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78–045 PDF 2002

S. Hrg. 107–309

WEAK LINKS: ASSESSING THE VULNERABILITY

OF U.S. PORTS AND WHETHER THE GOVERNMENT IS ADEQUATELY STRUCTURED TO SAFEGUARD THEM

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

DECEMBER 6, 2001

Printed for the use of the Committee on Governmental Affairs

(

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

JOSEPH I. LIEBERMAN, Connecticut, Chairman

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

THOMAS R. CARPER, Delaware

JEAN CARNAHAN, Missouri

MARK DAYTON, Minnesota

FRED THOMPSON, Tennessee

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ROBERT F. BENNETT, Utah

JIM BUNNING, Kentucky

JOYCE A. RECHTSCHAFFEN, Staff Director and Counsel

DAN FELDMAN, Counsel/Communications Adviser

JASON M. YANUSSI, Professional Staff Member

HANNAH S. SISTARE, Minority Staff Director and Counsel

JAYSON P. ROEHL, Minority Professional Staff Member

DARLA D. CASSELL, Chief Clerk

(III)

C O N T E N T S

Opening statements: Page

Senator Lieberman ........................................................................................... 1

Senator Levin .................................................................................................... 3

Senator Collins ................................................................................................. 15

Senator Cleland ................................................................................................ 30

Senator Bennett ................................................................................................ 33

Senator Thompson ............................................................................................ 36

WITNESSES

THURSDAY, DECEMBER 6, 2001

Hon. Ernest F. Hollings, a U.S. Senator from the State of South Carolina ....... 6

Stephen E. Flynn, Ph.D., Senior Fellow, Council on Foreign Relations and

Commander, U.S. Coast Guard ........................................................................... 10

F. Amanda DeBusk, Miller and Chevalier, former Assistant Secretary of

the Commerce Department and former Commissioner, Interagency Commission on Crime and Security in U.S. Seaports .................................................... 16

Rob Quartel, Chairman and Chief Executive Officer, FreightDesk Technologies and former Member, U.S. Federal Maritime Commission ................. 19

Rear Admiral Richard M. Larrabee, Ret., Director, Port Commerce Department, The Port Authority of New York and New Jersey .................................. 23

Deputy Chief Charles C. Cook, Memphis Police Department .............................. 40

Argent Acosta, Senior Customs Inspector, Port of New Orleans and President,

National Treasury Employees Union (NTEU) Chapter 168 ............................. 43

Michael D. Laden, President, Target Customs Brokers, Inc. ............................... 47

W. Gordon Fink, President, Emerging Technology Markets ................................ 49

ALPHABETICAL LIST OF WITNESSES

Acosta, Argent:

Testimony .......................................................................................................... 43

Prepared statement .......................................................................................... 127

Cook, Deputy Chief Charles C.:

Testimony .......................................................................................................... 40

Prepared statement .......................................................................................... 120

DeBusk, F. Amanda:

Testimony .......................................................................................................... 16

Prepared statement .......................................................................................... 93

Fink, W. Gordon:

Testimony .......................................................................................................... 49

Prepared statement .......................................................................................... 138

Flynn, Stephen E., Ph.D.:

Testimony .......................................................................................................... 10

Prepared statement with an attachment and slide presentation ................. 57

Hollings, Hon. Ernest F.:

Testimony .......................................................................................................... 6

Laden, Michael D.:

Testimony .......................................................................................................... 47

Prepared statement .......................................................................................... 133

Larrabee, Rear Admiral Richard M., Ret.:

Testimony .......................................................................................................... 23

Prepared statement .......................................................................................... 114

Page

IV

Quartel, Rob:

Testimony .......................................................................................................... 19

Prepared statement with slide presentation .................................................. 98

APPENDIX

Slide presentation by Stephen E. Flynn entitled ‘‘Bolstering the Maritime

Weak Link’’ ........................................................................................................... 80

Slide presentation by Rob Quartel ......................................................................... 107

Letter (with an attachment) to Senator Collins from Captain Jeffrey W.

Monroe, Director, City of Portland, Department of Transportation, dated

October 26, 2001 ................................................................................................... 142

U.S. Customs Service Optimal Staff Levels, Fiscal Years 2000–02, February

25, 2000 ................................................................................................................. 148

Classification of U.S. Customs Districts and Ports for U.S. Foreign Trade

Statistics ............................................................................................................... 285

Responses to questions for the record from:

Mr. Flynn .......................................................................................................... 248

Ms. DeBusk ....................................................................................................... 253

Mr. Quartel ....................................................................................................... 259

Rear Admiral Larrabee, Ret. ........................................................................... 270

Mr. Acosta ......................................................................................................... 275

Mr. Laden .......................................................................................................... 277

Mr. Fink ............................................................................................................ 282

(1)

WEAK LINKS: ASSESSING THE VULNERABILITY OF U.S. PORTS AND WHETHER THE

GOVERNMENT IS ADEQUATELY STRUCTURED TO SAFEGUARD THEM

THURSDAY, DECEMBER 6, 2001

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 9:08 a.m., in room

SD–342, Dirksen Senate Office Building, Hon. Joseph I. Lieberman, Chairman of the Committee, presiding.

Present: Senators Lieberman, Levin, Bennett, Cleland, Torricelli,

Collins, and Thompson.

OPENING STATEMENT OF CHAIRMAN LIEBERMAN

Chairman LIEBERMAN. Good morning. Thanks to all of you for

being here, particularly to Senator Hollings and our other witnesses. This is one of a continuing series of hearings that this Governmental Affairs Committee has held since the terrorist attacks of

September 11 which have examined the Federal Government’s ability to prevent, prepare for, and respond in the event of future terrorist attacks.

In some ways, we ask questions that some have been hesitant to

ask in the past, and I suppose some might wonder why we are asking them now—because they may reveal vulnerabilities. And yet,

if we do not ask them, we will not close those vulnerabilities and

we will be susceptible to further attack. I think all of us felt that,

unfortunately, after September 11, we have to start thinking more

like the terrorists do, and we are going to try to do it in a very

thoughtful and comprehensive way today and we have the witnesses here to make that happen.

Not since December 7, 1941, which is 60 years ago tomorrow, has

the question of our domestic security so dominated national debate.

The Committee has taken a hard look at whether the Federal Government is appropriately structured to meet those challenges. Specifically, we have held hearings on our aviation and postal systems,

on cyberspace, and more broadly, on the safety of our critical infrastructure and how we should organize for homeland security.

Today, we direct our attention to the security of the Nation’s 400-

plus ports through which 95 percent of all U.S. trade flows. The

picture, unfortunately, is not a reassuring one. U.S. ports are our

Nation’s key transportation link for global trade and yet there are

no Federal standards for port security and no single Federal agenVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 78045.TXT SAFFAIRS PsN: SAFFAIRS
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cy overseeing the 11.6 million shipping containers, the 11.5 million

trucks, 2.2 million rail cars, 211,000 vessels, and 489 million people

that passed through U.S. border inspections last year.

I just want to put an exclamation point there, that as I have

studied this more, I must say it surprised me. There are no Federal

standards for port security and no single Federal agency overseeing

port security. Port security is largely a matter of State and local

administration. The Coast Guard, the Customs Service, the Immigration and Naturalization Service, and other agencies all have a

role to play, but the plain fact is that the movement of goods into

the United States, five million tons a day, is now so efficient in the

sense of goods coming into the country and moving rapidly as a

matter of commerce to their destination that port security has been

sacrificed.

It is not possible to physically inspect more than a small sample

of containers as they arrive in the United States. Less than 1 percent are actually examined, and that leaves our ports, unfortunately, vulnerable to attack. And not just our ports. Containers arriving from Europe, Asia, or Canada are more likely to be inspected

at their final destination rather than at the arrival port.

I am sure that would surprise most Americans, but that is the

reality and it means that at any given time, authorities have virtually no idea about the contents of thousands of multi-ton containers traveling on trucks, trains, or barges on roads, rails, and

waterways throughout the country. The ease with which a terrorist

might smuggle chemical, biological, or even at some point nuclear

weapons into one of those containers without being detected is terrifying.

Even the physical security of ports is minimal. Last year, the

Commission on Crime and Security in U.S. Seaports reported that

of 12 of the Nation’s largest ports, 6 had perimeter fencing that

could be penetrated, 4 had no regular security patrols, and 10

never performed routine criminal background checks on employees.

The Commission said the state of security, ‘‘at U.S. seaports generally ranges from poor to fair.’’

The FBI told the Commission that ports were highly vulnerable

to terrorist attack, although at that time, they considered the

threat to be marginal. The assessment, of course, has changed

since September 11 and 2,000 military reservists have now been

activated to shore up port security.

Part of the overall problem, as is so frequently the case, is the

lack of resources to properly enforce port security. But, of course,

we are going to be dealing with that on the Senate Floor in the Department of Defense appropriations bill and the homeland security

funding that is part of that bill.

The Coast Guard, for example, has 95,000 miles of shoreline to

patrol but is at its lowest level of manpower since 1964. International trade has doubled since the mid-1990’s, but the number of

Customs inspectors has remained the same, just 8,000. The Federal

Government is also handicapped by a lack of coordination and communication between agencies.

I have heard that a ship with a—this is a hypothetical, but not

too improbable—a shadowy record of ports of call, for example, carrying a cargo that does not square with its home port and manned

3

by crew members on a watch list of people with suspected terrorist

ties might not necessarily raise any red flags, and that is because

the Coast Guard could know about the ship, Customs could know

about the cargo, and INS could know about the crew members, but

no one would necessarily have all that information, so the pieces

would not be pulled together to form a picture that would set off

alarms.

Even if resources and coordination were adequate, the front-line

agencies would still be handicapped by a lack of access to national

security intelligence from the FBI and the CIA. That is a complaint

that I have heard over and over again from local officials following

the September 11 attack.

The Committee is particularly pleased to welcome Senator Fritz

Hollings and to thank him for his leadership and dedication—lonely, most of the time—to pursuit of better port security in America

and the critical role that he has played in keeping this problem on

our collective radar screens over the years. I am very pleased that

he is with us today to testify about legislation that he and Senator

Bob Graham have written to respond to the vulnerability of our

ports. Their legislation, which I strongly endorse, addresses some

key findings and recommendations of the Commission on Seaport

Security. Our ports, goods, and citizens will be safer when it

passes.

I must say that the more that I study this issue, the more I realize how pervasive the problem is and how much work we have to

do on it to make sure that we get our entire system of importing

and exporting to a point where it is not only efficient, but it is also

safe. The entire commercial structure may need to be addressed

systematically, and as some of the witnesses we are going to hear

this morning will suggest, the best answer may lie in an entirely

new approach that relies on innovative technologies combined with

security inspections starting at ports of origin, rather than ports of

destination. I am going to be very interested to hear testimony on

that.

We may need, as one of our witnesses would put it, to push our

borders back and create sanitized shipping zones for goods bound

for the U.S. from overseas ports. We certainly need to put technologies to work so that containers can be electronically sealed and

alarmed after they are inspected, then X-rayed for a baseline

record of their contents. Global positioning satellite systems could

be attached to all containers to monitor shipments, and a secure

Internet tracking system could help place a shipment anywhere

along its path.

Fortunately, our ports are busy and they do not need a bail out.

They just need a sensible strategy to keep them safe and sound as

vital economic hubs, and I am hopeful that the testimony we will

hear today will help the Congress do just that.

Senator Levin.

OPENING STATEMENT OF SENATOR LEVIN

Senator LEVIN. Mr. Chairman, thank you. Thank you for these

series of hearings that you are holding that are really a comprehensive series, and I think perhaps the most comprehensive

4

look that is being given to our security issues in a whole host of

areas.

I also want to join you in welcoming Senator Hollings, an old

friend of both of ours, or a dear friend, I should say, of both of ours.

He has been, indeed, a leader in the subject that you are looking

at today.

We, who are on the Northern Border, are particularly very keenly interested in this subject. We have twice the Border as exists on

the South Borderand yet we have a small, tiny fraction of the security which exists there, and that is inadequate, and you will be

hearing more about that. The Northern Border receives about twothirds of the truck traffic, about 85 percent of the trains, a large

number of ships.

We have the longest coast, actually, of all the four coasts. People

sometimes forget that the St. Lawrence Seaway and the Great

Lakes is the longest coastline that we have in this country. We

have many ports of entry, lots of ships coming in from overseas,

and it is a major issue for us. The issues that the Chairman has

identified, are both the security issue as well as trying to move

trade, because when we have long lines of trucks, for instance,

coming into my home State and leaving my home State, with trade,

it means that our plants are not able to run as efficiently when we

have to wait 2 or 3 hours at a bridge or a tunnel. What you are

looking at today is mainly seaports, but I gather you are including

all ports of entry, and I think the third panel will be looking at

those, as well.

What you have identified, Mr. Chairman, one of the issues that

we are pushing very hard on is the reverse inspection issue. It

makes a lot more sense to be inspecting cargo before it lands at our

ports, before it goes through our tunnels, before it goes across our

bridges, because it could be too late. If someone wanted to attack

a port or a tunnel or a bridge, they would do so before they entered

our country, not afterwards, and they would do it in the process of

entering, not after they have entered.

So the reverse inspections that we are pushing so hard for, getting our Customs people to get involved in much more actively,

could be an important part of added security for our ports of entry,

including our bridges and tunnels. Some of the technologies which

the Chairman has identified are also very important and we must

put more resources into those technologies to identify threats to our

ports of entry.

And also, we need more resources. We have a huge shortage of

resources, particularly on the Northern Border, but I think that is

true on the South Border, and also on the East and West Coasts.

We have a large number now of temporary employees following

September 11. We have got to have permanent employees instead

of temporary employees. But we have both resource problems, technology challenges, and just plain common sense that push for those

reverse inspections that could provide so much greater security.

But while I must leave you, Mr. Chairman, I am very keenly interested in this subject. I want to again thank you for these hearings. I congratulate Senator Hollings for his usual steadfastness in

staying with an issue for so long, and I think that, finally, tragically, probably, because it took September 11 to wake us up, but

5

nonetheless, finally, I think we are going to get to the point where

Senator Hollings has been for so long.

PREPARED STATEMENT OF SENATOR LEVIN

It took the tragedy of September 11 and the subsequent need for heightened security along our borders to draw attention to what many of us have known for years;

there is an alarming lack of resources along our Northern Border. While much has

been done over the last decade to improve security on our border with Mexico, the

Northern Border has largely been ignored. For example, only 1,773 Customs Service

personnel are present at our border with Canada, while 8,300 protect our Southern

Border. Similarly, while 8,000 Border Patrol agents monitor our 2,000 mile Southern Border, only 300 are stationed at our 4,000 mile Northern Border. So, 96 percent of our Border Patrol agents are assigned to a border that is only half as long

as the one to which 4 percent of agents are assigned.

Although hugely understaffed, we process a large percentage of the country’s commercial traffic. The Northern Border has six of the top eight truck border crossings

in the country, including the number one truck border crossing, Detroit’s Ambassador Bridge. Our Customs officers on the Northern Border process 62 percent of

all trucks, 85 percent of all trains, and 23 percent of all passengers and pedestrians

entering the country each year. However, our Customs inspectors represent only a

small fraction of the currently deployed inspectors in the country, and their numbers have remained essentially static since the 1980’s.

The Detroit Region has half of all Northern Border crossing traffic yet has only

10 percent of the INS inspectors assigned to the Northern Border and 24 percent

of the Customs inspectors assigned to the Northern Border.

With this startling lack of resources, it’s no surprise that the new security measures at the border have a tremendous impact on our region’s economic well being.

Auto plants wait days for critical parts. Hospitals can’t perform vital services when

supplies and staff are trapped in long lines at the bridge and tunnel. We need to

find a permanent solution to the staffing shortfall at our borders so that we are able

to perform essential security inspections without causing unreasonable backups that

hurt our economy. We are grateful for the recent Federal commitment to increase

the number of National Guard at the Northern Border and are relying on them to

help protect our border and keep traffic and commerce flowing smoothly. However,

we need to move quickly to put permanent staff and technology in place.

Congress has taken some important steps to achieve this goal, but we are not

there yet. The FY 2002 Treasury Postal Appropriations bill provides an additional

$28 million for Customs to institute a Northern Border initiative including hiring

approximately 285 additional Customs officers. The Commerce Justice State FY

2002 Appropriations bill provides for $66.3 million for 570 new border patrol agents

across the nation and $25.4 million for 348 new land border ports-of-entry INS inspectors across the nation. Particular attention will be paid to the needs of the

Northern Border. Congress also tripled staffing levels for INS, Customs and Border

Patrol staffing on the Northern Border in the anti-terrorism bill. A portion of the

$40 billion emergency supplemental should also go to staffing up the security at our

Northern Border.

But improved border security involves more than just more money. It requires

changing policies and practices that don’t make sense. On November 13 I held a

hearing of the Permanent Subcommittee on Investigations to highlight an obvious

gap in our border security. The U.S. Border Patrol is the uniformed law enforcement

arm of the Immigration and Naturalization Service (INS) with the responsibility of

combating alien snuggling and illegal entries other than at ports of entry. The Subcommittee looked at how people who attempt to enter the country illegally at places

other than the official ports of entry are arrested and processed by the Border Patrol. When persons are arrested by the Border Patrol, the large majority voluntarily

returns to their country of origin, usually Mexico or Canada. The others, perhaps

as many as one-third of those arrested on the Northern Border, are given a notice

to appear at a removal hearing. The Border Patrol decides whether the person

should be detained, released on bond or, as is often the case, released on his or her

own recognizance while awaiting a hearing. This hearing can take several months

to occur.

In FY 2001 at the Detroit Border Patrol Sector—which encompasses all of Michigan—the Border Patrol arrested more than 2,100 people. A significant percentage

of these people were arrested while actually attempting to enter the U.S. illegally.

Most of these 2,100 were voluntarily returned to their country of origin. However,

more than one-third were given a notice to appear at a removal hearing. Reports

6

from Border Patrol agents indicate that the vast majority of the latter group were

released on their own recognizance pending their hearing. The INS wasn’t able to

tell us how many of the persons arrested in this situation and released fail to show

up for their scheduled hearing. However, by looking at related statistics and ballpark estimates, we estimated that the number is at least 40 percent and possibly

as high as 90 percent.

