FOREIGN OPERATION OF U.S.

PORT
FACILITIES
(10955)

HEARING
BEFORE THE

SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE

COMMITTEE ON
TRANSPORTATION AND
INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION

MARCH 9, 2006

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Committee on Transportation and Infrastructure

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman
THOMAS E. PETRI, Wisconsin, Vice-Chair
JAMES L. OBERSTAR, Minnesota
SHERWOOD L. BOEHLERT, New York
NICK J. RAHALL, II, West Virginia
HOWARD COBLE, North Carolina
PETER A. DEFAZIO, Oregon
JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, JR., Tennessee
WAYNE T. GILCHREST, Maryland
ELEANOR HOLMES NORTON, District of
JOHN L. MICA, Florida
Columbia
PETER HOEKSTRA, Michigan
JERROLD NADLER, New York
VERNON J. EHLERS, Michigan
CORRINE BROWN, Florida
SPENCER BACHUS, Alabama
BOB FILNER, California
STEVEN C. LATOURETTE, Ohio
EDDIE BERNICE JOHNSON, Texas
SUE W. KELLY, New York
GENE TAYLOR, Mississippi
RICHARD H. BAKER, Louisiana
JUANITA MILLENDER-MCDONALD,
California
ROBERT W. NEY, Ohio
ELIJAH E. CUMMINGS, Maryland
FRANK A. LOBIONDO, New Jersey
JERRY MORAN, Kansas
EARL BLUMENAUER, Oregon
GARY G. MILLER, California
ELLEN O. TAUSCHER, California
ROBIN HAYES, North Carolina
BILL PASCRELL, JR., New Jersey
LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut
TIM HOLDEN, Pennsylvania
HENRY E. BROWN, JR., South Carolina
TIMOTHY V. JOHNSON, Illinois
BRIAN BAIRD, Washington
TODD RUSSELL PLATTS, Pennsylvania
SHELLEY BERKLEY, Nevada
SAM GRAVES, Missouri
JIM MATHESON, Utah
MARK R. KENNEDY, Minnesota
MICHAEL M. HONDA, California
BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington
JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts
JIM GERLACH, Pennsylvania
ANTHONY D. WEINER, New York
MARIO DIAZ-BALART, Florida
JULIA CARSON, Indiana
JON C. PORTER, Nevada
TIMOTHY H. BISHOP, New York
TOM OSBORNE, Nebraska
MICHAEL H. MICHAUD, Maine
KENNY MARCHANT, Texas
LINCOLN DAVIS, Tennessee
MICHAEL E. SODREL, Indiana
BEN CHANDLER, Kentucky
CHARLES W. DENT, Pennsylvania
BRIAN HIGGINS, New York
TED POE, Texas
RUSS CARNAHAN, Missouri
DAVID G. REICHERT, Washington
ALLYSON Y. SCHWARTZ, Pennsylvania
CONNIE MACK, Florida
JOHN T. SALAZAR, Colorado
JOHN R. RANDY KUHL, JR., New York
JOHN BARROW, Georgia

LUIS G. FORTUNO, Puerto Rico

LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, JR., Louisiana
JEAN SCHMIDT, Ohio

(II)

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO,
HOWARD COBLE, North Carolina
WAYNE T. GILCHREST, Maryland
PETER HOEKSTRA, Michigan
ROB SIMMONS, Connecticut
MARIO DIAZ-BALART, Florida
DAVID G. REICHERT, Washington,ViceChair
CONNIE MACK, Florida
O, Puerto Rico
LUIS G. FORTUN
CHARLES W. BOUSTANY, JR., Louisiana
DON YOUNG, Alaska
(Ex Officio)

New Jersey, Chairman

BOB FILNER, California, Ranking Democrat
CORRINE BROWN, Florida
GENE TAYLOR, Mississippi
JUANITA MILLENDER-MCDONALD,
California
MICHAEL M. HONDA, California
ANTHONY D. WEINER, New York
BRIAN HIGGINS, New York
BRIAN BAIRD, Washington
JAMES L. OBERSTAR, Minnesota
(Ex Officio)

(III)

CONTENTS
TESTIMONY
Page

Ahern, Jay, Assistant Commissioner for Field Operations, Customs and Border Patrol ..............................................................................................................
Baker, Stewart A., Assistant Secretary for Policy, U.S. Department of Homeland Security, accompanied by Rdml Craig E. Bone, Director, Inspections
and Compliance Directorate, U.S. Coast Guard ................................................
Brown, Gary L., Union Security Liaison, International Longshore and Warehouse Union ..........................................................................................................
Carafano, Dr. James Jay, Ph.D, Senior Research Fellow for Defense and
Homeland Security, the Heritage Foundation ...................................................
Flynn, Dr. Stephen E., Jeane J. Kirkpatrick Senior Fellow for National Security Studies, Council on Foreign Relations ........................................................
Nagle, Kurt J., President, American Association of Port Authorities .................
Scavone, Robert, Executive Vice President, Strategic Planning & Development, P&O Ports North America, Inc. ...............................................................

3
3
38
38
38
38
38

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Filner, Hon. Bob. of California ...............................................................................
Johnson, Hon. Eddie Bernice, of Texas ..................................................................
Kennedy, Hon. Mark, of Minnesota .......................................................................
Oberstar, Hon. James L., of Minnesota .................................................................
Young, Hon. Don, of Alaska ....................................................................................

98
109
113
121
179

PREPARED STATEMENTS SUBMITTED BY WITNESSES

Baker, Stewart A .....................................................................................................
Brown, Gary L .........................................................................................................
Carafano, Dr. James Jay .........................................................................................
Flynn, Dr. Stephen E ..............................................................................................
Nagle, Kurt J ...........................................................................................................
Scavone, Robert ........................................................................................................

70
84
91
100
114
125

ADDITION TO THE RECORD

Yoshitani, Tay, Senior Policy Advisor, National Association of Waterfront
Employees (NAWE), statement ...........................................................................

(V)

183

FOREIGN OPERATION OF U.S. PORT

FACILITIES
Thursday, March 9, 2006

HOUSE

OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON

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

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

2167, Rayburn House Office Building, Hon. Frank A. LoBiondo
[chairman of the committee] presiding.
Mr. LOBIONDO. Good morning. The Subcommittee will come to
order. Before starting, I would like to ask unanimous consent that
members of the Committee who are not on the Coast Guard Subcommittee may participate in the hearing today. We want to open
this up. Do we hear any objection to that?
[No response.]
Mr. LOBIONDO. I dont think so. OK.
We welcome members of the full Committee.
Mr. Filner and Mr. Oberstar are on their way. On both of our
panels, we have folks who have critical schedules, and I know the
most important part of this will be coming to the questions. We
talked to Mr. Filners office, and I am going to start with my opening statement and ask Mr. Filner and Mr. Oberstar and Mr.
Young, if they are here, for their statements; ask the other members to please forego opening statements. We will get into the testimony of the panel members and then get right into questions.
So, without further ado, the Subcommittee is meeting this morning to review foreign operation of terminal facilities at U.S. ports
and to review the Federal Governments process in implementing
effective port security measures.
Given the high level of foreign operations at U.S. ports, the complete implementation of the Maritime Transportation Security Act
is vital to protect our security without dampening the international
trade that is the lynchpin of our economy.
I still remain very concerned and opposed to the pending transfer
of operational control over several U.S. port facilities to Dubai
Ports World. A number of us still have many questions about this
proposed deal, and hope that the witnesses testimony will be able
to address these complex issues.
Specifically, I am interested in learning to what level was the
Coast Guard, Customs, and Department of Homeland Security involved with the initial review of the proposed sale and what level
of participation each will have in the more stringent second review.
(1)

2
Secondly, what are the concerns that were raised by the Coast
Guard and the Department, and how were those concerns addressed?
Also, does the fact that DP World is a foreign state-owned entity
affect the Coast Guards ability to share sensitive information with
security officers who, by nature of their employment, could be considered agents of a foreign government?
I believe that these questions clearly demonstrate that we need
to do a great deal more, and we have to give very serious thought
and investigation before this sale is approved.
Along with my opposition to this specific transaction, I am extremely concerned with the Administrations lack of progress in implementing the broader port security measures this Congress
passed as part of the Maritime Transportation Security Act of 2002
and successive legislation. It is now more than three years after
the passage of the Maritime Transportation Security Act, and I am
very frustrated to hear that many of these programs have not been
implemented and, in fact, on some of them we have no idea when
they might be.
Under MTSA, the Department of Homeland Security is required
to develop the Transportation Worker Identification Credentials,
known as the TWIC program, that will issue biometrically embedded security cards to maritime workers that can be used interchangeably at any U.S. port. To this date, we have not progressed
beyond the prototype stage for this critical program, and without
any creditable explanation.
The Department has not developed a format for the card or the
readers that will be used to restrict access to secure areas in our
ports. They have not developed a procedure to carry out the background checks for individuals who are applying for the card, or for
the statutorily required biometric information that will be required
on this card.
I find it totally unacceptable that the Department has allowed
this program to be delayed for this long, clearly not giving it any
priority. The TWIC card will be one of the primary means of keeping unauthorized personnel out of our ports, and I hope that the
witnesses will be able to take back with them the very strong message that we expect this program to be moving forward and that
we are tired of the delays that have incurred.
Likewise, MTSA requires the Coast Guard to develop and implement a system to track vessels up to 2,000 nautical miles from
shore that will complement the near-shore tracking capabilities
under the Automatic Identification System. The Coast Guard has
previously testified that they are working through the International Maritime Organization to develop the components of a
global system, rather than implementing a long-range vessel tracking system domestically.
While I guess I understand and somewhat agree that we should
work with our international partners to develop a standardized system, again, I am very concerned and very frustrated by the Administrations apparent decision to delay the implementation of this
system here at home. Excuses and delays for critical maritime security measures such as the TWIC card and the tracking system
are unacceptable.

3
Finally, the Department is required to establish a secure systems
of transportation program. That is protecting our supply chain to
establish standards and procedures to secure the maritime cargo
supply chain from the point of loading to arrival in the U.S. And
of all the things that we are doing, making sure that these containers are protected before they get here is one of the most important.
This program will include standards for screening of cargo in foreign ports, standards for locks and seals to maintain security while
in transit, and procedures for the Federal Government to ensure
and validate compliance with this program. It is imperative that
we develop robust measures to assure that this and other maritime
security programs are being complied with. And I do not understand why the Department has absolutely disregarded this statutory requirement.
Integrity of our containers is essential and crucial if we are able
to affect any measure of maritime antiterrorism and port security.
We have taken steps to enhance security at our ports, but I believe
we must do much more. The proposed transfer of the port terminal
facilities to a foreign state-owned entity only highlights the need
for the Administration to fully implement the full extent of the
maritime security programs required under the Maritime Transportation Security Act and other laws to work with Congress to develop any further requirements. The American people expect us to
take the necessary actions to secure our ports, and this Subcommittee will continue to work with the entire Congress to develop legislation to enhance our maritime homeland security.
I thank the witnesses for appearing today.
OK, we will break from the witnesses testimony when Mr. Filner
and Mr. Oberstar come in to see if they still wish to make any
opening statements, but I would first like now to welcome our first
panel: Mr. Stewart Baker, Assistant Secretary for Policy for U.S.
Department of Homeland Security, accompanied by Rear Admiral
Craig E. Bone, who is the Director of Inspections and Compliance
Directorate with the United States Coast Guard, and Mr. Jay
Ahern, Assistant Commissioner of Field Operations for Customs
and Border Patrol.
Mr. Baker, please proceed.
TESTIMONY OF STEWART A. BAKER, ASSISTANT SECRETARY
FOR POLICY, U.S. DEPARTMENT OF HOMELAND SECURITY;
ACCOMPANIED BY RDML CRAIG E. BONE, DIRECTOR, INSPECTIONS AND COMPLIANCE DIRECTORATE, UNITED
STATES COAST GUARD; AND JAY AHERN, ASSISTANT COMMISSIONER FOR FIELD OPERATIONS, CUSTOMS AND BORDER PATROL

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

Subcommittee and the Committee. I will be brief. You have our
prepared testimony. I will not be discussing port security, which
Admiral Bone will discuss, or cargo security, which Mr. Ahern will
discuss.
What I thought I would do is simply address some of the questions about the CFIUS process that may have arisen in connection
with this transaction.

4
First, as the Chairman asked, what was the involvement of
Coast Guard and CBP and the Department of Homeland Security
in the process? The short answer is that both Coast Guard and
CBP were closely consulted about this transaction, and DHS, actually within the Department, took the lead in addressing some of
the security concerns that we in fact had raised.
As a result of DHSs efforts, rather than simply approving this
transaction, it was approved only with a letter of assurances from
the company, from both companies. That letter of assurances had
two principal safeguards. First, it took several programs that are
voluntary for other companies and made them mandatory, a best
security practices program called the Customs-Trade Partnership
Against Terrorism.
For every other company that is a voluntary program; you enter
it in order to get certain benefits in processing. For P&O, Ports
North America, and for DPW, those programs are not voluntary,
they are mandatory. That requires a lot of recordkeeping and a lot
of specific best security practices across the board.
They also assured us that we could have access to any data
about their U.S. operations without a subpoena, without a warrant,
we simply have to give them a written request for that data. That
will allow us, among other things, to do background to obtain a list
of all their current employees and to do background checks, run
them against security watch lists and the like. And we will be exercising that authority as soon as the letter takes effect.
So we do have substantial protections that were at the instance
[sic] of DHS and run to the benefit of both CBP and the Coast
Guard.
That is a very brief overview of the process. We will be glad to
take questions. I do want to emphasize that we certainly agree that
the focus on port security and the many measures that the Chairman mentioned are appropriate areas of concern. We will be glad
to work with the members of the Subcommittee and the Committee
with respect to how to improve port security, and we look forward
to discussing those ideas in the course of this hearing.
Thank you.
Mr. LOBIONDO. OK, thank you, Mr. Baker.
Admiral Bone?
Admiral BONE. Good morning, Chairman LoBiondo, Congressman Filner, and distinguished members of the Committee. I am
Rear Admiral Craig Bone, Director of Inspection and Compliance
for the Coast Guard, with responsibility for maritime ports, vessels,
facilities, both their safety and security operations.
As Assistant Secretary Baker stated, I will be responsible for the
security portion of this hearing, and we have undertaken and completed numerous improvements in our port, vessel, and facility security since Congress enacted the Marine Transportation Security
Act and IMO established the International Ship and Port Security
Code, which parallels MTSA.
Key to our efforts has been the Federal interagency cooperation,
coupled with the engagement of the maritime industry and State
and local officials, as well as law enforcement agencies. This was
accomplished not just at the national level and through the regulatory process, but also carried out in our daily operation through

