaries or the secretaries.

In this case, the transaction received considerable scrutiny at

DHS, from my office, from the Coast Guard, from CBP, and from

other offices. We decided that we wanted to get more assurances

from the company than had been provided; we negotiated those assurances. When we got the assurances that we wanted, since we

were the last of the agencies with questions and concerns about the

transaction, we reported back to CFIUS that our concerns had been

satisfied. The CFIUS process then determined it wasn’t necessary

for deputy secretaries or secretaries to meet on the transaction,

and it went forward.

For DHS purposes, the buck stops with me. I decided that we

had sufficient assurances and did not brief the deputy secretary or

the Secretary because they were not going to be asked to opine on

the transaction in the interagency process.

Mr. LOBIONDO. Well, that is somewhat troubling to a number of

us. I want to use my additional time initially here to talk about the

overall maritime security measures. We had a discussion last week,

when you appeared before the Armed Services Committee, about

the Transportation Worker Identification Card. After that hearing

there was an ABC News report that indicated a major security

breach at the ports of New York and New Jersey. They went on

to talk about the two ports handling millions of tons of cargo,

scores of cruise ships that pass through each year, and that truckers who transport much of the cargo are issued ID cards which give

them access to all areas of the port.

And ABC News learned that the cards given to thousands of

truckers by the Port Authority of New York and New Jersey were

issued with virtually no background checks and that an investigation at these two ports found stunning gaps in security; that the

DHS report which was obtained by ABC News shows that of the

9,000 truckers checked, nearly half had evidence of criminal

records, more than 500 held bogus licenses, and that officials were

unsure of who the real identities were of these people. The intelligence report found that truckers that were in the category of not

being checked had been convicted of homicide, assault, weapons

charges, sex offenses, arson, drug dealing, identity theft, and cargo

theft, and that some of those involved were identified with a gang

called MS–13, which has been described as one of the most dangerous gangs in the United States.

Now, my question is if this is going on at the second busiest

cargo port in the United States, why and how can DHS explain
11

that we have not put into place the identification card system and

as of last week you could not tell us when we might expect it? Can

we know anything about where we are going with this project?

Mr. BAKER. Yes, sir. First, I am aware of the study, and, of

course, that was done by—the responsibility for those cards and

the background checks was the responsibility of the Port Authority

of New York and New Jersey; they made the determination not to

carry out the background checks for a variety of reasons, I am sure.

It is a subject of considerable controversy what kinds of background checks and what kinds of criminal behavior ought to exclude people from working in the ports.

There are not a lot of former choir boys who sign up to be longshoremen and the longshoremen are concerned that irrelevant

criminal behavior far in the past might be considered disqualifying.

So there are some reasons on the other side of those background

checks why the Port Authority might not have determined that certain crimes were disqualifying for entry into the port.

Nonetheless, we agree with your basic point, which is that we do

need to do background checks on the people who have access to our

ports. That is why we have decided that, with respect to this transaction, we will exercise our authority under the assurances letter

to gain access to the names of all the persons who work for the terminals that are being acquired so that we can do background

checks on all of them.

More broadly, you have asked about the Transportation Worker

Identification Card, and I have taken back the concerns that you

raised at the last hearing in quite urgent terms, and I think it is

fair to say that the Department understands the urgency of beginning this process. We finished the pilots last year, about the middle

of the year, and I think in August received an evaluation of it.

We have been planning on what we will do to roll out a Transportation Worker Identification Card. Those efforts have been substantially accelerated and I think that we will be making an announcement within a matter of weeks to get that program up and

running.

Mr. LOBIONDO. I certainly hope that is the case, Mr. Baker. We

have such a high degree of frustration in not knowing how we can

convey any more strongly than we have the unacceptability of the

delays, and all the rhetoric doesn’t account for anything. It has

been pointed out over and over again if we have a terrorist incident

at one of our ports, it is likely to shut down all of them. And all

of these measures, including the Secure Systems Transportation

program, securing the supply chain, which Mr. Flynn has been so

eloquent about explaining. We have got to do something before

these containers get here.

Unless the Department takes the cue from Congress with the

laws that we pass and put some emphasis on this, we will be here

a year, two, three years from now talking about the same thing,

of why there were delays. I can’t say it strongly enough.

Mr. BAKER. I fully appreciate the concern here, and we share it.

I will defer to Mr. Ahern with respect to the details of some of the

cargo programs, but we certainly don’t believe that we are anywhere close to done with improving the security of the supply chain

or the ports.
12

Mr. LOBIONDO. Mr. Filner.

Mr. FILNER. Thank you, Mr. Chairman. Thank you for holding

the hearing.

Thank you for being here. I apologize for missing your opening

statement, but from the tone of your answers, Mr. Baker, I don’t

see any sense from the Administration that you have changed your

tone deafness on this issue, of the Dubai ports in specific or the

port security in general. In answer to Chairman LoBiondo, you

said, well, the buck stops with you, and Chertoff didn’t hear this

and the President didn’t hear this. I mean, there was no sense of

any mistake made. Do you think you made any mistake or do you

regret second-guessing? Would you do it differently this time

around, the next time around?

Mr. BAKER. Absolutely I would.

Mr. FILNER. Well, thank you. It took a revolution from the Country to say something.

But I just don’t understand the lack of seeming concern. The Administration says it is still backing this deal, the 45 days doesn’t

mean anything. In your opening statement you didn’t say anything

about that. The House Appropriations Committee, as you know,

voted 62 to 2—I don’t know if there is any vote on that committee

like that on anything—to overturn the sale. Are you still going to

recommend a veto of this when the Congress does pass to stop on

this?

Mr. BAKER. There is a certain constraint given that we are in a

45-day period in which we are carrying out our deliberations, but

I can assure you that this is a full review without preconceptions

of how it will come out. We are conducting additional fact-gathering with respect to the security practices of Dubai Ports World,

with respect to P&O Ports North America, with respect to the Port

of Dubai. Other parts of the Government are looking very closely

at the record of Dubai and the UAE with respect to proliferation

and trade. So I think we are conducting without preconceptions

a———

Mr. FILNER. I hope you will tell the President what your results

were, because he seems to have a preconception. He has continually, since this supposed review started, said he still backs the

original agreement, and Dubai, I think, this morning announced

that if we retaliate in this way, they would keep ships out of American ports. And it just seems that your initial unconcern about it

from the point of view of security is leading us into a bigger crisis.

Mr. BAKER. I would beg to differ with respect to the notion that

we weren’t concerned about security. The assurances that we received in this case were unprecedented. For the first time ever we

asked for special assurances in the context of a transaction involving U.S. ports.

Mr. FILNER. But the record that this Administration has on port

security, which this Committee has raised since 9/11, Mr. Oberstar

outlined them to begin with. You have not implemented the MTSA,

the Maritime Transit Security Act, I guess it is called, in almost

any of its demands on you. For example, we don’t have security

standards for containers; we don’t have a way—we are not scanning the containers before they get into the United States; we don’t

have background checks, as has just been noticed; we don’t have
13

secure entry to the marine terminals; we don’t have closed-circuit

TVs. I mean, we have more closed-circuit TVs, but we don’t know

what is in those containers when we learn here. And on and on.

So we are not convinced that the concern was fully taken, because there is all this other evidence. This has just sort of brought

to the surface the problems that this Administration has been having.

And I represent San Diego, California, as you know. We were

told by your agency that we did not qualify as a threat in your

UASI—I don’t know how you pronounce it—the Urban Area Strategic Initiative grants. And when I pointed out to Secretary Chertoff

or some of your staff that I don’t know of any port in America that

has three nuclear carriers, a dozen nuclear subs, we have a nuclear

power plant right nearby, we have the biggest Navy base in the

world, and we are not a threat. And the reason we are not a threat,

according to your staff, is that the Department of Defense assets

are invisible to our calculations when dealing with threats. That is,

because the—that is what they said—because we have the Navy

there, we are defended.

I mean, with that kind of reasoning, we are a sleepy fishing village in the eyes of the Department of Homeland Security. And with

that kind of thinking and that kind of blindness, of course we are

not convinced that you took this seriously with the Dubai thing, because you haven’t taken anything else seriously.

If you can’t take six nuclear reactors sitting in the harbor of San

Diego as a serious potential threat to terrorists—and we know that

two of the hijackers were casing us out for six months, very much

openly there—then something is wrong with your Department. And

I said I didn’t know the President’s nickname for Secretary

Chertoff, but I would say he’s doing a heck of a job, Chertie, for

all this. And I say that to you, based on your answers here.

It doesn’t seem you are taking all this stuff with any seriousness.

And why isn’t San Diego a threat because we are the biggest Navy

base in the world? Why wouldn’t that be a potential threat to the

Department of Homeland Security?

Mr. BAKER. We actually certainly appreciate the leadership this

Committee has shown on both sides of the aisle in addressing these

security issues, so I———

Mr. FILNER. All right, we are not going to get an answer here.

I will just move on, Mr. Chairman. I have used my time.

Mr. LOBIONDO. Mr. Coble.

Mr. COBLE. Thank you, Mr. Chairman.

Gentlemen, good to have you all with us. When I view the operation of a port, I see a four-legged stool: you have Customs and

Borders, you have United States Coast Guard, you have the terminal operator, and the port authority. Am I reading that correctly?

Do you all see the same stool that I see?

Now, I met with a group of our colleagues and business leaders

about three years ago from Denmark, Norway, Finland, and America, and many expressed concern there that port security must be

enforced to the letter. But they were concerned that perhaps some

of this enforcement may result in compromising the free flow of

commerce. Do you have any comment on that?
14

Admiral BONE. Congressman, there is always a tradeoff any time

you decide you are going to provide prescriptive measures or checks

and balances in a system, because you are going to take the time

to review, screen, examine, stop the flow or delay the flow. So there

is always that tradeoff.

And it is a matter of risk management always in that process,

and making sure and finding ways to target that through intelligence. Not just through intelligence, but also through history of

working with those entities or those organizational entities, as well

as randomly we are able to do that.

Now, do you operate a system with zero risk? No. Do we live in

a world of zero threat? No. And I think the challenge for us—and

with the guidance of Congress—is identifying what is that acceptable level, what are those measures. And we usually work that

through our regulatory process to help define that, and then we

prescribe it and put it into place.

Mr. COBLE. I got you.

Now, Mr. Hayes and I represent a State that has two ports,

Morehead City and Wilmington. But these ports do not reach the

volume of ports in, say, New York, Miami, et cetera. Are ports such

as Morehead City and Wilmington receiving adequate resources to

address the threats that are there?

Admiral BONE. Again, from the Coast Guard’s aspect, we put into

place the resources that Congress has provided based on risk, and

we best placed those in those ports, working, again, with State and

local entities. This isn’t—I would have added a couple more things

on your stool legs, which would have included the State and local

authority which provide security and assist us as well.

Mr. COBLE. Good point.

Admiral BONE. And also looking at the industry segment and

their capabilities to provide security as well.

Mr. COBLE. Mr. Baker, I am by no means a financial planner,

but I know we are trying to come to some sort of conclusion that

will assuage any of the discomfort that some of us have about

Dubai. Has anyone thought about the possibility of a passive ownership that would perhaps remove them from the day to day operation of moving cargo offloading cargo? Has that been raised to any

threshold?

Mr. BAKER. That is certainly an approach that has been used in

other CFIUS cases, usually in the context of defense contracts involving very sensitive technology, where it is important for every

piece of information that the defense contractor is dealing with to

be shielded from the foreign owner. So because we are carrying out

this review without preconceptions, that is certainly one possibility

that we are going to look at.

Mr. COBLE. Mr. Ahern, I have ignored you, but not intentionally.

Do you want to weigh into this before my red light illuminates?

Mr. AHERN. I would like to make a couple of comments back to

your question of the impact of security in the Port of Wilmington.

By our assessment, Wilmington and Morehead City are considered

one and the same port, and only 37,000 containers out of the 11.3

million that come into this Country come through those ports. So

we appropriately deploy the resources and the technology there to

meet that threat.
15

I would also like to go back to your other question, too, about

taking into consideration the impact on global trade and movement

of trade as we move forward with security measures, and I think

it also addresses a couple of the points that were brought up by

Congressman Filner and also Congressman Oberstar, challenging

the Department to move quicker; and certainly we want to move

quicker and we are.

But I think it also needs to be restated factually again that we

have taken our efforts overseas; we have begun defense in depth.

We did not have anybody overseas pre–9/11. Today, in 43 ports

throughout the world we have United States Customs and Border

Protection officers there doing the screening and doing the examinations with the host country counterparts of those containers that

pose a risk.

And also to, again, factually restate, as far as the radiation portal monitors are the tail end of our layered process, as once they

are clearing at a port in the United States and leaving to go into

the commerce of the United States. That is not the first or the only

opportunity we have for intervention, that is the last end. So that

is the end of our multilayered systems as we go forward.

So I just wanted to restate those facts, sir, also.

Mr. COBLE. Thank you. I see my time has expired.

Thank you, Mr. Chairman. Thank you, gentlemen, for being with

us.

Mr. LOBIONDO. OK, thank you, Mr. Coble.

It is greatly appreciated that members tried to be considerate of

all the folks who are here that we try to accommodate with staying

within the time line. We have been alerted that we expect the first

vote of the day probably in about a half hour. It is expected to be

one vote, and then we should be uninterrupted for a while.

With that, I will turn to Mr. Oberstar.

Mr. OBERSTAR. Thank you, Mr. Chairman.

The additional review that is underway has brought this response from Dubai Ports World. They jointly request CFIUS to conduct a full 45-day review: ‘‘DP World and P&O Ports of North

America will abide by the outcome of the review, but nothing herein shall constitute a waiver of any rights of DP World or POPNA

that have arisen from the original notification.’’

You are familiar with that, Mr. Baker?

Mr. BAKER. Yes, I am.

Mr. OBERSTAR. What is the meaning of the statement that they

are not waiving their rights from the original notification? Does

that original notification, after the 30-day review, give them the

right to complete the deal, that is, go to closing?

Mr. BAKER. Our view is that they have submitted themselves to

CFIUS review, that that gives us the authority, the President the

authority to say this transaction will not go forward or this transaction will go forward only when certain conditions are met, and

that they are in no different condition than anyone else who———

Mr. OBERSTAR. So their statement that this further review does

not constitute a waiver of any of their rights, that is vitiated by the

review?

Mr. BAKER. In our view, that does not prevent us from issuing

whatever order we would like to issue.
16

Mr. OBERSTAR. And in the course of that 45-day review, they cannot go to—they cannot close the deals themselves, cannot state that

the original notification constitutes an authority to close?

Mr. BAKER. The Exxon-Florio Act doesn’t distinguish between

closed deals and open deals. The transaction is subject to review,

and if the deal has closed, then the President has the authority to

order divestment; if it hasn’t closed, he has the authority to

prohibit———

Mr. OBERSTAR. You can give this Committee an ironclad assurance that notwithstanding the statement by Dubai Ports World,

that if the further 45-day review concludes that this is a security

threat, that that can be terminated or modified in some way to protect the security interests of the United States?

Mr. BAKER. That is our view, and we think we have the—it is

our interpretation of the statute that will govern. This is America;

anybody can sue over anything, so I can’t guarantee you there

wouldn’t be a lawsuit over that.

Mr. OBERSTAR. But a $6.8 billion deal will stay on hold.

Mr. BAKER. Most of the deal, of course, has nothing to do with

the U.S. ports; the U.S. ports are about 10 percent of this deal.

Mr. OBERSTAR. Or it could go to closing and you could order divestiture.

Mr. BAKER. That is correct.

Mr. OBERSTAR. All right.

On the Container Security Initiative, Mr. Ahern, that is managed

by your agency, Customs and Border Patrol. The proposal is to establish a regime to ensure that all containers that pose a security

potential will be identified and inspected at foreign ports. However,

not all foreign governments allow our Customs and Border Patrol

to see a scan that has been requested; you only get notification that

the scan was completed. And if it has passed, they will tell you it

has passed, but that is all. What are you going to do about that?

Mr. AHERN. Well, I think first off, that is not the case, with the

exception of possibly one country, where we have some concerns

with certain privacy and authorities within one particular country.

But in most circumstances we have our officers there with the host

country counterpart as the scans are being conducted, and it has

to be done to our satisfaction or we will issue a do not laid order

for that container not to be put on a vessel for the United

States———

Mr. OBERSTAR. Can you list for us———

Mr. AHERN.—if it is not reached to our satisfaction.

Mr. OBERSTAR. Would you list for the Committee, in a separate

document, those countries where you have such presence and such

screening?

Mr. AHERN. The 43 countries we have?

Mr. OBERSTAR. Yes.

Mr. AHERN. I would be happy to produce all of them for the 43

countries we have.

Mr. OBERSTAR. In a review that I conducted of the principal

points of export to the United States, that was certainly not the

case. Less than 5 percent of containers coming to the United States

are screened.
17

Mr. AHERN. Five percent of the universe of 11.3 million is actually scanned.

Mr. OBERSTAR. Yes.

Mr. AHERN. One hundred percent of the containers coming to the

United States are reviewed for intelligence and informational concerns through our National Targeting Center to score them for risk.

One hundred percent of those that pose a risk through our scoring

gets examined. If it is in a location where we have our officers as

part of the Container Security Initiative, that scanning is done,

that scanning is done overseas.

Mr. OBERSTAR. Well, I want to see the document that you have.

We have had difficulty getting accurate data.

Mr. AHERN. I have them right in front of me, sir.

Mr. OBERSTAR. and I would like to have that.

Mr. AHERN. OK, we would be happy to provide that.

Mr. OBERSTAR. Thank you.

Mr. LOBIONDO. Thank you, Mr. Oberstar.

Mr. Diaz-Balart?

Mr. DIAZ-BALART. Thank you, Mr. Chairman.

Let me just make sure I understood this, because there is now

this additional review, this further review. Was that also done—are

there other facilities that have the same type of arrangement with

foreign companies like the one from Dubai now is trying to get?

Mr. BAKER. The generally accepted figure is that about 80 percent of U.S. terminals are owned by foreign companies. So there

are lots of foreign companies and some foreign government-owned

companies that own or lease terminals.