The conclusion is inescapable: The vast majority of people arrested by the Border

Patrol while attempting to enter the U.S. illegally who don’t voluntarily return to

their own country are released on their own recognizance. Most of those released

don’t show up for their removal hearing and little or no effort is made to find them.

As I said at my Subcommittee’s hearing, this is a dysfunctional and absurd system that makes a mockery of our immigration laws. When we release persons into

the county who are without an address, without ties, without any record of who they

are, we’re abdicating our responsibility to the larger community. This is a practice

that has to stop. On November 13, I asked the INS and Border Patrol to report to

me on the steps they plan to take to close these enforcement loopholes. If the response is unsatisfactory, I plan to introduce legislation to accomplish it.

There is much that needs to be done. Customs and INS officials shouldn’t have

to rely on temporary fixes—we need permanent workers and we need them now. We

also need to find a way to compensate our local law enforcement volunteers and secure funds for technology. We should also consider performing reverse Customs inspections of vehicles entering tunnels and crossing bridges on the Northern Border.

With the increased security risks to our nation’s infrastructure in the post-September 11 climate, it seems obvious that inspecting vehicles for bombs or explosives

AFTER they enter our tunnels or cross our bridges is illogical. To rectify this security vulnerability, we must work with our neighbors to establish a reverse inspection program to inspect vehicles before they have the chance to endanger or destroy

important transportation infrastructure.

And finally, we need to make common sense changes to our law enforcement and

immigration policies to ensure the safety of our people and the integrity of our laws.

We are an open and generous country and we welcome persons from around the

world who want to contribute their hard work to help build a better America. But

we also have a duty to protect ourselves and our country from people who would

do us harm.

Chairman LIEBERMAN. Thanks, Senator Levin. Thanks for your

involvement in this. Because I know of the great interest in Michigan about this, I look forward to the questions you have raised, and

to working with you on some responses.

Senator Hollings, thanks so much for being here.

TESTIMONY OF HON. ERNEST F. HOLLINGS, A U.S. SENATOR

FROM THE STATE OF SOUTH CAROLINA

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

and Senator Levin. I am grateful to the Committee for the chance

to appear here.

Let me ask consent that my prepared statement be included in

the record.

Chairman LIEBERMAN. Without objection.

Senator HOLLINGS. I will get right into the advance check. I,

frankly, had not heard of that, the concept of pre-clearance of cargo

in foreign ports. Let me say, Senator Bob Graham of Florida and

I, as you indicated, Senator Levin, we have been at it 3 years. We

started off really in looking into drugs and the drugs coming in in

containers. We were not thinking of explosives and terrorism particularly at the time. President Clinton, at our behest, put in a

study commission. The study commission, comprised of 17 Federal

agencies, made its report. We put in a bill in the last Congress

with no further success. We have one in in this Congress that has

been reported out of committee unanimously. And yes, we have

been working to advance that bill forward as well.

7

Along that line, the only reason for the hold-up on the floor is

OMB. Our Republican colleagues embarrassedly have to stand up

and object on account of costs. You can ship a container anywhere

into the United States for $5,000, and bring in explosives or chemical weapons. We had one terrorist that was picked up in Italy in

a marine container, he had a phone, a toilet, cooking and sleeping

equipment, and plans and security passes for some of the airports,

false documentation to get into any and every entry point into the

United States and everything like that. He was living in the container.

So either one can come in for $5,000, or you can get in the contraband needed to destroy our Nation. We have spent billions for

the threats from outer space and a ballastic missile defense system

but we do not want to spend port security. We know the cost of everything and the value of nothing.

This is an emergency situation. Let me, if the Committee will

please, read from an article in the London Times entitled, ‘‘Secret

Fleet Supplied Bombers,’’ published over a month ago. ‘‘Three years

ago, nobody paid much attention to a crew unloading a cargo from

a rusting freighter tied up on the K-side at Mubasa, Kenya. The

freighter was part of bin Laden’s merchant fleet and the crew was

delivering supplies by the team of suicide bombers who weeks later

would blow up the U.S. embassies in Kenya and Tanzania. Bin

Laden’s covert shipping interests were revealed at the trial of the

bombers, but until now, security services have been slow to track

down how many vessels he operates.’’ Well, we have tracked it down now and he operates over 20 vessels, but he could easily hijack an oil tanker he does not own. Some

company like Chevron, Exxon, or responsible owner’s tanker could

be hijacked and used as a weapon. You can operate one with four

suicidalists, or martyrs, and run it right into the Golden Gate

Bridge or the Brooklyn Bridge or any place in the United States.

So we are into an emergency situation and we have to go to the

50 largest ports, at least, and very quickly. There are some 361

ports, and let me join in, in support of the very comprehensive

opening statement made by the distinguished Chairman. He has

covered the subject. We have 361 ports, we have 50 major ports,

and we have got to really move forward as fast as we can to have

a plan of security there. Currently we don’t have Federal security

plans.

I think the big problem is that the whole thrust in port operations, and I used to operate one when I was a Governor and have

been a big supporter of port facilities and economic expansion and

everything else of that kind, but they are many splendored things.

Some are owned privately. We are getting one privately developed

right now in the State of South Carolina. Some are owned by the

State itself. We have a State Ports Authority, and some are owned

by the State Ports Authority but are leased out. For instance, the

largest carrier in New York, Maersk lines, leases major portions of

the port. Also associated in the operations of ports are the Customs

Service, the Immigration Service, the Drug Enforcement Administration, the local police, the Coast Guard, and everything else.

To show you the lack of attention we did have, and it was not

Admiral Loy, the Commandant, but another admiral was before

8

our committee just 3 weeks ago and we asked who was in charge

of security at the port. He said he did not know. Under law, the

Captain of the Port, namely the Coast Guard official, is really,

under present law today, responsible for the security of the port,

but it is joined in by the local FBI, DEA, all these other agencies

that I mentioned.

And what we really need and the thrust of our bill is to get them

all together and submit as judiciously and as expeditiously as possible a plan, to the Secretary of Transportation, a plan for security.

They are all required to do that in the measure. There is some $1

billion overall provided with respect to quadrupling Customs

agents and so forth at the port, buying the inspection equipment

for the screeners. To my knowledge, the best screening equipment

is down in Miami. That not only X-rays, but it scans the heat and

can pick up drugs and articles in there. They tell me down in Georgia they are producing one that can even do better than that.

It requires the ocean shipping manifests of cargo coming in, but

as I indicated, you can have a good check-off on an oil tanker, but

it can easily be hijacked and brought in, so there is still that threat

that has got to be taken care of, and we need maritime protection

and to establish greater controls of foreign vessels.

I would be glad to try to respond to any questions. We have to

get this bill out, and Senator Bennett, I was just saying our Republican colleagues embarrassingly have to object to it. I know they

are for port security, but OMB has got them putting up a hold.

Incidentally, Senator Levin, it also includes the truck traffic coming in and the rail security and other modes of transport. We are

trying our best to prepare the New York and Baltimore tunnels

and so forth. You are going to hear before we leave about Amtrak

and the tunnels over here in Baltimore, particularly going into

New York and Grand Central Station. Those kinds of things have

got to be cared for, or we will have problems.

So we are trying our best to clear it, and pass the bill through

the Senate, and ours was passed out totally bipartisan, unanimously from the committee, and I again, will be glad to try to respond to any questions you have.

Chairman LIEBERMAN. Thanks very much, Senator Hollings. So

the bill is on the calendar now?

Senator HOLLINGS. Oh, yes. It has been on the floor twice now

and asked for its consideration, but there has been objection and

my best look-see at it has been at the behest of the Office of Management and Budget on the matter of cost. Like I said, you can get

a container brought in that has 60,000 pounds and thousands and

thousands of those containers come in each day, largely unchecked.

Incidentally, you cannot find out the ownership of those containers or the ship. I have been working on that as well. Some are

owned by the Chinese, and we have got one port out on the West

Coast operated by the Cosco, a Chinese government controlled company. Others are operated out of Hong Kong. Some are holding

companies and everything else like that.

The biggest difficulty I am having at the moment on the safety

side of the equation at seaports is where the poor truckers that

come onto the port facilities there and they spend 2 hours trying

to get a safe container chassis, because nobody maintains the chasVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
9

sis. If they get an unsafe one that blows a tire, or has defective

lights, the patrolman pulls them over and they have lost their livelihood because they have gotten a fine and penalties to their driver’s license, and the poor truck driver trying to work around the

clock to feed his family has lost out. So he has to come there 2

hours early on the lot at the port itself trying to find something

safe, and we have been trying to get some kind of requirements

and everything at the port itself to check these things out. But, ultimately, the maritime business operates under a cloak of secrecy.

There are all kinds of problems, but the biggest is security, and

there is no idea of security. The whole idea is, move it. If we can

move it faster than New York can or some other port can, brother,

we are going to get the business.

Chairman LIEBERMAN. So we have a very efficient but insecure

system now at ports?

Senator HOLLINGS. Yes, sir.

Chairman LIEBERMAN. Is there money for port security in the

$7.5 billion homeland security component of the DOD appropriations?

Senator HOLLINGS. The amount that is in that homeland security

is only $50 million, but that will give us a good start to do the

planning.

Chairman LIEBERMAN. A beginning.

Senator HOLLINGS. Yes, sir.

Chairman LIEBERMAN. I wonder, before Senator Hollings leaves,

do any of my colleagues have a question?

Senator LEVIN. Thank you.

Chairman LIEBERMAN. Senator Hollings, thanks very much. We

look forward to working with you.

Senator HOLLINGS. I thank the Committee very, very much.

Chairman LIEBERMAN. We will share the results of our hearing

today with you, and once again, we thank you for your leadership.

Senator HOLLINGS. Yes, sir.

Chairman LIEBERMAN. Do either of my colleagues have an opening statement, Senator Bennett or Senator Torricelli?

Senator BENNETT. No thank you.

Chairman LIEBERMAN. Let us go to the first panel, then, and I

am going to call Commander Stephen Flynn of the U.S. Coast

Guard, who is now a Senior Fellow of National Security Studies at

the Council on Foreign Relations, to go first.

In a very real sense, although I suppose we would have eventually found our way to port security as a result of this series of hearings, Steve Flynn’s testimony before this Committee on the subject

of homeland security really educated and alarmed us, and I think

he has become something, at least in my mind, of the Paul Revere

of 21st Century port security. So I do not want to work out whether

the terrorists are coming, but they will come unless we raise our

guard at the ports.

So I am going to give you a little more time than the 5 minutes

because I know you have a presentation. I think it may frame a

lot of the rest of the hearing. Go right ahead.

10

1The prepared statement of Mr. Flynn with an attachment appears in the Appendix on page

57.

TESTIMONY OF STEPHEN E. FLYNN,1 PH.D., SENIOR FELLOW,

COUNCIL ON FOREIGN RELATIONS AND COMMANDER, U.S.

COAST GUARD

Mr. FLYNN. Thank you very much, Mr. Chairman. It is a real

honor to be back in front of you again today to talk about this very,

very serious issue, and I certainly commend you, sir, for hosting

these hearings, because at the end of the day, I think we are talking about not just trying to protect the American people from potentially another catastrophic terrorism event, but we are also talking here, as well, about the sustainability of global commerce, because how the terrorists do their work may force us to respond in

a way that could sacrifice the movements of peoples and goods that

are so essential for us to continue to prosper.

We saw that in the week immediately following September 11,

when the United States had to do what no Nation could do to it,

which was essentially to impose a blockade on its own economy.

What we did was not just ground our aircraft, but we closed most

of our major seaports and effectively sealed our borders with Canada and Mexico, and we did that because we did not have much

confidence that we had the capacity to filter bad from good in all

those flows coming our way.

We started the engine back up again and we have done a good

scrubbing on the aviation side, but in my view, the aviation sector

is the virtual Fort Knox of security by comparison to the other two

sectors. The maritime and surface sector continue to be extraordinarily vulnerable, and we really have not come to grips with

those issues.

I would like to talk a little bit about that, because I think what

we have to take is another lesson from the September 11 time

frame, is what we saw here is not a singular event by a single

crazed individual or a network of individuals. I believe, as I think

some others in the national security field, which I am a part, believe that what we witnessed on September 11 was really how warfare will be conducted in the 21st Century. What this means is that

at the end of the day, regardless of what goes on in Afghanistan

now, and it looks to be a very successful campaign, is that, essentially, we are only defeating the terrorists of the moment.

The United States may be an unrivaled power in terms of global

military and economic and cultural reach, but the fact of the matter is, there are limits to that power. There will always be corners

of the world for terrorists to hide in or failed states or failing states

that have corners in their rural countrysides or mega-cities.

So we have to begin with the assumption here that there will be

for the foreseeable future anti-American terrorists with global

reach; that, second, they will continue, because of the age we are

in, to have access to weapons, including chemical and biological,

that could lead to a catastrophic terrorist attack here on U.S. soil;

and we also have to conclude that terrorists and our adversaries

who cannot take us on frontally in a conventional way because they

will lose in that enterprise, that are thinking about attacking

America asymmetrically, whatever their mode may be, will be inVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
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1 Copies of the slide presentation by Mr. Flynn entitled ‘‘Bolstering the Maritime Weak Link,’’

appears in the Appendix on page 80.

spired by what happened by September 11, inspired because these

folks made it look easy, and equally inspired and more soberly, perhaps, by the amount of particular economic disruption they have

caused as a result of that single attack.

We have to realize at the end of the day that terrorism is not

about just killing people or toppling buildings. There is military

utility to engaging in a terrorist act if you can generate societal

and economic disruption that weakens the power of your adversary

and forces it to change its behavior. That is why, militarily, you

would decide to engage in an attack in the way that we saw on

September 11, or what I worry about, alternatively, potentially exploit or target our other very open and vulnerable systems.

What we saw on September 11, I believe, is the exposure of the

soft underbelly of globalization. That is the very thing that has

made America so successful and prosperous, our global reach and

the networks that feed energy and labor and transport goods and

people. It is also a system that remains extremely vulnerable.

The best way, I think, to illustrate that problem, and not just in

our ports but in the broader issue, and I think this is the important

point, I guess, I hope to leave, is that we cannot think about our

transportation sector in isolated nodes. Unfortunately, our government is constructed that way. We look at surface, aviation, rail,

and we divide it up and we often make these modes compete with

one another for resources. The fact is, it is a network that allows

for global commerce to move and global travel to move and it is almost interoperable in today’s world. We call that intermodal.

The best way to illustrate, though, our current security measures, I would argue, is by taking a look at the container problem

that you have mentioned this morning, Mr. Chairman. Let me try

to illustrate it a little bit more.

Of course, we are talking about these 20-foot, 40-foot boxes that

are so ubiquitous I think so few of us pay any attention to them.

They are hurtling down the highways. They are on rails. They are

on ships. We drive by them. But we think things so often that show

up in Wal-Mart just magically appear there from a back room.

They, of course, come from all corners of the world and they come

to us via those containers. We are talking about, in 1999, they represented about 80 percent of all general cargo, but today, the numbers look to be well over 90 percent of general cargo that comes

into the United States transoceanic comes in a container.

[A slide presentation was shown.] 1

Mr. FLYNN. Now, a little over a year ago, I had written in foreign

affairs and I brought this up here as a way to illustrate this, a scenario where I put this man’s face up and I said, if I had been a

consultant to bin Laden, he had done this little job on one of our

embassies, but instead, what he might alternatively want to do, as

I suggested, is to buy a company that had been moving ceramics

in the New York area for the last 30 years and then load that out

of the port of Karachi and the container would perhaps move on,

like you see these throughout the Asia area here, one of these conVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
12

tainer movement operations, just from a barge that gets on one of

these rusty freighters.

And we bring it to a place like Hong Kong. This is just one of

five major terminals in the Port of Hong Kong. It is getting almost

cartoon-like as you see the numbers. We are talking about 1.1 million container movements a month in the Port of Hong Kong. They

are going to be loaded on something like perhaps the Virginia

Maersk. This is a 6,600 TEU. If you can imagine, that is right

there 3,300 railroad cars, 3,300 18-wheelers that are sitting not

just on top there, but in the hull of that ship. That could be loaded

in under 30 hours in Hong Kong.

And it would steam for Long Beach, perhaps, and then, because

it is going to Newark, it would probably travel in bond. That means

we would unload it right from the pier and it would go onto a rail

car, like this, and it would head into the inland of the United

States. Our Customs inspection system is built to inspect—it is

confusingly called the port of entry, but it is basically the point

where it enters the economy, which in this case would be Newark.

So it would be the Customs inspector in Newark who would actually have responsibility to examine the manifest and to ultimately

look at the container when it got to Newark.

Chairman LIEBERMAN. And that would be the first American to

do so?

Mr. FLYNN. That is right. It would go directly from the ship. Customs could, if alerted, stop it, of course, in the port of arrival, but

the routine is to allow it to move directly in and move it. And so

it may travel through a place like Chicago. I have—you do actually

see passenger freight, on that bridge there coming through is one.

If I had a chemical weapon with a GPS transponder on it, I could

set off that device. And what I would have done is, before anybody

knows what is in the container and where it is from, I would have

caused, obviously, a real catastrophic event near a major population center where—and this is a major rail hub, of course, near

the airport, and that would be very disruptive.

Now, let us imagine we just had some of that, even on a smaller

scale, and it led America to ask the question, how do we know

what is in these boxes? And I think most people would be rather

mortified to realize that we do not really have real command on

that. There are upwards of 500,000 entities out there that can load

boxes around the world. There are 40,000 freight forwarders that

load the box, seal it with a plastic seal, typically with a number

on it, and then it is off to the races. It goes from any where in the

way I just illustrated onto a ship and is coming here. And then the

verification is a Customs function done again at the port of entry.

Now, we would then say, well, gee, if we do the inspection at the

port of entry, what happens if there was a bomb in there that was

triggered when you opened it up? If we take—and this, by the way,

is sort of a rail yard. It gives you just a sense of what we are talking about trying to manage and sift through.