5
establishment of area maritime security committees with full interagency maritime stakeholders and State and local agency involvement.
All U.S. 3200 MTSA facilities in over 11,000 U.S. flag commercial
vessel security plans have been completed by the operators and reviewed satisfactorily by the Coast Guard. Annual compliance examinations are conducted, as well as unscheduled targeted vessel
boardings of U.S. and foreign flag vessels. Sixteen hundred
boardings since July 2004 have resulted in 143 major control actions, including, in some cases, actually expelling the vessel from
the port or not allowing it to come to the U.S. at all.
Annual compliance examination and random assessments of port
facilities have been conducted, with 700 violations and 44 major
control actions taken since July 2004. Those 44 would either stop
cargo operations or even shut down the facility.
We truly appreciate the Congressional support which has provided additional assets in the way of MSSTs, small boats and
crews, armed helicopters, increased inspectors, escorts and sea
marshals to protect high-risk vessels, command center improvements to integrate operations, AIS receivers, improved traffic management system, intelligence personnel, and many more.
We have also conducted national level exercise, as well as local
area exercises to test our response capability to threats or to an actual incident occurring to make sure there is better coordination.
Now, as I have said that, we know that there is much more to
do. Some examples include implementing home port, which is a
web-based system to improve communications within the ports and
the stakeholders within the maritime community and the law enforcement agencies. We are conducting studies on the use of barrier
booms to improve high-risk vessels and critical infrastructure; developing a marine security response team deployable 24/7 as a
counterterrorism capability.
We are working to improve screening technologies and training
for our passenger screening at both ferry and large passenger facilities; expanding AIS and LRIT, as you mentioned, through IMO;
and improving our maritime domain awareness, as well as continuing replacement of our deep water assets, our aircraft, our command centers and systems in order to support offshore operations
so we dont wait until the threat arrives here, but we address it
as far offshore as possible; and, finally, working with TSA to implement the TWIC card, which you mentioned, which is a critical element to port security in our environment.
And while much has been done, I dont want in any way for the
members here to think that we are complacent or feel that we have
closed the vulnerabilities in our ports and our waterways or our
maritime commerce that it supports. We look forward to working
within DHS and across all the Federal, State, and local agencies
and with the members of Congress as we continue to pursue security in the maritime environment.
Thank you, sir.
Mr. LOBIONDO. Thank you, Admiral Bone.
Mr. Ahern?
Mr. AHERN. Yes. Good morning, Chairman and members of the
Committee and the Subcommittee this morning. My name is Jay

6
Ahern, and I am the Assistant Commissioner for United States
Customs and Border Protection, and my responsibility is for our
field operations, to include our ports here within the United States.
It is important, I believe, today for us to have the opportunity
to discuss what role that we are playing in not only the CFIUS
process, but also in securing the United States, particularly at our
ports of entry. I think it is also important to have this Committee
and Subcommittee have a full understanding of what our roles and
responsibilities are, and I hope to outline some of those for you
with our layered defense and our mechanisms that we have in
place for protecting containers coming into this Country.
Our priority mission within CBP is homeland security, and we
dont take that lightly at all, and we believe we are Americas front
line at our ports of entry for protecting against the entry of terrorist, terrorist weapons, weapons of mass destruction or effect from
coming into this Country. And certainly I think it is also important
to realize that Americas seaports, the trading system is a global
one, and it is important to continue to understand that process.
And as we secure our seaports, we take that into consideration,
and it is certainly a work in progress as we craft an efficient system for providing security that is necessary for that supply chain,
but also making sure at the same time we dont stifle legitimate
trade coming into this Country that our economy and the global
economy so much counts on.
I will tell you also that I believe very strongly that our 322 ports
of entry in the United States are far safer today than they were
previous to 9/11. And I believe since 9/11 our Country, as well as
our organization, has made great strides in protecting supply chain
and promoting trade and travel into this Country, while, again,
maintaining the vitality of our economy, but never once taking our
eye off our security responsibility.
Our Government responsibility and our private sector partners
have instituted unprecedented programs to secure our seaports and
the cargo moving through those seaports, and I think it is important that I state that none of these programs existed previous to
9/11. Before 9/11, also, we had four different agencies responsible,
in three different Departments of Government, for protecting our
borders at ports of entry, and today we have one unified border
agency for that responsibility under the creation of the Department
of Homeland Security and Customs and Border Protection that responsibility rests within this Department and this organization.
After 9/11, Customs, now Customs and Border Protection, developed a layered defense to secure the movement of cargo and, particularly for this discussion, containerized cargo coming into this
Country, again, beginning security of the supply chain as deeply as
we can in that supply chain, taking our officers and our strategies
overseas to employ a defense and depth strategy, not making our
ports of entry here in the United States the first opportunity to intervene or interdict, but to focus on prevention and getting as deep
as we can in the support chain.
The first part of that five interrelated strategies I would like to
briefly talk about is the 24-hour rule in the Trade Act. It required
advanced electronic information on 100 percent of the cargo coming
to the United States. One hundred percent of the cargo is sent elec-

7
tronically under the Trade Act 24 hours prior to lading in a foreign
environment to the National Targeting Center here in Northern
Virginia. The National Targeting Center then deploys a risk-based
system called the Automated Targeting System, which is based on
intelligence information, as well as a rule-based algorithm set of
rules to target containers for risk coming into this Country. So it
is important to know that that did not exist prior to 9/11.
At the National Targeting Center, we have representatives from
the Coast Guard linking to the Intelligence Coordination Center, as
well as to the FBI, Immigration and Customs Enforcement, Joint
Terrorism Task Force. Many other agencies have representatives at
this Center as well.
The third component is the cutting technology, cutting-edge technology we have deployed as well. At our seaports and also overseas
we are deploying radiation portal monitors and large x-ray systems
to have the ability to look inside the containers and also scan for
radiation. Before 9/11, there were no radiation portal monitors deployed in our Country; today we have 181 at seaports around the
Country, and we continue to deploy in a very rapid pattern.
Those 181 radiation portal monitors have the ability to screen 37
percent of the 11 million containers that come into this Country as
they are departing terminals and ports within this Country to
enter into the commerce of the United States. By the end of this
calendar year, we will have 65 percent of the containers, throughout continued deployment of the radiation portal monitors. That is
a very key link and a key component of our strategy as we go forward.
A fourth initiative that is very critical in pushing our borders out
is the container security initiative. Again, this did not exist before
9/11. Currently, we have 43 ports. And that has changed from testimony in the last week and the week before from 42, because just
yesterday we opened up in the Port of Salalah, Oman. So we now
have 43 ports, accounting for about 75 percent of the containers
coming into this Country originate in ports where we have United
States Customs or Border Protection officers working with host
country counterparts using large-scale imaging technology, as well
as radiation detection capabilities to look at those containers that
have scored for risk that we receive 24 hours prior to lading. Again,
we did not have officers overseas before 9/11. As we move forward
through the rest of this year, we will be at 50 ports and account
for about 85 percent of the cargo coming through those ports.
The fifth initiative is the Customs-Trade Partnership Against
Terrorism, and as the Assistant Secretary mentioned, it is a key
component, it is one of the things that we did put forward as one
of the assurances process. Fifty-eight hundred certified members
are part of this program. These are some of the largest importers
in the United States that are joined in partnership. I believe it is
one of the largest and most successful public and private sector
partnerships since 9/11 working together to ensure supply chain security.
Together, when you take each one of these five components and
aggregate them together, I believe there is a very good layered
strategy that is in place. Certainly every one of those programs is
under a path of continuous improvement, and our goal is to con-

8
tinue to do that. But when you aggregate these five initiatives together, I believe it provides a greater protection against the introduction of the threat of terrorist attacks in this Country through
the maritime supply chain.
I will conclude there, Mr. Chairman, and look forward to taking
any questions on any of the layered defenses I have spoken about.
Mr. LOBIONDO. Thank you, Mr. Ahern.
I am now going to thank the Ranking Member, Mr. Oberstar, for
joining us and ask Mr. Oberstar for his opening thoughts.
Mr. OBERSTAR. Thank you very much, Mr. Chairman, for moving
out so vigorously and so forthright manner on this legislation, and
for your quick response on the aviation NPRM that involves a similar issue of national security with our commercial airlines and the
civil reserve air fleet issues that are associated with a proposed
regulation change that would subject our airlines to foreign ownership and endanger our national security with the commercial air
lift that was critical to Gulf War I and Gulf War II, moving personnel and equipment to the front lines aboard U.S. carriers.
For the past four years, since we enacted the port security legislation from this Committeeand it was this Committee that was
the driving force in the House-Senate conference on that legislation, we have been trying to get the rest of the Congress and the
Administration to pay attention to port security. It has taken this
Dubai ports issue, rather badly understood by the public and not
so well presented by the news media, to mobilize the Country into
an outrage over the proposed sale of terminals at critical U.S. ports
to a foreign interest which apparently a great body of the American
public do not trust.
I would separate the issue that is before us today, Mr. Chairman,
into two parts: the ownership issue and the capital flows associated
with it, and the underlying but more important, far more overshadowing, port security issue. The question of capital flows is one
that we have to think about as we look to ways of financing our
ports, and to understand that, you have to put it in some context,
that 20 percent of the world trade tonnage comes to the United
States. Ninety-five percent of non-land trade, that is, from Canada
or from Mexico, 95 percent comes by ship into the United States.
Seventy-five percent of the value comes by ship into the United
States.
We have 95,000 miles of shore line, 361 U.S. ports. Eighty percent of our port terminals are operated by foreign companies. Ninety-eight percent of the cargo that we import or export goes on foreign flag vessels. And that is an issue that has been going in the
wrong direction for the last 32 years, since I have served in Congress, despite all of our efforts to build a U.S. flag maritime fleet.
So now we have in the range of 13 million containers coming into
the United States, and the question is, where should they be
screened. Our Port Security Act had the basic principle of pushing
the border out. The further you go out with that border, the more
secure, the safer the United States is. While a witness just said
that we are going to have radiation portal monitors soon checking
65 percent of cargo, once it is here, it is too late.
We needand the point of the Port Security Act was to screen
those containers and that cargo oversees, before it gets into our

9
zone, our 200 mile economic zone. And that is the really significant
failure of the last four years, a failure to enforce and carry out the
provisions of the law, the key five provisions.
Our port security grants, the Coast Guard said that we need $5.4
billion to address the security needs at home and abroad. Congress
has appropriated $883 million; the Administration has invested
$700 and some million. We are short by any yardstick of measurement.
Background checks. The law requires that the Department of
Homeland Security set standards for background checks for persons who have access to the secure area of ports. No background
checks are required; no standards set for background checks.
Foreign flag security plans. The Coast Guard went to the international negotiations two years ago and settled on a plan that
stops the Coast Guard from hands-on investigation of, an assessment of the security plans in ports and of vessels and vessel owners, and satisfies itself with the overall scheme of the country that
says we have a security plan; they look at the plans and say, OK,
that is good enough for us. That is wrong. That is wrong. And we,
in 2004, tried to set the record straight and give the Coast Guard
greater authority to go into those plans.
Foreign port security plans. The law requires the Coast Guard to
conduct foreign port assessments on screening of cargo, access controls, authorized personnel, security management of those ports.
Those assessments have not been completed for our largest trading
partners.
Container seals, fifth point of the Security Act. We, in the law,
require Department of Homeland Security to establish standards
and procedures to secure cargo and monitoring the security while
in transit, including standards for tamper-resistant seals. None of
that has been done.
If those provisions had been put in place, Mr. Chairman, they
would have greatly mitigated the concerns and fears of some foreign country or foreign company taking over management of the
terminals at major U.S. ports. It still raises the question of whether the security review under the Florio Act has been carried out
property, and there has been a 45-day extension.
But the President said, my position hasnt changed. If there was
any doubt in mind or the people in my Administration that our
ports would be less secure and the American people endangered,
this deal wouldnt go forward, he said. Well, he is giving another
review. It seems he has made up his mind.
Well, we are going to, in this hearing, get to the bottom of some
of those issues and questions, and I appreciate very much that you
have called this hearing, and I expect that we will have a good, indepth look at the issue. Thank you, Mr. Chairman.
Mr. LOBIONDO. I thank Mr. Oberstar for his leadership on these
issues and, again, one of the things Mr. Oberstar referred to which
is disturbing for a number of us is that this proposal comes on the
heels of what we found out sort of through the back door in November, I guess, that for the first time in our history we are proposing
to allow foreign ownership of U.S. airlines. And there are many of
us who feel that any foreign ownership of critical infrastructure is
wrong.

10
That having been said, Mr. Baker, can you tell uswe understand that Secretary Chertoff was not made aware of the review
that as ongoing in this process. Is that your understanding, that
he was not made aware?
Mr. BAKER. That is correct.
Mr. LOBIONDO. Can you tell us why not?
Mr. BAKER. Yes. This process is run at the policy level, ordinarily, by the Treasury Department. The Treasury Department has
a set of escalating committees so that disputes can be resolved, as
they ordinarily are in the interagency process. The usual process
is that if a transaction can be agreed on at the assistant secretary
or staff level, then it is not raised to higher levels for discussion
by the deputy secretaries or the secretaries.
In this case, the transaction received considerable scrutiny at
DHS, from my office, from the Coast Guard, from CBP, and from
other offices. We decided that we wanted to get more assurances
from the company than had been provided; we negotiated those assurances. When we got the assurances that we wanted, since we
were the last of the agencies with questions and concerns about the
transaction, we reported back to CFIUS that our concerns had been
satisfied. The CFIUS process then determined it wasnt necessary
for deputy secretaries or secretaries to meet on the transaction,
and it went forward.
For DHS purposes, the buck stops with me. I decided that we
had sufficient assurances and did not brief the deputy secretary or
the Secretary because they were not going to be asked to opine on
the transaction in the interagency process.
Mr. LOBIONDO. Well, that is somewhat troubling to a number of
us. I want to use my additional time initially here to talk about the
overall maritime security measures. We had a discussion last week,
when you appeared before the Armed Services Committee, about
the Transportation Worker Identification Card. After that hearing
there was an ABC News report that indicated a major security
breach at the ports of New York and New Jersey. They went on
to talk about the two ports handling millions of tons of cargo,
scores of cruise ships that pass through each year, and that truckers who transport much of the cargo are issued ID cards which give
them access to all areas of the port.
And ABC News learned that the cards given to thousands of
truckers by the Port Authority of New York and New Jersey were
issued with virtually no background checks and that an investigation at these two ports found stunning gaps in security; that the
DHS report which was obtained by ABC News shows that of the
9,000 truckers checked, nearly half had evidence of criminal
records, more than 500 held bogus licenses, and that officials were
unsure of who the real identities were of these people. The intelligence report found that truckers that were in the category of not
being checked had been convicted of homicide, assault, weapons
charges, sex offenses, arson, drug dealing, identity theft, and cargo
theft, and that some of those involved were identified with a gang
called MS13, which has been described as one of the most dangerous gangs in the United States.
Now, my question is if this is going on at the second busiest
cargo port in the United States, why and how can DHS explain