I should stress that it is not necessary to go through CFIUS to

acquire or even to acquire a company to obtain those interests; a

foreign company could come into a port authority anywhere in the

United States and ask to sign a lease, and if they met the port

authority’s requirements, they could simply sign a lease; and that

transaction would never been seen at the Federal level, at least as

far as CFIUS is concerned, we wouldn’t have the authority to———

Mr. DIAZ-BALART. And it has been like that historically, correct?

Mr. BAKER. That is correct.

Mr. DIAZ-BALART. Are there, for an example, does Communist

China have that sort of arrangement on any of our ports?

Mr. BAKER. There is a company in, I believe, the Port of Long

Beach that is affiliated with the Chinese communist government

that has at least stevedoring arrangements. I am not sure that

they have a terminal.

Mr. DIAZ-BALART. This would be the same Communist China

that held a U.S. military plane hostage and that who executes its

own civilians pretty much at will. Was there a second review done

there? By the way, I am not saying there shouldn’t be a second or

third or fourth review. My question is why was that not done with

an entity such as this group from Communist China or other governments or other such countries?

Mr. BAKER. My understanding is that those transactions were

carried out before this Administration took office, and I don’t have

details on it based on my experience.

Mr. DIAZ-BALART. But as far as you know, this kind of review

didn’t take place, including with such an organization that has
18

close ties or may even be owned by the communist Chinese government, the same communist Chinese government that held a U.S.

plane hostage. As far as you know, there is no review like this?

Mr. BAKER. This review is the first review in which we were—

the Department of Homeland Security was a member of CFIUS,

was in a position to raise concerns. We raised concerns and the

agreements that we obtained here are without precedent. So these

issues were not flagged prior to our becoming part of the CFIUS

process.

Mr. DIAZ-BALART. Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you, Mr. Diaz-Balart.

Ms. Brown?

Ms. BROWN. Thank you, Mr. Chairman.

Mr. Baker, I have a question, and I need some understanding,

the Committee and the Country. The law is very clear in plain language, it says that the Department of Homeland Security’s rationale for deciding not to proceed with the mandatory investigation as

required by the plain language in the statute that the President

shall—it doesn’t say may—shall make an investigation in any instance in which an entity controlled by a foreign government

should seek to engage in any acquisition that shall affect the national security of the United States.

Mr. BAKER. The interpretation of that language, which is that if

there is no agency that believes that national security is at risk in

the transaction———

Ms. BROWN. Put a period right there. In December the Coast

Guard—the Coast Guard expressed serious concerns about the

deal. I have a letter that was sent. Now, is the Coast Guard a part

of an agency in this Administration?

Mr. BAKER. It is, but I don’t think the Coast Guard expressed

those concerns to the Department. Those concerns—I believe you

are talking about an excerpt taken somewhat out of context, saying

that there were certain intelligence gaps with respect to that.

Ms. BROWN. Excuse me. What is an intelligence gap?

Mr. BAKER. There were certain things that the Coast Guard did

not know when it put together that report. In that report, despite

the lack of that information———

Ms. BROWN. Sir, maybe the Coast Guard knew something that

Homeland Security didn’t know.

Mr. BAKER. The Coast Guard concluded that this transaction

could go forward, notwithstanding that memorandum, which—and

that memorandum itself concluded that there was not a risk to the

national security from the transaction.

Ms. BROWN. You know, I have never seen an Administration that

had such a contempt for the Congress in my entire life. The Coast

Guard estimated that we need $5.4 billion for facility security.

What did the Administration request?

Mr. BAKER. The $5.4 billion———

Ms. BROWN. Yes, billion, with a b.

Mr. BAKER.—was an estimate of the costs that would be incurred

by the private sector in carrying out the Maritime Transportation

Security Act. Those costs were not intended to be appropriated,

those costs were incurred by the private sector, and have been incurred. The Administration has requested approximately———
19

Ms. BROWN. Forty-six million.

Mr. BAKER. Three———

Ms. BROWN. For all port security.

Mr. BAKER.—$3.4 billion for port security, counting the———

Ms. BROWN. This year?

Mr. BAKER. Yes. If you add in the port security operations of the

Coast Guard, the C-TPAT and Container Security Initiative and

the port security and security grants, it is well over $3 billion.

Ms. BROWN. Sir, listen. Don’t play with me. Now, I’m asking

about———

Mr. BAKER. I am not going to do that.

Ms. BROWN.—port security grants.

Mr. BAKER. Port security grants———

Ms. BROWN. In fact, the Administration requests doing away

with them. And in answer to Mr. Filner’s question, we put language saying that we wanted those ports to have high consideration with military—with military—because I have 14 ports in

Florida.

So we had to go back, because we weren’t rated properly on the

scale, when we have all of that military equipment coming in. We

put language in there that they should get high consideration. But

now you all have recommended that we do away with port security.

And who is bearing the brunt of this is not the Federal Government, but it is local government and it is the State. The Federal

Government is not pulling their weight on this.

Mr. BAKER. I think we have suggested that the programs be consolidated so that they can be used———

Ms. BROWN. Bull. Consolidated. That means that you are taking

the money, doing something else with it. Consolidation, I know exactly what it means, and local government knows what it means.

With no help from the Administration, Congress has provided $883

million for port security. However, that amount represents only 16

percent of the Coast Guard estimated need. Explain that to me.

Mr. BAKER. The Coast Guard estimated those costs would be incurred by the private sector to carry out the facility security requirements of the Act. Those costs have actually been incurred;

that has been done. Those are private sector costs, they weren’t expected that we were going to be paying for them.

Ms. BROWN. Those are private security.

Can the Coast Guard person respond?

Admiral BONE. Again, what he has stated is accurate. Whenever

you put a regulation in place, you have to do an economic impact

analysis. Part of that analysis, in other words, is the cost worth the

risk investment. And in the case this is what we had to say, was

this was going to—these would be the costs incurred not just by the

industry, but also by the other enforcement agencies, State, local,

and individuals that would be engaged in providing assistance to

secure the facilities and the vessels. This was both for vessels and

security around facilities. So it wasn’t implied that while there is

an understanding that Congress put together a grant program to

try to assist them———

Ms. BROWN. It was my bill, so I know the intent.

Admiral BONE. Yes.

Ms. BROWN. I know the intent of the bill.
20

Admiral BONE. Yes. And I am not questioning the intent. I am

just trying to make sure the framework of what the estimate was

based on. And I believe—it appeared to me, from where I was sitting, that the bill was to assist them with those costs.

Ms. BROWN. I yield back the balance of my time.

Mr. LOBIONDO. Thank you, Ms. Brown.

Mr. Reichert?

Mr. REICHERT. Thank you, Mr. Chairman.

Just a question for the panels regarding Seattle/Tacoma port

areas. We have some companies owned by Korea, Japan, and Sweden, and I understand that there may be, right now, a deal on the

table, a discussion, negotiations occurring with the Chinese government. Are you aware of the Chinese government showing some interest in operating port facilities in the Tacoma port, the Seattle

port?

Mr. BAKER. I am not. I believe that, if there is a change of control, that that would trigger a reconsideration of the facility security plan so that, if it happens, the Coast Guard will get an opportunity to review the security aspects of that.

Mr. REICHERT. Yes, sir.

Admiral BONE. The only—there is one facility that currently is

Taiwanese that has operations which has a Taiwanese relationship.

So there may be—you know, because of that already, that linkage

already being there, it is possible that something like that could be

underway.

Mr. REICHERT. Thank you.

We talked about this four-or five-legged stool. Who has the ultimate authority for a particular port, is it the captain of the port,

for security?

Admiral BONE. Yes, to allow a vessel to come in for port operations within the port itself, any vessel, we can deny any vessel to

come in; we can close any facility or restrict its operation; we can

restrict any person from coming to a facility or going aboard a vessel; we can expel a vessel from the port; we can dictate operations

and restrictions within the port and the way it is carried out and

set requirements around operations if we believe there to be a security threat.

Mr. REICHERT. Does the captain of the port also have responsibility for training, security training?

Admiral BONE. For Coast Guard security training, but also for

standards set, to establish standards for industry as well, other

than that which might have been by other regulation or congressional regulation.

Mr. REICHERT. So the port facilities owned by foreign governments or foreign companies would come under the jurisdiction of

the captain of the port as far as training?

Admiral BONE. Yes.

Mr. REICHERT. Are those facilities also responsible for hiring any

security personnel?

Admiral BONE. Yes. They are responsible for both the training

program under MTSA and under the regulations that were implemented, as well as identification of security personnel and the responsibilities in providing security.
21

Mr. REICHERT. Who does the background investigation on those

security personnel hired by those foreign governments or foreign

companies?

Admiral BONE. The background investigation at this time is subject to State and local background checks.

Mr. REICHERT. There is no Federal background investigation on

these employees?

Admiral BONE. No, there isn’t.

Mr. REICHERT. Who is responsible for the training of the longshoremen? Do they participate in security training?

Admiral BONE. Again, the facilities, normally. Where longshoremen are employed, it should be included as part of their plan. And

I know in New York and New Jersey, by example, there is an organization that went about training them collectively because they

operate between multiple facilities.

Mr. REICHERT. Thank you, Mr. Chairman. I yield the balance of

my time.

Mr. LOBIONDO. Thank you, Mr. Reichert.

Mr. Taylor, are you prepared or do you need a minute?

Mr. TAYLOR. Thank you, Mr. Chairman.

Admiral, number one, I want to congratulate the Coast Guard on

having the courage not to tout the company line. And I am sure

somewhere somebody’s career is probably grinding to a halt. But I

want to let you know I appreciate the concerns that have been expressed on the part of the Coast Guard. And I think our democracy

is best served when people do speak their minds, even if it is not

what the folks in the White House and maybe even the folks in this

building want to hear.

What troubles me—and I think you articulated it pretty well—

is rather than a physical or even electronic search of the containers, it has been the Coast Guard’s policy to more or less rely on

an honor system, an honor system involving, in many instances, a

foreign manufacturer, a foreign port, a foreign steamship, and then

you add to that equation quite possibly now a foreign nation-held

port on our end. So given all of that, you have already got three

weak links in the chain. Why would it make sense to add a fourth

weak link in that chain?

Admiral BONE. Well, first off, post–9/11, we have the infrastructure and the laws that we have with regard to utilization of ports,

who can operate within them, et cetera, and MTSA provided certain authorities to execute within that. I don’t see everything as a

weak link.

In fact, I see much of industry as part of our strength in that

they have made significant investments in order to provide security. They have significant investments in and by themselves in the

manufacturers themselves to protect their cargos and not allow

them to be compromised. So———

Mr. TAYLOR. If I may, Admiral.

Admiral BONE. Yes, sir.

Mr. TAYLOR. What percentage of these Chinese firms that we are

counting on to tell us something is wrong would be state-owned?

Admiral BONE. I don’t have that—I don’t have the exact———

Mr. TAYLOR. Is it fair to say that some of them would be stateowned?
22

Admiral BONE. Government? Government owned or influenced?

If they are Chinese, I would imagine so.

Mr. TAYLOR. And aren’t we at opposite positions over the future

of Taiwan with the Nation of China?

Admiral BONE. Yes. But we have also had areas where we agree.

Mr. TAYLOR. OK. But getting back to the Taiwan issue, which

apparently is the biggest issue at the moment, so, again, we are

counting on, I regret to say, a possible foe, not necessarily a definite foe, but a possible foe to tell us if something in that container

could harm Americans.

Admiral BONE. I would have to defer to Customs on the container-specific issue, as they own the container cargo portion of the

supply chain. But we work closely as they target containers for examination, and if we find there is a threat or we believe there to

be a threat, we will intercept it offshore and it won’t arrive at our

ports, if it is believed to be a threat and we are able to vett it.

I guess what I am not—I don’t want to leave an impression with

any member of Congress or anyone else that if there is a viable

threat in the supply chain, that we don’t vett that out collectively

with CBP, Coast Guard, and any other agency, including DOD, to

assist us in removing that threat from the U.S. or not allowing it

to come here. And it could be a container, it could be an individual,

it could be some other cargo that is not in a container. We know

that drugs and illegal immigrants come in every day and not in

containers. I don’t void myself of all the other potential threat vectors.

Mr. TAYLOR. I am just curious Admiral—and, again, it is to make

my point on what I think is the weakness of your honor system—

what is the Coast Guard’s policy on drugs for your personnel?

Admiral BONE. There is zero tolerance.

Mr. TAYLOR. Do you count on your personnel to come forward

and say I smoked a joint last weekend, or do you have random testing?

Admiral BONE. No, we have tests. And maybe, I am sorry, you

might not have been in here earlier, but since July 2004 we have

boarded 16,000 vessels and turned away 143 of those vessels or expelled them from the ports as a result of their inability to provide

for the security that is necessary. We do—we provide protection

and escorts around other vessels so that they can’t be compromised

and there couldn’t be a small boat attack.

Are we doing everything? Are we examining every vessel that

comes in? No. But we are using the best intelligence in the targeting system in order to address that threat, and we don’t believe—

I don’t believe for a minute that a terrorist will say, hey, here I

am coming, I have got a weapon, and I am going to bring it to the

United States. We address and we evaluate threat and risk every

single day on every movement, whether or not it is coming foreign

or it is moving through our waters domestically, and decide how to

address it.

Mr. TAYLOR. What percentage of the approximately 20 million

container equivalents that came into the Country last year were inspected by the Coast Guard or Customs?

Mr. AHERN. I can tell you exactly of the 11.3 million containers

that came into the Country from foreign, 569,250 of those contain-
23

ers were examined by United States Customs or Border Protection.

That is the 5 percent figure that continues to be utilized.

But I think it is important again to go back to the various layers

in the overall supply chain. We do begin overseas with getting

manifest information 24 hours in advance. We then run that

through a very rigorous intelligence system to determine which one

of those pose for risk. We look at that body, that 100 percent body

that has been scanned and scored for risk, then receives our attention upon arrival.

We need to take into consideration also, as far as whether the

verification process—we like to call it the validation process—of

those partners that we have under the Customs-Trade Partnership

Against Terrorism. We have gone to the foreign locations, to the

suppliers, vendors, manufacturers, to see what kind of security

practices they have in place. So it is a trust, but it also is a verified

process that we have in place under that particular undertaking of

our layered strategy.

Mr. TAYLOR. Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you.

I would please ask and remind all the members we have a lot

that want to ask questions, to try as best they can for the five minutes.

With that, we will go to Mr. Simmons.

Mr. SIMMONS. Thank you, Mr. Chairman. I will do my best to say

within the limit.

Thank you, gentlemen, for coming in and testifying today. This

is clearly an important issue. Many of us have ports in our districts; many others are concerned about the security implications

of this proposal.

Secretary Baker, on page 8 of your testimony you refer to the

role of terminal operators and you say there has been a lot of attention in recent weeks about the threats posed by terminal operators. Let me clarify what they do. They do not run ports. They certainly don’t provide or oversee security for the entire port complex.

That is the responsibility of the government and the local port authority, which is usually a government agency, terminal operators

do not obtain a comprehensive window into the breadth and depth

of security measures, et cetera.

I think I understand what you are saying, but when I refer to

Coast Guard Regulations 33 C.F.R. Chapter 1, Section 105–265, it

states: Security Measures for Handling Cargo. General. The facility

owner or operator must ensure that security measures relating to

cargo handling are implemented. As it goes on, MARSAC Level 1.

At MARSAC Level 1, the facility owner or operator must ensure

the implementation of security measures. MARSAC 2: the facility

owner or operator must also ensure the implementation of additional security measures. MARSAC Level 3: the facility owner or

operator must ensure the implementation of additional security

measures.

The facility operator is listed in these regulations at every level

of security, and so I don’t understand. As I understand your testimony, facility operators or terminal operators have no responsibility for security, but under the Coast Guard regulations they have

responsibilities at every level. How are we to understand who is re-
24

sponsible, what those responsibilities are, and how are we to understand why there shouldn’t be concerned, security concerns about

foreign facility operators when it appears, under the regulations,

that they are charged with security responsibilities at every level?

Mr. BAKER. I certainly would not suggest that they have no responsibility for security. And I think if you read on page 9 we actually say that the Maritime Transportation Security Act requires

each terminal operator, because they operate inside the port, to file

a facilities security plan with the Coast Guard that specifically details their compliance with all of the security measures required by

Federal law, including those enforced by the Coast Guard. So there

was no effort to say there was no security responsibility on the part

of a terminal operator.

I think it is fair to say that the early coverage of this issue, in

particular the first week, suggested that somehow we were

outsourcing security for eight major ports to a foreign company.

That was never the case, but it was a mis-impression that we were

seeking to combat. There is no doubt that everyone who has a facility inside a port has security obligations that are enforced by the

Coast Guard.

Mr. SIMMONS. According to these regulations, the facility operator is charged with detailed responsibilities at every level for security. According to your testimony, they don’t run ports, they don’t

provide or oversee security for the complex, they do not obtain a

comprehensive window into the breadth and depth of security

measures.

I just think that if there is confusion on this issue out there—

and I would say that in my district there is not a lot of confusion—

they don’t want these facility operators to be engaged in any great

detail with the security operation of the port. But the regulations

say they are. And that is the crux of the problem. If I can’t figure

it out based on your testimony and based on the regulations, how

can the American people figure it out? And I guess their feeling is,

hey, enough already; this is a bad deal, vote no.

Admiral BONE. Congressman, maybe just to explain a little bit.

Within the confines of the facility itself, again, within from basically the pier to their gates, where the trucks come in and out of

or people enter, and the fences around it, that facility, that is the

responsibility of that foreign operator to provide for the security—

in other words, access control measures, not to let people through,

not to let people have access to those cargo, in other words, not unrestricted access to those cargos and to vett people as they come

through there and to protect that facility against an external threat

which may be by an individual or some other entity.

Those different MARSAC levels are different threat levels, and

they correspond then to protective measures. It may be increased

patrols, it may be increased security around particularly restricted

areas where high-risk cargos may be placed. But that is what that

responsibility really entails. It is not—in any way do they know

what the Coast Guard, Customs, or ICE, or other agencies, or even

State and local police security operations are with regard to other

protective measures, or even our oversight and review of their operations in the conduct of their responsibilities.
25

So I guess I don’t want to leave kind of a misunderstanding of

what port security is versus that facility security responsibilities of

that owner. Hopefully that helps.