But let us take the Port of Newark, for instance, and Admiral

Larrabee will talk a little bit more directly about this here. This

is the biggest container port, of course, on the East Coast, but this,

I think, is a very important picture for us to realize what we are

talking about.

13

Let me step up perhaps and point out, these are the container

terminals here. This is an aerial view of Newark International Airport. I call this an intermodal moment. In a mile, you have container ships coming in off-loading. This is actually one of the major

rail hubs that spiders off to the Northeast and the rest of the continent, along with the New Jersey Turnpike, along with the Newark International Airport. So we inspect the container in Newark

and it turns out to be a bomb. Where is the plume going to go? I

think we could imagine where it could go.

Out of that would be, I think most folks would suggest, let us not

open the box and inspect it in Newark anymore. We do not want

any uninspected boxes coming in. So, therefore, I guess we do not

have any boxes coming into Newark. Forty-million people within

200 miles would have a very disrupted market as a result.

So I lay that out as a sense of what we are talking about is not

just simply that we have a vulnerability and that somebody could

bring something in and cause disruption, but really, this is again

about the sustainability of global commerce. How we respond and

are set up to respond to this threat could, in fact, itself have real

ripple effects.

Out of those scenarios, I think there are three key things that

we have to have in regard to the hearing today. First is that seaports cannot be separated from the international transport system

to which they belong. Ports are really just, in essence, nodes in a

network where cargo is loaded or unloaded from one mode, a ship,

into other modes—trucks, trains, and on occasion, planes. Therefore, seaport security must always be pursued against the context

of transportation security, and this has been very difficult because

we have been taking this rather balloon effect approach to it.

Second, the port security initiatives must be harmonized within

a regional and international context. One of the major ports for the

Northeast is Montreal and Halifax. They bring in about a million

containers between the two of them, half of which come into the

United States. If you only regulated ports inside the United States,

you may push some of these problems offshore into Canada, Bahamas, Vancouver, or even into Mexican ports that could come online

here. So we have to be talking about this network not just within

the U.S. domestic context, but also overseas.

Finally, since U.S. ports themselves are perhaps America’s most

critical infrastructure, they should not be viewed as the primary

line of defense in an effort to protect the U.S. homeland. They are

essentially the last line of defense.

Now, the fact that seaport security must be considered within

the broader transportation logistic context that includes ports outside U.S. jurisdictions has obvious implications for how the U.S.

Government is organized to safeguard them. First, I would argue

we have three major structural impediments.

One is that the agencies with responsibilities for a specific transportation mode rarely communicate with their counterparts in the

other modes. In fact, there is a pervasive culture of competition

among the modes, often reinforced by the Congressional advocates,

I think most rather dramatically illustrated just this last couple of

weeks, when the House has decided to bankroll additional airport

security by taking $60 million out of the supplemental monies

14

promised the U.S. Coast Guard to pay for port security. It’s a little

bit, from my view, here of the classic horse leaving the barn and

closing the gate afterwards on that one.

The security challenge associated with seaports is not just one

posed by conveyances, ships, but the operators, passengers, and

cargoes on those ships. So we have a complicated problem of we

have to get a handle on people, we have got to get a handle on conveyances, and we have got to get a handle on goods. But people is

an issue of consular affairs. That is State and INS. Goods are U.S.

Customs, USDA, and FDA. Ships and the non-land side of the

ports are Coast Guard, but the land side is a smorgasbord, depending on what port you are here, of local, State, and private entities.

And then there are the trucks. About 10,000 trucks come into the

Port of Newark each day, entirely unregulated activity.

And then, finally, since the jurisdiction of most of these agencies

runs out at the water’s edge, they tend to approach the regulatory

enforcement issue with some strictly domestic contest or framework, rather, than an international one, and the international security community pays no attention to this problem.

So that is the state of affairs we are in, in a very quick framework, as I think many of the witnesses can fill in the blanks. But

I think the key here, I hope that this illustration provided highlights the importance of not thinking that we can achieve homeland security in this regard at home. We have to be looking at this

as a network and for what it is, which is one that moves overseas.

Our ultimate objective should be, go to the point of origin, and

how we get to this is, I think, first, with some standards about how

one gets to load a container, who gets to load it, and the process

that is done. It has to be done in a sanitized way. Standards have

to be identified in that and pushed through, whether it is the International Maritime Organization or the World Customs Organization, to say, if you stuff a box and you want to be off to the races

to come to a port in the United States or in any of the other large

ports in the world, you have to meet some basic requirements, and

if you cannot do it there and we cannot feel comfortable with that,

you have to restuff the box at a place that we feel comfortable that

we know what is there and that there is a trusted partner who is

doing that loading.

Second, when it is loaded, we want you to track it. We want you

to know where it is. This is sort of what I call in-transit visibility

and accountability, using technologies like GPS and electronic transponders and so forth. As soon as it leaves the factory, it goes from

there to the terminal and we can account for it every step of the

way.

There are two purposes for in-transit accountability and visibility. One is ideally to deter it. There is not much time for a bad

person to bring something in. But most importantly, as well, is that

when you have intelligence that there may be a compromise, which

is perhaps the only way we are going to find, in many instances,

a problem, it becomes actionable intelligence, that you can pinpoint

immediately where the problem is and go in and, working with the

carrier, you will be able to identify and figure out where the best

way to manage that compromise might be.

15

Then the terminal operator itself would have to have accountability of the box. That happens as a matter of routine in most

places. And then the ship mills where it is, and then the same on

the receiving end when it is loaded off, and in the case of in bond

shipment, again at trails along the way.

Then we have this complete control, sanitized control, and if that

is done with the technologies and the cooperation—and the final

piece is sharing data about who and what you are up front to allow

agencies to assess that against any watch list they may have—if

you do those three things, security up front, in-transit visibility and

accountability, and the sharing of data, you get the easy trade lane.

We are going to move you quickly, which makes sense from a security standpoint, because goods that rest often are most vulnerable

to crime. So you actually have a security incentive, not only a market one, to accelerate if you can be confident up front.

That is why I am confident this is going to be workable if we

think in these terms, because we can really—it has always been a

false proposition in my view, openness versus control. Without control, the whole system is in jeopardy. That is what we saw on September 11. With smart controls, there actually is a national security rationale to fix things that have been broken for a long time,

agencies that have paperwork requirements that make no sense or

that are duplicative and redundant, bottlenecks in infrastructure

that should not be there. We need to fix that from a security standpoint, and that, I think, parades an opening for this to be dealt

with, not just here at home, but also overseas.

Thank you very much, Mr. Chairman.

Chairman LIEBERMAN. Dr. Flynn, thank you for an excellent

opening statement. The country is fortunate that you have had the

practical and academic experience you have had and you have

brought them together at a time when, post-September 11, we need

that very much, so I look forward to questioning you.

I am pleased to say Senator Collins is sitting today as the Ranking Republican Member of the Committee, and I think it is appropriate that I ask her now if she would like to make an opening

statement before we go on to the other witnesses.

OPENING STATEMENT OF SENATOR COLLINS

Senator COLLINS. Thank you very much, Mr. Chairman. I apologize for being a few minutes late for the hearing.

I want to thank you for convening this important hearing. Coming from the State of Maine, as I do, the vulnerability of our ports

is of particular interest and importance. Our seaports are as important in the war against terrorism as the safety of the food we eat

and the security of the planes we fly in. With more than 95 percent

of our imports flowing through our ports and with millions of passengers and maritime containers passing through them with only

limited inspections, we must have a far better security system in

place than we do now.

Correspondence that I recently received from Captain Jeffrey

Monroe, the Director of Ports and Transportation for Portland,

Maine, makes the need for better port security very clear. Captain

Monroe, in commenting on the security of our ports, put it bluntly.

‘‘Our local, State, and Federal agencies were, in many cases, ill preVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
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1The letter from Captain Monroe with an attachment submitted by Senator Collins appears

in the Appendix on page 142. 1The prepared statement of Ms. DeBusk appears in the Appendix on page 93.

pared for September 11 and the coordination of information and effort was almost nonexistent,’’ he wrote. Captain Monroe’s letter includes a series of specific recommendations and I would ask that

this correspondence be made part of the record.1

Chairman LIEBERMAN. Without objection.

Senator COLLINS. Since September 11, the Coast Guard has expanded its patrols in Portland’s harbor and has increased its surveillance of ships entering the port. But given the volume and the

lack of personnel, this is a daunting and exhausting task. We must

improve coordination between Federal, State, and local agencies, as

well as the private sector. We must have highly trained and a sufficient number of employees. We must have a clear chain of accountability to achieve port security.

It is evident that we have a great deal to do and I am very

pleased that the Chairman has assembled such a distinguished list

of witnesses to assist us in this goal today. Thank you, Mr. Chairman.

Chairman LIEBERMAN. Thanks, Senator Collins. I really look forward to working with you on this. I think this is an area where

the Committee together can make an important contribution and

I thank you for that excellent opening statement.

The next witness is Amanda DeBusk, now with Miller and Chevalier, former Assistant Secretary of Commerce, former Commissioner, Interagency Commission on Crime and Security in U.S.

Seaports. Thanks so much for being here.

TESTIMONY OF F. AMANDA DeBUSK,1 MILLER AND CHEVALIER, FORMER ASSISTANT SECRETARY OF THE COMMERCE

DEPARTMENT AND FORMER COMMISSIONER, INTERAGENCY

COMMISSION ON CRIME AND SECURITY IN U.S. SEAPORTS

Ms. DEBUSK. Thank you very much. I am honored to be here

today. I am speaking to you as a former Commissioner on the

Interagency Commission on Crime and Security in U.S. Seaports.

President Clinton established the Commission by executive order

on April 27, 1999. Senator Bob Graham was particularly instrumental in the Commission’s establishment. I served on the Commission as the Commerce Department representative in my capacity as Assistant Secretary for Export Enforcement. The Commission issued a report in August 2000 with 20 findings and recommendations. I would like to highlight those that are most important for this Committee post-September 11.

Let me provide some background. One of the underlying concerns

was how wide open our seaports are compared to our airports. In

most cases, there is free access to the seaports. The Commission

found that significant criminal activity was taking place at most of

the 12 seaports that we surveyed. At many seaports, it is legal to

carry firearms, so criminals with arms may have access to terminals where passengers embark for cruises.

Concerning cargo, because of misreporting and lack of reporting,

no one knows in a timely fashion, if ever, what is in those containers at our seaports. One of the cases my former office invesVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
17

tigated involved a riot control vehicle that was exported to China

as a fire truck. The vehicle, it was a huge thing. It resembled a

tank. It had a turret on top for spraying pepper gas all around. It

was all boxed up in a container and at the time of export, no one

knew what was inside the container and so it was exported as a

fire truck.

The Commission approached the crime and security problem

with the possibility of terrorist activity associated with the new

millennium. Thankfully, nothing happened.

At that time, the FBI considered the threat of terrorism directed

at any U.S. seaport to be low. However, even though the threat

was low, the FBI considered that our vulnerability to attack was

high. The Commission found that the state of security at seaports

generally ranged from poor to fair, with a few exceptions where security was good.

We looked at fundamental activities for combatting terrorism,

protective measures, crisis management, and consequence management. These activities require comprehensive interagency coordination. They involve law enforcement, intelligence agencies, emergency response agencies, and if needed, the military. Outside the

Federal context, coordination is needed with the State and local authorities and the private sector.

Today, I would like to highlight recommendations in four areas

relevant to this Committee: Enhanced interagency coordination,

physical security at the ports, better and more timely information

about cargo transiting the ports, and increased use of technology.

First, we need better interagency coordination. There are 361

seaports. Most ports are chartered by States or local government.

Some terminals are operated by public port authorities. Others are

private. There is no central Federal authority. There are at least

15 Federal agencies with jurisdiction at the seaports. In addition,

there are State and local agencies and the private sector. Every

single group is important for combatting terrorism and has something to contribute, but coordinating these groups is a monumental

undertaking. Perhaps a Department of National Homeland Security could play a leadership role in this coordination.

The Commission found that there needed to be a comprehensive

and definitive statement of Federal responsibility. The Federal

Government needs to conduct threat assessments to determine

where the threat is greatest and where we urgently need preventive measures. The Federal Government should strengthen coordination to more effectively address terrorism. It should work with

all stakeholders. Key information available to the Federal Government should be disseminated to others, as needed.

Let me provide an example of where better coordination would

be useful. The FBI has excellent regional counterterrorism task

forces that consist of Federal, State, and local agencies. However,

at the time of our study, these groups did not focus on the seaports.

They should do so.

S. 1214, an amendment to the Merchant Marine Act, has some

good proposals on establishing local port security committees.

Second, the Commission found that we need better physical security at the seaports for both vehicles and people. At many ports, access is virtually uncontrolled. At one of the ports I visited, we saw

18

a line of vehicles that was parked right beside the vessel. We were

told that these were the dock workers’ vehicles that were parked

there for convenience. At the time, and as Senator Hollings alluded

to, we were trying to figure out if this is someplace where drugs

could be hidden for things coming off of vehicles, or coming out of

containers and being stashed into the vehicles. But now what we

have to do is think about the possibility that these vehicles lined

up right beside the vessels might contain a car bomb or even a

‘‘dirty nuclear weapon’’ that could be hidden inside them.

Many ports do not have ID cards for personnel. I observed all

sorts of people that were milling around at dockside. There was no

way we could tell who should be there and who should not. The

Commission found that at one point, pedestrians could freely walk

through the purported access control points without even being

questioned. We did not even want to contemplate a group of terrorists taking over a cruise ship, but it is a possibility.

Training of security personnel is also a problem. Many seaports

use private security personnel who lack crime prevention and enforcement training.

The Commission recommended developing regulations to create a

secure area where passengers board and disembark vessels. We

also recommended proceeding with an INS project to manage risk

with respect to both passengers and crew. We recommended creating shared dockside inspection facilities so that all relevant agencies have ready access to conduct inspections. The Commission

called for the establishment of minimum guidelines for physical security, such as fences, lights, gates, restrictions on vehicle access,

restrictions on carrying firearms, the establishment of a credentialing process so you would know who is supposed to be there, considering criminal background checks for those with access to sensitive areas of the port, and development of a private security officer certification program. S. 1214 moves in the direction of these

recommendations, but it does so through voluntary security guidance. The Committee should consider making some of those requirements mandatory.

Third, we need better information about cargo transiting the

ports. On the import side, information is often vague and import

entries may be filed 5 days after arrival. On the export side, information tends to be very general, with descriptions like ‘‘general

merchandise’’ that really do not tell you anything, and is required

10 days after export. One of the concerns with providing earlier

and more detailed information is that it would allow specific cargo

to be targeted for theft by those with access to the information, and

this concern needs to be addressed.

Fourth, we need better technology at the seaports. Better technology is needed for a whole variety of applications, which include

X-raying containers, using computer systems to target cargo associated with high-terrorist risk, collecting data on crimes at seaports,

and providing real-time information for tracking high-risk cargo

and personnel.

In sum, the Commission said, ‘‘A terrorist act involving chemical,

biological, radiological, or nuclear weapons at one of these seaports

could result in extensive loss of lives, property, and business, affect

the operations of harbors and the transportation infrastructure, inVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
19

1The prepared statement of Mr. Quartel with attachments appears in the Appendix on page

98.

cluding bridges, railroads, and highways, and cause extensive environmental damage.’’ We need to take action now to reduce the risk

of future catastrophes.

Thank you for inviting me here today to testify on this important

subject.

Chairman LIEBERMAN. Thank you, Ms. DeBusk, for excellent testimony, which, unfortunately, continues to paint a harrowing picture as I listen to it.

Rob Quartel is our next witness. He is the CEO and Chairman

of FreightDesk Technologies and a former member of the U.S. Federal Maritime Commission. Thanks for being here.

TESTIMONY OF ROB QUARTEL,1 CHAIRMAN AND CHIEF EXECUTIVE OFFICER, FREIGHTDESK TECHNOLOGIES AND

FORMER MEMBER, U.S. FEDERAL MARITIME COMMISSION

Mr. QUARTEL. Thank you, Senator. The last time I think I saw

you up close was about 6 or 8 months ago at Sutton Place Gourmet, and I cannot remember what you were buying—— [Laughter.]

But I would observe that probably half of what you and I bought

came in on a container. The meat probably came from Australia.

The flowers and other vegetables probably came from Latin America, and so on and so forth, so this is a problem that is right here,

wherever you are, every day. You are standing there in the middle

of the system. It is probably a good thing you cannot remember

what I was buying.

Chairman LIEBERMAN. I certainly cannot remember what I was

buying.

Mr. QUARTEL. I know that what I was buying was something fattening.

Chairman LIEBERMAN. Senator Collins and I were saying, I wish

I could say it was all American, but I am sure it was not. [Laughter.]

Mr. QUARTEL. But that is the beauty of the system——

Chairman LIEBERMAN. Yes.

Mr. QUARTEL [continuing]. The fact that we are able to access all

these markets worldwide, whether they are food, whether they are

the subcomponents of manufacturing. That is really what makes us

efficient as a country and contributes to the national economy.

I would like to thank you for the invitation. I have got a quick

slide show, and because of the time, what I am going to do is kind

of truncate some of this and really kind of talk to the slides.

But I think based on Commander Flynn’s and Ms. DeBusk’s

statements, this is really a scary issue and I would like to make

one point of policy that I think the Committee ought to adopt,

which is very straightforward. Every container destined to either

land in or go through the United States, and the last point is really

important, in my mind should be treated as a potential weapon of

mass destruction, every ship that carries it as a delivery device,

and every port as a potential target, and that suggests several

things.

20

1 Copies of the slide presentation appears in the Appendix on page 107.

First, it suggests you cannot let a terrorist container get into the

port. The port is the target. You saw the map where you had everything within a mile there in the Port of Newark, which, by the way,

is what makes that a very efficient port, because you can switch

from mode to mode to mode, whatever happens to be the most efficient way to do it.

It also suggests you cannot let it on a ship, and so one of the concepts I would like to talk to today is the notion of pushing the border back electronically. Ms. DeBusk talked about the fact that we

collect a lot of data. Every part of the process is documented. This

slide I am going to talk to in a minute shows the complexity of it,

but you need to bear in mind that everything in the process is documented.