11
that we have not put into place the identification card system and
as of last week you could not tell us when we might expect it? Can
we know anything about where we are going with this project?
Mr. BAKER. Yes, sir. First, I am aware of the study, and, of
course, that was done bythe responsibility for those cards and
the background checks was the responsibility of the Port Authority
of New York and New Jersey; they made the determination not to
carry out the background checks for a variety of reasons, I am sure.
It is a subject of considerable controversy what kinds of background checks and what kinds of criminal behavior ought to exclude people from working in the ports.
There are not a lot of former choir boys who sign up to be longshoremen and the longshoremen are concerned that irrelevant
criminal behavior far in the past might be considered disqualifying.
So there are some reasons on the other side of those background
checks why the Port Authority might not have determined that certain crimes were disqualifying for entry into the port.
Nonetheless, we agree with your basic point, which is that we do
need to do background checks on the people who have access to our
ports. That is why we have decided that, with respect to this transaction, we will exercise our authority under the assurances letter
to gain access to the names of all the persons who work for the terminals that are being acquired so that we can do background
checks on all of them.
More broadly, you have asked about the Transportation Worker
Identification Card, and I have taken back the concerns that you
raised at the last hearing in quite urgent terms, and I think it is
fair to say that the Department understands the urgency of beginning this process. We finished the pilots last year, about the middle
of the year, and I think in August received an evaluation of it.
We have been planning on what we will do to roll out a Transportation Worker Identification Card. Those efforts have been substantially accelerated and I think that we will be making an announcement within a matter of weeks to get that program up and
running.
Mr. LOBIONDO. I certainly hope that is the case, Mr. Baker. We
have such a high degree of frustration in not knowing how we can
convey any more strongly than we have the unacceptability of the
delays, and all the rhetoric doesnt account for anything. It has
been pointed out over and over again if we have a terrorist incident
at one of our ports, it is likely to shut down all of them. And all
of these measures, including the Secure Systems Transportation
program, securing the supply chain, which Mr. Flynn has been so
eloquent about explaining. We have got to do something before
these containers get here.
Unless the Department takes the cue from Congress with the
laws that we pass and put some emphasis on this, we will be here
a year, two, three years from now talking about the same thing,
of why there were delays. I cant say it strongly enough.
Mr. BAKER. I fully appreciate the concern here, and we share it.
I will defer to Mr. Ahern with respect to the details of some of the
cargo programs, but we certainly dont believe that we are anywhere close to done with improving the security of the supply chain
or the ports.

12
Mr. LOBIONDO. Mr. Filner.
Mr. FILNER. Thank you, Mr. Chairman. Thank you for holding
the hearing.
Thank you for being here. I apologize for missing your opening
statement, but from the tone of your answers, Mr. Baker, I dont
see any sense from the Administration that you have changed your
tone deafness on this issue, of the Dubai ports in specific or the
port security in general. In answer to Chairman LoBiondo, you
said, well, the buck stops with you, and Chertoff didnt hear this
and the President didnt hear this. I mean, there was no sense of
any mistake made. Do you think you made any mistake or do you
regret second-guessing? Would you do it differently this time
around, the next time around?
Mr. BAKER. Absolutely I would.
Mr. FILNER. Well, thank you. It took a revolution from the Country to say something.
But I just dont understand the lack of seeming concern. The Administration says it is still backing this deal, the 45 days doesnt
mean anything. In your opening statement you didnt say anything
about that. The House Appropriations Committee, as you know,
voted 62 to 2I dont know if there is any vote on that committee
like that on anythingto overturn the sale. Are you still going to
recommend a veto of this when the Congress does pass to stop on
this?
Mr. BAKER. There is a certain constraint given that we are in a
45-day period in which we are carrying out our deliberations, but
I can assure you that this is a full review without preconceptions
of how it will come out. We are conducting additional fact-gathering with respect to the security practices of Dubai Ports World,
with respect to P&O Ports North America, with respect to the Port
of Dubai. Other parts of the Government are looking very closely
at the record of Dubai and the UAE with respect to proliferation
and trade. So I think we are conducting without preconceptions
a
Mr. FILNER. I hope you will tell the President what your results
were, because he seems to have a preconception. He has continually, since this supposed review started, said he still backs the
original agreement, and Dubai, I think, this morning announced
that if we retaliate in this way, they would keep ships out of American ports. And it just seems that your initial unconcern about it
from the point of view of security is leading us into a bigger crisis.
Mr. BAKER. I would beg to differ with respect to the notion that
we werent concerned about security. The assurances that we received in this case were unprecedented. For the first time ever we
asked for special assurances in the context of a transaction involving U.S. ports.
Mr. FILNER. But the record that this Administration has on port
security, which this Committee has raised since 9/11, Mr. Oberstar
outlined them to begin with. You have not implemented the MTSA,
the Maritime Transit Security Act, I guess it is called, in almost
any of its demands on you. For example, we dont have security
standards for containers; we dont have a waywe are not scanning the containers before they get into the United States; we dont
have background checks, as has just been noticed; we dont have

13
secure entry to the marine terminals; we dont have closed-circuit
TVs. I mean, we have more closed-circuit TVs, but we dont know
what is in those containers when we learn here. And on and on.
So we are not convinced that the concern was fully taken, because there is all this other evidence. This has just sort of brought
to the surface the problems that this Administration has been having.
And I represent San Diego, California, as you know. We were
told by your agency that we did not qualify as a threat in your
UASII dont know how you pronounce itthe Urban Area Strategic Initiative grants. And when I pointed out to Secretary Chertoff
or some of your staff that I dont know of any port in America that
has three nuclear carriers, a dozen nuclear subs, we have a nuclear
power plant right nearby, we have the biggest Navy base in the
world, and we are not a threat. And the reason we are not a threat,
according to your staff, is that the Department of Defense assets
are invisible to our calculations when dealing with threats. That is,
because thethat is what they saidbecause we have the Navy
there, we are defended.
I mean, with that kind of reasoning, we are a sleepy fishing village in the eyes of the Department of Homeland Security. And with
that kind of thinking and that kind of blindness, of course we are
not convinced that you took this seriously with the Dubai thing, because you havent taken anything else seriously.
If you cant take six nuclear reactors sitting in the harbor of San
Diego as a serious potential threat to terroristsand we know that
two of the hijackers were casing us out for six months, very much
openly therethen something is wrong with your Department. And
I said I didnt know the Presidents nickname for Secretary
Chertoff, but I would say hes doing a heck of a job, Chertie, for
all this. And I say that to you, based on your answers here.
It doesnt seem you are taking all this stuff with any seriousness.
And why isnt San Diego a threat because we are the biggest Navy
base in the world? Why wouldnt that be a potential threat to the
Department of Homeland Security?
Mr. BAKER. We actually certainly appreciate the leadership this
Committee has shown on both sides of the aisle in addressing these
security issues, so I
Mr. FILNER. All right, we are not going to get an answer here.
I will just move on, Mr. Chairman. I have used my time.
Mr. LOBIONDO. Mr. Coble.
Mr. COBLE. Thank you, Mr. Chairman.
Gentlemen, good to have you all with us. When I view the operation of a port, I see a four-legged stool: you have Customs and
Borders, you have United States Coast Guard, you have the terminal operator, and the port authority. Am I reading that correctly?
Do you all see the same stool that I see?
Now, I met with a group of our colleagues and business leaders
about three years ago from Denmark, Norway, Finland, and America, and many expressed concern there that port security must be
enforced to the letter. But they were concerned that perhaps some
of this enforcement may result in compromising the free flow of
commerce. Do you have any comment on that?

14
Admiral BONE. Congressman, there is always a tradeoff any time
you decide you are going to provide prescriptive measures or checks
and balances in a system, because you are going to take the time
to review, screen, examine, stop the flow or delay the flow. So there
is always that tradeoff.
And it is a matter of risk management always in that process,
and making sure and finding ways to target that through intelligence. Not just through intelligence, but also through history of
working with those entities or those organizational entities, as well
as randomly we are able to do that.
Now, do you operate a system with zero risk? No. Do we live in
a world of zero threat? No. And I think the challenge for usand
with the guidance of Congressis identifying what is that acceptable level, what are those measures. And we usually work that
through our regulatory process to help define that, and then we
prescribe it and put it into place.
Mr. COBLE. I got you.
Now, Mr. Hayes and I represent a State that has two ports,
Morehead City and Wilmington. But these ports do not reach the
volume of ports in, say, New York, Miami, et cetera. Are ports such
as Morehead City and Wilmington receiving adequate resources to
address the threats that are there?
Admiral BONE. Again, from the Coast Guards aspect, we put into
place the resources that Congress has provided based on risk, and
we best placed those in those ports, working, again, with State and
local entities. This isntI would have added a couple more things
on your stool legs, which would have included the State and local
authority which provide security and assist us as well.
Mr. COBLE. Good point.
Admiral BONE. And also looking at the industry segment and
their capabilities to provide security as well.
Mr. COBLE. Mr. Baker, I am by no means a financial planner,
but I know we are trying to come to some sort of conclusion that
will assuage any of the discomfort that some of us have about
Dubai. Has anyone thought about the possibility of a passive ownership that would perhaps remove them from the day to day operation of moving cargo offloading cargo? Has that been raised to any
threshold?
Mr. BAKER. That is certainly an approach that has been used in
other CFIUS cases, usually in the context of defense contracts involving very sensitive technology, where it is important for every
piece of information that the defense contractor is dealing with to
be shielded from the foreign owner. So because we are carrying out
this review without preconceptions, that is certainly one possibility
that we are going to look at.
Mr. COBLE. Mr. Ahern, I have ignored you, but not intentionally.
Do you want to weigh into this before my red light illuminates?
Mr. AHERN. I would like to make a couple of comments back to
your question of the impact of security in the Port of Wilmington.
By our assessment, Wilmington and Morehead City are considered
one and the same port, and only 37,000 containers out of the 11.3
million that come into this Country come through those ports. So
we appropriately deploy the resources and the technology there to
meet that threat.

15
I would also like to go back to your other question, too, about
taking into consideration the impact on global trade and movement
of trade as we move forward with security measures, and I think
it also addresses a couple of the points that were brought up by
Congressman Filner and also Congressman Oberstar, challenging
the Department to move quicker; and certainly we want to move
quicker and we are.
But I think it also needs to be restated factually again that we
have taken our efforts overseas; we have begun defense in depth.
We did not have anybody overseas pre9/11. Today, in 43 ports
throughout the world we have United States Customs and Border
Protection officers there doing the screening and doing the examinations with the host country counterparts of those containers that
pose a risk.
And also to, again, factually restate, as far as the radiation portal monitors are the tail end of our layered process, as once they
are clearing at a port in the United States and leaving to go into
the commerce of the United States. That is not the first or the only
opportunity we have for intervention, that is the last end. So that
is the end of our multilayered systems as we go forward.
So I just wanted to restate those facts, sir, also.
Mr. COBLE. Thank you. I see my time has expired.
Thank you, Mr. Chairman. Thank you, gentlemen, for being with
us.
Mr. LOBIONDO. OK, thank you, Mr. Coble.
It is greatly appreciated that members tried to be considerate of
all the folks who are here that we try to accommodate with staying
within the time line. We have been alerted that we expect the first
vote of the day probably in about a half hour. It is expected to be
one vote, and then we should be uninterrupted for a while.
With that, I will turn to Mr. Oberstar.
Mr. OBERSTAR. Thank you, Mr. Chairman.
The additional review that is underway has brought this response from Dubai Ports World. They jointly request CFIUS to conduct a full 45-day review: DP World and P&O Ports of North
America will abide by the outcome of the review, but nothing herein shall constitute a waiver of any rights of DP World or POPNA
that have arisen from the original notification.
You are familiar with that, Mr. Baker?
Mr. BAKER. Yes, I am.
Mr. OBERSTAR. What is the meaning of the statement that they
are not waiving their rights from the original notification? Does
that original notification, after the 30-day review, give them the
right to complete the deal, that is, go to closing?
Mr. BAKER. Our view is that they have submitted themselves to
CFIUS review, that that gives us the authority, the President the
authority to say this transaction will not go forward or this transaction will go forward only when certain conditions are met, and
that they are in no different condition than anyone else who
Mr. OBERSTAR. So their statement that this further review does
not constitute a waiver of any of their rights, that is vitiated by the
review?
Mr. BAKER. In our view, that does not prevent us from issuing
whatever order we would like to issue.

16
Mr. OBERSTAR. And in the course of that 45-day review, they cannot go tothey cannot close the deals themselves, cannot state that
the original notification constitutes an authority to close?
Mr. BAKER. The Exxon-Florio Act doesnt distinguish between
closed deals and open deals. The transaction is subject to review,
and if the deal has closed, then the President has the authority to
order divestment; if it hasnt closed, he has the authority to
prohibit
Mr. OBERSTAR. You can give this Committee an ironclad assurance that notwithstanding the statement by Dubai Ports World,
that if the further 45-day review concludes that this is a security
threat, that that can be terminated or modified in some way to protect the security interests of the United States?
Mr. BAKER. That is our view, and we think we have theit is
our interpretation of the statute that will govern. This is America;
anybody can sue over anything, so I cant guarantee you there
wouldnt be a lawsuit over that.
Mr. OBERSTAR. But a $6.8 billion deal will stay on hold.
Mr. BAKER. Most of the deal, of course, has nothing to do with
the U.S. ports; the U.S. ports are about 10 percent of this deal.
Mr. OBERSTAR. Or it could go to closing and you could order divestiture.
Mr. BAKER. That is correct.
Mr. OBERSTAR. All right.
On the Container Security Initiative, Mr. Ahern, that is managed
by your agency, Customs and Border Patrol. The proposal is to establish a regime to ensure that all containers that pose a security
potential will be identified and inspected at foreign ports. However,
not all foreign governments allow our Customs and Border Patrol
to see a scan that has been requested; you only get notification that
the scan was completed. And if it has passed, they will tell you it
has passed, but that is all. What are you going to do about that?
Mr. AHERN. Well, I think first off, that is not the case, with the
exception of possibly one country, where we have some concerns
with certain privacy and authorities within one particular country.
But in most circumstances we have our officers there with the host
country counterpart as the scans are being conducted, and it has
to be done to our satisfaction or we will issue a do not laid order
for that container not to be put on a vessel for the United
States
Mr. OBERSTAR. Can you list for us
Mr. AHERN.if it is not reached to our satisfaction.
Mr. OBERSTAR. Would you list for the Committee, in a separate
document, those countries where you have such presence and such
screening?
Mr. AHERN. The 43 countries we have?
Mr. OBERSTAR. Yes.
Mr. AHERN. I would be happy to produce all of them for the 43
countries we have.
Mr. OBERSTAR. In a review that I conducted of the principal
points of export to the United States, that was certainly not the
case. Less than 5 percent of containers coming to the United States
are screened.