Mr. SIMMONS. Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you. We are going to go to Mr. Nadler for

Mr. Nadler’s five minutes, then we are going to break for the vote

and then go for a short recess for the vote and then come back.

Mr. Nadler.

Mr. NADLER. Thank you very much, Mr. Chairman.

Mr. Ahern, I think you stated that in 43 foreign ports all highrisk containers are screened electronically. Is that what you said?

Mr. AHERN. When we score the risk on the containers overseas

at the 43 ports———

Mr. NADLER. That is what you said.

Mr. AHERN.—the protocol is for those to be screened before lading.

Mr. NADLER. Yes. The answer is yes. Thank you. What percent

of all containers in foreign ports are screened electronically?

Mr. AHERN. Electronically? A hundred percent.

Mr. NADLER. What percentage of all containers are screened by

gamma ray technology and by radiation scanners?

Mr. AHERN. OK, that wasn’t your first—you said electronically.

Mr. NADLER. Forget that.

Mr. AHERN. A hundred percent through our systems are.

Mr. NADLER. I just asked the second question.

Mr. AHERN. It would be 1 percent.

Mr. NADLER. One percent of all containers are screened in a way

that would assure us that no nuclear materials are aboard.

Mr. AHERN. That is the correct number today, yes.

Mr. NADLER. One percent. And when are we going to get to 100

percent?

Mr. AHERN. As we continue to deploy additional resources and

technology to these ports.

Mr. NADLER. I asked for a date.

Mr. AHERN. Specific time frame, I don’t have that.

Mr. NADLER. Would it be within a year or two?

Mr. AHERN. As we move forward for the rest of this calendar

year———

Mr. NADLER. You are not answering.

Mr. AHERN.—43 to 50 ports, and that will get us to 85 percent

of the containers———

Mr. NADLER. No, no, no. That will get us to 85 percent of the

risky containers, right?

Mr. AHERN. That will get us to 85 percent of the entire universe

of containers.

Mr. NADLER. Eighty-five percent of the entire universe of containers will be screened by gamma ray and———

Mr. AHERN. No.

Mr. NADLER. That was my question.

Mr. AHERN. Well———

Mr. NADLER. Please answer my question.

Mr. AHERN. Give me an opportunity to provide it in a full context.
26

Mr. NADLER. I am not asking for that. You provided it before.

You are saying basically that eventually it will get to 85 percent—

we will have this equipment in 85 percent of foreign ports and we

will screen a lot of the containers that we determine are high-risk.

Mr. AHERN. That is correct.

Mr. NADLER. OK. My point is that I think it is absurd the same

Department that determined that the Dubai deal is not high-risk

determines which containers are high-risk. I feel very secure with

that.

I believe that since any low-risk container from a reliable supplier on the way from the factory to the port somebody can substitute an atomic bomb for a television set, there is no such thing

as a low-risk container. This Country will not be safe until every

container is scanned by gamma ray and other technology to make

sure there are no nuclear materials aboard.

Am I correct in assuming that there is no plan within a specific

time frame by this Administration to put into place a situation

which every single container is scanned in the way that I was talking about?

Mr. AHERN. That would be your understanding within our organization.

Mr. NADLER. That every—OK, there is no plan to scan every container.

Let me ask you a different question. Has the DHS mandated the

use of tamper-proof seals on containers once they are scanned?

Mr. AHERN. We currently, in testing with container security devices and advanced container security devices, the initial results,

we are only seeing about a 94 percent accuracy rate, which means

6 percent of that universe of 11 million containers need to be resolved because of false alarms or nuisance alarms. So we need to

get———

Mr. NADLER. So right now there is zero percent using these tamper-proof seals?

Mr. AHERN. We are in testing with the sum number of those containers. Until we actually get a reliable———

Mr. NADLER. Ninety-four percent isn’t reliable enough as an improvement over zero percent?

Mr. AHERN. Well, it means we will have to be resolving nuisance

alarms or false positiveMr. NADLER. And it is better to risk atomic bombs in American

ports than to resolve nuisance alarms?

Mr. AHERN. Of over 600,000 containers that are just nuisance or

false alarms. That is not a good utilization of our resources, sir.

Mr. NADLER. OK. Now, not all foreign governments allow CBP

personnel to see the scans, sometimes they only report the results

of the scan to CBP, is that correct?

Mr. AHERN. That is correct in———

Mr. NADLER. And what do we do to those foreign governments

to get them to change that policy?

Mr. AHERN. We are continuing to engage to go ahead and change

that policy———

Mr. NADLER. We are talking to them, in other words.

Mr. AHERN.—to see if we are able to go ahead and actually have

the images remoted to us. We are looking at that technology cur-
27

rently. And also please understand, too, that we have the ability

to issue a do not lade order if it is not resolved to our risk prior

to putting on board———

Mr. NADLER. Well, are we prepared to issue a do not load order

to every single container that we don’t see the scan of? And if not,

why not?

Mr. AHERN. If that makes sense to us, that is what we will do.

Mr. NADLER. Excuse me. I asked you a question.

Mr. AHERN. That would not be———

Mr. NADLER. Are we prepared to do that now? Not if that makes

sense. Does that make sense?

Mr. AHERN. We do it now when our risk is not resolved prior to

lading.

Mr. NADLER. Well, but you are estimating a risk. I asked a different question. Does it make sense, and if not, why not, to insist

on a do not load order on every container if we haven’t seen the

scan? And if not, why not?

Mr. AHERN. If the risk is not resolved to our satisfaction before

it is placed on a vessel, it will be———

Mr. NADLER. Why should we not———

Mr. AHERN.—do not load order.

Mr. NADLER. Excuse me. Why should we not insist that we see

every single scan? Why does that not increase our security?

Mr. AHERN. We are in the process of doing that right now with

the remaining country we have had some challenges with. But we

are getting———

Mr. NADLER. You just told me we are not doing that. We are not

prepared to order a do not load order on every container that we

don’t see the scan of. You just said that.

Mr. AHERN. Let me put it in full context again, please. If the risk

is not resolved prior to being put on board a vessel, we will give

a do not lade order.

Mr. NADLER. Is there any other—all right. You are saying if the

risk is not resolved, but that is somebody’s estimate of the risk. On

the assumption that every container has a risk if we haven’t seen

the scan, what are we doing and when we will be assured that we

will see every single scan? Not every single scan of a container that

someone decides is a risky container, every single container.

Mr. AHERN. I don’t agree with your assumption. I think there

needs to be risk management employed on———

Mr. NADLER. OK, so you don’t agree with the assumption that we

should inspect or scan and see the scan of every single container,

only those containers that, on the basis of some outside parameters, are judged to be high-risk.

Mr. AHERN. No. What I want to state is, as accurately as I can,

responsive to your question, is not every container poses a risk.

You have a different view of that.

Mr. NADLER. Yes, I do. Now, why do some containers not pose

a risk, because they are reliable suppliers? Why?

Mr. AHERN. Verification of the supply chain, suppliers, vendors,

manufacturers, that have had———

Mr. NADLER. All right, but once you verify the supply chain, you

have got a reliable supplier, et cetera, how can you guarantee that

some driver wasn’t bribed to take a long lunch hour and somebody
28

walked in, especially when you don’t have tamper-proof seals that

communicate with the U.S. Government on that container? How do

you know someone didn’t put something in that container, didn’t

replace a television set with an atomic bomb? So how can you always be certain of that?

Mr. AHERN. You can never be 100 percent certain.

Mr. NADLER. Ah. So there is always some risk.

Mr. AHERN. We assume a certain level of risk.

Mr. NADLER. We assume a certain level of risk and we are not

willing to follow a policy to zero out risk on potential atomic weapons. That is what you are telling me.

Mr. AHERN. No, I wouldn’t say that.

Mr. NADLER. You are saying minimizing the risk, but you are not

saying zero it out.

Mr. AHERN. I am saying we accept a certain level of risk———

Mr. LOBIONDO. Excuse me one minute. I apologize for interrupting. We are just about at the six minute mark, Mr. Nadler.

Mr. NADLER. Well, just finish that answer.

Mr. LOBIONDO. You are well over five minutes.

Mr. NADLER. OK, I will conclude by summarizing, then, that you

want to minimize the risk, but you don’t think it feasible or proper

or desirable to eliminate the risk, and we disagree on that. Thank

you very much.

Mr. AHERN. I don’t think it is feasible to scan every container

coming into the United States overseas.

Mr. NADLER. Why not?

Mr. AHERN. I don’t believe, first, there is a risk present to do 100

percent———

Mr. NADLER. You just said it isn’t feasible. Why is it not feasible

if we wanted to? If we spent enough money, why is it not feasible?

Mr. AHERN. Well, I think certainly if there are no limitations to

finances, then certainly anything is possible.

Mr. NADLER. Would it cost billions or hundreds of millions or

millions?

Mr. LOBIONDO. Let me apologize once again. Some of us don’t

want to miss the vote. I apologize to the panel. We will be in a

short recess. We will be back as soon as the vote is over.

[Recess.]

Mr. LOBIONDO. We are going to reconvene. If our panelists would

please take a seat.

Mr. Boustany was going to be next, but he is not here, so we are

going to go with Mr. DeFazio.

Mr. DEFAZIO. Thank you, Mr. Chairman. I am in a simultaneous

markup on aviation security. I appreciate the latitude.

I would like to go to the issue of the containers, Mr. Ahern.

When I had to leave to go to the other markup, you had mentioned

that if a container is identified by intelligence as a risk, it will be

screened overseas if we have persons available. Is that correct? And

then I understand subsequently you said 1 percent is screened

overseas, but another 4 percent are screened here. So that means

a total of 5 percent of all containers are identified as being at-risk,

is that correct?

Mr. AHERN. Five percent of the universe is identified for risk.
29

Mr. DEFAZIO. OK. Now, let me see if I understand the system.

There will be a factory somewhere, someplace where they load the

container. We have inspected some portion of these workplaces to

see that they have a paper plan and they have a security guard,

or whatever else. But we don’t have an ongoing presence at any of

the places where these containers are packed, is that correct?

Mr. AHERN. We have done validations———

Mr. DEFAZIO. Yes, you have visited the site once at some point

in time and said, OK. OK, so there is no American presence when

it is packed. So then we receive an electronic transmission or bill

of lading for that container which purports to tell us what is in the

container. And then we crank that into our security universe and

decide whether it is a risk. So we are not there when it is packed.

Now, when the container comes to the port, 1 percent are

screened overseas, OK. Now, I understand there was also a discussion of the seals while I was gone, and you have 94 percent confidence that the seals are good enough, but that doesn’t get into the

whole idea of removing an entire panel of the container to access

the contents and going around to the seal, does it? I mean, basically these containers can be opened without disturbing the seal,

and even then, if you disturb the seal, you may be able to fudge

that, is that correct?

Mr. AHERN. The full answer that was provided on the 94 percent

figure I would like to restate for you.

Mr. DEFAZIO. OK, well———

Mr. AHERN. We are currently in testing———

Mr. DEFAZIO. The answer would be yes. OK.

Mr. AHERN. We are currently in testing and we have a 94 percent accuracy rate of the containers that are currently in testing,

meaning we have 6 percent———

Mr. DEFAZIO. Again, any and all entry, not just the seal.

Mr. AHERN. The 6 percent false alarm rate on the current container security devices that are being tested.

Mr. DEFAZIO. But even that false alarm rate doesn’t go to whether the container was entered somewhere else.

Mr. AHERN. These are container security devices. We are testing

actually four or five different———

Mr. DEFAZIO. OK, that is good. Well, hopefully we can move

ahead and we are not, you know, going to delay further.

Mr. AHERN. We would———

Mr. DEFAZIO. So now we have a container—excuse me, sir. So we

have a container, we didn’t observe it being packed; we have examined what they have told us is in it; 1 percent of the time we validate that; and then we have seals that can fail. Now we will get

to the Admiral.

Admiral, we then load these things on ships, is that correct? And

these ships, do we know who own ships registered in Liberia? Can

we see through the registry now?

Admiral BONE. We do have the owner and the operator information, as well as the flag state.

Mr. DEFAZIO. Well, do we have it really or do we get back to a

lawyer somewhere?

Admiral BONE. Well, if you are asking do we know the banking

transitional, you know, and every layer behind it?
30

Mr. DEFAZIO. Right.

Admiral BONE. No.

Mr. DEFAZIO. OK.

Admiral BONE. We have someone, an entity that is legally liable

and responsible.

Mr. DEFAZIO. But that doesn’t tell us who really owns it, whether Osama bin Laden owns a fleet of ships or not, we don’t know.

Now, how about———

Admiral BONE. Well———

Mr. DEFAZIO. If we could, let us go to the crews, and we got into

this a few years ago. The IMO has certified schools in the

Phillippines, it has never physically visited them, and they have

been documented in new reports as selling certificates. Now, that

is a problem, because you end up with incompetent people. But beyond that, can you tell me that background checks are being run

on the crews of foreign ships coming here?

Admiral BONE. I can tell you that all the crews, every individual

that comes here, runs through an intelligence background.

Mr. DEFAZIO. Right. With their fingerprints?

Admiral BONE. No, there is no biometric———

Mr. DEFAZIO. No. We use the name.

Admiral BONE. There is no———

Mr. DEFAZIO. The name that they gave in the Phillippines when

they bought the phony certificates.

Admiral BONE. They have a passport or a travel document.

Mr. DEFAZIO. Sure. Right. Those can’t be forged, though.

Admiral BONE. And we have that as well.

Mr. DEFAZIO. A Belgian passport, do we accept those?

Admiral BONE. We have people trained to basically find and

identify those———

Mr. DEFAZIO. Right.

Admiral BONE.—and we have.

Mr. DEFAZIO. Sure. But—so we don’t know who owns the ships,

we don’t know what is in the containers, and we don’t know who

the crews are.

Admiral BONE. We do know the crews, sir.

Mr. DEFAZIO. Well, you know the names of the crews; they aren’t

fingerprinted, we haven’t run thorough background checks. They

are flying under flags that can be—OK, let us give you that. Do we

track the ship? Because they have to tell us where they have been.

How do we know where they have really been? Do we track the

ships? Do we require transponders on the ships?

Admiral BONE. There is AIS transponders———

Mr. DEFAZIO. No.

Admiral BONE.—but there is not long-range identification to

where I can place you———

Mr. DEFAZIO. Right, 20 miles and it only covers a few ports. Is

that correct?

Admiral BONE. Sir?

Mr. DEFAZIO. So we don’t cover the entire coastline of the United

States with that system

Admiral BONE. The AIS transponders are required on all the vessels, and the transponders are able to be received by aircraft as

well as by Coast Guard vessels.
31

Mr. DEFAZIO. OK. But we don’t track every ship within 20 miles

of our shore.

Admiral BONE. We don’t have a vessel tracking system———

Mr. DEFAZIO. Right.

Admiral BONE.—that you are referring to, but we have the ability.

Mr. DEFAZIO. We have the ability. That is good. I appreciate it.

Hopefully we will actually use that ability. Now, there are maritime companies that actually track their ships beginning to end,

because they are worried—so let us give you everything on the containers. That is great, 94 percent reliability.

What if the ship stops in the Straits of Malacca and loads a nuclear bomb? Do we have any way, other than our intelligence people might tell us about it if they know about it, but we are not

tracking that ship, so we don’t know that they made an unscheduled stop in the middle of the ocean in the Straits of Malacca, because we are not requiring known technology, technology that is

used commercially, the United States of America isn’t saying, you

know, what, no ship is coming to the United States of America unless we know where that was at all times and we track it at all

times, because we are concerned they might stop somewhere and

put—do we inspect the hulls of the ships?

I mean, we are worried about containers, but what about something that gets loaded on the ship? We are not very good on containers; what about loading something on the ship?

Admiral BONE. Let me answer your first question about tracking.

We would have to go into a classified environment if we are going

to talk about all the mechanisms of tracking that we have access

to.

Mr. DEFAZIO. So you are telling me———

Admiral BONE. We don’t have a commercial tracking

system———

Mr. DEFAZIO. Right.

Admiral BONE. —that we track all ships with.

Mr. DEFAZIO. So commercial companies can afford it and some

of the better ones use it, or they are worried about piracy, but we

don’t require it.

Admiral BONE. Again, the Coast Guard does not have a commercial tracking capability———

Mr. DEFAZIO. Right.

Admiral BONE.—that the Coast Guard owns and operates, other

than near-shore capability.

Mr. DEFAZIO. Right.

Admiral BONE. And even the long-range identification tracking

will be run out of some international body, most likely, rather than

just a U.S.-owned or Coast Guard-owned and operated that will

allow us to track commercial vessels. In fact, we have a group right

now at IMO looking at the technical requirements at COMSAR and

expect a vote this May from the full committee at IMO on LRIT,

which looks extremely favorable.

But we are working to get to where you are asking, but we are

not there yet.

Mr. DEFAZIO. Right. But I guess the point is, after 9/11, the

United States could demand these things. We are the people who
32

are buying all this junk from around the world and running a huge

and growing trade deficit, and people want to ship things here; we

are not shipping much out, so they couldn’t put retaliatory demands on us that we couldn’t meet.

So the idea would be why not, if it is commercially viable technology, begin to demand that? OK, so we don’t know exactly what

is in the containers, but we might screen them here. We don’t know

if the ship stops somewhere and they loaded. What are we doing

routinely in terms of ship inspections, given the fact that maybe

the bomb isn’t in the container, maybe it has been loaded into the

hull of the ship at sea? I am not talking about once it gets in the

port, because once it gets in the port, we kind of have a problem

if they decide to detonate.

Admiral BONE. At sea—in fact, at sea, there are at-sea

boardings. As I said, there are 16,000 boardings———

Mr. DEFAZIO. Out of how many ships?

Admiral BONE. Out of 7500 foreign flag vessels that make approximately 7200 visits———

Mr. DEFAZIO. Right.

Admiral BONE.—in the U.S. a year.

Mr. DEFAZIO. So we do a quarter of them, basically, a little more,

a little less.

Admiral BONE. But I think, again, and, again, you know, you are

going to go back to the same issue of targeting based on historical

information and based on intelligence that we basically target vessels for that, both with regard to their cargo, their owner, their operator, their background history, as well as that of the people onboard, as well as where the cargo—the cargo itself and who it may

be bound for. Those are all determinations of which vessels are

boarded.