From the time it is purchased, a buyer or seller transaction creates a purchase order that says what it is, how many you want,

the weights, eventually all the rest of that, to the trucker who

picks it up, to the train who moves it, to the ship that carries it,

to the train that delivers it, or truck in the United States, all of

that is documented in a series of documents. What does not happen, as Ms. DeBusk said, is that it does not all get there to Customs or anyone else early. It gets there strung out across the process.

[A slide presentation was shown.] 1

Mr. QUARTEL. This first slide really is intended to talk to the

issue of complexity. The international trade process is hugely complex. It is not like domestic trade, which goes from point to point.

You have in every single trade 20 to 25 involved parties, whether

they are the buyer, the seller, the transportation modes, all the

rest of those. You have as many as 30 to 40 documents. You have

a couple of hundred data elements. The messages all arrive in a

variety of different kinds of platforms, some electronic, some fax,

some by E-mail. But it is a tremendously complex process.

Admiral Loy has pioneered a concept called Maritime Domain

Awareness, and I think that is very relevant to this port issue here.

By the way, I also would ascribe to what Commander Flynn said

earlier. I view the port as really too late. In my mind, the port is

the least of the problems. Yes, you have to protect the port. Yes,

you have to protect the physical integrity of it. Yes, you have to

have all the security measures. The real problem is at the beginning of the cargo. That is where you have to interdict it.

I would take Admiral Loy’s thought and actually press it a little

further. I really suggest that there are five domains in international trade. The first is the origin of the cargo. In manufacturing today, you might have a company that does virtual manufacturing in Asia, where they will have 20 different factories that are

all subcomponents of the process. It starts in one. It moves by

truck to another. It moves by truck to another, by train to another,

and another to another to another, literally that many, and then

is assembled in one place and forwarded to the United States. So

that is part of the process that includes inland transportation, all

of the parties engaged in manufacturing.

21

The second, at the port of loading. And on this chart, by the way,

one of the things I have done is just very quickly, and it is not necessarily 100 percent accurate, I did it on a plane in the middle of

the night the other night, is to talk to some of the agencies on the

issue of where some of their authorities might lie in the process,

U.S. Government agencies, and also, as has been said earlier, these

authorities tend to be sort of stovepiped. They are aimed at a specific part of the process. That is really all they can do under the

law.

The second part of it is in transit. There are a number of protective things you need to do there.

One of the things from end to end, of course, is visibility. Companies are going to that, to tracking the cargo, though tracking is not

nearly so pervasive as we seem to think it is, based on when we

go to the web, we seem to know where everything is. One of the

reasons is that much of what we think of as being tracked is in

FedEx packages, typically air freight, which is different than ocean

and land, which are in containers.

The fourth is the port of discharge, which is really, I think, the

point of the hearing today.

And then finally, multiple destinations.

If you want to figure out what is happening to a cargo, you really

need to know what it is, where it came from, where it is going to,

who has touched it, what did they do with it, what did it cost, who

paid for it, and that is all the kind of data that is collected in a

system.

The information process itself provides an attraction because, if

you work at it, you can hide the transaction. This really kind of

talks to the issue of how cargo moves. Forty or more days before

it gets here and just in time, you may have a buyer-seller transaction. They generate a letter of instruction and a commercial invoice.

On this slide, the red documents are reported to Customs. It goes

to a warehouse. It finally gets to a ship and the ship creates a master bill of lading. A single container might contain as many as 10

or 20 different cargoes. It may be 10 containers which are the same

shipments, they are all the same thing to the same manufacturer.

Containers are not just packed by one person. They may be packed

by multiple people. You have people at each end who consolidate

what is in a container. You have people at the other end who

deconsolidate it and send it off in a bunch of different directions.

Carriers generate documents. Throughout the process today, you

typically have an intermediary, a freight forwarder or a customs

broker or a third-party logistics provider. That, by the way, is one

place that I think in the future we need to focus some of our thinking about how you manage the process for the government, because

they are the ones who typically handle the paperwork as well as

the financial documentation. You have additional carrier reporting

at the end. And then, finally, you have another set of documents

generated.

What I would like to suggest to you is today, we tend to think

of the border at the bottom there as being the physical border

where the ship comes in. The concept I would ask the Committee

to consider is to push that border to the top of the page between

22

the warehouse and the port of embarkation and to do that electronically.

The next two slides—this is a sample of the kinds of data that

comes out of the documents that are generated in a typical commercial transaction. By the way, when a ship lands in the United

States, it drops off 40,000 documents.

Chairman LIEBERMAN. Forty thousand?

Mr. QUARTEL. Documents for 6,000 containers. So that is my 10

to 20 to 30 documents per container.

Chairman LIEBERMAN. And who gets those documents?

Mr. QUARTEL. Customs gets some of them. The shippers get some

of them. Letters of instruction and financial letters go off to the

people who handle that. So there is a lot of data. That is one of

my key points to you. This is not a new process. Part of what we

have to do and the opportunity here is to manage the data process,

and we can talk to that.

If you go across this, you can get everything I am talking about.

You can find out—and this is the other part of it, is another 60 different elements. You could find out who paid for it, what it is, what

it weighed, where it was coming from, how it went, by truck on the

way, on the way back, the ship. If you go to the ship, you can actually tell what was going with it side by side.

Now, the process I would like to suggest to you—I am going to

go actually one slide further and then come back. The process I

would like to throw at you for your consideration is a kind of

profiling process. You create a commercial database from the kind

of data which is currently provided by the commercial sector, some

of which goes to the government and some of which does not, and

some of which should not go to the government because it is essentially competitive data. But you can create a commercial database.

We already have a database and bases of government data. The

Coast Guard, for example, has what is called a fusion center, where

they fuse conceptually data from a variety of different kinds of law

enforcement sources. Right now, that data is not always compared

against each other and it is certainly not compared when a cargo

originates.

What I would suggest to you is that you create a new process,

perhaps driven by Customs, in which you collect the commercial

data, you collect the law enforcement data, and you run it through

a decision algorithm which basically says, well, what is wrong with

this? Is it—and I can show you back here two slides—is the cargo

something that is said to be coming from a place where it is not

manufactured? Is it steel coming from Romania, where they do not

have a steel factory? Is it coming from Afghanistan but going to the

heart of New York? Is it something going by a nuclear power plant?

If you go through the documents, and this is just kind of an example of it, you can actually see where you can find these anomalies, and while I am not an expert in the mathematical profiling

aspect, I do know a lot about the data management process. But

there are people who are expert in profiling and we are dealing

with some of those and I have been working with the National Defense University, which looked through some of this, who create

the kinds of algorithms which can help you decide, and we use

some of this today with drug enforcement, but not to this extent.

23

1The prepared statement of Rear Admiral Larrabee appears in the Appendix on page 114.

Chairman LIEBERMAN. Mr. Quartel, excuse me, but you have

gone beyond the 5 minutes now—— Mr. QUARTEL. I am sorry. I am going to finish right now.

Chairman LIEBERMAN [continuing]. So if you can begin to think

about wrapping up.

Mr. QUARTEL. I am done, virtually.

Chairman LIEBERMAN. That was good timing.

Mr. QUARTEL. Thank you.

Chairman LIEBERMAN. Thanks very much for very thoughtful

and helpful testimony, which we will look forward to questioning

you on.

Our final witness on this panel is Richard Larrabee, who is a retired Rear Admiral of the U.S. Coast Guard and now Director of

the Port Commerce Department of the Port Authority of New York

and New Jersey, so a person with great experience and right in the

middle of the topic that we are discussing today. Thanks so much

for being here.

TESTIMONY OF REAR ADMIRAL RICHARD M. LARRABEE,1 RET.,

DIRECTOR, PORT COMMERCE DEPARTMENT, THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY

Rear Admiral LARRABEE. Mr. Chairman, thank you. Members of

the Committee, good morning. Thank you for the opportunity to

testify this morning.

I have provided written testimony and would ask that that would

be placed in the record.

Chairman LIEBERMAN. It will.

Rear Admiral LARRABEE. What I would like to do is just take a

couple of minutes in the interest of time to touch on some of the

things that the prior testimony has talked about, but do it from a

ports perspective.

Mr. Chairman, as you said before, the ports of this country are

a vital intermodal link in our transportation system and a large

part of our economy. The Port of New York handled about three

million containers last year, about 560,000 automobiles, and over

30 billion gallons of petroleum products, the largest petroleum port

in the United States. That system, as the Chairman suggested, is

based on speed, reliability, and cost, and we are living in a ‘‘just

in time’’ society where the movement of those goods are critical.

On the morning of September 11, the Port of New York and New

Jersey was closed. It was closed by the Coast Guard captain of the

port. Other law enforcement agencies were involved in that decision, but it was done in a very orderly way. There was a tendency

in the port from one perspective to keep the port closed because of

the fear of the threat of terrorism. On the other hand, the pressures that Commander Flynn talked about of keeping commerce

moving were obviously part of that discussion.

Because petroleum resources were going low, because of a shortage of other supplies that would normally come through the port,

we felt a great deal of pressure to open the port up as quickly as

possible, and on the morning of Thursday the 13th, we reopened

the port with a large number of security measures in place—all

24

ships boarded by the Coast Guard at sea, all manifests, both cargo

and crew manifests, checked, tug escorts into the port, and an extensive cargo inspection program by both Customs and Coast

Guard and other law enforcement agencies, a heightened level of

activity in terms of spot checks and patrols in the port.

That level of activity, along with an extensive effort by the Coast

Guard to protect vital assets of the Port of New York and New Jersey, certainly was an extraordinary effort on the part of all of those

Federal agencies, but it simply was not sustainable, and today in

the Port of New York, we are seeing far fewer resources doing

those kinds of things when today the level of our security might

have to be higher than it was perhaps the day after September 11.

I want to talk just briefly about this notion of who is in charge,

because we certainly heard Senator Hollings talk about that. I

think we have other models that we can look at. In my own experience, I can tell you that in the wake of Exxon Valdez, the U.S. Senate and the administration at the time certainly supported efforts

to improve that system. The end result was OPA 1990, and since

that time 10 years ago, we have seen a dramatic decrease in not

only the number of spills and the size of spills, but an increase in

our ability to respond. One of the key issues in that legislation was

answering the question: Who is in charge?

As it was suggested this morning, I believe the Coast Guard Captain of the Port currently has the jurisdiction to do a number of

things that we have heard about. Perhaps his position needs to be

strengthened, but I believe the Coast Guard is in the right position

to manage both the prevention and the response to an incident like

the one we are talking about this morning.

We have heard an awful lot about this notion that perhaps the

greatest threat in one of our ports is not a large tanker hitting one

of our bridges but the entry of a weapon of mass destruction using

our very efficient container movement system, and there is no

question about that.

I believe that last week, Admiral Loy, the Commandant of the

Coast Guard, addressed the Assembly of the International Maritime Organization and proposed that a working group be established to look at port security and terrorism, specifically at the

issues of cargo visibility and accountability. We certainly support

the Coast Guard’s proposal and believe that the IMO is one of

those appropriate forums to address the issues of international concern, and I think there certainly are parallels in this area, too.

The shipment of hazardous materials these days is a process that

has seen dramatic improvements over the last 20 to 30 years.

Today, the kinds of accountability and responsibility of moving

those kinds of materials certainly gives us opportunities to look at

parallels when it comes to moving other cargoes.

We have heard a little bit this morning about this notion that

communications is the foundation of coordination, and certainly

there is a real need to share intelligence and threat assessments

among the Federal, State, and local agencies, and I would have to

say to you this morning that as Director of the Port of New York

and New Jersey, I am not in a very good position today to tell you

whether our measures that are underway right now are adequate

25

for the threat that is out there. We simply are still not sharing the

kind of threat assessments that I think need to be in place.

Chairman LIEBERMAN. That is a very important statement. Forgive me for interrupting, but I hope we all listened to it. That is

an unacceptable situation. You just feel you are not getting the intelligence information you need?

Rear Admiral LARRABEE. As Senator Hollings said, this is a system that really is being managed day to day by the private industry, and it is not only the Port Authority, but more importantly,

terminal operators and shipping lines which need to be brought

into this circle and be made more aware of what the threats are

and what they can be doing in a practical way.

I think there is a need for standards, and Senator Hollings

talked about that this morning. My Port Authority Board is asking

me what I should be doing and my answer to them is—I am waiting for Federal legislation. We desperately need to pass the Hollings bill in the very near future and I would ask you to support

Senator Hollings’ efforts.

Just to conclude my statement, this is a system that, as you have

heard this morning, is the responsibility of an awful lot of people,

whether it is the paperwork or the number of agencies involved or

the number of hands that move this particular cargo. It simply is

a system that requires the diligence and responsibility of an awful

lot of people. We believe that there are ways to make the system

more secure. We believe that we have to do that.

We are very appreciative of the kind of support that we have gotten from agencies like the Coast Guard, the FBI, and Customs, and

we are very hopeful that you are going to be able to give them the

kind of resources that they are going to need to do their job.

Finally, I want to thank Senator Torricelli and others for supporting us in the local New York area. Supplemental legislation

has been passed, and I know, for one, we are going to be getting

some extra resources in the port in order to improve our security

level. Thank you.

Chairman LIEBERMAN. Thanks, Rear Admiral, for very helpful

testimony from a particularly important perspective.

Let me focus in on this question of coordination. It is a fascinating and, in many ways, troubling picture, even from an organizational point of view. And again, as I said in my opening statement, when I got more into this, I was surprised to be reminded

that there is no Federal coordinating role here, that the ports are

State and locally overseen, that there is a lot of private interests

involved. Ports in Connecticut, for instance, most of them are

owned privately, the harbor facilities.

Give me a sense of what happens at a typical port, either privately owned, and/or locally regulated. Are there Federal agencies

present at the major ports? Are they coordinating now? Maybe,

Rear Admiral Larrabee, you could give me a picture of what is happening at a typical port of entry.

Rear Admiral LARRABEE. Well, I do not think there is any question that there is a great deal more coordination today than there

was on September 10.

Chairman LIEBERMAN. Yes.

26

Rear Admiral LARRABEE. The boardings that I talked about that

the Coast Guard is conducting, vessels are being boarded on a priority basis based on an analysis of that vessel and what sort of

threat it might pose to the port 96 hours before the vessel arrives,

and my understanding is that both Customs and the Coast Guard

and INS are looking at cargo manifests and crew manifests, ports

of destination, and making decisions about whether or not to board

and what to look for. So that is there.

Chairman LIEBERMAN. Is that the universe we are talking about,

Customs, Coast Guard, and INS, of Federal presence at the ports?

Rear Admiral LARRABEE. I think, for the most part, that covers

all of the issues that we have talked about this morning.

Chairman LIEBERMAN. Let me then ask what can be done to either facilitate better communications between the front-line agencies in securing our ports, and more broadly, whether you think

there is a need for active Congressional involvement here through

legislation to create some kind of new overarching Federal organization to be concerned about the ports and to guarantee coordination. Ms. DeBusk.

Ms. DEBUSK. Yes. First to answer your question, I do think there

is a very strong need to have an umbrella to coordinate all this,

perhaps through homeland defense.

Let me just sort of give you a little vignette of what happens

there. You have 15 Federal agencies with some sort of authority at

the port, and——

Chairman LIEBERMAN. Fifteen, well beyond the three I mentioned.

Ms. DEBUSK. Absolutely.

Chairman LIEBERMAN. Just name a few more.

Ms. DEBUSK. You have the Commerce Department and you have

the Agriculture Department, you have the Food and Drug Administration, you have all these, and let me just take a few of the older

ones that you do not necessarily think about, like EPA, for instance.

Let us just take the Agriculture Department. They would perhaps know how to be on the lookout for contaminated food coming

in. Let us just think about a terrorist who decides to sprinkle a little cyanide in all the Cheerios, right. They would know how to be

on the lookout for that, but that is not the expertise of the Coast

Guard.

In my former office, Export Enforcement, we knew how to target,

to look for things that might be used for weapons of mass destruction or chemical or biological agents. But again, that is not the job

of the Coast Guard. The Customs folks, they know how to look very

well for the drugs that are coming in or going out. That is one of

their specialties, and obviously the drug trade supports terrorism.

But again, no one is bringing all these pieces of the puzzle together and I think there is a strong need for perhaps the Office of

Homeland Defense or some other body to be able to do that.

Chairman LIEBERMAN. Dr. Flynn, I know that you and Mr.

Quartel are asking us to consider pushing the border back, a very

interesting idea which I know the Committee will want to get to

in a few moments. But what about the border where it is, even if

you push it back? What do you suggest from your experience and

27

work as to what we should do, if anything, to facilitate better communications and coordination among the 15 Federal agencies and

the State and locals and privates involved to guarantee a more secure and efficient situation?

Mr. FLYNN. Let me say, Senator, that while I am talking about

pushing the border back, that we think about this problem as one

that starts much farther away than our border. I am not calling for

the end of the border.

Chairman LIEBERMAN. Right.

Mr. FLYNN. That is, it is really a series of concentric circles that

to the best of our ability, we put the most intensity at the origin

point and then the number of inspections narrows down as we have

to get to our own entry because of the volume and velocity issue

that we face here.

What is clear is that we need a general pool of data, and there

was an effort that Customs was involved with in the former administration to create what was called the International Trade Data

System that would bring all the kinds of things that Mr. Quartel

outlined there all in one pool and allow the agencies to shop within

that data.

Most of what we find is things also, as Mr. Quartel talked about

here, is this anomaly detection, the things that do not make sense,

a high-value good going on a slow boat to China originating from

a place, as he said, that does not make steel. And so what you need

there is this data up front and you need it in a pool, and ideally

you also would be housing people together.

We have models for this in the drug world. We have the EPICs,

the El Paso Intelligence Center. We have similar efforts in Jonestown and so forth here. But what we have learned here is that just

to try to take that small segment of high-risk drugs, we really have

to now think about all general cargo as at risk, as it always has

been, and it is not just for narcotics, of course. Now it is human

trafficking, but especially this concern with weapons of mass destruction. So there are various useful models of how we bring data

and infuse it that is brought out of the drug world. We just need

to expand, in part, upon that.