17
Mr. AHERN. Five percent of the universe of 11.3 million is actually scanned.
Mr. OBERSTAR. Yes.
Mr. AHERN. One hundred percent of the containers coming to the
United States are reviewed for intelligence and informational concerns through our National Targeting Center to score them for risk.
One hundred percent of those that pose a risk through our scoring
gets examined. If it is in a location where we have our officers as
part of the Container Security Initiative, that scanning is done,
that scanning is done overseas.
Mr. OBERSTAR. Well, I want to see the document that you have.
We have had difficulty getting accurate data.
Mr. AHERN. I have them right in front of me, sir.
Mr. OBERSTAR. and I would like to have that.
Mr. AHERN. OK, we would be happy to provide that.
Mr. OBERSTAR. Thank you.
Mr. LOBIONDO. Thank you, Mr. Oberstar.
Mr. Diaz-Balart?
Mr. DIAZ-BALART. Thank you, Mr. Chairman.
Let me just make sure I understood this, because there is now
this additional review, this further review. Was that also doneare
there other facilities that have the same type of arrangement with
foreign companies like the one from Dubai now is trying to get?
Mr. BAKER. The generally accepted figure is that about 80 percent of U.S. terminals are owned by foreign companies. So there
are lots of foreign companies and some foreign government-owned
companies that own or lease terminals.
I should stress that it is not necessary to go through CFIUS to
acquire or even to acquire a company to obtain those interests; a
foreign company could come into a port authority anywhere in the
United States and ask to sign a lease, and if they met the port
authoritys requirements, they could simply sign a lease; and that
transaction would never been seen at the Federal level, at least as
far as CFIUS is concerned, we wouldnt have the authority to
Mr. DIAZ-BALART. And it has been like that historically, correct?
Mr. BAKER. That is correct.
Mr. DIAZ-BALART. Are there, for an example, does Communist
China have that sort of arrangement on any of our ports?
Mr. BAKER. There is a company in, I believe, the Port of Long
Beach that is affiliated with the Chinese communist government
that has at least stevedoring arrangements. I am not sure that
they have a terminal.
Mr. DIAZ-BALART. This would be the same Communist China
that held a U.S. military plane hostage and that who executes its
own civilians pretty much at will. Was there a second review done
there? By the way, I am not saying there shouldnt be a second or
third or fourth review. My question is why was that not done with
an entity such as this group from Communist China or other governments or other such countries?
Mr. BAKER. My understanding is that those transactions were
carried out before this Administration took office, and I dont have
details on it based on my experience.
Mr. DIAZ-BALART. But as far as you know, this kind of review
didnt take place, including with such an organization that has

18
close ties or may even be owned by the communist Chinese government, the same communist Chinese government that held a U.S.
plane hostage. As far as you know, there is no review like this?
Mr. BAKER. This review is the first review in which we were
the Department of Homeland Security was a member of CFIUS,
was in a position to raise concerns. We raised concerns and the
agreements that we obtained here are without precedent. So these
issues were not flagged prior to our becoming part of the CFIUS
process.
Mr. DIAZ-BALART. Thank you, Mr. Chairman.
Mr. LOBIONDO. Thank you, Mr. Diaz-Balart.
Ms. Brown?
Ms. BROWN. Thank you, Mr. Chairman.
Mr. Baker, I have a question, and I need some understanding,
the Committee and the Country. The law is very clear in plain language, it says that the Department of Homeland Securitys rationale for deciding not to proceed with the mandatory investigation as
required by the plain language in the statute that the President
shallit doesnt say mayshall make an investigation in any instance in which an entity controlled by a foreign government
should seek to engage in any acquisition that shall affect the national security of the United States.
Mr. BAKER. The interpretation of that language, which is that if
there is no agency that believes that national security is at risk in
the transaction
Ms. BROWN. Put a period right there. In December the Coast
Guardthe Coast Guard expressed serious concerns about the
deal. I have a letter that was sent. Now, is the Coast Guard a part
of an agency in this Administration?
Mr. BAKER. It is, but I dont think the Coast Guard expressed
those concerns to the Department. Those concernsI believe you
are talking about an excerpt taken somewhat out of context, saying
that there were certain intelligence gaps with respect to that.
Ms. BROWN. Excuse me. What is an intelligence gap?
Mr. BAKER. There were certain things that the Coast Guard did
not know when it put together that report. In that report, despite
the lack of that information
Ms. BROWN. Sir, maybe the Coast Guard knew something that
Homeland Security didnt know.
Mr. BAKER. The Coast Guard concluded that this transaction
could go forward, notwithstanding that memorandum, whichand
that memorandum itself concluded that there was not a risk to the
national security from the transaction.
Ms. BROWN. You know, I have never seen an Administration that
had such a contempt for the Congress in my entire life. The Coast
Guard estimated that we need $5.4 billion for facility security.
What did the Administration request?
Mr. BAKER. The $5.4 billion
Ms. BROWN. Yes, billion, with a b.
Mr. BAKER.was an estimate of the costs that would be incurred
by the private sector in carrying out the Maritime Transportation
Security Act. Those costs were not intended to be appropriated,
those costs were incurred by the private sector, and have been incurred. The Administration has requested approximately

19
Ms. BROWN. Forty-six million.
Mr. BAKER. Three
Ms. BROWN. For all port security.
Mr. BAKER.$3.4 billion for port security, counting the
Ms. BROWN. This year?
Mr. BAKER. Yes. If you add in the port security operations of the
Coast Guard, the C-TPAT and Container Security Initiative and
the port security and security grants, it is well over $3 billion.
Ms. BROWN. Sir, listen. Dont play with me. Now, Im asking
about
Mr. BAKER. I am not going to do that.
Ms. BROWN.port security grants.
Mr. BAKER. Port security grants
Ms. BROWN. In fact, the Administration requests doing away
with them. And in answer to Mr. Filners question, we put language saying that we wanted those ports to have high consideration with militarywith militarybecause I have 14 ports in
Florida.
So we had to go back, because we werent rated properly on the
scale, when we have all of that military equipment coming in. We
put language in there that they should get high consideration. But
now you all have recommended that we do away with port security.
And who is bearing the brunt of this is not the Federal Government, but it is local government and it is the State. The Federal
Government is not pulling their weight on this.
Mr. BAKER. I think we have suggested that the programs be consolidated so that they can be used
Ms. BROWN. Bull. Consolidated. That means that you are taking
the money, doing something else with it. Consolidation, I know exactly what it means, and local government knows what it means.
With no help from the Administration, Congress has provided $883
million for port security. However, that amount represents only 16
percent of the Coast Guard estimated need. Explain that to me.
Mr. BAKER. The Coast Guard estimated those costs would be incurred by the private sector to carry out the facility security requirements of the Act. Those costs have actually been incurred;
that has been done. Those are private sector costs, they werent expected that we were going to be paying for them.
Ms. BROWN. Those are private security.
Can the Coast Guard person respond?
Admiral BONE. Again, what he has stated is accurate. Whenever
you put a regulation in place, you have to do an economic impact
analysis. Part of that analysis, in other words, is the cost worth the
risk investment. And in the case this is what we had to say, was
this was going tothese would be the costs incurred not just by the
industry, but also by the other enforcement agencies, State, local,
and individuals that would be engaged in providing assistance to
secure the facilities and the vessels. This was both for vessels and
security around facilities. So it wasnt implied that while there is
an understanding that Congress put together a grant program to
try to assist them
Ms. BROWN. It was my bill, so I know the intent.
Admiral BONE. Yes.
Ms. BROWN. I know the intent of the bill.

20
Admiral BONE. Yes. And I am not questioning the intent. I am
just trying to make sure the framework of what the estimate was
based on. And I believeit appeared to me, from where I was sitting, that the bill was to assist them with those costs.
Ms. BROWN. I yield back the balance of my time.
Mr. LOBIONDO. Thank you, Ms. Brown.
Mr. Reichert?
Mr. REICHERT. Thank you, Mr. Chairman.
Just a question for the panels regarding Seattle/Tacoma port
areas. We have some companies owned by Korea, Japan, and Sweden, and I understand that there may be, right now, a deal on the
table, a discussion, negotiations occurring with the Chinese government. Are you aware of the Chinese government showing some interest in operating port facilities in the Tacoma port, the Seattle
port?
Mr. BAKER. I am not. I believe that, if there is a change of control, that that would trigger a reconsideration of the facility security plan so that, if it happens, the Coast Guard will get an opportunity to review the security aspects of that.
Mr. REICHERT. Yes, sir.
Admiral BONE. The onlythere is one facility that currently is
Taiwanese that has operations which has a Taiwanese relationship.
So there may beyou know, because of that already, that linkage
already being there, it is possible that something like that could be
underway.
Mr. REICHERT. Thank you.
We talked about this four-or five-legged stool. Who has the ultimate authority for a particular port, is it the captain of the port,
for security?
Admiral BONE. Yes, to allow a vessel to come in for port operations within the port itself, any vessel, we can deny any vessel to
come in; we can close any facility or restrict its operation; we can
restrict any person from coming to a facility or going aboard a vessel; we can expel a vessel from the port; we can dictate operations
and restrictions within the port and the way it is carried out and
set requirements around operations if we believe there to be a security threat.
Mr. REICHERT. Does the captain of the port also have responsibility for training, security training?
Admiral BONE. For Coast Guard security training, but also for
standards set, to establish standards for industry as well, other
than that which might have been by other regulation or congressional regulation.
Mr. REICHERT. So the port facilities owned by foreign governments or foreign companies would come under the jurisdiction of
the captain of the port as far as training?
Admiral BONE. Yes.
Mr. REICHERT. Are those facilities also responsible for hiring any
security personnel?
Admiral BONE. Yes. They are responsible for both the training
program under MTSA and under the regulations that were implemented, as well as identification of security personnel and the responsibilities in providing security.

21
Mr. REICHERT. Who does the background investigation on those
security personnel hired by those foreign governments or foreign
companies?
Admiral BONE. The background investigation at this time is subject to State and local background checks.
Mr. REICHERT. There is no Federal background investigation on
these employees?
Admiral BONE. No, there isnt.
Mr. REICHERT. Who is responsible for the training of the longshoremen? Do they participate in security training?
Admiral BONE. Again, the facilities, normally. Where longshoremen are employed, it should be included as part of their plan. And
I know in New York and New Jersey, by example, there is an organization that went about training them collectively because they
operate between multiple facilities.
Mr. REICHERT. Thank you, Mr. Chairman. I yield the balance of
my time.
Mr. LOBIONDO. Thank you, Mr. Reichert.
Mr. Taylor, are you prepared or do you need a minute?
Mr. TAYLOR. Thank you, Mr. Chairman.
Admiral, number one, I want to congratulate the Coast Guard on
having the courage not to tout the company line. And I am sure
somewhere somebodys career is probably grinding to a halt. But I
want to let you know I appreciate the concerns that have been expressed on the part of the Coast Guard. And I think our democracy
is best served when people do speak their minds, even if it is not
what the folks in the White House and maybe even the folks in this
building want to hear.
What troubles meand I think you articulated it pretty well
is rather than a physical or even electronic search of the containers, it has been the Coast Guards policy to more or less rely on
an honor system, an honor system involving, in many instances, a
foreign manufacturer, a foreign port, a foreign steamship, and then
you add to that equation quite possibly now a foreign nation-held
port on our end. So given all of that, you have already got three
weak links in the chain. Why would it make sense to add a fourth
weak link in that chain?
Admiral BONE. Well, first off, post9/11, we have the infrastructure and the laws that we have with regard to utilization of ports,
who can operate within them, et cetera, and MTSA provided certain authorities to execute within that. I dont see everything as a
weak link.
In fact, I see much of industry as part of our strength in that
they have made significant investments in order to provide security. They have significant investments in and by themselves in the
manufacturers themselves to protect their cargos and not allow
them to be compromised. So
Mr. TAYLOR. If I may, Admiral.
Admiral BONE. Yes, sir.
Mr. TAYLOR. What percentage of these Chinese firms that we are
counting on to tell us something is wrong would be state-owned?
Admiral BONE. I dont have thatI dont have the exact
Mr. TAYLOR. Is it fair to say that some of them would be stateowned?

22
Admiral BONE. Government? Government owned or influenced?
If they are Chinese, I would imagine so.
Mr. TAYLOR. And arent we at opposite positions over the future
of Taiwan with the Nation of China?
Admiral BONE. Yes. But we have also had areas where we agree.
Mr. TAYLOR. OK. But getting back to the Taiwan issue, which
apparently is the biggest issue at the moment, so, again, we are
counting on, I regret to say, a possible foe, not necessarily a definite foe, but a possible foe to tell us if something in that container
could harm Americans.
Admiral BONE. I would have to defer to Customs on the container-specific issue, as they own the container cargo portion of the
supply chain. But we work closely as they target containers for examination, and if we find there is a threat or we believe there to
be a threat, we will intercept it offshore and it wont arrive at our
ports, if it is believed to be a threat and we are able to vett it.
I guess what I am notI dont want to leave an impression with
any member of Congress or anyone else that if there is a viable
threat in the supply chain, that we dont vett that out collectively
with CBP, Coast Guard, and any other agency, including DOD, to
assist us in removing that threat from the U.S. or not allowing it
to come here. And it could be a container, it could be an individual,
it could be some other cargo that is not in a container. We know
that drugs and illegal immigrants come in every day and not in
containers. I dont void myself of all the other potential threat vectors.
Mr. TAYLOR. I am just curious Admiraland, again, it is to make
my point on what I think is the weakness of your honor system
what is the Coast Guards policy on drugs for your personnel?
Admiral BONE. There is zero tolerance.
Mr. TAYLOR. Do you count on your personnel to come forward
and say I smoked a joint last weekend, or do you have random testing?
Admiral BONE. No, we have tests. And maybe, I am sorry, you
might not have been in here earlier, but since July 2004 we have
boarded 16,000 vessels and turned away 143 of those vessels or expelled them from the ports as a result of their inability to provide
for the security that is necessary. We dowe provide protection
and escorts around other vessels so that they cant be compromised
and there couldnt be a small boat attack.
Are we doing everything? Are we examining every vessel that
comes in? No. But we are using the best intelligence in the targeting system in order to address that threat, and we dont believe
I dont believe for a minute that a terrorist will say, hey, here I
am coming, I have got a weapon, and I am going to bring it to the
United States. We address and we evaluate threat and risk every
single day on every movement, whether or not it is coming foreign
or it is moving through our waters domestically, and decide how to
address it.
Mr. TAYLOR. What percentage of the approximately 20 million
container equivalents that came into the Country last year were inspected by the Coast Guard or Customs?
Mr. AHERN. I can tell you exactly of the 11.3 million containers
that came into the Country from foreign, 569,250 of those contain-