Mr. DEFAZIO. OK, so———

Mr. LOBIONDO. Excuse me, Mr. DeFazio.

Mr. DEFAZIO. Thank you, Mr. Chairman. I have got to go back

to Aviation. Thank you.

Mr. LOBIONDO. OK. Thank you.

Mr. Boustany.

Mr. BOUSTANY. Thank you, Mr. Chairman.

Last week I read the Coast Guard report pertaining to the DP

World transaction which cited intelligence gaps that would make it

difficult to determine the actual risk involved with this transaction,

and the Coast Guard, in general terms, reported that these gaps

included a potential for foreign influence on DP World, unknown

backgrounds of DP World personnel and general questions about

terminal security.

And it is my understanding that these were resolved before the

CFIUS approval, but they were resolved merely by obtaining assurances, as you had stated, Mr. Baker, that DP World would, in the

future, provide the Coast Guard with additional information about

personnel at the terminals and that they would enroll in the Customs-Trade Partnership, where they are saying that they will tighten security in exchange for the privilege of foregoing certain container inspections and so forth.

Has any additional information surfaced that has been provided

by DP World at this time, as of today? Either of you.
33

Mr. BAKER. Why don’t I let the Coast Guard address the intelligence report that they generated, and we can also talk about additional information.

Mr. BOUSTANY. Thank you.

Admiral BONE. Again, just as you stated, you know, his was an

internal assessment, as we are a member of DHS and we are a full

partner actually in review of the CFIUS process. And you are correct in that the letter of assurance—this is one of those areas

where you know what you know and what you don’t know you don’t

know.

The letter of assurances will provide us access to that information, and, again, the contract portion hasn’t been—at which point

in time the Department can ask for those names of those individuals, employees and other members of DPW or P&O if P&O personnel are being kept on to have the background check conducted,

et cetera. So we don’t see anything that limits us not only to know

that, but also know what other agreements or operational agreements they have with other entities.

We don’t have that visibility anywhere else other than, as the

Secretary indicated, you know, at certain military load-out facility

areas where those similar type of agreements have been reached.

So I don’t see anything that is going to preclude us from obtaining

that.

We also have 30 days before a facility is allowed to operate that

they are required to amend their facility security plan, at which

point in time, for example, these letter of assurances, we can require that information or any other information we believe necessary to provide for the security of that facility. That is an amendment process that is currently in our regulations that we carried

out under MTSA. Now, we don’t—that doesn’t necessarily prescribe

a full security plan review, but we can identify those areas of risk

that we believe we need to address.

Mr. BOUSTANY. What action would you take, under this promise

of assurances, what actions would you take if you don’t get forthcoming information within this prescribed period?

Admiral BONE. We don’t allow operations.

Mr. BOUSTANY. OK.

Admiral BONE. No vessel could go to the facility. You know, you

can own something, but nobody can operate it.

Mr. BOUSTANY. Do you feel like some of the information you have

requested is starting to flow at this time?

Admiral BONE. Again, I think that once the transaction process

goes to some level of completion, I don’t know that specifically, but

as that gets completed, then I fully expect, and I know the Secretary and Secretary Baker’s intent is to pursue that aggressively.

Mr. BAKER. We have talked to the company, indicated that we

expect to receive the information, and they have been entirely cooperative. So as soon as we make the request, we expect to get the

information. We have done, using the assurance letters already,

baseline reviews with both the Coast Guard and CBP inspecting

current operations of the P&O North America terminals and have

gotten a substantial amount of information there. Also, I believethe

Coast Guard is doing a foreign port inspection of Dubai in this 45-

day period.
34

Admiral BONE. What I might offer is we have completed examination of the P&O ports that they are planning to acquire, and we

found them to be and remain in compliance, and part of the reason

for that was literally to be able to say—for DPW to be able to not

say these were problems that existed currently at this facility, before we acquired it, these weren’t problems that we brought on.

Our folks just returned from Dubai, visiting all the DPW ports

in Dubai and conducting port security assessment compliance with

ISPS and found them in compliance with ISPS and, in fact, in

many areas exceeding what we have in the United States with regard to security measures.

Mr. BOUSTANY. And you are referring to all the ports owned not

only by DP Ports, but P&O as well? The entire system that would

be?

Admiral BONE. Well, the P&O ports that are being acquired by

DPW or where even DPW stevedore operations take place.

Mr. BOUSTANY. Thank you.

My time has expired. Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you.

Mrs. Kelly.

Mrs. KELLY. Thank you very much, Mr. Chairman.

There has been a great deal of attention paid to the container security, and appropriately so, but too often it is forgotten that Dubai

Port World would also operate the Manhattan cruise terminal,

where tens of thousands of passengers get on and off of boats; they

enter and leave the Country every year. We have seen that Al

Qaeda operatives have targeted cruise lines. The Washington Post

reported that just three weeks ago. The United States does not let

foreign countries play any role in security at America’s airports, so

it is concerning that they may play a role in security at America’s

flagship passenger seaport.

Before you answer—Mr. Baker, this question is directed at you—

I know that you are going to reiterate the Coast Guard is responsible for ship security and terminal operations will continue as before, but you and I both know that operating the Manhattan terminal would give Dubai Ports detailed information about sailing

times, passenger lists and locations, destinations, crew names and

addresses, and other vital information that can compromise the

safety of the ship and its passengers after it leaves the dock. Tell

me what specific safeguards, if any, the United States Government

has demanded from Dubai Ports to prevent any of this information

from being shared with the company and utilized in an adverse

way.

Mr. BAKER. I think the assurances we have received to date address that to some degree. We have the ability to see any information about their U.S. operations. That would include if we were

concerned that they were gathering or transmitting information

about sailing times or people involved in cruise ship landings, we

can———

Mrs. KELLY. Excuse me, Mr. Baker, but how do you know if they

are gathering it? We are in an electronic world; there is no paper

trail.
35

Mr. BAKER. We have authority to ask for electronic trails as well,

and it is very difficult, in fact, to hide electronic trails, both in

transmission and in the systems that you use.

Mrs. KELLY. What is their obligation to respond if you request?

Is it merely a request or is there some penalty attached?

Mr. BAKER. They have committed to us that they will provide,

without a subpoena, any information that we ask for about any aspect of their U.S. operations. And as I think you heard Admiral

Bone say, we have all of the authority we need to make sure that,

if they lose our trust, they are not going to be doing business in

the United States.

Mrs. KELLY. Well, if they own the port, sir, it is hard to say that

they can’t do business in the United States. I am extremely concerned about the flow of information that could jeopardize our

cruise terminal in Manhattan. It is an important piece of the economics of Manhattan.

I want to go to another question I have, because I have only a

few minutes, and I know you are in a hurry because you need to

leave also.

The Wall Street Journal recently reported that the UAE refused

a request from the U.S. Government in 2003 to intercept a shipment of nuclear technology facilitated by a man who was later convicted by the United States for violating the weapons of mass destruction sanctions. Can you discuss how this may have been

factored into the Government’s view of the UAE and this specific

port deal?

Mr. BAKER. I am aware of the allegation, and we have assured

members of the Congress that that is going to be examined in the

course of the 45-day review by the intelligence community and by

the members of CFIUS. So we are looking at that closely. I am not

sure whether it was looked at by the intelligence community in the

first review, and I am not sure that the charge has been verified;

it appeared on a Web site. I don’t know whether it is accurate.

Mrs. KELLY. The charge against whom, sir? The man was found,

he was found guilty in a U.S. court, as I understand it.

Mr. BAKER. I think the question of whether———

Mrs. KELLY. In 2003.

Mr. BAKER. I am sorry, I thought you were referring to a 2003

incident in which Dubai was alleged not to have cooperated in an

investigation.

Mrs. KELLY. No, the man was—this instance I am talking about,

a man was convicted by the United States of America for violating

the WMD sanctions. And I want to know if this was factored in on

the UAE with regard to this ports deal.

Mr. BAKER. We did examine, through the intelligence community, all of the proliferation and terrorism risks associated with

Dubai, the owners of the company. We also took into account our

own experience with the company, with both companies, and they

have been entirely cooperative and professional in their dealings

with us.

Mrs. KELLY. I would like to have you give us more information

about this, if you could.

Mr. BAKER. I would be glad to.
36

Mrs. KELLY. I know you are in a hurry and I am out of time. But

I would appreciate getting more information about both of my questions.

Mr. Chairman, I hope that is all right with you.

Mr. LOBIONDO. Yes, without objection.

Mrs. KELLY. Thank you.

Mr. BAKER. Thank you.

Mr. LOBIONDO. Thank you, Mrs. Kelly.

Mr. Poe.

Mr. POE. Thank you, Mr. Chairman.

I represent Southeast Texas. We border Louisiana, where Mr.

Boustany represents those good people. Between us is a river. We

are glad about that. It is the Sabine-Neches Riverway. And you

travel all the way up the Sabine-Neches Riverway, you show up at

the Port of Beaumont. The Port of Beaumont ships one-third of the

military cargo that goes to Iraq and Afghanistan. We get it from

Fort Polk and we get it from Fort Hood. One of the terminals and

stevedore operations involved in this UAE deal is a terminal and

a stevedore operation that happens to load that cargo to Iraq and

Afghanistan.

Of course, the port is protected by the Coast Guard. And, Admiral, I want to tell you that the Coast Guard folks there do a tremendous job going up and down that Riverway in those rubber

boats. About half the people on active duty are reservists from all

over the United States. They do a good job. I wanted to let you

know that.

But this whole thing concerns me about homeland security. My

background as a judge trying outlaws for 22 years always makes

me suspect of what I see going on.

And, Mr. Baker, if I understand your comments correctly, you

say that the UAE government-owned corporation is going to employ

the best securities practice. And the more I hear about the cooperation of the UAE, this government that happens to own a corporation in our Country, it sounds like we are turning over security to

that country, we are outsourcing homeland security to a foreign

government. And we can label it something else, but that is the

way I see it and the way it comes across to me.

A couple of questions. In this CFIUS situation, how many proposals have been denied since 9/11?

Mr. BAKER. It is difficult to say that any have been denied. A

number have been———

Mr. POE. Let me understand your question. Have any of them

been denied?

Mr. BAKER. Formally, no. Several, I am sure———

Mr. POE. How many of them have been reviewed?

Mr. BAKER. We do about 65 or 70 a year, so approximately 450,

I think.

Mr. POE. And they have all found to pass muster on security

issues?

Mr. BAKER. No, that is not correct.

Mr. POE. But none of them have been denied.

Mr. BAKER. Well, in many cases people have withdrawn them because they did not believe that they would get approval.

Mr. POE. Because they didn’t pass muster on security issues.
37

Mr. BAKER. That is right.

Mr. POE. All right.

We have heard that the Administration is responsible for homeland security and basically through Homeland Security Department, comments have been made that we are in charge of that, so

you can ′′trust us.′′ I don’t do ‘‘trust us.’’ I want results and obvious

security measures that are employed.

Let me ask you a hypothetical. You know, if the war on terror

takes us to some other country that happens to be an ally with the

UAE, and here we are shipping cargo from Texas to the war on terror all over the world, doesn’t common sense say that might be a

problem, giving that information to a government that happens to

own a company in a port that ships cargo for the war on terror?

Doesn’t common sense say that that is a problem?

Mr. BAKER. Obviously, there is a lot of information that you

wouldn’t want to provide to anyone outside the U.S. Government,

and we do our best, as does the Defense Department———

Mr. POE. Let us just talk about the information they have. They

have the stevedore operation, they have the manifest, they know

when ships are leaving, they know what is on the ship, they know

where the ship is going, they know who loaded the ship, they know

when the ships are coming into port, they know where they come

from and what is on those ships. That doesn’t seem like maybe a

security risk, letting a country, a foreign country have that information?

Mr. BAKER. Depends on the information. The information about

what is coming in is not necessarily—what is in those containers

is not necessarily known but to the terminal operator or to the stevedoring operation. They know what container they are supposed

to move, they don’t———

Mr. POE. So you don’t see, in my hypothetical—I am sorry, I just

have a couple of minutes.

Mr. BAKER. I am sorry.

Mr. POE. That hypothetical, you don’t see that being a problem?

Mr. BAKER. There is risk in every transaction, and I am not trying to say that there is no risk in———

Mr. POE. Then why would we want to take another risk?

Mr. BAKER. This risk we believe we have taken special steps to

minimize well beyond the steps that have been taken in the context

of all the other foreign owners and operators of terminals in the

United States today.

Mr. POE. It just seems like, to me, that this U.S. port marriage

to the UAE has all the semblances of a bad marriage starting out.

You know, they say that a failed marriage starts out what a deal,

then it is an ordeal, then it is no deal. And I think this ought to

be a no deal before it becomes an ordeal, Mr. Baker.

And I want to thank all of you for your time for being here. I

have some more questions, but I am going to turn them in in writing.

Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you, Mr. Poe.

We are kind of in a dilemma here because we have got more

questions for the first panel, but, Mr Baker, you have an appointment you are late for. Mr. Flynn has a plane to catch. We des-
38

perately want to hear you. And the other second panel members

also have challenging time lines. We thought we were doing a good

thing by opening this up to the full Committee. I am having second

thoughts about it.

But to the first panel, gentlemen, thank you very much. We will

probably want to try to follow up on some things at a future date.

But thank you.

And we will do a switch-out to the second panel.

I thank the second panel for joining us. We have Dr. Stephen

Flynn, who is the Jeane J. Kirkpatrick Senior Fellow for National

Security Studies, Council on Foreign Relations. We have got Mr.

Kurt Nagle, who is President of American Association of Port Authorities; we have Dr. James Jay Carafano, Senior Research Fellow

for Defense and Homeland Security at the Heritage Foundation;

Mr. Robert Scavone, who is Executive Vice President of Strategic

Planning and Development for P&O, Ports of North America; and

Mr. Gary Brown, who is the Union Security Liaison for the International Longshore and Warehouse Union.

With your indulgence, gentlemen, I am going to ask that Dr.

Flynn give his statement, and we will try to allow you, Dr. Flynn,

to get on your plane.

And then, Mr. Carafano, we know you have a pretty important

appointment this afternoon, and we will try to clear you out as

well.

Dr. Flynn, please proceed.

TESTIMONY OF DR. STEPHEN E. FLYNN, JEANE J. KIRKPATRICK SENIOR FELLOW FOR NATIONAL SECURITY STUDIES, COUNCIL ON FOREIGN RELATIONS; KURT J. NAGLE,

PRESIDENT, AMERICAN ASSOCIATION OF PORT AUTHORITIES; DR. JAMES JAY CARAFANO, PH.D, SENIOR RESEARCH

FELLOW FOR DEFENSE AND HOMELAND SECURITY, THE

HERITAGE FOUNDATION; ROBERT SCAVONE, EXECUTIVE

VICE PRESIDENT, STRATEGIC PLANNING & DEVELOPMENT,

P&O PORTS NORTH AMERICA, INC.; AND GARY L. BROWN,

UNION SECURITY LIAISON, INTERNATIONAL LONGSHORE

AND WAREHOUSE UNION

Mr. FLYNN. Thank you very much, Mr. Chairman. I am delighted

to be back with you again to talk about this very sobering topic.

This morning we are, of course, talking about the Federal Government’s progress in implementing the maritime security measures

as required by the Maritime Transportation Security Act of 2002,

and I would also like to provide some of my recommendations on

how to advance this critical agenda.

Certainly, the controversy surrounding the takeover of five

American container terminals by Dubai Ports World has had the

salutary benefit of engaging Washington and the American people

in a national conversation on the state of port security. This is long

overdue given the enormous national security and economic security stakes should the next catastrophic terrorist attack on U.S. soil

involve the global maritime transportation system and America’s

waterfront. While it has too often been lonely work, Chairman

LoBiondo, I commend you and your Committee for your leadership

in advocating that our critical maritime infrastructure should not
39

be overlooked in our post–9/11 efforts to secure the American

homeland.

This is my second opportunity to appear before this Committee.

On August 25th, 2004, I provided testimony that I entitled ‘‘The

Ongoing Neglect of Maritime Transportation Security.’’ At that

hearing, I said, ‘‘I believe maritime transportation is one of the Nation’s most serious vulnerabilities, and we are simply not doing

enough to respond to the terrorist threat to this critical sector.’’

Sadly, I have seen too little progress in the ensuing 18 months

to modify that assessment. Based on my visits to a dozen major

seaports within the United States and abroad since 9/11, my conclusion is that the security measures that are currently in place do

not provide an effective deterrent for a determined terrorist organization intent on exploiting or targeting the maritime transportation

system to strike at the United States.

At the Federal level, the primary frontline agencies—the Coast

Guard and Customs and Border Protection—are just grossly underfunded for what has become essentially a brand new mission for

them, a major mission for them on 9/11. On the local and State levels, the size of port authority police forces remains tiny, providing

often only token police presence within most seaports. While the

Maritime Transportation Security Act of 2002 represented a constructive stepping off point for advancing security within this sector, we have made little meaningful progress since that passage of

that Act.

In my remarks today, I will speak to both the shortfalls of our

port security efforts within the United States and with our efforts

to advance port security overseas and provide some recommendations on how to proceed. Our domestic and international efforts

must be complementary because seaports, at the end of the day,

are simply on-ramps and off-ramps into a global transportation

network. To focus on just the security of U.S. seaports is a bit like

hiring a network security manager who only puts in place firewalls

to the computers in reach of his desk. If the whole network is not

secure, such an effort would be futile.

To begin with, we must be candid in acknowledging that the

MTSA is more of a sketch than a security blueprint. That is, it sets

forth general requirements without establishing minimum standards for satisfying those requirements. For instance, the MTSA requires vessels and marine facilities have a plan for establishing

and maintaining physical security, passenger and cargo security,

and personnel security.

However, it does not actually define what that security is. It requires that there be a system for establishing and controlling access to secure areas of vessels or a facility, but it doesn’t elaborate

how that should be done. It mandates that there should be procedural security policies, but provides no guidance on what those

policies should be.

The MTSA requires that there be a ‘‘qualified individual’’ to implement security issues, but sets no standards on what it takes to

be ‘‘qualified.’’ There are not even any minimal training standards

that are required. The Coast Guard has worked with the Maritime

Administration to create a ‘‘model’’ training course, but there is no
40

requirement that a facility or ship security officers attend a certified course based on that model curriculum.