But we rushed with some legislation here right after September

11 to put more primary inspectors. You look at everything, you see

nothing in this business, and we all know this from those people

with the glazed eyes who look at the X-ray machines as the luggage goes by. That is not the way to do it. You have to be smarter.

And so the challenge here is analysts, well-trained people who

know their segments and markets—and this issue of information

sharing is huge. I am almost confident, for instance, that Rear Admiral Larrabee has not been given a clearance and it would probably take him about a year or two, perhaps, to get a security clearance. He was a former flag officer in the U.S. Coast Guard that has

been doing this for years and we cannot find a way to clear him

into a system to share intelligence that would be useful for him as

a decision maker and a manager at work here. These stovepipes

are huge and have to be addressed.

Chairman LIEBERMAN. Well said. My time is up. Do you have a

clearance?

28

Rear Admiral LARRABEE. No, sir. I had a clearance, but I have

not gotten it back yet.

Chairman LIEBERMAN. Yes. Senator Collins.

Senator COLLINS. Thank you, Mr. Chairman.

Commander Flynn, I understand from my staff that through discussions that they have had with Rear Admiral Naccara that you

have been involved in developing a Northern New England Border

security project. Could you tell me about that project and whether

you think it would help solve some of the coordination and communication problems that we have heard about today?

Mr. FLYNN. Sure. This is actually spawned out of the State of

New Hampshire, and Governor Jeanne Shaheen actually took a

real leadership role and interest on this.

This is obviously a real concern by most of the Northern States,

and Senator Levin was here as well, about the hardened border

and what that would mean. In the New England context and

Northern New England context, this is about the Port of Montreal

and Halifax, as well. About half the containers coming to Halifax

and Montreal come into the United States. So getting a handle on

the cross-border trade is central without a kind of hardened, sealed

border approach.

The notion here is that I was very excited to hear in terms of

this interest in New England, and I think it is something that we

need as a model overall. We have to do some experimentation, and

I think the way this is done is some delegation by the headquarters

here to regional commanders, such as Rear Admiral Naccara and

the Regional Director of Customs and let them work with the governors and private sector, trusted partners, and with their counterparts across the border in the provinces and the ports in Halifax

and begin to do this process of vetting legitimate players and finding ways to expedite their movements, applying some of these technologies.

Ideally, we will find some companies up there who will want to

play. There will be some resources found to test some technologies

and you bring together INS, Coast Guard, and the other players,

FDA and so forth, to try to get a handle on this.

So what there seems to be, I know she has contacted Governor

King in Maine and Governor Dean in Vermont and there is interest, I think, in Massachusetts, and I have been up in Ottawa last

week, in fact, testified before their House of Commons on this

issue. There is real interest on the other side of the border to try

to come to arrangements where—this, I think, is so important.

What we are trying to do here is not just find the needle in the

haystack bad thing. What we are trying to do, as well, is to take

the legitimate trade and travel and validate it as such we can set

that haystack aside. That way, even if we had something as horrific as happened on September 11, we do not have to stop that

flow. We know what it is. We do not have to stop those people, stop

that train.

And so part of our efforts should be not entirely driven towards

finding that one needle, but it should be focused on how to take the

vast majority of legitimate goods, validate as such, so even if a terrorist attacked, we do not have to disrupt that. Thank you very

much.

29

Senator COLLINS. I think it is interesting that at every single

hearing we have had, no matter what the areas we are looking at,

we find that agencies are not talking to one another or not sharing

information or there is a lack of coordination. That is the common

theme, whether we are talking about immigration policies or airports or our seaports. It does seem to be something that ought to

be able to be solved.

Ms. DeBusk, I want to ask you about a comment you made about

having voluntary standards for port security. You expressed some

concern that voluntary standards might not be enough. What particular standards do you think need to be made mandatory rather

than leaving it up to the individual ports?

Ms. DEBUSK. Firearms would be an excellent example. I do not

know why you would want anyone with firearms to just be strolling

around at the port, so I do not know why you could not just say,

no, you cannot have firearms at the port, as opposed to see if ports

want to have—you put out a guideline that says it is better if you

do not have firearms at the port. That would, to me, be a perfect

example.

Senator COLLINS. Mr. Quartel, I am very intrigued by the notion

that both you and Mr. Flynn brought up of pushing the borders

back. If we can inspect at the point of origin, it seems to me that

really is the way we have to go, because if we do not inspect until

the container gets to the United States, and we know we do not

inspect most of them in any event, it is too late in many cases.

Assuming we could get agreements from countries and companies to have a system that pushes the borders back, do we have

the technology that would allow us, once a container is inspected,

to electronically seal it and alarm it and have a monitoring system?

I am just unfamiliar with the technology in this area. Does that

exist now?

Mr. QUARTEL. Some of that technology exists, and I think one of

the later panels is going to be talking to the specific physical aspect

of technology. If I might, I think what I would like to conceptualize

for you, though, is a non-physical means of inspecting, which is

really, I think, what we are suggesting to you here.

In the hierarchy of things you want to do, you want to first

screen a cargo electronically. You know the data. You can funnel

out 80 percent of it just by knowing with some certainity that they

are good people, they are good companies, they have security in

place, you know they maintain it. Then you go to a scan. There are

passive scans. There is an issue there of the cost, which you will

probably hear about later, and we cannot mandate that a foreign

port use it. Then you go to search, and then you go to actually seizing it. So it is screen, scan, search, stop, basically.

There are technologies for the physical control of the process.

They are a lot more expensive than most people can actually afford

to introduce across a system of 40-some million containers worldwide.

Senator COLLINS. Thank you, Mr. Chairman.

Chairman LIEBERMAN. Thank you, Senator Collins.

Senator Cleland, good morning.

30

OPENING STATEMENT OF SENATOR CLELAND

Senator CLELAND. Thank you very much, Mr. Chairman, and

thank you for having the hearing today. Thank you, panelists, for

coming.

I would just like to follow up on Senator Collins’ observation. I

am on the Commerce Committee as well as this Committee.

Whether we are talking about aviation security, bus security, port

security, rail security, homeland security, it does seem to us that,

and to me as I connect the dots, that we are talking about three

basic bugaboos: Coordination, cooperation, and communication between and with Federal agencies. Now, that is no rocket science

there, but it is coordination, cooperation, and communication.

I have been briefed on the Dark Winter exercise, the attack or

presumed attack by smallpox on the country, and Senator Nunn

played the role of the President with the Johns Hopkins mock attack on smallpox back in June. That exercise was called Dark Winter, and Senator Nunn, who was in this body for 24 years, former

chairman of the Armed Services Committee, said, as President, as

he got into the mock exercise, he found himself becoming more and

more impatient with bureaucracy. What he was running across was

the lack of coordination, cooperation, and communication.

[The prepared statement of Senator Cleland follows:]

PREPARED STATEMENT OF SENATOR CLELAND

Mr. Chairman, as a Senator from a State with several ports, I appreciate your

holding this hearing today.

I am also a member of the Senate Commerce Committee, which has oversight of

our Nation’s seaports. I welcome our chairman, Senator Hollings, here today to tell

us what the Commerce Committee has done to help secure the Nation’s ports. I supported these efforts, and voted for S. 1214, the Port and Maritime Security Act of

2001. Given the 2000 Report of the Interagency Commission on Crime and Security

in U.S. Seaports which found that security at U.S. seaports ‘‘generally ranges from

poor to fair, and, in a few cases, good,’’ there was not time to waste after this country realized its vulnerabilities on September 11.

S. 1214 contains several provisions that I believe would help strengthen port security. The bill calls for a vulnerability assessment at our ports, and the review of this

assessment should involve all relevant authorities for each port, which usually includes local, State, and Federal officials. At the Nation’s 50 most economically and

strategically important ports, the vulnerability assessment would be updated on a

regular basis. The Department of Transportation would develop procedures for

screening passengers, cargo and crew members at maritime facilities, and those employed at security sensitive jobs at ports would have to undergo criminal background checks. Attempts would also be made to work with foreign ports to assess

security vulnerabilities abroad, which is an important part of this equation. Also,

S. 1214 authorizes loan guarantees and grants to help fund security improvements

and upgrades. This bill provides for funding of research initiatives to develop technology for detection of chemical and biological agents, which is vitally important as

we continue to hear of the potential that terrorists may have access to ‘‘dirty’’ bomb

materials. Unfortunately, there have been some Senate colleagues who have blocked

consideration of this legislation despite the efforts of Senator Hollings and others

to bring this bill to the floor. I am hopeful that we will be able to address this bill

soon.

Since September 11 was not an attack on our ports, it is difficult to raise this

issue with the public in order to have the public demand action. But, the facts point

to the need for better port security: 95 percent of foreign goods enters or leaves by

ship, only 1-2 percent of cargo containers are inspected, and the U.S. has 95,000

miles of shoreline. In Georgia, over 12 and a half tons of cargo on over 2,500 vessels

entered our State ports during fiscal year 2001. I must be able to reassure my constituents and all Americans that the vast amount of material entering the U.S. via

ship is safe. How do I do this under the current regime? I hope to get some answers

today from our panelists.

31

Senator CLELAND. Now, how do we improve that? I just want to

ask some basic questions based on the fact that I have a State

which has two major ports, Brunswick, Georgia, and Savannah,

Georgia. As a matter of fact, Brunswick is very close to the Trident

nuclear submarine base at King’s Bay, which stores nuclear weapons. That has been a real eye-opener to see how the lack of security

at Brunswick, the Port of Brunswick, impacts, say, a nuclear sub

base just to the South and how the nuclear sub base has had to

take extraordinary measures just to protect its nuclear weapons.

I will say first, Mr. Commander, since the President says we are

at war and the Coast Guard is supposed to be under the Navy, coordinated by the Navy in wartime, are we remiss by not having the

Coast Guard under the Navy so at least at a nuclear submarine

base like King’s Bay, you have the coordination built in because the

Navy is in command of the Coast Guard and the Coast Guard could

help out with the protection of nuclear weapons? I just throw that

out to you.

Mr. FLYNN. Sure, Senator. The cooperation between the Coast

Guard and Navy has always been ongoing. Of course, even the

Vietnam War, the Coast Guard was actively involved in the Vietnam War. We did a lot of river patrols and so forth, but we never

felt officially under the Department of Navy in that instance.

Today, in fact, you have the CND offered to Admiral Loy naval

assets to assist the Coast Guard in this new war, that is, helping

in the patrolling, giving some Naval patrol craft to help the Coast

Guard do its mission. You already have a Maritime Defense Zone

Commander who is a Coast Guard Commander who is dual-hat

and works with the Atlantic Fleet Commander.

So I am not worried about the ability for the Coast Guard to

work with the Navy in an integrated way. I am more worried and

concerned about the rest of that tapestry.

What we know about these terrorists is that they are blending

into the real estate. They are blending into the day-to-day movements and trying to look as legitimate as possible, whether it is as

a fisherman or a charter boat or whatever might be on the water,

or that their commerce blends into legitimate commerce, and we

are trying to get a handle on the people, the conveyances, and the

cargo and have a sense of being able to fuse the details of that in

advance.

The Coast Guard will have some knowledge about the conveyance, in this case a ship. That actually works. Our intelligence people sit with the Office of Naval Intelligence and the Navy works

closely with that, as well, in tracking those.

Customs will know about the cargo and INS will know about the

people, and obviously Consular Affairs, who give the visas, will

know about the people. The FBI and CIA will have the backlist.

The challenge here, just to illustrate quickly, though, is—I heard

this from a Customs agent who was involved with designing a scenario, he said, last April that followed this weapon of mass destruction, the container, and it was built out of—the FBI had given Customs some information about a household goods from Asia which

actually had a dirty bomb in it and it was going to be arriving in

New York on the Fourth of July. This had to go up to headquarters

to get scrubbed before they used it. It got kicked back initially.

32

They said it was unrealistic because the FBI would never give the

information about the household goods being contaminated to the

Customs organization.

Senator CLELAND. May I just interrupt? Mr. Chairman, we have

run across this with the CDC—— Chairman LIEBERMAN. That is right.

Senator CLELAND [continuing]. A couple of times—and we just

had the Postmaster General here—we have demonstrated in hearings that the FBI, once it gets hold of the anthrax letters, whether

it is Senator Daschle’s letter or Senator Leahy, does not send it to

the CDC. It sends it to Fort Detrick, Maryland, who does it, and

Fort Detrick, Maryland, looks upon that as the FBI as a customer,

so they are not going to tell anybody, and the FBI does not tell anybody. Therefore, the CDC winds up in the dark and ultimately

gives bad advice to the Postmaster General about a Postal Service

entity one step removed from Daschle’s office while two people are

dying at Brentwood.

The point is that it is not healthy for the right hand to not know

what the left hand is doing. Again, coordination, cooperation, communication. So I just want to get your take on whether the Coast

Guard, since the President said we are at war and the Coast Guard

in wartime is under the Navy, ought to be under the Navy, but

that is not your concern. Your concern is working with the other

entities, right?

So let me move on to Ms. DeBusk. You mentioned the possibility

of the fact that there is no central authority, controlling authority,

in terms of port security in America. You mentioned the creation

maybe of a Department of Homeland Security. As a matter of fact,

that is exactly what the Hart-Rudman Commission recommended

over a year ago, that an entity, an agency with budgetary authority

and troops, people, infantry to command, be instilled in our Federal

Government to coordinate this kind of thing.

Instead, we have an Office of Homeland Security with 18 people.

Tom Ridge is a good guy, a fellow Vietnam veteran, but I doubt

that 18 people are going to go up against 60 different agencies. So

we still are left with the challenge of coordination, cooperation, and

communication.

Any thoughts about what this Committee ought to do in furthering our strong interest in strengthening an Office of Homeland

Security or creating a Department of Homeland Security?

Ms. DEBUSK. Yes, and I think you have already answered the

question and that is resources. The only way you really get good

coordination is through resources to back it up in addition to

jawboning and saying, let us all talk together.

The resources would come in for basic things like computer systems that talk to each other. There is a lot of good will in the agencies. They like to cooperate. For instance, my former office got

along excellently with the Customs Service, but we did not have

the same database for going back and forth on the computer system with the information.

And so I think in terms of getting coordination and the concept

of pushing back the border, it only works if there are resources

that would be committed to doing things like letting the agencies

talk to each other over the computer system.

33

Senator CLELAND. Thank you very much. My time is up.

Just to highlight, I mentioned this in the Commerce Committee,

I will mention it here, that Georgia Tech in Atlanta has developed

a little chip, a little glass sensor to pick up biological and chemical

agents, which might be helpful in this war against terrorism and

detecting early on what is in some of these containers.

Thank you very much, Mr. Chairman.

Chairman LIEBERMAN. Thank you, Senator Cleland. That is very

interesting. You know, you are right. Something is going on here,

and probably my colleagues on the Committee have had the same

experience I have, which is that a lot of complaints from local officials about difficulty in working with the Federal intelligence agencies and the FBI. I wonder if the Committee might not have a role

to play in calling in the agencies, either in a public or private session, and talk about this problem. The examples that you just gave,

Dr. Flynn, and I think it was Rear Admiral Larrabee gave another

example earlier on, they are just not acceptable, because you are

now—ports are now the front lines, so we have got to arm you with

the information to protect us.

Senator Bennett.

OPENING STATEMENT OF SENATOR BENNETT

Senator BENNETT. Thank you very much, Mr. Chairman, and for

your pursuing this continued issue. In the spirit of full disclosure,

I am going to be very shameless in pushing my bill.

Chairman LIEBERMAN. It would not be the first time that has

happened around Congress. [Laughter.]

I was not speaking of you, but it has been done in Congress before.

Senator BENNETT. Right. In July, the Defense Threat Reduction

Agency, DTRA, gave me a top secret briefing on air vulnerability

analysis of the Port of Baltimore, and, of course, the members of

the panel might not know, but my hobby horse, my focus here is

on critical infrastructure protection generally, but the computer

portion of it more specifically.

Some people say to me, well, why are you focused on computers

because homeland defense, homeland security involves so much

more than computers. I will give you an example that I use in

speeches. With the ability that currently exists for hackers and others who want to get into computers, this is not a theoretical. This

has happened. Someone got into the computer system at a dam and

was in a position to control whether or not the floodgates would be

opened or closed. Downstream from the dam was a military installation which would have been flooded and destroyed had the hacker

or activist or whoever it was decided to open the floodgates.

So when you think of homeland security and you want to protect

the military installation, or fill in the blank, put in whatever you

want, downstream, you want to protect the facility downstream, it

was the vulnerability of the computer that made that possible.

And as I sit here and listen to all of you describe your frustrations and your problems, I realize that we cannot stovepipe port security away from the issue of computer security. You talk about

anomalies, Commander Flynn and Mr. Quartel, you wanted to look

for an anomaly in the situation, suppose I was the individual loadVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
34

ing that dirty bomb in a place where it would not show up, should

not show up, and that would be an anomaly that would immediately appear on a computer screen somewhere. And prior to

learning that, I break into the computer system and change the

data so that the data that comes says this is not an anomaly. This

really is woolen goods or cotton goods or something coming from an

agricultural country, and yes, it has an unstable political background, but these are T-shirts that we do not need to worry about

because I have changed the computers to have the information that

comes to you say it is T-shirts.

And when we talk about the theme that Senator Cleland talked

about and Senator Collins talked about of not talking to each other

and not getting the proper analysis, we come back to the fact that

I have heard several of you say a very large portion of the ports

are under private control, and unless we pass a law that requires

private people to give us all of the information as to what is happening in terms of the threat on their computers, which law does

not exist now, again, shamelessly, we need to pass my bill which

says they can voluntarily share that information with a common

analysis center in the government without worrying about a FOIA

request being filed by Osama bin Laden saying, I want to know

what the private sector is telling the government about my attempt

to break into their computers.

So, as I say, shamelessly, I am laying this out. Now, I would like

your responses to that and your comments about that and see if I

have misread some of your testimony about vulnerabilities here.