23
ers were examined by United States Customs or Border Protection.
That is the 5 percent figure that continues to be utilized.
But I think it is important again to go back to the various layers
in the overall supply chain. We do begin overseas with getting
manifest information 24 hours in advance. We then run that
through a very rigorous intelligence system to determine which one
of those pose for risk. We look at that body, that 100 percent body
that has been scanned and scored for risk, then receives our attention upon arrival.
We need to take into consideration also, as far as whether the
verification processwe like to call it the validation processof
those partners that we have under the Customs-Trade Partnership
Against Terrorism. We have gone to the foreign locations, to the
suppliers, vendors, manufacturers, to see what kind of security
practices they have in place. So it is a trust, but it also is a verified
process that we have in place under that particular undertaking of
our layered strategy.
Mr. TAYLOR. Thank you, Mr. Chairman.
Mr. LOBIONDO. Thank you.
I would please ask and remind all the members we have a lot
that want to ask questions, to try as best they can for the five minutes.
With that, we will go to Mr. Simmons.
Mr. SIMMONS. Thank you, Mr. Chairman. I will do my best to say
within the limit.
Thank you, gentlemen, for coming in and testifying today. This
is clearly an important issue. Many of us have ports in our districts; many others are concerned about the security implications
of this proposal.
Secretary Baker, on page 8 of your testimony you refer to the
role of terminal operators and you say there has been a lot of attention in recent weeks about the threats posed by terminal operators. Let me clarify what they do. They do not run ports. They certainly dont provide or oversee security for the entire port complex.
That is the responsibility of the government and the local port authority, which is usually a government agency, terminal operators
do not obtain a comprehensive window into the breadth and depth
of security measures, et cetera.
I think I understand what you are saying, but when I refer to
Coast Guard Regulations 33 C.F.R. Chapter 1, Section 105265, it
states: Security Measures for Handling Cargo. General. The facility
owner or operator must ensure that security measures relating to
cargo handling are implemented. As it goes on, MARSAC Level 1.
At MARSAC Level 1, the facility owner or operator must ensure
the implementation of security measures. MARSAC 2: the facility
owner or operator must also ensure the implementation of additional security measures. MARSAC Level 3: the facility owner or
operator must ensure the implementation of additional security
measures.
The facility operator is listed in these regulations at every level
of security, and so I dont understand. As I understand your testimony, facility operators or terminal operators have no responsibility for security, but under the Coast Guard regulations they have
responsibilities at every level. How are we to understand who is re-

24
sponsible, what those responsibilities are, and how are we to understand why there shouldnt be concerned, security concerns about
foreign facility operators when it appears, under the regulations,
that they are charged with security responsibilities at every level?
Mr. BAKER. I certainly would not suggest that they have no responsibility for security. And I think if you read on page 9 we actually say that the Maritime Transportation Security Act requires
each terminal operator, because they operate inside the port, to file
a facilities security plan with the Coast Guard that specifically details their compliance with all of the security measures required by
Federal law, including those enforced by the Coast Guard. So there
was no effort to say there was no security responsibility on the part
of a terminal operator.
I think it is fair to say that the early coverage of this issue, in
particular the first week, suggested that somehow we were
outsourcing security for eight major ports to a foreign company.
That was never the case, but it was a mis-impression that we were
seeking to combat. There is no doubt that everyone who has a facility inside a port has security obligations that are enforced by the
Coast Guard.
Mr. SIMMONS. According to these regulations, the facility operator is charged with detailed responsibilities at every level for security. According to your testimony, they dont run ports, they dont
provide or oversee security for the complex, they do not obtain a
comprehensive window into the breadth and depth of security
measures.
I just think that if there is confusion on this issue out there
and I would say that in my district there is not a lot of confusion
they dont want these facility operators to be engaged in any great
detail with the security operation of the port. But the regulations
say they are. And that is the crux of the problem. If I cant figure
it out based on your testimony and based on the regulations, how
can the American people figure it out? And I guess their feeling is,
hey, enough already; this is a bad deal, vote no.
Admiral BONE. Congressman, maybe just to explain a little bit.
Within the confines of the facility itself, again, within from basically the pier to their gates, where the trucks come in and out of
or people enter, and the fences around it, that facility, that is the
responsibility of that foreign operator to provide for the security
in other words, access control measures, not to let people through,
not to let people have access to those cargo, in other words, not unrestricted access to those cargos and to vett people as they come
through there and to protect that facility against an external threat
which may be by an individual or some other entity.
Those different MARSAC levels are different threat levels, and
they correspond then to protective measures. It may be increased
patrols, it may be increased security around particularly restricted
areas where high-risk cargos may be placed. But that is what that
responsibility really entails. It is notin any way do they know
what the Coast Guard, Customs, or ICE, or other agencies, or even
State and local police security operations are with regard to other
protective measures, or even our oversight and review of their operations in the conduct of their responsibilities.

25
So I guess I dont want to leave kind of a misunderstanding of
what port security is versus that facility security responsibilities of
that owner. Hopefully that helps.
Mr. SIMMONS. Thank you, Mr. Chairman.
Mr. LOBIONDO. Thank you. We are going to go to Mr. Nadler for
Mr. Nadlers five minutes, then we are going to break for the vote
and then go for a short recess for the vote and then come back.
Mr. Nadler.
Mr. NADLER. Thank you very much, Mr. Chairman.
Mr. Ahern, I think you stated that in 43 foreign ports all highrisk containers are screened electronically. Is that what you said?
Mr. AHERN. When we score the risk on the containers overseas
at the 43 ports
Mr. NADLER. That is what you said.
Mr. AHERN.the protocol is for those to be screened before lading.
Mr. NADLER. Yes. The answer is yes. Thank you. What percent
of all containers in foreign ports are screened electronically?
Mr. AHERN. Electronically? A hundred percent.
Mr. NADLER. What percentage of all containers are screened by
gamma ray technology and by radiation scanners?
Mr. AHERN. OK, that wasnt your firstyou said electronically.
Mr. NADLER. Forget that.
Mr. AHERN. A hundred percent through our systems are.
Mr. NADLER. I just asked the second question.
Mr. AHERN. It would be 1 percent.
Mr. NADLER. One percent of all containers are screened in a way
that would assure us that no nuclear materials are aboard.
Mr. AHERN. That is the correct number today, yes.
Mr. NADLER. One percent. And when are we going to get to 100
percent?
Mr. AHERN. As we continue to deploy additional resources and
technology to these ports.
Mr. NADLER. I asked for a date.
Mr. AHERN. Specific time frame, I dont have that.
Mr. NADLER. Would it be within a year or two?
Mr. AHERN. As we move forward for the rest of this calendar
year
Mr. NADLER. You are not answering.
Mr. AHERN.43 to 50 ports, and that will get us to 85 percent
of the containers
Mr. NADLER. No, no, no. That will get us to 85 percent of the
risky containers, right?
Mr. AHERN. That will get us to 85 percent of the entire universe
of containers.
Mr. NADLER. Eighty-five percent of the entire universe of containers will be screened by gamma ray and
Mr. AHERN. No.
Mr. NADLER. That was my question.
Mr. AHERN. Well
Mr. NADLER. Please answer my question.
Mr. AHERN. Give me an opportunity to provide it in a full context.

26
Mr. NADLER. I am not asking for that. You provided it before.
You are saying basically that eventually it will get to 85 percent
we will have this equipment in 85 percent of foreign ports and we
will screen a lot of the containers that we determine are high-risk.
Mr. AHERN. That is correct.
Mr. NADLER. OK. My point is that I think it is absurd the same
Department that determined that the Dubai deal is not high-risk
determines which containers are high-risk. I feel very secure with
that.
I believe that since any low-risk container from a reliable supplier on the way from the factory to the port somebody can substitute an atomic bomb for a television set, there is no such thing
as a low-risk container. This Country will not be safe until every
container is scanned by gamma ray and other technology to make
sure there are no nuclear materials aboard.
Am I correct in assuming that there is no plan within a specific
time frame by this Administration to put into place a situation
which every single container is scanned in the way that I was talking about?
Mr. AHERN. That would be your understanding within our organization.
Mr. NADLER. That everyOK, there is no plan to scan every container.
Let me ask you a different question. Has the DHS mandated the
use of tamper-proof seals on containers once they are scanned?
Mr. AHERN. We currently, in testing with container security devices and advanced container security devices, the initial results,
we are only seeing about a 94 percent accuracy rate, which means
6 percent of that universe of 11 million containers need to be resolved because of false alarms or nuisance alarms. So we need to
get
Mr. NADLER. So right now there is zero percent using these tamper-proof seals?
Mr. AHERN. We are in testing with the sum number of those containers. Until we actually get a reliable
Mr. NADLER. Ninety-four percent isnt reliable enough as an improvement over zero percent?
Mr. AHERN. Well, it means we will have to be resolving nuisance
alarms or false positiveMr. NADLER. And it is better to risk atomic bombs in American
ports than to resolve nuisance alarms?
Mr. AHERN. Of over 600,000 containers that are just nuisance or
false alarms. That is not a good utilization of our resources, sir.
Mr. NADLER. OK. Now, not all foreign governments allow CBP
personnel to see the scans, sometimes they only report the results
of the scan to CBP, is that correct?
Mr. AHERN. That is correct in
Mr. NADLER. And what do we do to those foreign governments
to get them to change that policy?
Mr. AHERN. We are continuing to engage to go ahead and change
that policy
Mr. NADLER. We are talking to them, in other words.
Mr. AHERN.to see if we are able to go ahead and actually have
the images remoted to us. We are looking at that technology cur-

27
rently. And also please understand, too, that we have the ability
to issue a do not lade order if it is not resolved to our risk prior
to putting on board
Mr. NADLER. Well, are we prepared to issue a do not load order
to every single container that we dont see the scan of? And if not,
why not?
Mr. AHERN. If that makes sense to us, that is what we will do.
Mr. NADLER. Excuse me. I asked you a question.
Mr. AHERN. That would not be
Mr. NADLER. Are we prepared to do that now? Not if that makes
sense. Does that make sense?
Mr. AHERN. We do it now when our risk is not resolved prior to
lading.
Mr. NADLER. Well, but you are estimating a risk. I asked a different question. Does it make sense, and if not, why not, to insist
on a do not load order on every container if we havent seen the
scan? And if not, why not?
Mr. AHERN. If the risk is not resolved to our satisfaction before
it is placed on a vessel, it will be
Mr. NADLER. Why should we not
Mr. AHERN.do not load order.
Mr. NADLER. Excuse me. Why should we not insist that we see
every single scan? Why does that not increase our security?
Mr. AHERN. We are in the process of doing that right now with
the remaining country we have had some challenges with. But we
are getting
Mr. NADLER. You just told me we are not doing that. We are not
prepared to order a do not load order on every container that we
dont see the scan of. You just said that.
Mr. AHERN. Let me put it in full context again, please. If the risk
is not resolved prior to being put on board a vessel, we will give
a do not lade order.
Mr. NADLER. Is there any otherall right. You are saying if the
risk is not resolved, but that is somebodys estimate of the risk. On
the assumption that every container has a risk if we havent seen
the scan, what are we doing and when we will be assured that we
will see every single scan? Not every single scan of a container that
someone decides is a risky container, every single container.
Mr. AHERN. I dont agree with your assumption. I think there
needs to be risk management employed on
Mr. NADLER. OK, so you dont agree with the assumption that we
should inspect or scan and see the scan of every single container,
only those containers that, on the basis of some outside parameters, are judged to be high-risk.
Mr. AHERN. No. What I want to state is, as accurately as I can,
responsive to your question, is not every container poses a risk.
You have a different view of that.
Mr. NADLER. Yes, I do. Now, why do some containers not pose
a risk, because they are reliable suppliers? Why?
Mr. AHERN. Verification of the supply chain, suppliers, vendors,
manufacturers, that have had
Mr. NADLER. All right, but once you verify the supply chain, you
have got a reliable supplier, et cetera, how can you guarantee that
some driver wasnt bribed to take a long lunch hour and somebody

28
walked in, especially when you dont have tamper-proof seals that
communicate with the U.S. Government on that container? How do
you know someone didnt put something in that container, didnt
replace a television set with an atomic bomb? So how can you always be certain of that?
Mr. AHERN. You can never be 100 percent certain.
Mr. NADLER. Ah. So there is always some risk.
Mr. AHERN. We assume a certain level of risk.
Mr. NADLER. We assume a certain level of risk and we are not
willing to follow a policy to zero out risk on potential atomic weapons. That is what you are telling me.
Mr. AHERN. No, I wouldnt say that.
Mr. NADLER. You are saying minimizing the risk, but you are not
saying zero it out.
Mr. AHERN. I am saying we accept a certain level of risk
Mr. LOBIONDO. Excuse me one minute. I apologize for interrupting. We are just about at the six minute mark, Mr. Nadler.
Mr. NADLER. Well, just finish that answer.
Mr. LOBIONDO. You are well over five minutes.
Mr. NADLER. OK, I will conclude by summarizing, then, that you
want to minimize the risk, but you dont think it feasible or proper
or desirable to eliminate the risk, and we disagree on that. Thank
you very much.
Mr. AHERN. I dont think it is feasible to scan every container
coming into the United States overseas.
Mr. NADLER. Why not?
Mr. AHERN. I dont believe, first, there is a risk present to do 100
percent
Mr. NADLER. You just said it isnt feasible. Why is it not feasible
if we wanted to? If we spent enough money, why is it not feasible?
Mr. AHERN. Well, I think certainly if there are no limitations to
finances, then certainly anything is possible.
Mr. NADLER. Would it cost billions or hundreds of millions or
millions?
Mr. LOBIONDO. Let me apologize once again. Some of us dont
want to miss the vote. I apologize to the panel. We will be in a
short recess. We will be back as soon as the vote is over.
[Recess.]
Mr. LOBIONDO. We are going to reconvene. If our panelists would
please take a seat.
Mr. Boustany was going to be next, but he is not here, so we are
going to go with Mr. DeFazio.
Mr. DEFAZIO. Thank you, Mr. Chairman. I am in a simultaneous
markup on aviation security. I appreciate the latitude.
I would like to go to the issue of the containers, Mr. Ahern.
When I had to leave to go to the other markup, you had mentioned
that if a container is identified by intelligence as a risk, it will be
screened overseas if we have persons available. Is that correct? And
then I understand subsequently you said 1 percent is screened
overseas, but another 4 percent are screened here. So that means
a total of 5 percent of all containers are identified as being at-risk,
is that correct?
Mr. AHERN. Five percent of the universe is identified for risk.