The International Maritime Organization’s International Ship

and Port Facility Security Code, the ISPS Code, mirrors the MTSA

in that it provides a framework of requirements without stipulating

specific standards for satisfying those requirements. Ships and port

facilities must have security plans, security officers, and certain security equipment, but the Code leaves it up to each foreign government to provide the specifics.

There are no minimum training standards for becoming a ‘‘qualified’’ security officer. There are no mandatory guidelines of what

constitutes perimeter security. There are no mandated requirements to govern facility access controls. It is also important to

point out that while most ships are in the business of moving

cargo, the ISPS Code does not address cargo security.

When it comes to port security, the buck is essentially stopped

outside of Washington, D.C. Since seaports in the United States

are locally run operations where port authorities typically play the

role of landlord, issuing long-term leases to private companies, it

falls largely to those companies to provide for the security of the

property they lease.

Just how far we have to go I think is best illustrated by the case

of the Port of Los Angeles, our Nation’s biggest port complex with

Long Beach. In the case of Los Angeles, they have 7500 acres of

facilities that run along 49 miles of waterfront, and that security

is being provided by minimum-wage private security guards and a

tiny port police force of under 100 officers.

The situation in Long Beach is even worse, with only 12 full-time

police officers assigned to its 3,000 acres of facilities and a small

cadre of private guards provided by the port authority and its tenants. I saw more security guards on the La Guardia security check

on my way down here today than we have to patrol the entire Port

of Long Beach. The problem of how to control what comes into the

terminal is compounded by the fact that there are 11,000 independent truck operators who are authorized access to the port terminals, and yet there is no credentialing system in place to confirm

the background of the drivers.

Mr. Chairman, you mentioned about the ABC report. At least in

the case of New York-New Jersey, they actually have a pass system

for who comes into the port. In L.A.-Long Beach, and most of our

ports, that doesn’t exist. So it would be difficult for DHS to go in

and do these background checks of whether people have criminal

records or not, simply because there is no pass system in place in

most of our seaports.

The West Coast terminal operators have no way of even identifying who is on their facilities at any given moment. In the four

years since September 11th, the two cities have received less than

$40 million in Federal grants to improve the port’s physical security measures. That amount is equivalent to what American taxpayers spend in a single day on domestic airport security.

Now, all this is on the on-ramp side of things, or the off-ramp

here in the U.S. The real challenge is that we are facing a threat

that is likely to emanate beyond our shores. And here the problems

that I worry about are—I have talked to you about frequently be-
41

fore this Committee and others—is focused on the issues of the

intermodel container, because it goes way into a country where we

initially put into a factor, load it on local trucks that bring it often

to multiple weigh stations before it gets to a major port, and then

is loaded on a major ship arriving in the United States.

There are a lot of places along that trail where there is chance

for real mischief. And we know there is because we have seen lots

of crime and smuggling in the same system here. And, yet, when

we look at the safeguards that we have in place to deal with all

this, in addition to the limits of what is happening on the ports

themselves, the challenge of physical security, perimeter security,

access control and so forth, and when we face another piece of this

will be the ships coming to us, we would like to know where they

are—and, again, we have this Automated Identification System set

by the MTSA, and yet the Coast Guard basically has a line-of-sight

system where it does not have the means to routinely track vessels

from long distances away. It is an honor system.

The 96-hour rule that requires that vessels tell us their last five

border calls, that tell us what cargo they are bringing, that tell us

who is on the ship is an honor system. There is no way to verify

they are 96 hours out. There is no way to verify those are the five

last ports of call they make. You can do a lot of detective work, but

it is an honor system. The Coast Guard isn’t routinely out there

verifying that the vessels are where they say they are. And for

most shipping, since it is legitimate, that works fine. But it is a

problem worrying about the illegitimate that we need to be focused

on.

The customs, of course, overseas is relying on Container Security

Initiative teams. This is a big progress, putting agents overseas.

However, their targeting over there is the same targeting criteria

they use here, which is ultimately based on reliance on the cargo

manifest information. This manifest information may not even provide the point of origin where the container was first stuffed. That

would be an import document.

But that is not routinely provided to Customs 24 hours in advance of loading. So the decision about what poses a risk is based

on essentially second-party information provided to ocean carriers

who basically tell Customs this is what we think our customer says

is onboard, and from there we decide what poses a risk or not.

The issue, of course, going back to the supply chain, relying on

C-TPAT. This is a very positive thing involving the private sector

in this enterprise, but because Customs does not have adequate resources to actually even process the applications, never mind routinely verify that in fact companies are living up to the security

plans they provide them—and this is a complicated business—we

have a lot of free-riders in this system, people who participate in

the program that, frankly, are not vesting much in security.

We have, of course, the ISPS Code. We are required by MTSA,

as requires the Coast Guard confirm that in fact overseas ports and

terminals are abiding by this agreement. And yet, the Coast Guard

has a total of 13 international security liaison officers to service

Europe, Africa, the Middle East, Latin America, and the Caribbean. Now, Brazil has 25 ports onto itself, but a country visit is
42

often a two-to three-day stop-by, visit one port, and the country is

good to go.

What we are building here is a house of cards. What is going to

happen when we have a maritime incident is virtually all these initiatives to manage risk are going to be implicated. It will be from

a C-TPAT company, it will be going through a CSI port on an

ISPS-compliant facility, on an ISPS-compliant vessel, and it will arrive in the United States and will have a major maritime terrorist

incident.

And when we want to restart the system as we close down afterwards, we are not going to be able to restore public trust because

the kind of questions that you are asking today are going to be

asked with a lot more rigor post the next event. And if we can’t

answer satisfactorily that risk can be managed, we are going to

shut down the system.

We are putting a lot of money into something called missile defense. The technology that is associated with that is a very high

bar. The expense is quite high. But we are saying in that program,

basically, a zero tolerance about the risk of weapons of mass destruction put on a ballistic missile sent to the United States. And,

yet, we basically have a trust-but-don’t-verify system for being able

to safeguard us in the event that a weapon of mass destruction is

put in a cargo container and shipped into our ports.

We have a very long way to go. The technology is there. I think

the will and the capabilities within these agencies are largely

there; they simply haven’t been resourced, it has not been made a

priority. And if we don’t get this right, what we are seeing, I think,

in these last few weeks is the kind of reaction that we would likely

get post an event. This is like a World Trade Center I scenario we

hear.

We are worried about the potential security risk associated with

DB Ports World deal, and, in my own view, it ranks very near the

bottom of the concerns to have the specific issue of terminal operators, because all these other gaps should be of much higher priority. But we are worried about it enough that we are looking at fundamentally changing the way this system works. And I worry that

post the event that we may have in the not-distant future, we

won’t even have a conversation about how best to do this, we will

just simply take actions that may in fact be cures worse than the

disease.

Now is the time to act, to work out the kinks, to put into place

a robust system. But what is key to remember here is that the terminal operators at the end of the day, the global terminal operators, like DP World, whether it ultimately gets this piece of properties on the U.S. or not is going to have to be a part of how we

deal with global security, maritime security.

Dubai World is going to have one-half of the Port of Karachi. If

you want to get a weapon of mass destruction from Pakistan to

Dubai, or anywhere else in the Middle East, you are probably going

to go through a container terminal. One-half of it is going to be by

a global terminal operator called Hutchison Port Holdings, the

other is going to be Dubai Port World. We are going to need to cooperate with that terminal operator to put in place counter-proliferation controls, even if something is not destined here.
43

So we have to be very careful, I think, as we proceed with our

legitimate concerns about seaport security in the United States

that we are keeping an eye on the fact that it is a global system,

and we have to work with all the partners who are legitimate. If

that is what the end of the 45-day review gives us, we have to work

with them in order to put in place the adequate safeguards.

Thank you very much, Mr. Chairman.

Mr. LOBIONDO. Thank you, Dr. Flynn. We are going to ask a couple of questions of Dr. Flynn and let him try to catch his plane.

Thank you for this rather comprehensive overview of where the

shortfalls are, and I know that you have been talking about this

for years. And if there is any good to come out of this latest incident with the United Arab Emirates, it is that I think more attention is being paid to maritime domain awareness. Your testimony

last week before Armed Services I think was very powerful. I have

appreciated the fact that you have at least gotten the attention of

more people with your ability to get the story out on 60 Minutes

and National Public Radio, which I both listened to—I have listened to both.

But we have a great deal of frustration because most of the members are off doing other things, everybody is pretty busy, and this

window that we have to make an imprint on changing how we are

handling port security is, I think, very small. And I am very frustrated that we can’t seem, no matter how loud we shout, no matter

how loud you shout, to get other members of Congress, to get the

Administration to pay attention to these issues.

Obviously, if we had an incident, people would pay attention very

quickly. And, obviously, if we had an incident, the faucets of money

would open up and, you know, money would flow into port security

like it did the aviation security, some $25 billion overall.

With what you have seen, Dr. Flynn, and what you have heard

and what you have observed, we have got the aspects of the MTSA,

which have not been implemented, where no action has been taken,

and there are lot of critical areas here. But the difficult part getting any of them started is then trying to prioritize, because they

are not going to do them all at once. If you had to offer us advice

on what we should focus the most on, the quickest, what would you

say?

Mr. FLYNN. I think the first is the need to focus over there, to

continue what has been an effort—certainly the Administration has

taken important steps in putting Customs agents overseas and

adopting the ISPS Code in order to get our trading partners and

other maritime nations to share a common vision about where we

need to go. The problem is there still isn’t much behind these curtains.

And so I think the top priority should be working with the overseas terminal operators and putting in place a system that are

being piloted in Hong Kong, where every container coming into the

truck gate, or one of two truck gates and two terminals in the Port

of Hong Kong—the busiest terminal in the world is the Hong Kong

International Terminal—is getting a radiation image, a cargo scan

image, and a picture of the container’s number and putting it into

a database.
44

The ability to capture all that data—not necessarily to examine

and scrutinize everyone, but capture all that data—is something

that I think the industry can put in. The technology is available,

and it would help us in so many positive ways, both in terms of

creating I think a more effective deterrent than what we have now

in the system, but basically give a primary screen tool even to deal

with false alarm issues that we don’t have right now if we target

a container overseas, which can wear out your welcome mat. For

the 1 percent you have, if you constantly pull boxes out and it

turns out there is nothing there, you are causing disruption, you

are causing expense, and so primary screens of everything coming

through could be helpful.

It also can support counter-proliferation. I was talking about that

in my remarks the Karachi to Dubai issue. The Department of

Homeland Security doesn’t have that as a focus, but the President

has made counter-proliferation a top priority. Well, this material,

as we know from Kahn network, moves through this system. As we

build visibility in the system, we provide the means to support

counter-proliferation as well. And I would hope that some resources

come out of the intelligence community could then be applied to

this problem, not just relying solely on Customs and Coast Guard’s

resources to deal with this.

So putting this basically—turning to the terminal operators, the

four biggest in the world would account for about 8 out of every 10

boxes coming to the United States, encouraging them to essentially

make this investment, which they can recover through a surcharge

for imports coming through, would be a big step forward that I

think many who have looked at it said this could work at a reasonable cost, without disruption, that would make it a qualitative leap

forward and giving us physical evidence that low-risk is low-risk.

The second priority I would make would be the issue of some sort

of third-party audit of the security plans. Customs will never have

enough agents to do this; Coast Guard will never have enough

agents to check everything overseas. Let us create essentially a

third-party audit system where we then, Government, audit the

auditors by setting high bars, bonded systems, folks that go out

and check whether in fact companies are living up to what they say

they are doing in terms of supply chain security.

And the third option in terms of priority would be getting a handle on the whole issue of who is in the port on our end, because

you can attack a port not just by bringing stuff overseas, but just

by driving a truck in it full of explosives, and there is plenty of that

stuff around here as well. So the need to get on with the

credentialing process and knowing who is in the port, the TWIC

process plus, anybody who is in that port, we should know who

they are in order so that we can, if we have intelligence, we can

manage that, but we can have some sense of adult supervision in

these critical assets.

So those would be the three things I would focus on: moving towards overseas, developing a radiation and gamma imaging and

other technologies, creating database of what moves through the

system, the third-party audit, and then, lastly, the TWIC process.

I just want to make, I think, an important point as well about

radiation portals that are currently deployed a lot in our ports that
45

the Assistant Commissioner Ahern spoke about. Radiation portal

technology such as the one we are using today will not help you

find a nuclear weapon; they will not find—they won’t be able to detect a nuclear weapon, they won’t help be able to detect a lightly

shielded dirty bomb, and they won’t detect highly-enriched uranium.

Other than that, it is a great technology. It is capable of spotting

plutonium and an unshielded dirty bomb. And the idea of putting

radiation portals with gamma imaging together is that the radiation forces the need for shielding, and then the screening will see

a dense object where there is not supposed to be a dense object.

That application makes sense; it is affordable; it has been demonstrated in Hong Kong.

But running away with lots of radiation portals in the United

States and doing ribbon-cuttings to say we have made ourselves

safe from nuclear weapons here is not quite true with basically

what—representing what that capability really provides. We really

need to get a handle on that.

Mr. LOBIONDO. How long has the Hong Kong project been running?

Mr. FLYNN. It started first in one terminal, Modern Terminal, in

September, the first sort of startup, but it really has been running

full test since January 2005. So a full year now or 14 months. In

that time they have collected more than 1.2 million images of everything moving into those gates. And if I put that in contrast,

CBP, through the Container Security Initiative, has examined

about 3500 containers during that year under the CSI protocol. So

we are capturing and have the ability to capture that amount of

information.

And this is no U.S. money and no Hong Kong government

money; this is the terminal operator who invested in this capability, one who, by the way, does not have any terminals here in the

United States. Hutchison Port Holdings has no terminals in the

United States, but is vested in the network and vested in the system, and is terrified, legitimately, that if we shut it down, their

whole enterprise implodes.

Again, I think it is important to realize these global terminal operators, with appropriate checks and supervision, are an ally in

how we can go about building a system, they are not just the problem. The key is not the ownership, for me, it is adequate rules and

oversight of those rules. And we have to partner with foreigners—

it is part of dealing with that outside world—and we also have to

make sure that they are playing by rules that safeguard our interests. And my experience has been, dealing with terminal operators,

all of whom are foreign owned, and many of the liners, is that they

are for leaning on this, because it is their billions of dollars of capital investment that are at stake.

Mr. LOBIONDO. My recollection from Armed Services last week,

when you gave testimony on the Hong Kong pilot project, was that

DHS indicated that maybe this could work, but we don’t have anywhere near enough data and we have got to wait much longer to

see if in fact this is viable. In your view, how much longer do we

have to wait before we decide that this is a viable system?
46

Mr. FLYNN. Well, the good news is there is progress. DHS, the

Deputy Secretary, Michael Jackson, has essentially directed the

Department in late December, Customs, to take a solid look. They

have begun the process. They have a sample, I believe, of 20,000

images, which are now sort of looking at how will they work into

the protocol.

So it is not a case that they have not been entirely disengaged

from this process; they have been tentative because it is not a

sponsored project. There is no requirement for them to evaluate

this or anything else. So they have been looking at it sort of hesitantly, but now there is more engagement on it, which I think is

constructive.

The issues are legitimate on CBP’s part. You know, they have legitimate concerns about essentially giving another big ticket highly

visible program without their resources to actually manage it, the

IT backbone, numbers of inspectors and personnel and so forth.

Those are legitimate concerns. I mean, if the industry ends up

making what could be about a $1.5 billion investment to do this

globally in the four biggest terminal operators companies and we

work to get that built in the rest of the area, and it turns out CBP

doesn’t have the IT trunk to access those images, doesn’t have

enough inspectors to do examinations, then it is an albatross for

them.

And, so, given the track record of setting new requirements like

the MTSA—I mean, the MTSA requires that the Coast Guard do

all these audits, but nobody provided any new billets for them to

do it; they had to take it out of hide. So there are legitimate concerns, I would say, within the bureaucracy about taking on another

ambitious program, but not adequate funding to actually execute it

and then ending up being with more egg on their face.

This is a soluble problem. We are not talking about massive

numbers of people. The IT problem is manageable. The people in

San Diego can, right now, see all those images that are being collected in real-time through—remotely in San Diego. So it can be

done in Northern Virginia, where the National Targeting Center is,

as well, as the actual containers are moving through, if they knew

to target it.

But certainly they can go after the archive. It is doable, but there

are practical issues. You need to have the IT backbone, you need

the bodies. And if this is a big program, then they need the resources, they need commitment from the Administration and from

this body, obviously, that they will get them.

Mr. LOBIONDO. I have got a couple more, but let me turn to Mr.

Nadler.

Mr. NADLER. Thank you, Mr. Chairman.

It is good to see you again, Dr. Flynn. Dr. Flynn, this morning’s

testimony—I don’t know if you heard Mr. Ahern’s testimony in response to my questions this morning. He said that it was not feasible to require scanning of all containers in the foreign port. Is

there any reason it is not feasible?

Mr. FLYNN. I mean, I think in principle, yes, we could mandate

it happen. What I would be worried about is right now there is not

the technology available to deploy this in this next year. If we said
47

this applies by July 1st, everybody has to have it, it wouldn’t be

feasible———

Mr. NADLER. Because we don’t have enough of the scanning machines?

Mr. FLYNN. Yes. The machines would have to be fabricated. Nobody has taken on that scale of a project, so you would have to

manufacture them, you would have to deploy them———

Mr. NADLER. How long do you think it would take to do this?

Mr. FLYNN. I think you could set a clock, a reasonable clock, of

two to three years, and———

Mr. NADLER. So we could require———

Mr. FLYNN.—graduated process.

Mr. NADLER. So we could require that in two to three years every

container be scanned in the foreign port before it gets put on a ship

bound for the United States?

Mr. FLYNN. I think that the marketplace could respond to that

requirement if it were set with that kind of time frame. What I

would say is that there is an opportunity I hear I think with this

controversy that the main operators would do it on their own if

they know that in fact the data they would produce is going to be

used and if basically they can apply a surcharge to cover the costs.