Mr. QUARTEL. I actually have not read your bill, but I like what

you are saying. In the specific example—by the way, I have also

a port story. I was at the Port of Los Angeles Tuesday afternoon

and they had a similar story to this one about information sharing.

There are reasons for not information sharing, which we know,

firewalling various kinds of data. But there are also ways to share

data by tapping databases electronically without violating all of

these other provisions, which I think is what you are talking about.

No terrorist is going to tell you he has got 20 tons of nitrate

kinds of fertilizers and a $80 GPS and a $3 blasting cap that he

is going to load through there. There is a hierarchy of responses.

Data by itself will not tell you anything.

Customs today has a program they call BASC, for example,

which they use in the drug process, where they work with trusted

parties, people who have procedures in place where they seal and

load and they know the people there, they have security as to who

the people are, so they can actually certificate across the process

and that helps them speed it.

So while you use data to look for anomalies and suspect situations, you also do what Steve Flynn was saying, which is you also

can channel big chunks of that out. If it is a Cisco, for example,

they may have a procedure in place that you cannot load a nuclear

weapon or a dirty bomb in any of their systems. So maybe those

cargoes go through faster.

There may be small players in the business who can also get

through that process. In fact, most of our cargoes that come from

Asia have a lot of small players, so we actually have to deal with

the real world as it really is.

35

If I have one message to the Committee beyond that I have already said, it is that what we should do is tap into the way business works, and one of the things as government we do not do very

well, particularly in transportation, is ever ask the shipper, meaning the guy who owns the cargo, what they think. We go to the carriers, we go to the labor unions, we go to this, we go to that, but

we do not go to the shipper, and these are the guys who have the

holistic view of the process.

We have talked about tracking. Most shippers do not care where

a cargo is every minute. It is not useful data. What is useful is to

know it arrived at the port or it is going to be 3 days late at the

port or it missed the train, because then they use it for planning.

So if we talk about tracking, for example, it should align with

what a customer wants to do with it. It should align with his commercial interests. And if we do not align the interests, you are

going to find things like port shopping.

Senator Hollings said, well, let us concentrate on the top 25

ports. You should, but on September 11, the guys came through a

minor airport, an out-of-the-way crossing at the border, and then

fed into a major funnel and you will have exactly the same kind

of thing in shipping unless you align your interests with the way

the commercial sector operates and data is a key part of it.

Ms. DEBUSK. Let me just add something on that from one of the

concerns of the private sector, because the security of the data is

incredibly important for getting the cooperation of the private sector.

Senator BENNETT. That is right.

Ms. DEBUSK. One of the big concerns is the very mundane concern of theft. If you know exactly what is coming in, exactly where

it is, you can find it exactly with this high-tech device. It turns out

that it is great new color TVs, which, unfortunately, can disappear

before reaching its final destination. So a major private sector concern in trying to do the public-private sector cooperation on data

would have to be addressed through the security of the data.

Senator BENNETT. That is exactly the point of my bill. It says you

can share this information and it will stay secure within the government.

Ms. DEBUSK. And also secure within the government, and then

you have to think about a limited number of people within the government that would have access encrypted passwords, the whole

thing.

Senator BENNETT. Sure.

Mr. FLYNN. And absolutely, Senator, I would support this, as

well. You find most sophisticated ports are actually run virtually

by computer, the gantry cranes and everything else. You take down

the computer system, you shut down that port, as well. So the

cyber attack could do it as much as a physical bomb kind of thing

with huge disruption effects, so there is that area.

The other is, ultimately, of course, we must be talking about

sharing data overseas. We are dealing with multinationals, not just

private sector domestic, but multinationals, and we are also, as

with Canada, in an effort to enhance our data shopping there, if

there is not comfort about the security of the data, that is going

to make that much more problematic.

36

I think taking that wartime analogy, though, that we are in, as

the President said, about trying to apply it in this area, I think it

would behoove us to think about—I get from a number of private

sector people up in New York who have really been, obviously, mobilized by the tragic events of September 11 and are waiting for the

call, basically. These are the people who understand how to do data

management, understand how to do data mining. We have huge

companies out there who solved how to bring legacy systems together and make mainframes go and they are just sitting idle.

I think some calling in of a red team, almost, to solve this information issue from private sector folks, anoint them, give them 9

months’ charter, give them all the resources they need to fix this

problem. Everything we are talking about in the government is 5-

or 7-year, multi-year programs in one sector that we are not going

to finance anyways until whenever. That is unacceptable. I do not

think we are going to fix it through our traditional public sector

needs. If it is a wartime, let us treat it as such and fix this by getting the smart people into this.

Senator BENNETT. That is a good summary, because in World

War II, a lot of information from the private sector was considered

secret, classified, shared with the government with the understanding that it would not be available, and in the war we are talking about here, with 90 percent of the critical infrastructure in private hands, that means an intelligence officer trying to see what

is happening on the battlefield has 90 percent of the battlefield

blacked out to him if the private sector does not share the data.

But as you indicate, Ms. DeBusk, the private sector will not share

the data if they think it is going to be made public.

Thank you, Mr. Chairman.

Chairman LIEBERMAN. Thanks, Senator Bennett. Your questioning may have been shameless, but it was quite productive, I

thought, and very interesting.

Senator Thompson.

OPENING STATEMENT OF SENATOR THOMPSON

Senator THOMPSON. Thank you, Mr. Chairman. Sorry for being

late. I was a witness this morning, an uncustomary role though it

may be, at a U.S.-China Commission hearing. I wanted to get over

here as quickly as I could.

Chairman LIEBERMAN. We are glad you are here.

Senator THOMPSON. It occurs to me in listening to this that one

of the things that is happening here is going to cause us to really

look at the issue of federalism in a different way. One of the things

this Committee deals with, of course, the relationship between the

various levels of government.

I listened to you and once again we see various Federal agencies

are involved to one extent or another, but so is State, so is local.

And, law enforcement is on one side, while prevention is on the

other. The real question, I think, that we are grappling with is who

ought to be doing what? What should we be doing and who should

be doing it? If you think about it, that is really the main question

of the government and it is not an easy one.

I think that what we are seeing now after September 11 is that

we are going to be doing some reassessing and we are probably

37

going to be bringing the Federal Government into some areas, at

least on the prevention side, that maybe they have not been before.

We need your help on that.

Hopefully, we will learn to stop doing some things at the Federal

level that we should not be doing and let those responsibilities go

to the State and local governments. We should consider a realignment, a reprioritization, as it were, to look at federalism anew and

start concentrating and spending more of our resources on the

things that the Federal Government can do and must do best. We

should look for standardization. I think in areas of national security, we have to really look at that.

The other thing that is kind of related that concerns me is what

is the economic impact of all of this going to be and what are we

going to be willing to tolerate. We can devise all these systems, but

as we have seen at the bridge in Detroit, a little bit of slowdown,

a little bit of disruption and things start backing up. What is that

going to do, what is our toleration level going to be, and to what

extent are we going to have to start looking at things differently?

We have been called upon to sacrifice in this country, but so far,

about the only sacrifice we have been called upon to do is shop at

the mall, and buy more. What if we have to get used to doing more,

not just at our airports, but here?

My testimony today before the China Commission had to do with

the extent to which we should be allowing foreign companies that

are engaged in proliferation activities, that our government determines that are engaged in proliferation activities, to raise billions

of dollars in our capital markets, no questions asked, without disclosing to the investors that they are engaged in proliferation activities.

It seems like a no-brainer to me, but that is what is happening,

billions and billions of dollars by companies, including Chinese

companies that our country knows are engaged in proliferation activities, making the world more dangerous, which we say we need

a national missile defense system to protect us against. But they

can come and raise billions of dollars and hand it over to the military, as far as we know.

As I am speaking, half of Wall Street is downstairs explaining

why I am wrong because the measures I recommended will not do

any good, because they will have an economic impact, it is going

to cost us business. How much are we going to be willing to do?

Has anybody made an assessment of the economic impact of the

preventive measures that are being put on the table?

Rear Admiral LARRABEE. In the Port of New York and New Jersey, we have estimated that it will cost us about $150 million in

the next couple of years to implement just some of the things that

the Hollings bill has suggested. As we begin to talk about other

ways to prevent terrorism, I think that the cost goes up.

You are absolutely right. My job every day is to find a way to

balance a system that works very well because of its speed and its

economy with the need to slow it down and be more deliberate in

terms of making sure that we know what comes across the border,

and that is a very, very difficult challenge, because the system that

we operate today is what drives the engine of our economy, and the

minute that that system slows down and we cannot bring oil in on

38

the basis that we bring it in now, the system comes to a grinding

halt.

Mr. QUARTEL. If I can add to that, too—— Senator THOMPSON. Liquid nitro gas, which is very much a concern.

Mr. QUARTEL. Maybe I can take it from the micro to the macro.

Every trip I now take on an airplane, and I used to travel a lot,

adds 4 hours. That is half a day. So I travel 80 percent less. So

I am certainly not helping the aviation system, nor, frankly, are a

lot of the rules, the way they are being implemented across the system.

In logistics, the cost of transporting and moving goods and logistics and storing and maintaining them as inventories in the United

States 20 years ago was 25 percent of GDP. Today, it is 15 percent.

We have saved $1 trillion annually in terms of the kinds of things

we have built into the system by moving cargo swiftly, reducing inventories, reducing the cost—— Senator THOMPSON. Just in time?

Mr. QUARTEL. Just in time. Although even ‘‘just in time’’ is only

in a small percentage of the economy, these things affect everybody, from the biggest to the smallest.

Senator THOMPSON. Some people are saying we are going from ‘‘just in time’’ to ‘‘just in case’’ now.

Mr. QUARTEL. Well, there is some issue there, but let me give

you a number there. If you only increase inventories by 5 percent,

you add $75 billion in costs to the American economy. That is

75,000 jobs you have just lost.

Mr. FLYNN. I might add here, though, I think the key, again,

about this prescription, if we are willing to take this in a comprehensive networked approach, Rear Admiral Naccara, the First

District Commander up in Boston, has a very creative and ultimately successful model for how to deal with the liquified natural

gas. What he is doing is he is sending inspectors to Trinidad where

it is loaded. They are inspecting the facility, which actually is a

pretty good, secure facility, to board the vessel when it leaves the

harbor, inspect it before it goes to make sure there are no bad people on it, sail the harbor and get off at the pilot buoy. If it was hijacked in between, there would obviously be some communication

of that.

The advantage is when it gets to Boston, we are actually able to

speed it in. I mean, you are going to still do some controls, but you

do not want it harboring out there for a few days having a big advertisement, LNG is waiting here as a target. You actually want

to get it in relatively quickly. So they will be met with an escort,

but it will be moving very quickly. The company loves it because

it now has expedited treatment in. We are more secure.

The same modeling applies, I think, even as we think about

cargo. If we are talking about building this in as a standard up

front, the market will adapt, I think, to it.

I would propose that, for instance, that perhaps Governor

Ridge—well, the President would issue a homeland security Presidential directive to the Secretary of Transportation to meet with

his counterparts in the six or seven major megaports to essentially

say, we are not going to allow mystery boxes anymore into our

39

ports because they are a critical infrastructure and here are the

standards. And as soon as that is harmonized, the cost issue starts

to get adjusted, just as it has with oil tankers.

When we had this real problem many years ago, there were a lot

of unsafe tankers, people were saying we could not impose standards. The oil would not come in anymore. Well, we have rationalized and adjusted.

The real cost, though, for me, the one that most keeps me awake

almost every night, knowing what I know about the system, is the

cost of turning the spigot off. Ninety-five percent of general cargo

coming into the United States comes in a container. This makes

the anthrax in the mail service pale by comparison. We went to Email and faxes and UPS and FedEx. When you compromise this

system and you turn off the switch, there is no alternative. Cargo

stops coming in. That is the cost matrix I think we need to balance

against, the dollars that we are talking about here and putting in

a smart approach.

Senator THOMPSON. Ms. DeBusk.

Ms. DEBUSK. Yes. One of the important things that is in the Hollings legislation, and that was recommended by the Seaports Commission, has to do with threat assessment. Because it is simply not

possible to do everything that we can or should do at every single

one of the 361 ports. So an important way to weed out spending

priorities would be to conduct threat assessments and figure out

where the greatest vulnerabilities are and tackle those first.

Rear Admiral LARRABEE. And then with better information, you

can adjust your reaction with the idea that you cannot do everything, and—— Senator THOMPSON. It seems to me like a threat assessment, certainly, everything has got to be prioritized and all that, but it looks

to me like once we do that, it has got to be the most closely held

information in all of our government.

Ms. DEBUSK. I agree.

Senator THOMPSON. If the bad guys have that information, then

it is all for naught.

Ms. DEBUSK. I agree completely, and even some of the information that was put out by the Seaports Commission is no longer

available.

Mr. FLYNN. On the reverse, I just might say, Senator, is the

schemes that we talked about, the criminals are there. They

know—we are not talking about a hypothetical—about containers

being used. They have been used for the last 15 years to smuggle

narcotics into this country, as a matter of routine, almost. So bad

guys know the vulnerabilities of this system.

Mr. QUARTEL. And I would suggest to that, every one of us can

tell you how to get it in, and if we can, someone else can, as well.

Senator THOMPSON. Knowing what we are watching and what we

are not watching is what I am talking about.

Mr. FLYNN. Oh, yes, sir.

Senator THOMPSON. Thank you, Mr. Chairman.

Chairman LIEBERMAN. Thanks, Senator Thompson.

Thanks to the four of you. We have got to move on to the next

panel, and we really did not go into some of the very big ideas that

you gave us for reform, such as pushing the border back and how

40

1The prepared statement of Mr. Cook appears in the Appendix on page 120.

that would work, how we station our personnel there or do we, and

does that require international treaties and agreements. And then,

although we will get into both of these matters in the next panel,

too, I hope, the use of technologies that are available now to create

new ways to track containers without slowing them up so that

there is no adverse economic effect.

Perhaps either with the Committee or our staffs, we could ask

you to give us some more time to better develop those ideas, because it may be that this Committee can take a leadership role,

hopefully after Senator Hollings’ bill is passed, which I hope will

happen soon, to implement some of those ideas.

But in the meantime, I thank you very much. It has been excellent testimony.

Chairman LIEBERMAN. We will call our third panel, Argent

Acosta, Customs Inspector, Port of New Orleans, and President of

the NTEU Chapter 168; Deputy Chief Charles Cook of the Memphis Police Department; W. Gordon Fink, President of Emerging

Technology Markets; and Michael Laden, President of Target Customs Brokers, Inc.

Thank you all for being here. Chief Cook, we are going to call on

you first. You come from a great city.

Mr. COOK. Thank you, sir.

Chairman LIEBERMAN. You even have some great Senators representing your State here in Washington.

TESTIMONY OF DEPUTY CHIEF CHARLES C. COOK,1 MEMPHIS

POLICE DEPARTMENT

Mr. COOK. Thank you very much, Mr. Lieberman. I would like

to say good morning to the Members of the U.S. Senate, witnesses,

and others present. I want to give special thanks to Senator Fred

Thompson and, in particular, his staff, Hannah Sistare, Jason

Roehl, and Morgan Munchik, for inviting me to speak here today

on behalf of the people of Memphis.

I am here today to talk about the City of Memphis, how we have

responded to the events of September 11, and the needs of Memphis in the area of homeland security. I am sure our situation is

much like those of other cities our size.

Prior to September 11, the Memphis Police Department, the local

FBI, the Memphis and Shelby County Emergency Management

Agency, the Memphis and Shelby County Fire Departments, the

City of Bartlett, the City of Germantown Police and Fire Departments began training with incident command tabletop exercises.

Our focus was on natural disasters, the threat of terrorist attacks,

school shootings, and plane crashes.

This multi-agency training developed a team concept in responding to large-scale, long-duration events. Our departments began

seeking further training for various contingencies. In all the exercises, role players simulated their responses, and as a result of the

critiques and follow-ups, they determined that additional training,

equipment, and manpower resources were needed.

Because of extreme delays on the Memphis to Arkansas bridges

across the Mississippi River at I–55 and I–40 caused by relatively

41

simple accidents, a multi-agency bridge mitigation team was

formed in the year 2000. Members of this group came from the police departments of Memphis and West Memphis, Arkansas; the

sheriff departments from Shelby County, Tennessee, and Crittenden County, Arkansas; the Tennessee Highway Patrol and the

Arkansas State Police; the Railroad Police; the Tennessee and Mississippi Departments of Transportation. Various casualties, including marine accidents, terrorist attacks, and any subject threatening

bridge security became topics of discussion. Decisions regarding

multi-agency jurisdiction and removing hazards from the roadway

were made and the agencies took joint responsibility for patrolling

the bridges and they continue to do so.

Most police, fire, and emergency management agencies during

the first few hours of September 11 reacted by encircling the government buildings in the downtown area. We deployed our resources to include other targets of opportunity, including bridges,

water supplies, power utilities, and similar government-related

services. We received numerous phone calls from businesses, manufacturers and trucking firms, refineries and other facilities. Each

caller was interested in information on what to expect in the way

of local terrorist attacks.

Their questions were addressed through the media in a press

conference with public officials, including the Memphis Mayor, the

Shelby County Mayor, the Police Director, the Shelby County Sheriff’s Chief Deputy, the Fire Director, and other emergency services

personnel. These officials made an evaluation of the immediate

threat to the city based on information from the FBI and national

and local television news. This resulted in an agreement that our

response could be reduced at that time. Jointly, in an organized

setting, this team of city officials released information to the public.

It was timely, informative, and reassuring.

We have continued to maintain high levels of alertness, giving

special attention to large sporting events, concerts, and the Beale

Street entertainment district. We have experienced a blow to our

budget as a result of September 11 and our anthrax responses.

Sustained actions resulting from hoaxes, threats, and actual attacks are devastating to local budgets, as you know, draining dollars by eating overtime. There is little that can be held in the hand

following unbudgeted responses.

Since the events and continuous warning of future threats, many

cities are looking at budget shortfalls. We have still maintained

high levels of awareness and are establishing communications between our precincts, manufacturers, and redistribution.