29
Mr. DEFAZIO. OK. Now, let me see if I understand the system.
There will be a factory somewhere, someplace where they load the
container. We have inspected some portion of these workplaces to
see that they have a paper plan and they have a security guard,
or whatever else. But we dont have an ongoing presence at any of
the places where these containers are packed, is that correct?
Mr. AHERN. We have done validations
Mr. DEFAZIO. Yes, you have visited the site once at some point
in time and said, OK. OK, so there is no American presence when
it is packed. So then we receive an electronic transmission or bill
of lading for that container which purports to tell us what is in the
container. And then we crank that into our security universe and
decide whether it is a risk. So we are not there when it is packed.
Now, when the container comes to the port, 1 percent are
screened overseas, OK. Now, I understand there was also a discussion of the seals while I was gone, and you have 94 percent confidence that the seals are good enough, but that doesnt get into the
whole idea of removing an entire panel of the container to access
the contents and going around to the seal, does it? I mean, basically these containers can be opened without disturbing the seal,
and even then, if you disturb the seal, you may be able to fudge
that, is that correct?
Mr. AHERN. The full answer that was provided on the 94 percent
figure I would like to restate for you.
Mr. DEFAZIO. OK, well
Mr. AHERN. We are currently in testing
Mr. DEFAZIO. The answer would be yes. OK.
Mr. AHERN. We are currently in testing and we have a 94 percent accuracy rate of the containers that are currently in testing,
meaning we have 6 percent
Mr. DEFAZIO. Again, any and all entry, not just the seal.
Mr. AHERN. The 6 percent false alarm rate on the current container security devices that are being tested.
Mr. DEFAZIO. But even that false alarm rate doesnt go to whether the container was entered somewhere else.
Mr. AHERN. These are container security devices. We are testing
actually four or five different
Mr. DEFAZIO. OK, that is good. Well, hopefully we can move
ahead and we are not, you know, going to delay further.
Mr. AHERN. We would
Mr. DEFAZIO. So now we have a containerexcuse me, sir. So we
have a container, we didnt observe it being packed; we have examined what they have told us is in it; 1 percent of the time we validate that; and then we have seals that can fail. Now we will get
to the Admiral.
Admiral, we then load these things on ships, is that correct? And
these ships, do we know who own ships registered in Liberia? Can
we see through the registry now?
Admiral BONE. We do have the owner and the operator information, as well as the flag state.
Mr. DEFAZIO. Well, do we have it really or do we get back to a
lawyer somewhere?
Admiral BONE. Well, if you are asking do we know the banking
transitional, you know, and every layer behind it?

30
Mr. DEFAZIO. Right.
Admiral BONE. No.
Mr. DEFAZIO. OK.
Admiral BONE. We have someone, an entity that is legally liable
and responsible.
Mr. DEFAZIO. But that doesnt tell us who really owns it, whether Osama bin Laden owns a fleet of ships or not, we dont know.
Now, how about
Admiral BONE. Well
Mr. DEFAZIO. If we could, let us go to the crews, and we got into
this a few years ago. The IMO has certified schools in the
Phillippines, it has never physically visited them, and they have
been documented in new reports as selling certificates. Now, that
is a problem, because you end up with incompetent people. But beyond that, can you tell me that background checks are being run
on the crews of foreign ships coming here?
Admiral BONE. I can tell you that all the crews, every individual
that comes here, runs through an intelligence background.
Mr. DEFAZIO. Right. With their fingerprints?
Admiral BONE. No, there is no biometric
Mr. DEFAZIO. No. We use the name.
Admiral BONE. There is no
Mr. DEFAZIO. The name that they gave in the Phillippines when
they bought the phony certificates.
Admiral BONE. They have a passport or a travel document.
Mr. DEFAZIO. Sure. Right. Those cant be forged, though.
Admiral BONE. And we have that as well.
Mr. DEFAZIO. A Belgian passport, do we accept those?
Admiral BONE. We have people trained to basically find and
identify those
Mr. DEFAZIO. Right.
Admiral BONE.and we have.
Mr. DEFAZIO. Sure. Butso we dont know who owns the ships,
we dont know what is in the containers, and we dont know who
the crews are.
Admiral BONE. We do know the crews, sir.
Mr. DEFAZIO. Well, you know the names of the crews; they arent
fingerprinted, we havent run thorough background checks. They
are flying under flags that can beOK, let us give you that. Do we
track the ship? Because they have to tell us where they have been.
How do we know where they have really been? Do we track the
ships? Do we require transponders on the ships?
Admiral BONE. There is AIS transponders
Mr. DEFAZIO. No.
Admiral BONE.but there is not long-range identification to
where I can place you
Mr. DEFAZIO. Right, 20 miles and it only covers a few ports. Is
that correct?
Admiral BONE. Sir?
Mr. DEFAZIO. So we dont cover the entire coastline of the United
States with that system
Admiral BONE. The AIS transponders are required on all the vessels, and the transponders are able to be received by aircraft as
well as by Coast Guard vessels.

31
Mr. DEFAZIO. OK. But we dont track every ship within 20 miles
of our shore.
Admiral BONE. We dont have a vessel tracking system
Mr. DEFAZIO. Right.
Admiral BONE.that you are referring to, but we have the ability.
Mr. DEFAZIO. We have the ability. That is good. I appreciate it.
Hopefully we will actually use that ability. Now, there are maritime companies that actually track their ships beginning to end,
because they are worriedso let us give you everything on the containers. That is great, 94 percent reliability.
What if the ship stops in the Straits of Malacca and loads a nuclear bomb? Do we have any way, other than our intelligence people might tell us about it if they know about it, but we are not
tracking that ship, so we dont know that they made an unscheduled stop in the middle of the ocean in the Straits of Malacca, because we are not requiring known technology, technology that is
used commercially, the United States of America isnt saying, you
know, what, no ship is coming to the United States of America unless we know where that was at all times and we track it at all
times, because we are concerned they might stop somewhere and
putdo we inspect the hulls of the ships?
I mean, we are worried about containers, but what about something that gets loaded on the ship? We are not very good on containers; what about loading something on the ship?
Admiral BONE. Let me answer your first question about tracking.
We would have to go into a classified environment if we are going
to talk about all the mechanisms of tracking that we have access
to.
Mr. DEFAZIO. So you are telling me
Admiral BONE. We dont have a commercial tracking
system
Mr. DEFAZIO. Right.
Admiral BONE. that we track all ships with.
Mr. DEFAZIO. So commercial companies can afford it and some
of the better ones use it, or they are worried about piracy, but we
dont require it.
Admiral BONE. Again, the Coast Guard does not have a commercial tracking capability
Mr. DEFAZIO. Right.
Admiral BONE.that the Coast Guard owns and operates, other
than near-shore capability.
Mr. DEFAZIO. Right.
Admiral BONE. And even the long-range identification tracking
will be run out of some international body, most likely, rather than
just a U.S.-owned or Coast Guard-owned and operated that will
allow us to track commercial vessels. In fact, we have a group right
now at IMO looking at the technical requirements at COMSAR and
expect a vote this May from the full committee at IMO on LRIT,
which looks extremely favorable.
But we are working to get to where you are asking, but we are
not there yet.
Mr. DEFAZIO. Right. But I guess the point is, after 9/11, the
United States could demand these things. We are the people who

32
are buying all this junk from around the world and running a huge
and growing trade deficit, and people want to ship things here; we
are not shipping much out, so they couldnt put retaliatory demands on us that we couldnt meet.
So the idea would be why not, if it is commercially viable technology, begin to demand that? OK, so we dont know exactly what
is in the containers, but we might screen them here. We dont know
if the ship stops somewhere and they loaded. What are we doing
routinely in terms of ship inspections, given the fact that maybe
the bomb isnt in the container, maybe it has been loaded into the
hull of the ship at sea? I am not talking about once it gets in the
port, because once it gets in the port, we kind of have a problem
if they decide to detonate.
Admiral BONE. At seain fact, at sea, there are at-sea
boardings. As I said, there are 16,000 boardings
Mr. DEFAZIO. Out of how many ships?
Admiral BONE. Out of 7500 foreign flag vessels that make approximately 7200 visits
Mr. DEFAZIO. Right.
Admiral BONE.in the U.S. a year.
Mr. DEFAZIO. So we do a quarter of them, basically, a little more,
a little less.
Admiral BONE. But I think, again, and, again, you know, you are
going to go back to the same issue of targeting based on historical
information and based on intelligence that we basically target vessels for that, both with regard to their cargo, their owner, their operator, their background history, as well as that of the people onboard, as well as where the cargothe cargo itself and who it may
be bound for. Those are all determinations of which vessels are
boarded.
Mr. DEFAZIO. OK, so
Mr. LOBIONDO. Excuse me, Mr. DeFazio.
Mr. DEFAZIO. Thank you, Mr. Chairman. I have got to go back
to Aviation. Thank you.
Mr. LOBIONDO. OK. Thank you.
Mr. Boustany.
Mr. BOUSTANY. Thank you, Mr. Chairman.
Last week I read the Coast Guard report pertaining to the DP
World transaction which cited intelligence gaps that would make it
difficult to determine the actual risk involved with this transaction,
and the Coast Guard, in general terms, reported that these gaps
included a potential for foreign influence on DP World, unknown
backgrounds of DP World personnel and general questions about
terminal security.
And it is my understanding that these were resolved before the
CFIUS approval, but they were resolved merely by obtaining assurances, as you had stated, Mr. Baker, that DP World would, in the
future, provide the Coast Guard with additional information about
personnel at the terminals and that they would enroll in the Customs-Trade Partnership, where they are saying that they will tighten security in exchange for the privilege of foregoing certain container inspections and so forth.
Has any additional information surfaced that has been provided
by DP World at this time, as of today? Either of you.

33
Mr. BAKER. Why dont I let the Coast Guard address the intelligence report that they generated, and we can also talk about additional information.
Mr. BOUSTANY. Thank you.
Admiral BONE. Again, just as you stated, you know, his was an
internal assessment, as we are a member of DHS and we are a full
partner actually in review of the CFIUS process. And you are correct in that the letter of assurancethis is one of those areas
where you know what you know and what you dont know you dont
know.
The letter of assurances will provide us access to that information, and, again, the contract portion hasnt beenat which point
in time the Department can ask for those names of those individuals, employees and other members of DPW or P&O if P&O personnel are being kept on to have the background check conducted,
et cetera. So we dont see anything that limits us not only to know
that, but also know what other agreements or operational agreements they have with other entities.
We dont have that visibility anywhere else other than, as the
Secretary indicated, you know, at certain military load-out facility
areas where those similar type of agreements have been reached.
So I dont see anything that is going to preclude us from obtaining
that.
We also have 30 days before a facility is allowed to operate that
they are required to amend their facility security plan, at which
point in time, for example, these letter of assurances, we can require that information or any other information we believe necessary to provide for the security of that facility. That is an amendment process that is currently in our regulations that we carried
out under MTSA. Now, we dontthat doesnt necessarily prescribe
a full security plan review, but we can identify those areas of risk
that we believe we need to address.
Mr. BOUSTANY. What action would you take, under this promise
of assurances, what actions would you take if you dont get forthcoming information within this prescribed period?
Admiral BONE. We dont allow operations.
Mr. BOUSTANY. OK.
Admiral BONE. No vessel could go to the facility. You know, you
can own something, but nobody can operate it.
Mr. BOUSTANY. Do you feel like some of the information you have
requested is starting to flow at this time?
Admiral BONE. Again, I think that once the transaction process
goes to some level of completion, I dont know that specifically, but
as that gets completed, then I fully expect, and I know the Secretary and Secretary Bakers intent is to pursue that aggressively.
Mr. BAKER. We have talked to the company, indicated that we
expect to receive the information, and they have been entirely cooperative. So as soon as we make the request, we expect to get the
information. We have done, using the assurance letters already,
baseline reviews with both the Coast Guard and CBP inspecting
current operations of the P&O North America terminals and have
gotten a substantial amount of information there. Also, I believethe
Coast Guard is doing a foreign port inspection of Dubai in this 45day period.

34
Admiral BONE. What I might offer is we have completed examination of the P&O ports that they are planning to acquire, and we
found them to be and remain in compliance, and part of the reason
for that was literally to be able to sayfor DPW to be able to not
say these were problems that existed currently at this facility, before we acquired it, these werent problems that we brought on.
Our folks just returned from Dubai, visiting all the DPW ports
in Dubai and conducting port security assessment compliance with
ISPS and found them in compliance with ISPS and, in fact, in
many areas exceeding what we have in the United States with regard to security measures.
Mr. BOUSTANY. And you are referring to all the ports owned not
only by DP Ports, but P&O as well? The entire system that would
be?
Admiral BONE. Well, the P&O ports that are being acquired by
DPW or where even DPW stevedore operations take place.
Mr. BOUSTANY. Thank you.
My time has expired. Thank you, Mr. Chairman.
Mr. LOBIONDO. Thank you.
Mrs. Kelly.
Mrs. KELLY. Thank you very much, Mr. Chairman.
There has been a great deal of attention paid to the container security, and appropriately so, but too often it is forgotten that Dubai
Port World would also operate the Manhattan cruise terminal,
where tens of thousands of passengers get on and off of boats; they
enter and leave the Country every year. We have seen that Al
Qaeda operatives have targeted cruise lines. The Washington Post
reported that just three weeks ago. The United States does not let
foreign countries play any role in security at Americas airports, so
it is concerning that they may play a role in security at Americas
flagship passenger seaport.
Before you answerMr. Baker, this question is directed at you
I know that you are going to reiterate the Coast Guard is responsible for ship security and terminal operations will continue as before, but you and I both know that operating the Manhattan terminal would give Dubai Ports detailed information about sailing
times, passenger lists and locations, destinations, crew names and
addresses, and other vital information that can compromise the
safety of the ship and its passengers after it leaves the dock. Tell
me what specific safeguards, if any, the United States Government
has demanded from Dubai Ports to prevent any of this information
from being shared with the company and utilized in an adverse
way.
Mr. BAKER. I think the assurances we have received to date address that to some degree. We have the ability to see any information about their U.S. operations. That would include if we were
concerned that they were gathering or transmitting information
about sailing times or people involved in cruise ship landings, we
can
Mrs. KELLY. Excuse me, Mr. Baker, but how do you know if they
are gathering it? We are in an electronic world; there is no paper
trail.