Mr. NADLER. Now, Mr. Ahern also said that we don’t need to do

that, in effect, because we are on track, that we are going to be

scanning all the high-risk containers. Now, it is my contention, and

I sort of said this to him, that we don’t really know what high-risk

containers are, that our low-risk container, the driver can be bribed

to take an extra long lunch hour and somebody can put an atomic

bomb in a container operated by a very reputable company, and no

one knows the difference.

So, in your judgment, is it necessary for the security of this

Country to really go on track toward scanning all the containers,

as opposed to somebody’s judgment as to what high-risk containers

are?

Mr. FLYNN. I think the good news with the application in Hong

Kong is it is not possible to build it into the truck entry process

without scanning every container, including those who don’t come

to the United States, that, basically, it doesn’t make sense. You

can’t create a traffic pattern for just U.S.-bound containers. That

means the cost of doing this is applied to everybody.

The issue becomes actually analyzing all those images, and the

time that that would take. Now, clearly I think, in time, you are

going to see computer-assisted tools that will so support that, but

the answer—the particular concern I share that you have, Congressman, which is how is it that Customs knows what is highrisk. And the fact is, as we know, our intelligence services are broken big time, and we are having a real struggle reorganizing that,

and I would say it is 10 to 15 years before we are probably going

to———

Mr. NADLER. So we don’t really know what is high-risk and what

is low-risk.

Mr. FLYNN. We don’t. And, further, the assumptions about what

is risk is built around past efforts of criminality, which are ongoing

conspiracies. And there we can see that there is a tendency to
48

gravitate to the weakest links in the system, but terror is actually

likely to be a one-short deal———

Mr. NADLER. Exactly.

Mr. FLYNN.—and so penetrating a legitimate company once is doable in almost any circumstance.

Mr. NADLER. And, therefore, there is no definition of high-risk

and low-risk that makes sense in an anti-terrorist situation.

Mr. FLYNN. Well, I think you have to view every container as a

Trojan horse and as a high-risk.

Mr. NADLER. OK.

Mr. FLYNN. If we can verify it in the systems that we are talking

about here would provide to mean that low-risk is low-risk.

Mr. NADLER. So we should go to a system where we require

every container be scanned as rapidly as feasible.

Mr. FLYNN. I think we can go to that system, and it would be,

again, setting a reasonable time frame so the market could respond.

Mr. NADLER. As rapidly as feasible.

Mr. FLYNN. And then—I do. And what I would set, though, is a

tiered system for analysis right now———

Mr. NADLER. OK.

Mr. FLYNN.—that would basically use———

Mr. NADLER. Yes, you said that in your testimony.

Mr. FLYNN. Very good.

Mr. NADLER. Let me ask you a different question. Right now we

don’t require seals on the containers that are tamper-proof and

that would notify, in effect, a GPS or somehow notify the United

States if that container was tampered with or opened after it was

scanned. Do you think it would be a good idea or a mandatory idea

to require such seals on all containers after they were scanned?

Mr. FLYNN. Yes, I think we have certainly got to do something

about the seal issue. Again, there are lots of ways one could defeat

the technology. You would want to have it checked. I would say one

thing about building this beachhead in an overseas terminal is if

you did have the seal and it had that information, it could be

downloaded before it enters the terminal. So that would work, I

think, well.

Mr. NADLER. OK.

Mr. FLYNN. There are still some kinks with these seals; the false

alarm issues and how you reconcile them and so forth. One thing

is the Operation Safe Commerce Initiative, but nobody knows what

the results are. You know, this has been treated as super-secret

stuff. We need to know what basically we learned as a Government

by doing lots of tests and figure out how we can improve on it. But

I think we will reach a point where seals are used on containers

for supply chain visibility and accountability purposes.

Mr. NADLER. Thank you. Finally, Congressman Oberstar, the

Ranking Member of the full Committee, and I yesterday introduced

the Sale Only If Scanned Act, the SOS Act, which essentially requires—the bill said one year; maybe we will change it to two

years—that no container can be put on a ship bound for the United

States unless that container has been scanned with the latest

available technology as defined as you have been talking about—

gamma radiation plus—gamma ray plus radiation detection—and
49

has a proper tamper-resistant seal that will tell you if it is tampered with; and that we should require as a matter of law that no

container can be put on a ship bound for the United States until

that has been done.

Now, within this time frame of two to three years, do you think

that is reasonable legislation, that that would greatly enhance our

security, or not?

Mr. FLYNN. The key is the time frame.

Mr. NADLER. Within the time frame that you specified.

Mr. FLYNN. My sort of approach here right now is let us see if

we can get the four main terminal operators to jump forward and

do it here and work out the kinks, and then definitely set the requirements that would move. We want a universal system that gets

us there.

And I think there is an opportunity here for the terminal operators themselves to embrace this if they get the right signal from

the U.S. Government that we would use the data and move forward. There is some value in that, obviously, if the market takes

the ownership of the issue, but the signal from Congress that basically we need to have a trust-but-verified system and we need the

best———

Mr. NADLER. And what we heard from the Administration this

morning is that they see no necessity of scanning any but the

high—as they define the high-risk containers. Your testimony is we

don’t really know what high-risk containers are because of a oneshot terrorist deal, and that we must go to a system where we will

scan every container as soon as feasible.

Mr. FLYNN. I think if we adopt that globally, we will also make

a big step forward on counter-proliferation, which is also another

critical issue of our time.

Mr. NADLER. Yes. Thank you very much.

Mr. LOBIONDO. Just one last question, Dr. Flynn. Is Hong Kong

able to do anything with chemical or biological scanning?

Mr. FLYNN. Let me be clear that what this pilot project that was

done by the private company was designed to show if it was possible to collect scanning data on every container, truck entering

into a busy terminal at 300 trucks an hour. No analysis was done

on this data because the private players don’t make judgment

about the risk, it was they can make this available. So the answer

is no on the chemical and biological, there are not sensors in place.

It is a radiation portal, it is gamma ray technology. That is what

it would be focused on.

Mr. LOBIONDO. So that would be a whole separate problem we

would have to worry about.

Mr. FLYNN. It is a complicated problem, particularly when you

get to biological. The problems with biology, most of the tests we

use, like pregnancy tests, have very limited shelf life because they

actually have live agents in it to react to the agent. Chemical is

a little more straightforward.

But with the tools we have, I think you are able to do both the

imaging I think is important to see whether you are seeing things

in a shipment that is not supposed to be there. The notion is, if

it evolves, as you merge commercial data, you will start to have archival information what Nike sneakers look like repeatedly, and
50

the software will automatically check and say there is a big something in here which doesn’t belong; it could be a weapon, it could

be components for a weapon of mass destruction, or it could be

chemicals or whatever.

That would be helpful obviously for dealing with the counterdrug issue as well. A lot of the chemicals, for instance, that are

used for methamphetamine are coming out of a place like India.

Legitimate companies and transactions end up in Mexico. We can’t

see that right now, and that feeds that problem. The more transparency and visibility we can advance from the system, a lot of

public goods will be served beyond just a terror threat.

Mr. LOBIONDO. Mr. DeFazio, Dr. Flynn was trying to catch a

plane. I don’t know, if you have got questions, if you will be able

to———

Mr. DEFAZIO. I always—I have read his book. I appreciate his

comments. Mr. Chairman, sorry, I have been back and forth with

the Aviation Transportation Security Administration markup.

And I don’t know if this would be repetitive, but, if you could,

Dr. Flynn, I have seen your comments in the press regarding the

Dubai transfer and where it doesn’t raise to a level of concern, but

you are raising other points about security at the ports. I don’t

know if you were here for the first panel.

Mr. FLYNN. I was, yes.

Mr. DEFAZIO. You know, I—I mean, do you think that some of

those issues I raised, the fact that we really don’t track ships as

they move, I mean, something could feasibly be on-loaded, even if

we had secure containers? And my understanding from the testimony is we don’t have secure containers.

I mean, are you looking outward and sort of moving back into the

U.S. in terms of your ideas? Because, I mean, the idea that we

screen 1 percent of containers overseas and the rest here seems a

problem, because, once it is here, they don’t necessarily have to deliver it to a predesignated spot to cause mayhem.

Mr. FLYNN. I am, and I think all those scenarios are there.

Again, the honor system we have in place right now for a very

scary scenario, which is a bit crazy, I think. But certainly in terms

of every ship crossing the Pacific and the Atlantic Ocean that is legitimate and is of a legitimate size is using MARSAC to communicate with their home office.

You can’t talk to a satellite without giving away where you are.

It would be possible to use existing technology of commercial networks here to track most of the ships moving across the ocean at

a nominal cost. And why we are not there, why we are building a

whole system to see line-of-sight—the Coast Guard is not out there

patrolling every bit of the time around the clock.

Twenty miles at 20 knots is an hour in a very big ship. I don’t

think a plane will fall out of the sky when you shoot at it, you have

got to stop something with a lot of momentum. And that is not

going to happen if there is nobody there.

There was a sea marshal program, as you may recall, early after

9/11. The Coast Guard ran out of money, so it stopped doing it. So

now it is relying on risk data and intelligence. Well, this is an area

that we don’t exactly have—it wasn’t at the top of the intelligence

food chain to monitor what was going on in the maritime transpor-
51

tation industry, so how we miraculously, after 9/11, had such good

intelligence we could run a risk-based approach, without having

any verifications in the system, I think is a bit of a stretch.

We need the best intelligence we can get, but we need verification on the way, and there is lots in the transportation logistic industry that makes that required. But, again, I think one of the

things is I don’t know the nitty gritty and certainly not part of the

classified review on DP World, but they will be the third biggest

terminal operator in the world. And if we are talking about deploying a global system, you want to be able to work with the operators

in that system.

So the challenge here is obviously legitimate concerns about

what this means for U.S. ports, but in the context that if we are

pushing the borders out, we need all the partners we can get. And

I think we should leverage this moment to get DP World, along

with the other terminal operators, to do more on improving security, instead of throwing them out of the club, essentially being

here, and then we have got to work with them in any event.

I am trying to be pretty pragmatic about this, and I know it is

not what is driving———

Mr. DEFAZIO. Right. Well, I mean, I guess I question whether the

UAE would be the partner I would look for in having a global system of security.

Mr. FLYNN. They will have the system, so, in my view, you don’t

look at the ownership issue, you say will you put in place this

equipment and do you let us access to the data, is it maintained?

And when they are not, then there is some leverage that you use

there. So you work with the partners you have.

Mr. DEFAZIO. But I am just intrigued by your comments about

an honor system, which seems to me—I mean, we are so reliant

upon essentially the bills of lading. You know, I mean, I don’t know

if you are familiar with the crew issue, but it was sort of the———

Mr. FLYNN. It is an honor system there as well.

Mr. DEFAZIO. Right.

Mr. FLYNN. I mean, 96 hours you list the crew. We hope they put

them all in and they spell them right; and these are complicated

names, often, to spell. And, again, there is no underlying intelligence that supports most of that, so it is a problem.

The real issue is not so much that we will have a single incident.

The real issue for me is we will have an incident—it is almost inevitable—and our reaction, because these programs aren’t as robust

as they need to be, will we have these cascading—we will pull up

the drawbridge and we will end up causing ourselves much more

harm than the terrorist cause themselves.

So we need to keep that duality in mind here. It is both trying

to deal with the threat, but also the threat ourselves—the threat

of damage that we will do to ourselves by not having adequate systems in place that will pass the smile test for the American public

post the event.

Mr. DEFAZIO. Thank you.

Thank you, Mr. Chairman.

Mr. FLYNN. Thank you.
52

Mr. LOBIONDO. OK, thank you, Dr. Flynn, very much. We appreciate it. Thank you for continuing to be such a strong advocate.

Please keep shouting.

Mr. FLYNN. My apologies to the rest of the panel for taking your

time.

Mr. LOBIONDO. Dr. Carafano.

Mr. CARAFANO. Thank you, Mr. Chairman. I have submitted a

statement for the record, and, if I could, I would just like to make

five very brief comments. And thank you for trying to accommodate

my schedule. I hope to get over to the White House for the signing

of the Patriot Act, which I think is something that will make us

a lot safer.

I share and I validate the Congress’s concerns and frustrations

with the manner in which the Administration handled the Dubai

World Ports deal and particularly the lack of notification and infrastructure. And I think we all share the good news here, that we

have America’s attention, and I think simply most Americans don’t

realize that global maritime system is simply the lifeline of the

American economy. I mean, the internet could crash; we could

ground all the airplanes tomorrow; and pretty much the U.S. economy would still be there. But if we stop moving goods and services

out of this Country by sea, this economy would simply grind to a

halt.

And I admire and commend the Chairman and everyone on this

Committee for all the work they have done, realizing the number

of vulnerabilities that are out there and the spade work that is required to close them and the enormous amount of work that is left

to be done.

My approach to maritime security has been the same with my

approach to all the aspects of strategy in the long war, and I have

always argued there are four components that you have to have in

every aspect of your long war strategy, that is: security, promoting

economic growth, protecting the civil society and civil liberties, and

winning the war of ideas.

And if you have any security solution that doesn’t meet all four

of those criteria equally well, then you have got a bad answer and

you need to go back and start over. And I would hope that the Congress would use this kind of criteria as they look forward to determine what are the next and most important steps to take.

I have three, my top three on the list of what I would do in maritime security. Number one is simply fix the Coast Guard first. The

Coast Guard is involved in every aspect of maritime security, and

unless they are fully funded and have all the resources they need,

everything else really hangs on that skeleton. And I think this is

not just about funding Deepwater, which I think if the Administration funds this at anything less than $1.8 billion a year, it is inadequate.

But I think it is time to have the conversation about building the

kind of robust, specialized law enforcement capability tracks in the

Coast Guard, building specialized special operations capabilities in

the Coast Guard that are equivalent of every other service’s, building, of course, security professionals, a degree of expansion in the

Coast Guard that we simply haven’t seen, and actually bringing to

fruition some of the concept of maritime domain awareness.
53

Number two would simply be we need better commercial information into the targeting process before containers are loaded on

ships. And I think that commercial information is available. I think

it would make high-risk targeting a lot more efficient. And that, I

think, would be my second priority.

And my third would be international cooperation. I really think

that we lost the bubble and that we are not focusing on the weakest link in the system, which is the shippers and ports in the developing world, which are the entre into the system that I think terrorists are most likely to use.

I think there are legislative—with regard to foreign ownership,

I think there are legislative remedies that the Congress could do

to give more confidence to the American people that these issues

are being addressed, and I would point out two very quickly. One

is MTSA and the other is the law that governs the CFIUS process.

MTSA was simply not designed to think about the notion of changing of ownership and changing foreign ownership.

And I think we have to ask what appropriate amendments could

be made to the law that could strengthen our degree of confidence

when maritime infrastructure is transferred between foreign ownership or to foreign ownership. And I think there are some common

sense things that we could add to the law.

Number one is a requirement that the security officer of the company be a U.S. citizen and have a suitable background check. And

I have listed these in my testimony. I will just summarize some of

the ones here. Number two is a mandatory review of the security

plan by the Coast Guard on notice of an application.

Also, there would be a mandatory requirement, after the application has been approved, that ownership is taken a mandatory requirement that changes have been made to the plan. Mandatory

commitments to assist in law enforcement investigations. And,

most important, penalties for non-compliance with these measures.

In regard to CFIUS, I think the problem with CFIUS is that the

process is just too informal, and that what it needs is a stronger

set of regulatory requirements as to exactly what the CFIUS process is supposed to accomplish. I think there should be mandatory

regulatory requirements for agencies to obtain commitments where

there is significant national security interest involved.

I think there should be penalties in the law established for noncompliance with those commitments. I think that where there is a

significant national security interest identified, I think the CFIUS

approval should be based on the joint conclusions of DOJ, Department of Homeland Security, and DOD, not a consensus agreement

by the committee as a whole. And I think there should be very firm

and clear and specific reporting requirements to Congress.

And I look forward to your questions.

Mr. LOBIONDO. Thank you very much. Do you—I am taking that

you do share Dr. Flynn’s assessment about doing something on foreign shores before containers are actually loaded?

Mr. CARAFANO. I do, but I really oppose this notion that this is

about pushing the border out. I think that is really the wrong impression, because that really doesn’t actually get you anything. OK,

let us say we have pushed the border out and we are 100 percent
54

confident between Singapore and the United States that we are

good to go.

Well, you know what? Singapore is one of the key hubs of global

commerce in the world, and if the terrorists get to Singapore and

they do something in Singapore or Hong Kong, that is going to affect all of us almost as badly as if something happened in Los Angeles. So we need to get over this notion that it is about pushing

security out. That is exactly the wrong impression. What we need

to be talking about is about securing the global commons, securing

the domain that we all use, that makes us all healthy and well.

Now, you know, in regards to specific solutions, I have to admit

I have a predisposed dislike of security screening as a measure, because what you wind up doing is spending 99 percent of your time

and resources on things that are not a problem. I mean, this is the

problem we have in the aviation realm. We screen—we spend $6

billion a year—that is the budget of TSA—screening people that

get on planes every day that we almost know for a fact are no security risk.

And I much prefer security regimes that put the majority of the

security resources against the threat, as opposed to mass screening,

which I think is very, very inefficient. I have no problem with the

mass screening scenario. The problem I have with a specific technology, if somebody can make a sound business case for these technologies, Steve and I totally agree that there has to be two fundamental requirements if we are going to do this. One is that there

has got to be a business case for it and two is it has got to be global

so it is a level playing field for everybody.

But in terms of where screening of cargo, mass screening of cargo

fits in my list of priorities, I, quite frankly, think it is not high, one,

because I think mass screening is inefficient, it has high false

positives and false negative rates; it puts a lot of drag on the system and actually doesn’t give you a lot of security in the end because in a global supply chain, there are so many intervention

points that mass screening secures one intervention point, but you

get on either side of that point, you are vulnerable again.

So it is a system that can be relatively easily defeated and I

think the scenarios that we use to justify it, which is the nuke in

the box, I think is among the most implausible of terrorist scenarios. If a terrorist has a nuclear weapon, then he wants—and

this is true of every terrorist attack. Terrorists have limited assets,

and they like predictability. They like predictability in knowing

what they are going to face and they like predictability in knowing

the outcome of their attack. And if you look at every terrorist tactic, it is based on trying to gain that predictability.