Following the New York attack, we have experienced the uncertainty and fear of bio-terror. There have been several warnings of

additional attacks. As we further assess our ability to deal with attacks of this type, it is necessary to evaluate what is needed in

order to defend ourselves against attack, to respond to and reduce

the damage and loss of life, and to fully recover.

In reviewing the needs of the city, I must mention the Port of

Memphis, an integral part of the Memphis economy. Memphis is

known as America’s distribution center. I think this notoriety

comes from its association with Federal Express, the United Parcel

Service, and other air carriers. However, the marine port facilities

42

of the Memphis metropolitan area is one of only three cities served

by five class one railroad carriers serving 48 contiguous States, two

barge fleeting services, and a multitude of barge and truck transport services. International shipments come through the Port of

New Orleans and are filtered to the other States through Memphis,

the world’s largest cargo airport hub.

The Port of Memphis is the fourth busiest inland port in the

country. The port facility has immediate access to Interstate 40

and Interstate 55 and is located less than 15 minutes from the

Memphis International Airport. The Port of Memphis also provides

a unique industrial area for the convergence of transportation services located near the Memphis downtown district.

This transportation hub has been of interest to organized crime

due to the large quantity of manufactured goods. The Memphis Police, the Shelby County Sheriff’s Office, the local FBI, the U.S. Customs Service, and the National Insurance Crime Bureau was organized through a memorandum of understanding, updated yearly,

into the Tennessee, Arkansas, Mississippi Auto Cargo Theft Task

Force. This is a multi-agency investigative law enforcement unit

targeting organized vehicle theft, including heavy equipment and

farm and construction machinery, and associated criminal activity

and thefts from interstate cargo shipments. They are involved in

activities in and around both marine ports and the airport.

These are the reasons Memphis is considered to be a potential

terrorist threat.

The following are suggested measures which should be considered in the interest of preventing terrorist attacks, attacks which

would severely interrupt interstate commerce for years if successful, seriously crippling the Nation.

Use a multi-agency approach to the investigation of suspected

terrorists and develop the availability of an electronic clearing

house for all information gathered nationally and internationally

on suspected terrorists.

Assign fully-armed U.S. Coast Guard personnel to 24-hour operations, providing visible patrols on the Mississippi River, Wolf

River, McKellar Lake, Tennessee Chute, and the new Frank

Pidgeon Industrial Park.

Support a national or international truck driver licensing program for drivers entering and exiting the U.S. from Canada and

Mexico and for crossing major infrastructures, bridges, and tunnels. Also, support technology capable of identifying drivers and

driver history by fingerprint, photos, and newer iris scan technology for officers to use in the field.

Support smart card technology for trucks and loads, capable of

immediately identifying driver, cargo, origination point, destinations, and route plans. This would also do well for marine vessels.

Organize a U.S. Coast Guard inspection boarding team to meet

and board vessels above and below the Mississippi River bridges to

identify operators and crew and to monitor approaches to sensitive

infrastructure, such as bridges, industrial complexes, and production facilities with river access.

Assign U.S. Army or Army Reserve troops to provide 24-hour security and surveillance to the more critical targets, where attacks

would cause severe repercussions for America.

43

1The prepared statement of Mr. Acosta appears in the Appendix on page 127.

Provide security gates and barricades limiting access to Presidents Island, refineries, and chemical plants from vehicles without

proper identification and authorization.

Establish privately-owned police agencies, like the Railroad Police and Federal Express Security Police, for the protection of businesses which produce or manage critical materials.

Also, establish a Homeland Security Block Grant to meet such

needs as police and fire overtime, training, communication and rescue equipment, and for security measures to protect airports, waterways, utilities, public transit, and other public infrastructures.

Thank you once again for inviting me here to testify today. I will

be happy to work with the Committee in the future in any way and

I will be glad to answer any questions you may have.

Chairman LIEBERMAN. Thanks, Chief Cook. That was excellent

testimony and I appreciate the specificity of the recommendations.

We are going to hold a hearing in the Committee, I believe at the

end of next week, particularly having local officials come in from

around the country to talk about some ideas, and the idea of federalism Senator Thompson talked about earlier. But your proposals

here really set the table for that and I appreciate it.

Mr. COOK. Thank you, sir.

Chairman LIEBERMAN. Mr. Acosta, thanks for being here. You

bring firsthand experience as a longtime Customs inspector and we

appreciate your willingness to be here and look forward to your testimony.

TESTIMONY OF ARGENT ACOSTA,1 SENIOR CUSTOMS INSPECTOR, PORT OF NEW ORLEANS AND PRESIDENT, NATIONAL

TREASURY EMPLOYEES UNION (NTEU) CHAPTER 168

Mr. ACOSTA. Thank you. Chairman Lieberman, Members of the

Committee, thank you for inviting me here today to talk about port

security. My name is Argent Acosta and I am a Senior Customs Inspector at the Port of New Orleans. I am also the President of

Chapter 168 of the National Treasury Employees Union. My chapter actually encompasses five States, Louisiana, Mississippi, Tennessee, Arkansas, and Alabama. There are 19 ports in that region

of Customs and the majority of those are seaports.

I have been a Customs inspector for 30 years, the Chapter President for 26 years. My job is to ensure that illegal contraband, from

knock-off designer jeans to cocaine to bombs, does not enter the

country, and that legal goods that enter the country are assessed

the correct duties.

At seaports like the Port of New Orleans, the mainstay of the job

is boarding incoming vessels, primarily cargo ships, to inspect for

illegal goods. It can be a very dangerous and not very glamorous

job, but there is a great deal of commitment by the front-line inspectors to do the best job possible, especially since the events of

September 11.

I would like to share with the Committee a recent example of

that commitment. Inspector Thomas Murray, a 31-year veteran of

the Customs Service, died tragically during an inspection of the

hold of a vessel at the Port of Gramercy, Louisiana, on October 30

44

of this year. He was killed by toxic fumes, as was a member of the

vessel’s crew and the ship’s captain, who followed him into the

hold. A second Customs inspector was overcome by the fumes, but

is recovering.

Inspector Murray was aware that the vessel he was searching

previously brought illegal drugs into the United States, so he was

determined to be as thorough as possible. He did not know what

dangers he would encounter when he went below the deck, but he

went anyway. Tragically, his commitment to doing his job, despite

potential danger, cost him his life. His fellow inspectors, especially

those of us from Louisiana, will mourn his loss for a long time to

come, but we will also remember his bravery and commitment

every time we are faced with boarding a suspect vessel or searching a hold that we believe to be dangerous.

Mr. Chairman, you asked in your letter of invitation that I address several questions regarding port security in my testimony.

The first was, what is the current adequacy of port security? I am

afraid that I must answer that question by saying I believe port security is currently not adequate and poses serious potential threats

to those not only in the immediate area of the port, but to those

who may come in contact with uninspected material that arrives

through our ports and moves throughout the country in other

modes of transportation.

The Customs Service is currently only capable of inspecting

about 2 percent of the 600,000 cargo containers that enter our seaports every day. From my own experience in New Orleans, despite

the huge increases in trade since I started with Customs in 1970,

the number of Customs inspectors at the Port of New Orleans has

dropped from approximately 103 in 1970 to 29 this year. In addition, since September 11, Customs inspectors from around the

country have been temporarily reassigned, primarily to Northern

Border ports to cover the gaping holes in security there.

Since I had previously volunteered for emergency response team

duty, not realizing, of course, that September 11 was on the horizon, I was among the first to do a temporary tour of duty in Michigan, at Port Huron, one of the busiest truck crossings in the country. On September 14, I was given 4 hours to go home, pack, board

a Customs flight at the Gulf Port Airport and go to Michigan, at

which time I found out I would be in Port Huron.

There was an incredible amount of pressure on inspectors at Port

Huron since many ‘‘just in time’’ auto parts headed from Canada

to the big three auto makers go through the port. I know my biggest personal concern was not to be the one who let a terrorist into

the country, and some supervisors seemed to support that view, the

view that extreme caution was necessary. However, others seemed

to be sending the signal that we needed to move things through

more quickly because of the need for the auto parts, so it is a very

difficult balance and I can appreciate the problem that they are

faced with.

I will begin another temporary assignment at Port Huron in January. These temporary assignments, while currently necessary due

to the extreme shortage of personnel, leave home ports, like my

Port of New Orleans, able to inspect even fewer vessels than usual.

Also, the more an inspector knows about a particular characteristic

45

of his port, what the main goods that go through the port are, what

are the main carriers, the destinations, etc., the more effective he

or she can be. Obviously, 30-day temporary assignments at different ports does not lend itself to building this kind of experience.

The use of the National Guard at some ports may be temporarily

necessary due to the unprecedented threats we are facing, but in

many cases, due to their lack of training and experience in the area

of cargo and vessel inspection, the National Guard provides the appearance of security rather than any real increase in security. In

any case, having military personnel perform these duties is obviously not a long-term solution.

In addition to the severe limitations on the ability to do actual

inspections, the technology that is supposed to help us do our jobs

by providing us with advance information on oncoming vessels is

outmoded, subject to brownouts, and often incompatible with the

technology of those we need to communicate with. In addition, the

advance information about what cargo may be aboard a vessel

often is not sent early enough to do any good, and even more often

is not accurate. Customs has determined through its own system

that the accuracy rate of vessel cargo information is only 56 percent accurate, and let me give you a real current story to point out

this aspect.

In April of this year, a vessel arrived from the Port of Savannah.

It was a foreign flag vessel with containers on board for discharge

throughout the United States. Our enforcement team targeted the

vessel for boarding. We targeted the vessel to look at the cargo that

was available. It had empty containers and full containers. By

doing that, we set certain containers aside that we wanted to pull

off and take a look at and we wanted to verify all the rest of the

containers, including the fact that the empty containers were

empty, and you will see why we do this.

We looked at the vessel and encountered one of the empty containers and upon opening it found out that it had cargo in it. We

sealed the container and sent it to our cargo examination station.

It sat for a day or two. When the two inspectors who worked the

station went to open it up, their radiation detectors went off. They

went off big time. One of the inspectors was our actual HAZMAT

coordinator and trainer, so she backed everybody off, moved everybody away. We called in the experts. The container was very hot.

It had drill testing, well testing equipment on it, but it was a serious threat to everybody around it. Fortunately, after testing and

after a period of time, it appears as though the inspectors did not

suffer any long-lasting effects. We hope they did not.

But were it not for us targeting the vessel and looking at the containers, this empty container would have moved throughout the

country to wherever it was going to go, and whoever else who

might have walked up to it who did not have equipment to note

that there was something wrong with it might easily have been

harmed or killed.

There are also problems with regard to the physical security of

the port. Access to cargo and cruise vessels in many ports is not

limited to those with prior approval to be in the area. Virtually

anyone can gain access to the areas where vessels unload passengers and cargo. While there are secure areas in the Port of New

46

Orleans, access to those areas is overseen by contract security personnel, who, like airport baggage screeners, receive low wages and

little training.

In fact, in the immediate aftermath of September 11, while Customs was and still is on its highest state of alert, I noted as I

passed a secure area, the checkpoint going into the port area of the

port, that there was no one in the security checkpoint. I sat for a

few minutes thinking that maybe somebody had stepped into the

bathroom, and it was the case. They had stepped away from the

access. So access to the secure area was totally insecure.

The second question you asked me to address is what problems

confront the Customs Service and other Federal agencies charged

with securing our ports. I believe that the biggest problem is a lack

of personnel. As I mentioned earlier, trade has grown exponentially. The number of airports, seaports, and border crossings have

increased and have seen huge increases in passenger traffic. Funding and personnel levels have not kept up. I believe that funding

is also an issue with regard to the use of low-wage contract personnel to provide security services to the port.

Another problem facing Customs in securing our ports is that I

believe the balance between rigorous enforcement and facilitation

of the trade can tip too much towards trade facilitation. In the

aftermath of the September 11 attacks, there has been a renewed

focus on our enforcement role and it has revealed great vulnerabilities. Yet we need to move trade and people throughout ports

quickly, but we also need to make sure that we are doing it in a

way that protects our security. In order to do both, we need more

personnel.

Other problems mentioned earlier include lack of adequate technology and timely and accurate manifest information. It also includes the sharing of information.

The final issue you asked me to address was whether I had any

recommendations to address the problems discussed above. The

most important recommendation I would make is that Customs

needs to be provided with adequate funding. In February 2000, the

Customs Service commissioned a study, referred to as the Resource

Allocation Model, that set optimum staffing levels for Customs at

ports throughout the country. That report, which I would like to

submit for the record, showed a need for 14,000 additional Customs

positions. That was before September 11. I would hope that Congress would act to provide those additional positions.

I believe that there is also a need to look at recruitment and retention issues for Customs inspectors. The compensation and benefits are less generous than many State and local law enforcement

officers and there is a serious concern that experienced Customs inspectors will leave to go to other professions, including the air marshals, due to the more generous compensation package, particularly

in the area of retirement. Customs inspectors should receive the

20-year retirement benefit available to other Federal law enforcement officers if Customs is to remain competitive.

Customs also needs upgraded technology. Congress has provided

initial funding for the Automated Commercial Environment, or

ACE, system, which will make remote inspection of cargo more acVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
47

1The prepared statement of Mr. Laden appears in the Appendix on page 133.

curate. I must point out, however, that this kind of technology can

never take the place of physical inspection.

There is also a need to address the physical security issues at

our ports by setting up secure areas for incoming cargo and personnel and by ensuring that port security personnel are well

trained.

I would add just one more thing. Customs recently has entered

into a program which has taken away the option of boarding vessels midstream for Customs. This really has serious consequences,

because, in effect, it leaves Customs inspectors such as myself and

my counterparts blind as to what is in a vessel sitting in the river.

Many vessels arrive in the Port of New Orleans. They go to anchor. They actually load or discharge their cargo all while at anchor, so we will never have an opportunity to board the vessel to

fully look at the manifest, and we use—in the case of the radioactive container, there are many needs that we have to look at. We

have to match all of these up just to try to come up with a picture

that is reasonably accurate, and this is about accuracy.

I have heard other panel members discuss the fact that Customs’ area of expertise is the cargo. I believe that is true. I believe it is

supposed to be. But I want to impress upon you that, by our own

study, 56 percent accurate is not a very good rate.

So we have to use whatever means that are available to us. That

includes the vessel, the chief officer of the vessel, the information

that the steamship line provides us, stevedore information. We get

it from anyplace that we can, and then what we have to do is basically put all that information together and extrapolate what we

think is the best possible picture of what is on the vessel.

Thank you. I would be happy to answer any questions.

Chairman LIEBERMAN. Thanks very much to you, Mr. Acosta. We

have got a lot of work to do.

Mr. ACOSTA. Yes, sir.

Chairman LIEBERMAN. Mr. Laden, you bring a unique perspective and a very important one here as President of Target Customs

Brokers, and that is the private sector, the customers. Thank you

for being here.

TESTIMONY OF MICHAEL D. LADEN,1 PRESIDENT, TARGET

CUSTOMS BROKERS, INC.

Mr. LADEN. Thank you, Mr. Chairman. Mr. Chairman, Members

of the Committee, good morning. My name is Michael Laden and

I am the President of Target Customs Brokers, Inc., a wholly

owned subsidiary of Target Corporation. I am also the current

Chairman of the American Association of Exporters and Importers,

and I am an appointee to the Treasury Advisory Committee on the

Commercial Operations of the U.S. Customs Service, otherwise

known as COAC. I would like to thank you for allowing me the opportunity to express my views under consideration today.

Without trying to become too prophetic or philosophical in my

comments, the atrocities committed against us all on September 11

have forever distorted the way in which we as a people will live.

It is reshaping and transforming the way we think about everyVerDate 11-MAY-2000 08:48 Aug 06, 2002 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 78045.TXT SAFFAIRS PsN: SAFFAIRS
48

thing, security first, everything else second. ‘‘Just in time’’ for some

companies has morphed into ‘‘just in case,’’ adjusting lead times

and building safety stocks to offset potential security delays.

Our industry, perhaps more than any other in America, will be

deeply impacted just by the very nature of the business itself. As

you have heard, the fabric of our industry is an intricate weave of

very complex components and stakeholders. A single import shipment and the documents accompanying it pass through many

hands and many different checkpoints as it travels to our country.

Every one of those handoffs creates new vulnerabilities.

Now, before I continue with my comments, please allow me to

make one very important distinction. I am not holding myself out

as a security expert. I do rely on others, including the U.S. Customs Service, for advice and assistance. What I can offer this Committee today, however, is more than 25 years of practical operations experience in international logistics and on Customs matters.

Target’s bottom line is this: We want no more nor any less than

exactly what we have ordered when it comes to an international

consignment. Simply put, we want no contraband of any kind— drugs, laundered money, weapons of mass destruction, bio- or

chemical-hazards contaminating our shipments, and we certainly

do not want to fathom the possibility of fouling our domestic supply

chain. You do not need a very vivid imagination to know that the

consequences of that would be catastrophic.

In part, some of the answers to our security concerns lie in newer

developing technologies, but we must also rely on good old-fashioned common sense and American ingenuity. All stakeholders in

the supply chain must closely examine their processes end to end.

I am pleased to report to you and the Committee Members today

that the trade community and the U.S. Customs Service, under the

direction of the Treasury Department, are working cooperatively

together to improve many of the security features already in place.

At the U.S. Customs Trade Symposium held last week in Washington, Customs Commissioner Bonner called upon the trade community to advance the partnership currently embracing Customs

and the trade to a new plateau. Speaking on behalf of Target,

COAC, and AAEI, we stand prepared to work side-by-side with

Customs and other areas of the Federal Government in establishing practical, effective, and cost-efficient methods to ensure the

safekeeping of our supply chain.

In my written statement submitted to the Committee, I discussed

the industry partnership programs currently in place at U.S. Customs and some of the programs that Target employs to assure compliance and security. For example, Target’s approved for purchase

and vendor compliance programs are well positioned to complement

our active participation in the Business Anti-Smuggling Coalition,

otherwise known as BASC. BASC is a voluntary industry-led, Customs-supported program that was established in 1995. It was a

natural evolution of the Carrier Initiative Programs launched by

Customs in the late 1980’s and early 1990’s.