35
Mr. BAKER. We have authority to ask for electronic trails as well,
and it is very difficult, in fact, to hide electronic trails, both in
transmission and in the systems that you use.
Mrs. KELLY. What is their obligation to respond if you request?
Is it merely a request or is there some penalty attached?
Mr. BAKER. They have committed to us that they will provide,
without a subpoena, any information that we ask for about any aspect of their U.S. operations. And as I think you heard Admiral
Bone say, we have all of the authority we need to make sure that,
if they lose our trust, they are not going to be doing business in
the United States.
Mrs. KELLY. Well, if they own the port, sir, it is hard to say that
they cant do business in the United States. I am extremely concerned about the flow of information that could jeopardize our
cruise terminal in Manhattan. It is an important piece of the economics of Manhattan.
I want to go to another question I have, because I have only a
few minutes, and I know you are in a hurry because you need to
leave also.
The Wall Street Journal recently reported that the UAE refused
a request from the U.S. Government in 2003 to intercept a shipment of nuclear technology facilitated by a man who was later convicted by the United States for violating the weapons of mass destruction sanctions. Can you discuss how this may have been
factored into the Governments view of the UAE and this specific
port deal?
Mr. BAKER. I am aware of the allegation, and we have assured
members of the Congress that that is going to be examined in the
course of the 45-day review by the intelligence community and by
the members of CFIUS. So we are looking at that closely. I am not
sure whether it was looked at by the intelligence community in the
first review, and I am not sure that the charge has been verified;
it appeared on a Web site. I dont know whether it is accurate.
Mrs. KELLY. The charge against whom, sir? The man was found,
he was found guilty in a U.S. court, as I understand it.
Mr. BAKER. I think the question of whether
Mrs. KELLY. In 2003.
Mr. BAKER. I am sorry, I thought you were referring to a 2003
incident in which Dubai was alleged not to have cooperated in an
investigation.
Mrs. KELLY. No, the man wasthis instance I am talking about,
a man was convicted by the United States of America for violating
the WMD sanctions. And I want to know if this was factored in on
the UAE with regard to this ports deal.
Mr. BAKER. We did examine, through the intelligence community, all of the proliferation and terrorism risks associated with
Dubai, the owners of the company. We also took into account our
own experience with the company, with both companies, and they
have been entirely cooperative and professional in their dealings
with us.
Mrs. KELLY. I would like to have you give us more information
about this, if you could.
Mr. BAKER. I would be glad to.

36
Mrs. KELLY. I know you are in a hurry and I am out of time. But
I would appreciate getting more information about both of my questions.
Mr. Chairman, I hope that is all right with you.
Mr. LOBIONDO. Yes, without objection.
Mrs. KELLY. Thank you.
Mr. BAKER. Thank you.
Mr. LOBIONDO. Thank you, Mrs. Kelly.
Mr. Poe.
Mr. POE. Thank you, Mr. Chairman.
I represent Southeast Texas. We border Louisiana, where Mr.
Boustany represents those good people. Between us is a river. We
are glad about that. It is the Sabine-Neches Riverway. And you
travel all the way up the Sabine-Neches Riverway, you show up at
the Port of Beaumont. The Port of Beaumont ships one-third of the
military cargo that goes to Iraq and Afghanistan. We get it from
Fort Polk and we get it from Fort Hood. One of the terminals and
stevedore operations involved in this UAE deal is a terminal and
a stevedore operation that happens to load that cargo to Iraq and
Afghanistan.
Of course, the port is protected by the Coast Guard. And, Admiral, I want to tell you that the Coast Guard folks there do a tremendous job going up and down that Riverway in those rubber
boats. About half the people on active duty are reservists from all
over the United States. They do a good job. I wanted to let you
know that.
But this whole thing concerns me about homeland security. My
background as a judge trying outlaws for 22 years always makes
me suspect of what I see going on.
And, Mr. Baker, if I understand your comments correctly, you
say that the UAE government-owned corporation is going to employ
the best securities practice. And the more I hear about the cooperation of the UAE, this government that happens to own a corporation in our Country, it sounds like we are turning over security to
that country, we are outsourcing homeland security to a foreign
government. And we can label it something else, but that is the
way I see it and the way it comes across to me.
A couple of questions. In this CFIUS situation, how many proposals have been denied since 9/11?
Mr. BAKER. It is difficult to say that any have been denied. A
number have been
Mr. POE. Let me understand your question. Have any of them
been denied?
Mr. BAKER. Formally, no. Several, I am sure
Mr. POE. How many of them have been reviewed?
Mr. BAKER. We do about 65 or 70 a year, so approximately 450,
I think.
Mr. POE. And they have all found to pass muster on security
issues?
Mr. BAKER. No, that is not correct.
Mr. POE. But none of them have been denied.
Mr. BAKER. Well, in many cases people have withdrawn them because they did not believe that they would get approval.
Mr. POE. Because they didnt pass muster on security issues.

37
Mr. BAKER. That is right.
Mr. POE. All right.
We have heard that the Administration is responsible for homeland security and basically through Homeland Security Department, comments have been made that we are in charge of that, so
you can trust us. I dont do trust us. I want results and obvious
security measures that are employed.
Let me ask you a hypothetical. You know, if the war on terror
takes us to some other country that happens to be an ally with the
UAE, and here we are shipping cargo from Texas to the war on terror all over the world, doesnt common sense say that might be a
problem, giving that information to a government that happens to
own a company in a port that ships cargo for the war on terror?
Doesnt common sense say that that is a problem?
Mr. BAKER. Obviously, there is a lot of information that you
wouldnt want to provide to anyone outside the U.S. Government,
and we do our best, as does the Defense Department
Mr. POE. Let us just talk about the information they have. They
have the stevedore operation, they have the manifest, they know
when ships are leaving, they know what is on the ship, they know
where the ship is going, they know who loaded the ship, they know
when the ships are coming into port, they know where they come
from and what is on those ships. That doesnt seem like maybe a
security risk, letting a country, a foreign country have that information?
Mr. BAKER. Depends on the information. The information about
what is coming in is not necessarilywhat is in those containers
is not necessarily known but to the terminal operator or to the stevedoring operation. They know what container they are supposed
to move, they dont
Mr. POE. So you dont see, in my hypotheticalI am sorry, I just
have a couple of minutes.
Mr. BAKER. I am sorry.
Mr. POE. That hypothetical, you dont see that being a problem?
Mr. BAKER. There is risk in every transaction, and I am not trying to say that there is no risk in
Mr. POE. Then why would we want to take another risk?
Mr. BAKER. This risk we believe we have taken special steps to
minimize well beyond the steps that have been taken in the context
of all the other foreign owners and operators of terminals in the
United States today.
Mr. POE. It just seems like, to me, that this U.S. port marriage
to the UAE has all the semblances of a bad marriage starting out.
You know, they say that a failed marriage starts out what a deal,
then it is an ordeal, then it is no deal. And I think this ought to
be a no deal before it becomes an ordeal, Mr. Baker.
And I want to thank all of you for your time for being here. I
have some more questions, but I am going to turn them in in writing.
Thank you, Mr. Chairman.
Mr. LOBIONDO. Thank you, Mr. Poe.
We are kind of in a dilemma here because we have got more
questions for the first panel, but, Mr Baker, you have an appointment you are late for. Mr. Flynn has a plane to catch. We des-

38
perately want to hear you. And the other second panel members
also have challenging time lines. We thought we were doing a good
thing by opening this up to the full Committee. I am having second
thoughts about it.
But to the first panel, gentlemen, thank you very much. We will
probably want to try to follow up on some things at a future date.
But thank you.
And we will do a switch-out to the second panel.
I thank the second panel for joining us. We have Dr. Stephen
Flynn, who is the Jeane J. Kirkpatrick Senior Fellow for National
Security Studies, Council on Foreign Relations. We have got Mr.
Kurt Nagle, who is President of American Association of Port Authorities; we have Dr. James Jay Carafano, Senior Research Fellow
for Defense and Homeland Security at the Heritage Foundation;
Mr. Robert Scavone, who is Executive Vice President of Strategic
Planning and Development for P&O, Ports of North America; and
Mr. Gary Brown, who is the Union Security Liaison for the International Longshore and Warehouse Union.
With your indulgence, gentlemen, I am going to ask that Dr.
Flynn give his statement, and we will try to allow you, Dr. Flynn,
to get on your plane.
And then, Mr. Carafano, we know you have a pretty important
appointment this afternoon, and we will try to clear you out as
well.
Dr. Flynn, please proceed.
TESTIMONY OF DR. STEPHEN E. FLYNN, JEANE J. KIRKPATRICK SENIOR FELLOW FOR NATIONAL SECURITY STUDIES, COUNCIL ON FOREIGN RELATIONS; KURT J. NAGLE,
PRESIDENT, AMERICAN ASSOCIATION OF PORT AUTHORITIES; DR. JAMES JAY CARAFANO, PH.D, SENIOR RESEARCH
FELLOW FOR DEFENSE AND HOMELAND SECURITY, THE
HERITAGE FOUNDATION; ROBERT SCAVONE, EXECUTIVE
VICE PRESIDENT, STRATEGIC PLANNING & DEVELOPMENT,
P&O PORTS NORTH AMERICA, INC.; AND GARY L. BROWN,
UNION SECURITY LIAISON, INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION

Mr. FLYNN. Thank you very much, Mr. Chairman. I am delighted

to be back with you again to talk about this very sobering topic.
This morning we are, of course, talking about the Federal Governments progress in implementing the maritime security measures
as required by the Maritime Transportation Security Act of 2002,
and I would also like to provide some of my recommendations on
how to advance this critical agenda.
Certainly, the controversy surrounding the takeover of five
American container terminals by Dubai Ports World has had the
salutary benefit of engaging Washington and the American people
in a national conversation on the state of port security. This is long
overdue given the enormous national security and economic security stakes should the next catastrophic terrorist attack on U.S. soil
involve the global maritime transportation system and Americas
waterfront. While it has too often been lonely work, Chairman
LoBiondo, I commend you and your Committee for your leadership
in advocating that our critical maritime infrastructure should not

39
be overlooked in our post9/11 efforts to secure the American
homeland.
This is my second opportunity to appear before this Committee.
On August 25th, 2004, I provided testimony that I entitled The
Ongoing Neglect of Maritime Transportation Security. At that
hearing, I said, I believe maritime transportation is one of the Nations most serious vulnerabilities, and we are simply not doing
enough to respond to the terrorist threat to this critical sector.
Sadly, I have seen too little progress in the ensuing 18 months
to modify that assessment. Based on my visits to a dozen major
seaports within the United States and abroad since 9/11, my conclusion is that the security measures that are currently in place do
not provide an effective deterrent for a determined terrorist organization intent on exploiting or targeting the maritime transportation
system to strike at the United States.
At the Federal level, the primary frontline agenciesthe Coast
Guard and Customs and Border Protectionare just grossly underfunded for what has become essentially a brand new mission for
them, a major mission for them on 9/11. On the local and State levels, the size of port authority police forces remains tiny, providing
often only token police presence within most seaports. While the
Maritime Transportation Security Act of 2002 represented a constructive stepping off point for advancing security within this sector, we have made little meaningful progress since that passage of
that Act.
In my remarks today, I will speak to both the shortfalls of our
port security efforts within the United States and with our efforts
to advance port security overseas and provide some recommendations on how to proceed. Our domestic and international efforts
must be complementary because seaports, at the end of the day,
are simply on-ramps and off-ramps into a global transportation
network. To focus on just the security of U.S. seaports is a bit like
hiring a network security manager who only puts in place firewalls
to the computers in reach of his desk. If the whole network is not
secure, such an effort would be futile.
To begin with, we must be candid in acknowledging that the
MTSA is more of a sketch than a security blueprint. That is, it sets
forth general requirements without establishing minimum standards for satisfying those requirements. For instance, the MTSA requires vessels and marine facilities have a plan for establishing
and maintaining physical security, passenger and cargo security,
and personnel security.
However, it does not actually define what that security is. It requires that there be a system for establishing and controlling access to secure areas of vessels or a facility, but it doesnt elaborate
how that should be done. It mandates that there should be procedural security policies, but provides no guidance on what those
policies should be.
The MTSA requires that there be a qualified individual to implement security issues, but sets no standards on what it takes to
be qualified. There are not even any minimal training standards
that are required. The Coast Guard has worked with the Maritime
Administration to create a model training course, but there is no

40
requirement that a facility or ship security officers attend a certified course based on that model curriculum.
The International Maritime Organizations International Ship
and Port Facility Security Code, the ISPS Code, mirrors the MTSA
in that it provides a framework of requirements without stipulating
specific standards for satisfying those requirements. Ships and port
facilities must have security plans, security officers, and certain security equipment, but the Code leaves it up to each foreign government to provide the specifics.
There are no minimum training standards for becoming a qualified security officer. There are no mandatory guidelines of what
constitutes perimeter security. There are no mandated requirements to govern facility access controls. It is also important to
point out that while most ships are in the business of moving
cargo, the ISPS Code does not address cargo security.
When it comes to port security, the buck is essentially stopped
outside of Washington, D.C. Since seaports in the United States
are locally run operations where port authorities typically play the
role of landlord, issuing long-term leases to private companies, it
falls largely to those companies to provide for the security of the
property they lease.
Just how far we have to go I think is best illustrated by the case
of the Port of Los Angeles, our Nations biggest port complex with
Long Beach. In the case of Los Angeles, they have 7500 acres of
facilities that run along 49 miles of waterfront, and that security
is being provided by minimum-wage private security guards and a
tiny port police force of under 100 officers.
The situation in Long Beach is even worse, with only 12 full-time
police officers assigned to its 3,000 acres of facilities and a small
cadre of private guards provided by the port authority and its tenants. I saw more security guards on the La Guardia security check
on my way down here today than we have to patrol the entire Port
of Long Beach. The problem of how to control what comes into the
terminal is compounded by the fact that there are 11,000 independent truck operators who are authorized access to the port terminals, and yet there is no credentialing system in place to confirm
the background of the drivers.
Mr. Chairman, you mentioned about the ABC report. At least in
the case of New York-New Jersey, they actually have a pass system
for who comes into the port. In L.A.-Long Beach, and most of our
ports, that doesnt exist. So it would be difficult for DHS to go in
and do these background checks of whether people have criminal
records or not, simply because there is no pass system in place in
most of our seaports.
The West Coast terminal operators have no way of even identifying who is on their facilities at any given moment. In the four
years since September 11th, the two cities have received less than
$40 million in Federal grants to improve the ports physical security measures. That amount is equivalent to what American taxpayers spend in a single day on domestic airport security.
Now, all this is on the on-ramp side of things, or the off-ramp
here in the U.S. The real challenge is that we are facing a threat
that is likely to emanate beyond our shores. And here the problems
that I worry about areI have talked to you about frequently be-