Well, what is wrong with a nuke in a box scenario is if I have

one nuclear weapon, why would I put it on a cargo container which

I had no control over in environmental conditions—and there are—

when you have a nuclear weapon, or any kind of bomb, you are

concerned about environmental conditions—and send it off out of

my control?

If I had a nuclear weapon or a deadly biological weapon or a

dirty bomb that I wanted to get into the United States or a U.S.

port, I would do it the way smugglers do it: I would take it on a

noncommercial vessel, I would land in Mexico and I would drive it
55

across the border. Or I would take it on a non-commercial vessel

and I would land it between a port of entry, which is totally unguarded and I would walk it in. Or if I really wanted to blow up

the port itself, I would take it on a non-commercial vessel, I would

take it into the port and I would blow up the port.

So this notion that we are going to do 100 percent screening to

keep the nuke in a box out of the United States I think is just simply silly. You know, if you have an infinite number of

vulnerabilities and you take one away, you have infinite number of

vulnerabilities minus one. That doesn’t really make you much

safer.

Mr. LOBIONDO. Do you share the confidence that Customs and

Border Patrol indicated in their process of identifying high-risk and

then running it through———

Mr. CARAFANO. No, sir, I don’t. I think that—I agree with highrisk analysis and screening of high-risk cargo. I don’t think that

they have access to the kind of information they need to do to do

a quality high-risk assessment. And I think Steve and I agree on

this, that you have to have information that goes to the beginning

of the supply chain.—and I have listed some of these requirements

in my testimony—but you have to know the shipper, the country

of origin, who packed it. And that kind of commercial information

needs to be part of the risk assessment before the container is loaded on the ship.

Now, the other thing I think is very, very important to realize

is will risk assessment give you 100 percent confidence? And the

answer is no, of course not. But the other thing people have to realize is you are not depending on the risk assessment as your last

line of defense. Risk assessment, in conjunction with robust law enforcement and auditing capabilities, that gives you real security.

You know, it is like we don’t ask the police to stop every car they

see; we say stop the people that break the law. And I think that

is what we want here. What you want is you want a high-risk assessment that is going to give a degree of you some confidence in

the system, but you can’t trust the system. And I think any part

of the system that is based on honor is stupid.

I mean, Reagan had it right when he said trust but verify, which

meant don’t trust anybody. So you have a system which provides

high-risk assessment, which gives you some clues, but that is

backed up by robust law enforcement and auditing. That is what

gives you the confidence that the system is secure, not the screening process itself.

Mr. LOBIONDO. And that is where the critical nature of funding

the Coast Guard comes into play?

Mr. CARAFANO. Absolutely. I mean, this is simply silliness. I

mean, quite frankly, I mean, to make an analogy, there is a burglar

in the neighborhood. You know, Steve’s solution is let us wall up

all the houses. If there is a burglar in the neighborhood, let us tell

everybody to lock their doors and then let us hire some cops to go

out and get the burglar.

That is the right answer. And so I think you are right, if there

is an Achilles heel or the emperor has no clothes in this, it is that

the one institution which really links all this stuff together and

makes the system that we have credible is the Coast Guard, be-
56

cause they touch every aspect of maritime security, whether it is

law enforcement or screening or maritime domain awareness, and

they simply do not have the resources to make this system legitimate.

Mr. LOBIONDO. You mentioned the Deepwater program, which is

certainly near and dear to me, and the funding of it, which certainly has been inadequate, and each year we seem to fight that

battle. You, I think, mentioned anything less than $1.5 billion is

really a bad mistake. Was I correct?

Mr. CARAFANO. Yes. And I think that is a very modest number.

Mr. LOBIONDO. Have you had an opportunity, up to this point,

to review and study how they are spending the money? In other

words, with all the challenges of replacing the assets, some of how

they are choosing to replace these assets, have you looked at that?

Mr. CARAFANO. Quite frankly—and I think this is actually true

for all the services. In many sense they are making poor choices.

What they are doing is they are making choices—they are making

the choices they can make as opposed to the choices that over the

long term would be the most cost-efficient.

You know, for example, if this was a private sector firm, they

would say, you know, spending a $5 billion over three years buys

you a heck of a lot more than spending $10 billion over 10 years,

because, you know, replacing older equipment more quickly, in the

long term, just saves you a lot of money. So I think what they are

doing is because we haven’t accelerated the acquisition of the program, what they are doing is they are not making the cost-effective

choices, they are making the most operationally-effective choices.

In other words, they are trying to keep the car from falling apart.

You really ought to buy a new car, so instead what they are doing

is they are doing things like, well, they are fixing the brakes, you

know, just to keep things running. But in the long run that just

costs you more money.

So I think that many of the choices that they are doing are grossly sub-optimal because they are dealing with the fiscal realities of

having to go out and do their job every day, and they can’t buy the

stuff they would want to because the stuff they have got has got

to work tomorrow.

Mr. LOBIONDO. I understand that. What I am actually trying to

get at is I think some of their decisions to spend money on the biggest ticketed items in the range of what they have to do is what

I question when they are spending all this money on a couple of

huge ships, and they could, you know, be spreading it out and getting a whole lot more bang for the buck.

Mr. CARAFANO. But I think that is part of the—I agree with you,

and it is part of the same problem, is they are forcing and making

these sub-optimal choices. You know, as we know, the big ticket

items get people’s attention, and the big ticket items are easy to

get funded, and the little—if you have 15 little things, you are

much likely to get whittled to death than if you have one big thing.

So I think that we have just given them an impossible job, we

have told them to figure out how to do all this, and then we

haven’t—and then we have kept the checkbook in the drawer and

kept them on an allowance. I just can’t—it is just unfair to ask
57

these guys to make smart decisions on the amount of money we are

giving them.

Mr. LOBIONDO. The last question, I think, how do we improve

the quality and quantity of information that comes into the Customs and Border Patrol through the advance submission?

Mr. CARAFANO. I think that—I mean, that simply has to be done

through the international agreement, and I just don’t think that we

have been aggressive enough in terms of pushing the envelope on

this, and I think that Steve is right, the United States has an enormous stick because we are one of the world’s largest global traders,

and I just think we should be much more aggressive.

Mr. LOBIONDO. OK, Dr. Carafano, thank you very much.

We are now going to move to Mr. Nagle. Thank you for joining

us.

Mr. NAGLE. Thank you, Mr. Chairman. Good afternoon. Thank

you for inviting us to testify before your Committee on areas where

additional efforts are needed to meet the objectives of MTSA. I ask

that my full written testimony be placed in the record.

Enhancing maritime security and protecting America’s seaports

from acts of terrorism and other Federal crimes is a top priority for

AAPA and our member U.S. port authorities. Ports handle 99 percent of our overseas cargo by volume, enable the deployment of our

military, and serve as departure points for millions of cruise passengers each year.

Let me begin by some comments on the proposed DP World acquisition of P&O ports.

In reviewing a transaction of this type, it is the appropriate role

of the Federal Government to determine if there are national security concerns with any proposed business arrangement involving

non-U.S. interests, whether that involves port operations or any

other business. There should be a rigorous process to appropriately

consider and resolve those questions.

AAPA believes that the current 45-day process underway regarding the Dubai Port World’s acquisition of P&O ports should be allowed to run its course prior to Congress taking any action either

on this proposed arrangement or on any blanket prohibition

against a foreign government-affiliated company from providing

terminal operating services at U.S. ports.

With regard to individual business arrangements, public port authorities often have leases with terminal operating companies to

operate port-owned facilities. These leases typically provide that

any assignment of a lease to a successor company in the event of

a merger or acquisition must be approved by the port authority.

Leases generally cannot be transferred or assigned without permission.

The recent focus on port security has made many question what

else this Country needs to do to secure our ports. My testimony

today will focus on three areas: one, the Port Security Grant Program; two, the Transportation Worker Identification Credential,

TWIC, that has been mentioned this morning; and, three, adequate

resources for the Federal agencies primarily responsible for port

and maritime security.

Soon after September 11th, Congress established the Port Security Grant Program to provide much needed help to port facilities
58

to harden security to protect these vital ports of entry from acts of

terrorism. While the program has provided much needed funding,

it still has several problems. Let me begin with the funding level.

From its inception, the Port Security Grant Program has been

dramatically underfunded. DHS has been able to fund only about

20 percent of the identified needs through the applications. AAPA

recommends an annual funding level of $400 million for this program. Limited funds have placed huge burdens on port authorities

as security projects compete with funds required for maintenance

of facilities, channel dredging, and other port expansion projects to

meet growing international trade. The biggest impact of funding

limitations, however, is a delay in making security enhancements.

Limited funds means slower progress.

This low level of annual funding has resulted in DHS limiting

the eligibility of the program. Last year, DHS decided to limit eligibility, leaving nearly half of our member ports ineligible to even

apply. We support a risk-based system; however, we believe that

each port facility that must meet the requirements of MTSA should

be able to apply. We are also concerned that limits on eligibility

might leave a class of perceived underprotected ports.

The Administration, also as has been mentioned this morning,

has sought to eliminate the Port Security Grant Program during

the last two years by lumping port security into a broader targeted

infrastructure protection program. This is not the time to dilute the

focus on port security; it should remain as a separate dedicated

program. AAPA is also concerned by the slow pace in making the

funds available. For fiscal year 2006, we are still waiting for the

application process to open for the port security grants, nearly six

months after the appropriation bill became law.

A second priority for AAPA related to port security is quicker implementation of the TWIC. Four years after this requirement was

enacted in MTSA, we are still far from implementing a TWIC system nationwide.

The third area AAPA believes should be a priority for port security is ensuring that adequate resources are available for the Federal agencies with primary responsibility for port and maritime security. Again, there has been a significant discussion of this both

this morning and in this panel.

The U.S. Coast Guard and Customs and Border Protection are

the two key agencies that need adequate resources to address port

security. Both have done a great job to address these new challenges post–9/11. Projections on container and passenger volumes,

however, show a huge increase at seaports in the coming years.

Congress needs to take a careful look at whether these agencies

will have the manpower and resources to handle this growth in

their security responsibilities.

In conclusion, our Nation and its public ports have made great

progress in enhancing port security since September 11th, in large

measure due to the actions of this Committee and your leadership

in moving forward MTSA legislation. However, we continue to need

to make progress in this area. On behalf of the American Association of Port Authorities and our member ports, thank you for the

opportunity to be here this afternoon, and I am willing to answer

any questions at your time, Mr. Chairman. Thank you.
59

Mr. LOBIONDO. Well, thank you very much. There are so many

different areas to talk about. The port security grant issue is one

that has disturbed us a great deal. Depending on what numbers we

use, the current requested level of funding from DHS I think last

week looked like it would take some 60 years before we come to

even the bottom line of what was required.

In the meantime, you are expected to continue to do more, you

are just given more and more mandates. And we are hoping that

we can get someone’s attention or the secretary and Mr. Baker carries back this message. He heard some pretty strong messages last

week in Armed Services, and I think he did hear again today.

But I would like to ask you some specific questions about how

do you interact with the Coast Guard and other DHS agencies to

carry out the common mission of the port security?

Mr. NAGLE. I think as was relayed this morning, certainly with

Representative Coble’s discussion as far as the four-legged stool, it

definitely is a partnership effort between the Federal agencies.

Again, certainly Customs on the cargo security side and Coast

Guard on the vessel and facility security side have primary responsibility. However, the public port authorities have a role in that,

the terminal operators have a role in that, as well as the private

sector that are involved.

As indicated, all of the facility operators, whether they are public

agencies or private, do need to prepare and provide a facility security plan that is reviewed and approved by the Coast Guard. And

then—so you have a facility security plan process that is approved

and in place and ongoing. You then also have essentially a local

port area maritime security program that is chaired by the Coast

Guard captain of the port, and the local port authorities are part

of that local security committee that looks at the broader, beyond

the individual facilities, to generally the port area. And there are—

also as part of that there are studies, analysis, et cetera, to determine and make recommendations as far as what security or enhancements are required to address security in the broader port

area.

Mr. LOBIONDO. Do you receive sensitive or classified information

from the Coast Guard or any other Federal agency regarding potential threats to homeland security at our ports?

Mr. NAGLE. We, as AAPA, do not receive sensitive security material. If there are—and in many cases at the local port authority the

facility security officers or others that may well have security clearances would be able to receive that information, but as a general

course of matter, and certainly through the Association, no. We are

on certainly the correspondence with Department of Homeland Security regarding security sensitive information that they are able

to provide that we can provide through the Association to our local

individual members, but not secure information.

Mr. LOBIONDO. I take it from your testimony that the top two

items that you would suggest the Federal Government needs to get

on quickly would be additional port security grants and then the

TWIC card?

Mr. NAGLE. I would say from the port authority’s perspective, I

think all three of the areas are—I would certainly indicate as

equal, the two you mentioned as well as the additional resources
60

for Coast Guard and Customs. Again, the first two are principally

looking at the security of the port facilities and making sure that

the people that are on that facility are who they say they are and

have authorization to be on that facility and to take cargo either

onto or off of that facility as appropriate.

The third area as far as the Coast Guard and Customs is in the

essentially outside of the terminal gates responsibility regarding

cargo and vessels that are entering the U.S. And as has been mentioned, whether you defining it as pushing the borders out or however you define that process, certainly there is significant value

and interest in moving the determination of any either vessels or

cargo at risk before it reaches the U.S. port. As Mr. Oberstar mentioned earlier, certainly, while it is the last layer of defense, doing

something, radiation portals at the U.S. port in many instances

that could potentially be too late.

Mr. LOBIONDO. Could you say what is the biggest risk, exposure,

threat because of lack of port security grants? What gaping hole is

that leaving that the private side is not able to pick up? We know

there is an enormous number of dollars that are necessary to even

come up close. How would you rank what are the areas that are

most at risk because of lack of port security clearance?

Mr. NAGLE. The areas that our members tell us are the areas

that they have identified as still requiring significant enhancements at the funding because of lack of funding is being at least

delayed, if not being able to be done, period, are in the areas of access control—again, whether that is physical access controls or

credentialing systems, et cetera, that, again, are in many having to

wait to be implemented because of the TWIC, not knowing what

their requirements are going to be from the Federal TWIC to make

sure that they are compatible with what a local port authority

would do in terms of credentialing, et cetera.

But access controls. Perimeter security, whether, again, that is

the physical perimeter security by personnel or by fencing, lighting,

video surveillance, certainly utilizing technology to better being

able to provide surveillance of the facility. Communication systems,

being able to communicate amongst the various—whether it is the

port authority security personnel, local law enforcement. In general, those would be the first responders in any incident related to

a port or maritime environment. Communications command and

control systems are certainly recognized as very important.

And probably the final area that again is still a subject of particular interest is water-side security. Again, the Coast Guard has

primary responsibility for that, but with their limited resources,

they are obviously not able to be at every single facility at all

times. So looking at the opportunity of either patrol boats and either radar or sonar detection devices that help provide a level of

security regarding any intrusion from the water side. Those are, I

would say, the four areas that our members have identified as most

in need of additional funding.

Mr. LOBIONDO. So are you saying that if we had an incident with

one of your members at one of the ports, that there would be an

inability for the different entities involved to communicate directly?

Mr. NAGLE. I would say that there are still cases that you are

still looking at the compatibility—I think that was certainly given
61

the experience in September 11th, the inability of the various responders to be able to communicate———

Mr. LOBIONDO. What I am getting at.

Mr. NAGLE. Yes. Certainly there has been progress made in that,

but I would not say that there has been certainly conclusive determination of what that interoperability between systems is between

all those local responders. In many cases they are outside the control, obviously, of either the port authority or the Federal, say, Customs, Coast Guard, et cetera, because you are coordinating with

the local and State agencies that would have their own communications systems. So it is a matter of trying to coordinate all of those

various potential first-responders and be able to communicate

amongst themselves. That is still an issue.

Mr. LOBIONDO. I have a hunch you are being pretty kind in your

description of how that has come together and where we are with

all that. Last question I have, do you have any estimate of what

your members have spent, either on their own initiative or mandated, in port security that has been non-governmental help?

Mr. NAGLE. I can’t give you an actual figure, but essentially we

have been able to determine—I would say it is beyond what is provided in the Port Security Grant funding, which has been, to date,

actual, $707 million, and then with the additional $175 million that

will be coming out in this upcoming round, so roughly a little over

$880 million. In general, it looks like there has been, I would say,

hundreds of millions of dollars spent by the port authorities in addition to that figure.

I think the numbers that were referenced this morning, the $5.4

billion estimate was only for facility security. There was some intimation that that was for a broader level of security beyond facilities. The estimate, when Coast Guard looked at the costs of implementing MTSA on facility security was $5.4 billion over 10 years.

The first five rounds of grants, there has been a total identified

needs applied for of $3.8 billion, and only $700 million has been applied. That is the 20 percent that I was referencing in the reference

that you made as far as how little has been provided to public

ports.

So I think there has been some level of correspondence between

the level of identified needs that have been applied for and that

Coast Guard estimate that gives us the general feeling that that

total figure of $5.4 billion seems to be certainly within the ballpark.

Mr. LOBIONDO. I thank you very much. We apologize and we

thank you for adjusting your travel schedule. We understand that

you have missed your original flight and had to reschedule, and we

very much appreciate that. And if in fact you need to go, please feel

free.

Mr. NAGLE. At this point, because of the switch, I am fine, and

if you would prefer for me to stay for the panel, I would be happy

to do that.

Mr. LOBIONDO. Might be an additional question.

Mr. NAGLE. OK, sure.

Mr. LOBIONDO. OK.

Mr. Scavone, please.

Mr. SCAVONE. Thank you, Mr. Chairman. I have submitted my

comments for the record. I know that you, sir, heard my remarks
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at the Armed Services Committee last week. I will mention a few

points relative to my comments today and try not to be repetitive.

In addition to being also responsible for security at P&O, I also

serve on the Board of the National Association of Waterfront Employers, who did submit comments on port security to the Senate

Commerce Committee today, and with your permission, sir, I would

like to send those into this Committee for its record.

Mr. LOBIONDO. Without objection.

Mr. SCAVONE. I would like to offer first a few comments on the

security of the global supply chain.

Of late, we have become accustomed to hearing that our ports in

the U.S. are the most vulnerable points of entry. This tends to lead

to the conclusion that the ports themselves are the location where

security needs most to be enhanced.