As Customs’ air and sea interdiction efforts successfully closed off

the smuggling corridors, the drug cartels increasingly looked for

new and more innovative methods of moving their illicit products

49

1The prepared statement of Mr. Fink appears in the Appendix on page 138.

to market. As a result, they began targeting ordinary, law-abiding,

legitimate commercial cargo and the BASC program was the end

result of the trade community coming together and telling the

world that we do not want contraband in our shipments.

All of these programs are vigorously enforced and engaged at

Target and we will be coordinating our deterrence and detection efforts throughout the company. As we speak, these programs are

being strengthened and retrofitted to discourage supply chain incursions.

And so now that we may begin a lively and active dialogue on

these vital matters, I relinquish the rest of my time to the Committee for questions. Mr. Chairman, thank you for allowing me to

appear before you today.

Chairman LIEBERMAN. Thanks very much, Mr. Laden, a very interesting piece of the picture. That is what one of the witnesses on

the first panel said. Sometimes when folks go, and unfortunately,

he mentioned another store chain in Wal-Mart, but when they go

into Target, they just think about the inventory coming out of the

back room, but obviously a lot of it comes from all around the world

and it puts you—I am fascinated that this company, Target Customs Brokers, exists, but I obviously understand why. So thanks

for your testimony.

Mr. LADEN. Sure.

Chairman LIEBERMAN. Gordon Fink is President of Emerging

Technology Markets and is well positioned to testify about the

range of technologies that can be used either by the government or

the private sector to improve security at our ports. Thanks so much

for being here.

TESTIMONY OF W. GORDON FINK,1 PRESIDENT, EMERGING

TECHNOLOGY MARKETS

Mr. FINK. Thank you very much, Mr. Lieberman. I appreciate the

opportunity to summarize my statement, which I ask be included

in the record.

Chairman LIEBERMAN. We will do it, without objection.

Mr. FINK. Other Members of the Committee, and I applaud your

holistic approach to looking at government programs. I am going

to give you some personal examples from my career in the government where I can cite technology that can help out.

Technology is being used, and I will mention and highlight just

a few areas. One, to improve the asset utilization of the industry,

the truck tractors, the trailers, and the use of the chassis. I am

going to give you some examples of that; to meet the demands of

the shippers and the constant need to know where their shipment

is so that they know when they can advertise—when they can start

moving product into their stores.

But significantly, just recently announced by the FBI is the increase in cargo theft. This was announced by the FBI at an American Trucking Association meeting a couple months ago. It is the

fastest growing crime in the United States, and they mentioned it

is at $12 billion a year. A lot of that cargo theft crime goes unreported. One of the reasons is that the penalties are lax, there is a

50

high priority or a high payment for some of the cargo value. Pentium chips are more than worth their weight in equivalent cocaine

and they are not marked so it is easy to resell them. And low risk

as far as the law enforcement—the risk of being caught and the

penalties are not very good.

This also raises the thrust of stealing one of the trucks or one

of the cargo containers even after it has arrived in the United

States and use it as a delivery mechanism, as a weapon of terror.

I have some ideas I will share with you about the technology that

can address that.

The technology is used extensively by the truck tractors now. The

long-haul trucking firms, such as Schneider, J.B. Hunt, etc., know

where their tractors are, the status of the engine, the behavior of

their drivers. They can remotely shut it down. But more recently,

they have chosen to put in the same technology in their trailers,

because that asset can be decoupled from the tractor. They need to

know its status, its location, when the doors are open, when the

doors are closed, and it is part of asset management as well as

knowing where their cargo is.

The chassis—some on the Committee may not know what I mean

by chassis, is a frame with pins on the end of it that the container

sits down on and it is the device that moves a lot of these containers out of the ports, either to railheads or to their destination.

There are about 750,000 of those chassis in use right now.

While Senator Collins has left—one of the things that I would

like to address is the fact that electronic seals for containers is now

being tested. There is a pilot program in the Northwest part of the

United States where cargo entering Seattle has an electronic seal

affixed to it. It is for Customs in-bond shipments that go across the

border at Blaine and into Canada. The technology is starting to

emerge and most of the technology is now available. I am happy

to see that it is available from several different vendors so that you

can start to get some competition and help make the business case

in the decision to adopt the technology.

I have chosen to spend a lot of my time working with the Maritime Administration in a program they call the Cargo Handling Cooperative Program, which is described in my statement. It is a program to look for technology and make it available to the members

of the industry—the carriers, the shippers, so that they can help

understand what the technology is, make sure that they know

what its maturity is, and then also help them make the business

case for it.

Some of the technology that is very relevant is non-intrusive inspection, the so-called gamma ray inspection, which was started at

the land border crossings between Mexico and the United States by

U.S. Customs Service to inspect the trucks and some containers—

mostly trucks and vehicles with a high degree of success. It does

fit very well—with reference to some of the comments by previous

panel members—to be deployed overseas at the point of embarkation.

So in addition to getting a manifest of that particular container,

you can get the electronic image of it. It can be rescanned when

it comes into the United States. The scanners scan so when it is

in motion, not at 60 miles an hour, but roughly up to 10 miles an

51

hour, and it is also used on railroad trains the same way. They can

rescan it to see if there has been any change. The scanning device

can see if there is anything that is inconsistent with the manifest.

These technologies are mature and ready for application.

I would just like to conclude by making a couple of comments.

My bio mentions that I helped set up, and run the El Paso Intelligence Center for DEA. The reason it was in El Paso was to put

outside of the Washington area so that we could get Customs,

Coast Guard, and INS agents, along with DEA agents, to work in

harmony against the drug interdiction problem. It did work and it

was very highly successful, including sharing that information with

State and local authorities.

There is a model that works in trying to get the different organizations to work and provide strategic intelligence—what may be

coming in in what form, as well as tactical intelligence. Approximately 50 percent of the phone calls that were made by people in

the field got some form of intelligence back. There was a high hit

rate in the databases.

I appeared before many committees of the Congress that did not

want me to merge those databases together as is now being done

in the counterterrorism area. When I was with the CIA, I helped

set up the Counterterrorism Center with technology support. But

at the time, there was a fear of merging those databases. So we

had the individual agents go into their databases, pull out what

they had, and made an assessment. So we had kind of a round

robin assessment and provided the information back in the field.

I also did have the pleasure, of working for Bob Ehinger, who

headed the International Trade Data System activity under the Department of Treasury. One of the significant outcomes of that activity is to combine all of the information requirements of the 100-

plus Federal agencies that were mentioned before into one common

database so that those people that import goods into the United

States only have one form to fill out. It makes the scanning, the

review of that data, it was mentioned earlier, much easier to do.

So I have come here as a technologist talking about the maturity

of technology, but I must also say that the response has got to be

balanced by some of the other techniques, such as looking at the

documentation—where that container has been, where the vessel

has been, the crew on the vessel—as a part of the whole operation.

That concludes my summary.

Chairman LIEBERMAN. Thanks, Mr. Fink. That is very interesting.

Maybe I will take off from your testimony and ask the other witnesses the extent to which we are seeing some of the technologies

that Mr. Fink describes embraced or utilized by the private and the

public sectors, the idea of—mostly in the trucking business, but the

idea that you can not only follow where the truck is, but almost

what the truck driver is doing and then what is being opened and

closed and when, and also this very interesting X-ray technology,

which I gather lets you look inside a container——

Mr. FINK. Yes, sir.

Chairman LIEBERMAN [continuing]. To see what is there without

having to open it. What is the rate of acceptance of these? Maybe

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I will just go down, to the extent that you know, starting with you,

Mr. Laden, in the private sector?

Mr. LADEN. The rate of acceptance is good. Some of the technology, though, is cost prohibitive still, as Mr. Fink suggested.

There is an increase in availability of this kind of technology, but

today, on seaborne—most of Target’s business is marine.

Chairman LIEBERMAN. Right.

Mr. LADEN. On Target’s business, we are not using transponders

or GPS technology yet. We are using reusable seals. But we have

found there is other technology or design flaws. The drug and contraband smugglers will just literally take the doors of the container

off, defeating any seal that you have on, and replace the doors. We

need as an industry to look at better design and what can be done.

Chairman LIEBERMAN. Mr. Acosta, are you seeing much of this

new high-tech stuff coming into your work as a Customs inspector?

Mr. ACOSTA. Yes. We utilize a gamma ray machine. Our problem

is, I think we have the second prototype of the gamma ray machine, so we did real good in getting in there early to get a machine, but——

Chairman LIEBERMAN. Yes.

Mr. ACOSTA [continuing]. So we have some down time with it.

They are looking at it right now and hopefully we can upgrade

that. We could probably use more than one, and because we have

so many ports that are involved in our area, we take it on the road

on occasion. So we have an opportunity to travel, for example, to

the Gulf ports in Mississippi.

Chairman LIEBERMAN. And the containers go through it relatively quickly?

Mr. ACOSTA. Yes. It is funny because it is hard to—people’s paradigms. So you have a truck driver and you explain that you can

drive through this at about five miles an hour. It is OK. And they

will drive up to a certain point and they will stop, because their

idea is, well, if they are taking a picture of the container, it is going

to be blurry. It is difficult to change that paradigm, but yes, you

can.

Chairman LIEBERMAN. Of course, that is a great advance, because then you do not have to open it up. And the reliability, you

have found, is pretty good?

Mr. ACOSTA. It is reasonably good. Our picture is very small for

what we have, so it is a little more difficult. What is good for us,

for example, as in the story that I told you before, we can set this

up and we can run empty containers through so we do not have

to pop a seal and open the door, because it will tell us for sure that

a container is empty. It will tell us if there is something in the container.

Mr. FINK. I might mention, Mr. Chairman, the Port of Miami has

found a lot of stolen vehicles leaving their port in what were

thought to be empty containers, through X-raying empties that are

departing the United States.

Chairman LIEBERMAN. Yes. That is important.

Mr. ACOSTA. We do the same thing. We have an inbound and an

outbound team, and, of course, they are looking for armaments,

they are looking for stolen vehicles, they are looking for currency.

53

So we can use that gamma ray technology both on inbound cargo

and outbound cargo.

One thing I would say about containers, though, is we talk about

containers and containers can simply be thought of as a box. It is

no more or no less than a box that you can put things in, just like

any other box. But we are talking a lot about what you might find

that is put into the box, maybe something in the cargo that is put

into the box or something that is thrown in along with the cargo.

But along those lines, we have to remember that the box itself accounts for about half of the seizures that we make. So within the

walls, in the floor, in the roofing, in the tubing that the container

is constructed in, many times, that is where we find contraband

hidden, and a lot can be done—there is a lot that can be hidden

in the box itself without talking about the space where you store

cargo.

Chairman LIEBERMAN. Thanks. Chief Cook, have you seen any of

this high-tech stuff coming into use in the Port of Memphis?

Mr. COOK. Our Auto Theft Cargo Task Force has and is more

and more familiar with this type of equipment every day. But usually when we come into contact with these boxes, they are already

empty. We have found contraband in quite a number of them while

doing other investigations, but yes, we are becoming more familiar

with it every day.

Chairman LIEBERMAN. Thanks to all of you very much. I am

going to call on Senator Thompson because I notice we have a vote

that has just started, so I want to give my two colleagues time to

ask some questions.

Senator THOMPSON. Thank you, Mr. Chairman.

I want to follow up on the technology question. I guess most people would wonder, if we have developed this technology to this advanced stage, why are we not inspecting more? What are the limits

of technology? I mean, just for the layperson to understand, can

scanning technology with a high degree of accuracy make a determination with regard to potential weapons of mass destruction or

other things of that nature, and to what extent is it a technological

limitation and to what extent is it a cost limitation?

Mr. FINK. I think it is—— Senator THOMPSON. Why are we not scanning more stuff and

why do we not feel more secure if we have this capability?

Mr. FINK. One of the things is the initial cost. These systems

range up to $1 million apiece, and as you get more of them in operation, that cost will go down. Then there is the person who is looking at the image. We can do a lot to make that process move into

pattern recognition into the computer to assist an operator.

But there still are all deterrents, and while the payoff is high,

it is not going to be 100 percent, and one of the things that we saw,

of course, in the drug business and we now see in the theft business are organized criminal elements involvement. So they are very

much aware and drilling out parts of the container and inserting

some of their cargo in it, but you can still see some of those.

I am encouraged because the technology is proven, and I think

with quantity purchases it will be deployed. As you move inspection overseas, it raises another issue. Now you are asking the port

of embarkation of that container to perform the imaging. But it is

54

a global problem. Terrorism is a global problem. Maybe that will

be part of what will help induce some of them to do it.

One other thing I would just add. I do not know if Rear Admiral

Larrabee is here, but in some of the U.S. ports, they have volunteered to put some of this scanning equipment in just to keep the

flow of containers going. When Customs decides to pull something,

it disrupts that flow. So they have said to me, I would invest in

the gamma-ray equipment in a joint project with Customs in order

to keep the cargo flowing. Some of the terminals do not have a lot

of land to store the cargo on when Customs decides they want to

conduct inspection, they disrupt the flow. So there are a number

of business factors.

Senator THOMPSON. Mr. Acosta, what would be your response to

my question on why we are not inspecting more than 2 percent in

some categories?

Mr. ACOSTA. Somewhat the same. The systems are very costly,

and so Customs has X amount of systems. We, of course, would—

ideally, if I could set it up in New Orleans, I would like to see a

system up-river and one down-river—there are two separate areas

that are sort of divided areas—and then another system that we

could lend to some of the smaller ports, but we have one system.

The second thing is that it requires personnel to run the system.

So when you set up a gamma ray machine, you have to establish

the perimeter. There is an element in there that can be hazardous

to individuals, so we have to be able to make sure that we have

the truck run through and to set up the flow of trucks. We have

to have people inside working the machine, setting the machine up.

We also have to have people available who, if necessary, will open

and look in the containers immediately. Some containers we will

target for further examination. Others, we are so interested in the

image that we are seeing, we need to get into it right away.

So that is upwards of 10 people, and I do not know if you remember, but when I told you that the personnel put in New Orleans

today is 29 inspectors, that is a third of your workforce. It is very

difficult. It is cost for the equipment and it is personnel. If you

could give us more equipment and the personnel to operate it, we

would do all of those things.

Senator THOMPSON. Why did you stop instream, or were you told

to stop instream?

Mr. ACOSTA. They said it was a safety issue. I think that is

bogus. I really think it is bogus.

The second thing, and I did not mention it because I was conscious of the fact that I had a small period of time to deliver the

statement, the second thing is that we have been questioned recently on the number of enforcement boardings that we have determined. I guess that is a budget issue and that is a problem because

we do target vessels and we are conscious of—and I worked on the

task force that gave us a boarding policy 2 years ago and we are

not living up to that boarding policy. As a matter of fact, it just

changed.

So it bothers me that if we are true to what the policy said and

we are doing vessel targeting based on all the information we had,

and understand that sometimes it is difficult to get that information, that now, we have somebody that comes back and questions,

55

well, you have too many enforcement boardings, and I do not understand that.

Senator THOMPSON. Thank you for that. That is important.

I do want to thank Chief Cook for being here. He is responsible

for the investigation of all the crimes at the international port in

Memphis. You have one of the better interagency coordination

groups, I think, going. You pointed out the unique circumstances

there that you have to deal with. It is not only the fourth largest

inland port in the country, but the second largest inland port on

the shallow draft portion of the Mississippi River and serves as a

transportation hub and warehouse and distribution center, and

perhaps no other port in the country shares the same characteristics as Memphis.

I am wondering about a law or an approach by the Federal Government that is a one-size-fits-all. It seems to me that Memphis

has some unique characteristics—inland port, heavier concentration of activity, and so forth. Do you see your situation as maybe

needing some kind of different attention, than some other places?

Mr. COOK. I think it is not recognized as the port that it is. Memphis has never, until the last few years, really recognized its own

potential as a distribution center, but it is growing leaps and

bounds by day. In fact, I mentioned the Frank Pidgeon Industrial

Park, which is a new industrial park that is being developed on the

Southwest corner, just South of what is now called President’s Island, and it is going to be at least half as large as the industrial

complex on President’s Island.

So much of the industry that I said is in Memphis, and those

that come into Memphis, a large portion comes into Memphis, but

it is distributed within 600 miles of Memphis. And because of the

bridges, we estimated that about $2 billion worth of commerce

crosses those bridges each day. We do not think that it gets enough

attention as far as the types of visibility patrols.

Now, we are doing things as far as our agencies that I mentioned, Tennessee and Arkansas agencies who both join in taking

care of riding on the bridges and removing vehicles and so forth on

the bridges. But as far as the actual, what I think should be 24-

hour marine surveillance of the bridges from below, and also attention to the barges that are so large and so potentially dangerous

as far as striking the bridges and just completely removing them

from the river itself.

I think that is a major concern, because one barge can actually

take out both bridges, and especially from a vessel that is coming

down-river. If that were to happen, it would really destroy commerce in the surrounding area. In fact, I believe it would actually

kill it for at least 2 or 3 years it would take to rebuild the bridges.

Senator THOMPSON. I think you are right. A lot of people do not

understand the amount of traffic and the amount of activity going

on there and that makes it a port that deserves much more attention. We appreciate what you are doing there.

Mr. COOK. Thank you very much, sir.

Senator THOMPSON. We also appreciate you taking a real leadership role in terms of the Southeast in your interagency work.

Thank you, Mr. Chairman.

Chairman LIEBERMAN. Thank you, Senator Thompson.

56

I thank the members of this panel as well as those on the first

panel. I think the Committee has learned a lot as a result of the

testimony today. I would like to think about, at the next hearing

on this subject, calling the heads of the Federal Government agencies involved and ask some of the same questions of them that you

have raised here.

There is never enough time at these hearings, but there are a lot

of questions unanswered, so I am going to leave the hearing record

open for 2 weeks, and if it is all right—and even if it is not all

right—we are going to submit some questions to you in writing to

follow up and look forward to your answers.

In the meantime, I thank you very much for your time and the

great contribution you have made. I hope we can serve as advocates for what all of you want, which is a system that is both economically productive and efficient but is also secure, most important of all.

The hearing is adjourned.

[Whereupon, at 11:58 a.m., the Committee was adjourned.]

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