That is not a correct conclusion. Our ports in the U.S. are already the one point in the supply chain over which we have the

most control. It would be more accurate to say that if the security

of the supply chain in a foreign location should fail, the place

where we in the U.S. will be first exposed to that failure would be

in the U.S. port. However, no amount of security on the part of the

terminal operator in that U.S. facility will change that fact.

Therefore, the enhancement of the security of our U.S. ports and,

by extension, our homeland, is best accomplished by improving the

security at the point of origin. We have heard today about programs like the 24-hour rule, C-TPAT, the CSI program, which have

all contributed to that goal. If efforts will be made to continually

improve our security, this is where the focus must remain, to include such matters as the integrity of container seals, the improved

capability to conduct non-intrusive inspections at port of loading,

ideally at the direction of U.S. Customs, and the upgrading of Customs’ Automated Targeting System.

Some of these objectives will experience substantial progress via

the simple decision to devote more resource to them, which has

been discussed already today. Others would require a global program joining the governments of virtually every trading company

with carriers, terminal operators, technology vendors, and international standards bodies such as the International Standards Organization, or ISO, which leads me to a few points about foreign

ownership.

The fact that foreign interests own many of the companies that

manage our terminals in the U.S. has recently, as we know, become a major point of discussion. The focus has been on the extent

to which such ownership may impact the security inside our terminals. The answer is it does not impact the security function at all.

We have already heard that the Coast Guard, Customs, and the

port itself continue to be responsible for that security. We, as terminal operators, do have responsibility to have access controls to

our facilities, but that function is approved, monitored, audited,

and enforced by the Coast Guard.

The terminal operator has no role in verifying or inspecting the

declared contents of any container entering the United States. A

terminal operator does not open a container to verify its contents.

Inspection is performed exclusively by U.S. Customs under its own
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supervision. And no container leaves a U.S. facility until U.S. Customs indicates that it is free to go.

In every case of which I am aware, foreign ownership of terminal

operating businesses in the U.S. is conducted by U.S. subsidiaries

employing predominantly U.S. citizens and U.S. labor. However,

under no circumstances does this permit the foreign shareholder to

control any port or terminal in the U.S. Obviously, the shareholder

will control indirectly the overall business strategy of the company,

but like any business, it will be subject to the laws of the countries

in which it operates, and it may only exercise its influence within

those limits.

If you accept that the security at the originating end of the supply chain is the area most requiring attention, you will then recognize that the participation inside the U.S. of the major global terminal operating companies of the world, alongside our U.S. terminal operating companies, permits us to have a much broader global

cooperative effort to address the ways and means to enhance the

security of that supply chain.

For example, the global operators who also have a U.S. presence

represent possibly the single greatest resource in the effort to deploy scanners in foreign countries and to supply to U.S. Customs

the scans of every container they move onto a vessel bound for the

U.S., which in turn addresses the question of intervention that Dr.

Carafano raised, where you could potentially intervene at any point

along the way. But if you check the box before it is actually loaded

onto the vessel heading for the U.S., there is no additional intervention after that.

A question was raised about the impact of DP World deal on the

security of the New York cruise terminal. By agreement with the

Coast Guard at the New York cruise terminal, the role of the facility security officer is actually filled by Michael Stapleton Associates, a private security firm composed of ex-NYPD detectives and

officers. That firm, in cooperation with the Coast Guard, prepared

our facility security plan and they operate it.

The Coast Guard has been highly complimentary of our security

measures there, which include measures beyond those required by

the regulations, such as canine patrols, and nothing about that is

going to change. Further, we do not have access to passenger lists

or crew lists; those are kept by the cruise lines and CBP. The sailing schedules are on the cruise line Web sites; thus, the sale of the

P&O parent company in London would have no impact on the security at this terminal.

In Beaumont, Texas we load military vehicles on vessels chartered by the military. We use longshoremen to do it. Numerous

military personnel are always present to supervise that operation.

The only information we receive about the cargo is a written list

of equipment to be loaded. If anyone wanted access to this information, they would only have to stand outside the terminal fence and

count what goes in and out, the point being the information we

have is not confidential to begin with.

In conclusion, Mr. Chairman, when we discuss risk in the supply

chain, I believe it is important to distinguish between risks that

exist today and risks that might somehow be created if P&O is

sold. I believe we have seen that those who know how security real-
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ly works are virtually unanimous that this sale is not an issue from

a security standpoint.

Thank you, Mr. Chairman, for the opportunity to submit these

comments today.

Mr. LOBIONDO. Thank you.

Mr. Brown, thank you for your patience. Thanks for making a

very long trip, and I am waiting for your remarks.

Mr. BROWN. Thank you, Chairman LoBiondo. And thank you,

Member Filner and the rest of the members of the Committee. I

want to thank you for having the opportunity to come and speak

here and for the invitation.

My name is Gary Brown. I am a third generation longshoreman

in the Port of Tacoma, Washington; roughly 37 years down there.

I am also privileged to serve as the security liaison officer for the

International Longshore and Warehouse Union. And in this capacity I have received numerous security certificates and certifications

from the Coast Guard. I have taken my class with FEMA and I

was very fortunate to have taken a class that was sponsored by the

U.S. Attorney’s Office for anti-terrorists. So that is a little bit of my

background.

Also, on February 14th and 16th of this year, I organized a port

security training session for the ILWU and its members in conjunction with the Pacific Maritime Institute, which is one of the few

government recognized and organizations institutes. I had

longshore workers from every local up and down our coast, the

whole International, including two members from Hawaii, and they

were trained on a facility, company and vessel security regulations

required by the Coast Guard.

I had the distinct pleasure of having retired Captain Danny Ellis,

Coast Guard, and Assistant Chief AD Vickery, Seattle Fire Department, who has been involved in several—I guess he is the grandfather, as they say, or the founding father for the Marine Terrorist

Response Program in Puget Sound, and which is going to be nationwide. They have helped me with my program and were nice

enough to have the Coast Guard send two people to speak at the

class, Customs sent two people, and along with, like I said, the Fire

Department, first responders, and a gentleman that was retired

from the Treasury Department to speak on some anti-terrorist

things for us to be watching out for.

So it was a very good class. All the members were certified and

this was totally funded by and paid for by the ILWU. We paid and

initiated for this because our employer had failed to conduct a

proper training course which is required by the Coast Guard. And

on that note there, that is where we are at with our training, and

if we could get any help with any funding, we would appreciate it.

Just to touch on the Dubai Ports deal as far as the International

Longshore and Warehouse, where we stand is that we fully support

the bipartisan calls in Congress for the Bush Administration to direct a committee on the foreign investment to conduct a full 45-day

investigation, because our seaports are part of our global economy.

The ILWU believes that we should not rush to open the doors for

such assets to companies owned or operated by foreign countries

where there were serious concerns with existing terrorist activities

and funding. Therefore, we are urging that the decision for the ap-
65

proval be based on national security interests of the United States,

and not on commercial interests of any one company or one country.

We also urge the Federal Government, including Congress, to

focus its attention beyond the controversy over the one future commercial contract and to recognize and correct immediate major deficiencies of the security that exists today in American ports. It is

the current lack of effective port security since the terrorist attacks

of 9/11 that is the real concern of all the dockworkers and millions

of Americans who live within close proximity of our Nation’s ports.

To touch on that, you have heard several discussions from everybody today on panel one and the gentleman here was on seals.

Seals was something that we as longshoremen used to conduct,

physically check the seals, and now they are done via the cameras,

and the cameras, you can’t see the number and you can’t tell if it

is secured. It is a severe problem.

Another problem is empties. This is something that was brought

up and a lot of people wonder why empties are such a problem.

Empties are a perfect example of an access for somebody to use to

put something in to transport something in, because they are not

examined. We used to examine them for several reasons: number

one, to make sure they were empty; number two, to make sure they

were clean, because a lot of the customers require a certain type

of container; and we also checked for structural damage, which is

a safety factor.

And not only that, but we have found—I personally found 25

Chinese in a container one night that was an empty, and, fortunately, the only reason we found it was because we were getting

ready to stack it in the storage area, which is where it would have

probably stayed for about four or five days. And for some reason

it was close to lunch time, so I told my driver just leave it on the

ground, and within five minutes I got calls on the radio that there

were people running all over the terminal down there, so I caught

one of them and that is what I found out, that they had been in

that container, it was an empty.

And another problem we have is we don’t have, like on our shipping list. They talked about—the gentleman earlier talked about

the honor system, and we work with several of those companies

that are on this honor system, but these same companies we have

containers, if we get a discharge list of approximately 450 containers, we have 462 come off. That is 12 extra. And they are not on

the list.

Well, according to regulations, and if everybody was to follow the

rules, you call Customs, because now you have got a break in security; you have got 12 extra containers. Unfortunately, the companies’ response is just write those numbers in and worry about it

later on. And this is something that we deal with every day, and

this is not acceptable.

We talk about rules and regulations, and they are not being followed. And like I said, with the seals, with the loads, with the

empties, we have loads coming off ships now and it is such a fast

paced business that we are getting—if you happen to look at some

of these manifests on there, they are listed as dummy, D-U-M-M-
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Y, because they don’t want to take the time to stop and verify that

container, so they come through as dummies.

And I have had several meetings with the companies and I said,

you know, what is the process with that, because you have these

dummy containers? Well, what they will do is they will run it

through and the computer will pick it up, where, in the old days,

I had—I am a marine clerk, and I had the manifests, I would verify

these things; I would verify the seal, I would verify the container,

and at one time we knew what the contents were. And we don’t

have access to any of that anymore, and this is all done through

the computer process, and this is what our concerns are at, because

we don’t have access to that anymore.

And we have had several where there was an incident in Long

Beach where the container blew up. Had we had access like the old

days, what we are supposed to do is check that container, we would

have found out that it had propane in it. But on this list that was

set out, it was FAK, freights of all kinds/dummy. And luckily nobody was killed, but it blew the container doors off and, my understanding, it blew things about 40 feet behind it. And these are our

concerns, you know, the empties, loads, and, of course, now we

have at our gates now we have—to give you a quick incident, if I

could.

We used to be down in the lanes. When a driver would pull in,

he would give us his manifest, we would double check to make sure

the container was right, the seal number was right, plus it was

locked; you would physically grab it and pull it. And if it was placarded with ‘‘Hazardous,’’ you would walk around and make sure it

has all the placards on it because of Coast Guard regulations.

Well, now a driver pulls up and he gives you the seal number

over the phone. And, of course, your camera on it shows—you look

in your camera and the density and stuff, it just shows a glob.

There is no way you can verify the number; there is no way you

can verify if that seal is actually secure.

And in this one incident, the gentleman came out of Canada and

it was hazardous, and he pulled up to the lane down there and I

asked him the seal number, and he gave me a seal number. Well,

he had had placards on it, so I had to go down and walk around

it.

Well, when I got to the rear of the container, there was no seal.

And I walked up to the driver and I said, you gave me a seal number over the radio; there is no seal on the door. And he just shook

his shoulders. And I said, did you check the container before it left

the dock in Canada, and he goes no. And, of course, he didn’t stop

because he used a NAFTA lane coming across the border, where he

doesn’t have to stop.

And I said, did you stop anywhere along the way? And he goes

no. And I said where is the seal? There is no seal on this. He says,

I don’t know. So at this point I had just finished one of my classes,

and, of course, that was a red flag, foreign container, hazardous,

no seal, breach of security. And so the response was the protocol

is to call Customs.

Well, unfortunately, when I called the terminal operator and explained to them—that is their job to call Customs—their response

was throw another seal on it, it is going to miss the ship. And I
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said, no, we have got a severe breach here, we have to call Customs. So I was chastised for that, but I called Customs and that

container was taken aside. So I don’t know what happened at the

end of that, but this is just things we go through daily down there

as far as security. And it is of great concern because, like with the

empties, I like to touch back on that.

It is also the empties coming in from inside, not just the ones

coming off the ship, because we have found tons of things in there,

and the gentleman eluded earlier about the empty containers and

the drivers. Drivers come in and a lot of these companies the terminal operators, a couple of them own their own trucking companies

now, so they actually have a little kind of a card they put on their

dashboard, and they are just in and out of the terminals.

And there is no way you can monitor these guys. I have seen

drivers come in with giant sleepers, and just out of the corner of

my eye I catch them where they are parking in the terminal, and

I see two or three guys pile out of this sleeper. You know, they are

helping them with the container or they are lose on it. Those aren’t

being inspected and the drivers aren’t being I.D.’d, you know. That

is another concern of ours. And since we aren’t checking empties

any more, you know, the people ask me, they say why would you

check an empty? Because I told them I found people in there, I

found cargo in there.

And, you know, the stuff that—we are looking at loads and we

are looking at seals, you know, this is where we are concentrating,

but we have also got to concentrate on those empties because as

we know, you know, the people that want to do us harm are very

methodical, and they are very inventive, and if they can see we are

paying attention to loads and seals and all this stuff, but not on

empties, because these empties are loaded on the ship next to the

loads and the empties are loaded on and off trucks just as they do

as the loads, and if we are not paying attention to those empties,

it is a golden opportunity for these people.

And I say from the enemy within, because, as we all know, unfortunately, the terrorists that attacked us on 9/11, that attack occurred within the United States, within our States, and I believe

after some of the classes I have been and listened to some of the

people, that there are people in this Country that have pretty much

established themselves, and for them to put—if their goal is to destroy or disrupt our docks, you know, they could very easily build

a bomb or whatever they want in Scottsdale, Arizona and ship it,

and once it is on the terminal ignite it. So the concern from inside

as well as outside is very sincere.

And like I said, you have my statement, and I thank you for the

time, if you have any questions.

Mr. LOBIONDO. Thank you. What would be in your order of priority? You mentioned a lot of things, but the top three things that

we need to do from your perspective to better secure the ports?

Mr. BROWN. Well, like I said, Mr. Chairman, the sad part is that

we used to do the job of, like I say, checking the seals and checking

empties. That is something we don’t do any more. We actually had

letters from terminal operators that don’t want it done any more.

I have been to several meetings on committees and stuff where

people have asked me, you know, why did you guys quit doing that,
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and I said, well, it wasn’t us. And they thought it was pretty silly.

And in this day and age, after what we have had happen, we

should be a little bit more vigilant and a little bit more checking

this stuff, and it has just gone backwards.

So actually the checking of the seals, the documentation, and—

because, like right now, you cannot—if a container pulls up to the

terminal, we are looking at the seal now with a camera, and you

can’t tell the number; you have to take the driver’s word for it.

And, unfortunately, you can’t go find out if that thing is—I did a

test with a news reporter up in our area about a year ago, and I

told them, and they said, well, what is the big hoopla about seals,

once they are sealed?

Well, there was a broken seal that had already been cut, and I

went over and put it on a container, used my chewing gum, put the

tip back on it and stood back and said, now look through your camera. Does it look like it is sealed? He said yes. So I went over and

popped it off. And when we were doing it, you know, you give it

a good yank and make sure and make sure the number matched,

all that stuff, and we would look for any abnormalities on that

stuff.

And we are just not doing that anymore, and that is the big concern, because, you know, people—like I said, people in there, if they

wanted to store something in there—but the seals and the empties

and probably the drivers that come, the truck drivers. A lot of

these guys are around the terminal, they are not—you know, they

are not monitored. And you get on a busy terminal down there and

you have got a couple thousand people rolling around there, it is

impossible, absolutely impossible to catch.

And the only time we come across, like I mentioned earlier with

the empties coming off the container ship, that is when I call or

have my members call Customs or Coast Guard, and they will respond. But we have to catch them. And on a busy day, you know,

like I mentioned before, the Coast Guard and Customs, those people are very thin; they can’t be at every port, they can’t be at every

ship.

And this is kind of like when—that is what we are down there

for. And with this training and stuff, you know, we figure, you

know, we are down there daily, we know who belongs or who

doesn’t, you know, and we are a valuable resource working with

the first responders.

To give you a quick instance of why we want to enhance our

training and be there to help is they had a ship fire up in Seattle,

and the Fire Department—I mean, it was an intense fire, and they

stood on the dock and they weren’t going to go aboard because

there was a container right on the middle of the deck and it had

placards on it. And they were waiting for that. They didn’t want

to get on board and have that thing blow up and then kill a whole

bunch of people.

And nobody knew what to do, but the longshore, one of our members had gone back up in the crane and hoisted that container out

of the fire, got it off the ship they were in. So this kind of brought

on our program, because I had worked with a lot of first responders

and like the fire chief says, he says, I don’t know how to drive a

crane and you don’t know how to drive a fire truck, but together,
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if there is an incident, an event, you know, we will make a hell of

a partnership. And that is kind of where our program has gone.

Mr. LOBIONDO. Thank you.

Mr. Scavone, if the acquisition of P&O ports by Dubai Port World

is approved, would Dubai Port World also have direct control over

stevedoring operations in these 16 additional ports?

Mr. SCAVONE. Yes. Well, P&O Ports, which would remain a place

as a U.S. company with U.S. employees operating in the U.S., yes.

They would be the ultimate owner of that company, about five or

six corporations up the chain.

Mr. LOBIONDO. And how does P&O Ports’ involvement at U.S.

ports where it operate terminals differ from its operation as a stevedore in the 22 U.S. ports?

Mr. SCAVONE. The 22 locations I think you are referring to, Mr.

Chairman, include the 6 where we actually manage terminal facilities. All this information is on our Web site and has been for a long

time. In most ports we serve purely as a stevedore, simply to remove the cargo from a vessel and put it down in the terminal.

But in those cases the terminal itself is operated by, for instance,

a port authority that is an operating port authority like Houston

or Norfolk, and that entity would be the one responsible for the security of the terminal facility and for the preparation of the facility

security plan with the Coast Guard; whereas, in places like Port

Newark, we also operate the terminal itself.

So in addition to stevedoring the vessel, we manage the terminal

facility and then it becomes our responsibility to agree with the

Coast Guard a facility security plan, which is primarily the access

controls to that facility for people and vehicles under the supervision and direction and enforcement of the Coast Guard.

Mr. LOBIONDO. OK, gentlemen, I thank you very much. It has

been very helpful and informative. We appreciate your patience.

And the Committee stands adjourned.

[Whereupon, at 1:37 p.m., the subcommittee was adjourned.]
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