41
fore this Committee and othersis focused on the issues of the
intermodel container, because it goes way into a country where we
initially put into a factor, load it on local trucks that bring it often
to multiple weigh stations before it gets to a major port, and then
is loaded on a major ship arriving in the United States.
There are a lot of places along that trail where there is chance
for real mischief. And we know there is because we have seen lots
of crime and smuggling in the same system here. And, yet, when
we look at the safeguards that we have in place to deal with all
this, in addition to the limits of what is happening on the ports
themselves, the challenge of physical security, perimeter security,
access control and so forth, and when we face another piece of this
will be the ships coming to us, we would like to know where they
areand, again, we have this Automated Identification System set
by the MTSA, and yet the Coast Guard basically has a line-of-sight
system where it does not have the means to routinely track vessels
from long distances away. It is an honor system.
The 96-hour rule that requires that vessels tell us their last five
border calls, that tell us what cargo they are bringing, that tell us
who is on the ship is an honor system. There is no way to verify
they are 96 hours out. There is no way to verify those are the five
last ports of call they make. You can do a lot of detective work, but
it is an honor system. The Coast Guard isnt routinely out there
verifying that the vessels are where they say they are. And for
most shipping, since it is legitimate, that works fine. But it is a
problem worrying about the illegitimate that we need to be focused
on.
The customs, of course, overseas is relying on Container Security
Initiative teams. This is a big progress, putting agents overseas.
However, their targeting over there is the same targeting criteria
they use here, which is ultimately based on reliance on the cargo
manifest information. This manifest information may not even provide the point of origin where the container was first stuffed. That
would be an import document.
But that is not routinely provided to Customs 24 hours in advance of loading. So the decision about what poses a risk is based
on essentially second-party information provided to ocean carriers
who basically tell Customs this is what we think our customer says
is onboard, and from there we decide what poses a risk or not.
The issue, of course, going back to the supply chain, relying on
C-TPAT. This is a very positive thing involving the private sector
in this enterprise, but because Customs does not have adequate resources to actually even process the applications, never mind routinely verify that in fact companies are living up to the security
plans they provide themand this is a complicated businesswe
have a lot of free-riders in this system, people who participate in
the program that, frankly, are not vesting much in security.
We have, of course, the ISPS Code. We are required by MTSA,
as requires the Coast Guard confirm that in fact overseas ports and
terminals are abiding by this agreement. And yet, the Coast Guard
has a total of 13 international security liaison officers to service
Europe, Africa, the Middle East, Latin America, and the Caribbean. Now, Brazil has 25 ports onto itself, but a country visit is

42
often a two-to three-day stop-by, visit one port, and the country is
good to go.
What we are building here is a house of cards. What is going to
happen when we have a maritime incident is virtually all these initiatives to manage risk are going to be implicated. It will be from
a C-TPAT company, it will be going through a CSI port on an
ISPS-compliant facility, on an ISPS-compliant vessel, and it will arrive in the United States and will have a major maritime terrorist
incident.
And when we want to restart the system as we close down afterwards, we are not going to be able to restore public trust because
the kind of questions that you are asking today are going to be
asked with a lot more rigor post the next event. And if we cant
answer satisfactorily that risk can be managed, we are going to
shut down the system.
We are putting a lot of money into something called missile defense. The technology that is associated with that is a very high
bar. The expense is quite high. But we are saying in that program,
basically, a zero tolerance about the risk of weapons of mass destruction put on a ballistic missile sent to the United States. And,
yet, we basically have a trust-but-dont-verify system for being able
to safeguard us in the event that a weapon of mass destruction is
put in a cargo container and shipped into our ports.
We have a very long way to go. The technology is there. I think
the will and the capabilities within these agencies are largely
there; they simply havent been resourced, it has not been made a
priority. And if we dont get this right, what we are seeing, I think,
in these last few weeks is the kind of reaction that we would likely
get post an event. This is like a World Trade Center I scenario we
hear.
We are worried about the potential security risk associated with
DB Ports World deal, and, in my own view, it ranks very near the
bottom of the concerns to have the specific issue of terminal operators, because all these other gaps should be of much higher priority. But we are worried about it enough that we are looking at fundamentally changing the way this system works. And I worry that
post the event that we may have in the not-distant future, we
wont even have a conversation about how best to do this, we will
just simply take actions that may in fact be cures worse than the
disease.
Now is the time to act, to work out the kinks, to put into place
a robust system. But what is key to remember here is that the terminal operators at the end of the day, the global terminal operators, like DP World, whether it ultimately gets this piece of properties on the U.S. or not is going to have to be a part of how we
deal with global security, maritime security.
Dubai World is going to have one-half of the Port of Karachi. If
you want to get a weapon of mass destruction from Pakistan to
Dubai, or anywhere else in the Middle East, you are probably going
to go through a container terminal. One-half of it is going to be by
a global terminal operator called Hutchison Port Holdings, the
other is going to be Dubai Port World. We are going to need to cooperate with that terminal operator to put in place counter-proliferation controls, even if something is not destined here.

43
So we have to be very careful, I think, as we proceed with our
legitimate concerns about seaport security in the United States
that we are keeping an eye on the fact that it is a global system,
and we have to work with all the partners who are legitimate. If
that is what the end of the 45-day review gives us, we have to work
with them in order to put in place the adequate safeguards.
Thank you very much, Mr. Chairman.
Mr. LOBIONDO. Thank you, Dr. Flynn. We are going to ask a couple of questions of Dr. Flynn and let him try to catch his plane.
Thank you for this rather comprehensive overview of where the
shortfalls are, and I know that you have been talking about this
for years. And if there is any good to come out of this latest incident with the United Arab Emirates, it is that I think more attention is being paid to maritime domain awareness. Your testimony
last week before Armed Services I think was very powerful. I have
appreciated the fact that you have at least gotten the attention of
more people with your ability to get the story out on 60 Minutes
and National Public Radio, which I both listened toI have listened to both.
But we have a great deal of frustration because most of the members are off doing other things, everybody is pretty busy, and this
window that we have to make an imprint on changing how we are
handling port security is, I think, very small. And I am very frustrated that we cant seem, no matter how loud we shout, no matter
how loud you shout, to get other members of Congress, to get the
Administration to pay attention to these issues.
Obviously, if we had an incident, people would pay attention very
quickly. And, obviously, if we had an incident, the faucets of money
would open up and, you know, money would flow into port security
like it did the aviation security, some $25 billion overall.
With what you have seen, Dr. Flynn, and what you have heard
and what you have observed, we have got the aspects of the MTSA,
which have not been implemented, where no action has been taken,
and there are lot of critical areas here. But the difficult part getting any of them started is then trying to prioritize, because they
are not going to do them all at once. If you had to offer us advice
on what we should focus the most on, the quickest, what would you
say?
Mr. FLYNN. I think the first is the need to focus over there, to
continue what has been an effortcertainly the Administration has
taken important steps in putting Customs agents overseas and
adopting the ISPS Code in order to get our trading partners and
other maritime nations to share a common vision about where we
need to go. The problem is there still isnt much behind these curtains.
And so I think the top priority should be working with the overseas terminal operators and putting in place a system that are
being piloted in Hong Kong, where every container coming into the
truck gate, or one of two truck gates and two terminals in the Port
of Hong Kongthe busiest terminal in the world is the Hong Kong
International Terminalis getting a radiation image, a cargo scan
image, and a picture of the containers number and putting it into
a database.

44
The ability to capture all that datanot necessarily to examine
and scrutinize everyone, but capture all that datais something
that I think the industry can put in. The technology is available,
and it would help us in so many positive ways, both in terms of
creating I think a more effective deterrent than what we have now
in the system, but basically give a primary screen tool even to deal
with false alarm issues that we dont have right now if we target
a container overseas, which can wear out your welcome mat. For
the 1 percent you have, if you constantly pull boxes out and it
turns out there is nothing there, you are causing disruption, you
are causing expense, and so primary screens of everything coming
through could be helpful.
It also can support counter-proliferation. I was talking about that
in my remarks the Karachi to Dubai issue. The Department of
Homeland Security doesnt have that as a focus, but the President
has made counter-proliferation a top priority. Well, this material,
as we know from Kahn network, moves through this system. As we
build visibility in the system, we provide the means to support
counter-proliferation as well. And I would hope that some resources
come out of the intelligence community could then be applied to
this problem, not just relying solely on Customs and Coast Guards
resources to deal with this.
So putting this basicallyturning to the terminal operators, the
four biggest in the world would account for about 8 out of every 10
boxes coming to the United States, encouraging them to essentially
make this investment, which they can recover through a surcharge
for imports coming through, would be a big step forward that I
think many who have looked at it said this could work at a reasonable cost, without disruption, that would make it a qualitative leap
forward and giving us physical evidence that low-risk is low-risk.
The second priority I would make would be the issue of some sort
of third-party audit of the security plans. Customs will never have
enough agents to do this; Coast Guard will never have enough
agents to check everything overseas. Let us create essentially a
third-party audit system where we then, Government, audit the
auditors by setting high bars, bonded systems, folks that go out
and check whether in fact companies are living up to what they say
they are doing in terms of supply chain security.
And the third option in terms of priority would be getting a handle on the whole issue of who is in the port on our end, because
you can attack a port not just by bringing stuff overseas, but just
by driving a truck in it full of explosives, and there is plenty of that
stuff around here as well. So the need to get on with the
credentialing process and knowing who is in the port, the TWIC
process plus, anybody who is in that port, we should know who
they are in order so that we can, if we have intelligence, we can
manage that, but we can have some sense of adult supervision in
these critical assets.
So those would be the three things I would focus on: moving towards overseas, developing a radiation and gamma imaging and
other technologies, creating database of what moves through the
system, the third-party audit, and then, lastly, the TWIC process.
I just want to make, I think, an important point as well about
radiation portals that are currently deployed a lot in our ports that

45
the Assistant Commissioner Ahern spoke about. Radiation portal
technology such as the one we are using today will not help you
find a nuclear weapon; they will not findthey wont be able to detect a nuclear weapon, they wont help be able to detect a lightly
shielded dirty bomb, and they wont detect highly-enriched uranium.
Other than that, it is a great technology. It is capable of spotting
plutonium and an unshielded dirty bomb. And the idea of putting
radiation portals with gamma imaging together is that the radiation forces the need for shielding, and then the screening will see
a dense object where there is not supposed to be a dense object.
That application makes sense; it is affordable; it has been demonstrated in Hong Kong.
But running away with lots of radiation portals in the United
States and doing ribbon-cuttings to say we have made ourselves
safe from nuclear weapons here is not quite true with basically
whatrepresenting what that capability really provides. We really
need to get a handle on that.
Mr. LOBIONDO. How long has the Hong Kong project been running?
Mr. FLYNN. It started first in one terminal, Modern Terminal, in
September, the first sort of startup, but it really has been running
full test since January 2005. So a full year now or 14 months. In
that time they have collected more than 1.2 million images of everything moving into those gates. And if I put that in contrast,
CBP, through the Container Security Initiative, has examined
about 3500 containers during that year under the CSI protocol. So
we are capturing and have the ability to capture that amount of
information.
And this is no U.S. money and no Hong Kong government
money; this is the terminal operator who invested in this capability, one who, by the way, does not have any terminals here in the
United States. Hutchison Port Holdings has no terminals in the
United States, but is vested in the network and vested in the system, and is terrified, legitimately, that if we shut it down, their
whole enterprise implodes.
Again, I think it is important to realize these global terminal operators, with appropriate checks and supervision, are an ally in
how we can go about building a system, they are not just the problem. The key is not the ownership, for me, it is adequate rules and
oversight of those rules. And we have to partner with foreigners
it is part of dealing with that outside worldand we also have to
make sure that they are playing by rules that safeguard our interests. And my experience has been, dealing with terminal operators,
all of whom are foreign owned, and many of the liners, is that they
are for leaning on this, because it is their billions of dollars of capital investment that are at stake.
Mr. LOBIONDO. My recollection from Armed Services last week,
when you gave testimony on the Hong Kong pilot project, was that
DHS indicated that maybe this could work, but we dont have anywhere near enough data and we have got to wait much longer to
see if in fact this is viable. In your view, how much longer do we
have to wait before we decide that this is a viable system?

46
Mr. FLYNN. Well, the good news is there is progress. DHS, the
Deputy Secretary, Michael Jackson, has essentially directed the
Department in late December, Customs, to take a solid look. They
have begun the process. They have a sample, I believe, of 20,000
images, which are now sort of looking at how will they work into
the protocol.
So it is not a case that they have not been entirely disengaged
from this process; they have been tentative because it is not a
sponsored project. There is no requirement for them to evaluate
this or anything else. So they have been looking at it sort of hesitantly, but now there is more engagement on it, which I think is
constructive.
The issues are legitimate on CBPs part. You know, they have legitimate concerns about essentially giving another big ticket highly
visible program without their resources to actually manage it, the
IT backbone, numbers of inspectors and personnel and so forth.
Those are legitimate concerns. I mean, if the industry ends up
making what could be about a $1.5 billion investment to do this
globally in the four biggest terminal operators companies and we
work to get that built in the rest of the area, and it turns out CBP
doesnt have the IT trunk to access those images, doesnt have
enough inspectors to do examinations, then it is an albatross for
them.
And, so, given the track record of setting new requirements like
the MTSAI mean, the MTSA requires that the Coast Guard do
all these audits, but nobody provided any new billets for them to
do it; they had to take it out of hide. So there are legitimate concerns, I would say, within the bureaucracy about taking on another
ambitious program, but not adequate funding to actually execute it
and then ending up being with more egg on their face.
This is a soluble problem. We are not talking about massive
numbers of people. The IT problem is manageable. The people in
San Diego can, right now, see all those images that are being collected in real-time throughremotely in San Diego. So it can be
done in Northern Virginia, where the National Targeting Center is,
as well, as the actual containers are moving through, if they knew
to target it.
But certainly they can go after the archive. It is doable, but there
are practical issues. You need to have the IT backbone, you need
the bodies. And if this is a big program, then they need the resources, they need commitment from the Administration and from
this body, obviously, that they will get them.
Mr. LOBIONDO. I have got a couple more, but let me turn to Mr.
Nadler.
Mr. NADLER. Thank you, Mr. Chairman.
It is good to see you again, Dr. Flynn. Dr. Flynn, this mornings
testimonyI dont know if you heard Mr. Aherns testimony in response to my questions this morning. He said that it was not feasible to require scanning of all containers in the foreign port. Is
there any reason it is not feasible?
Mr. FLYNN. I mean, I think in principle, yes, we could mandate
it happen. What I would be worried about is right now there is not
the technology available to deploy this in this next year. If we said

47
this applies by July 1st, everybody has to have it, it wouldnt be
feasible
Mr. NADLER. Because we dont have enough of the scanning machines?
Mr. FLYNN. Yes. The machines would have to be fabricated. Nobody has taken on that scale of a project, so you would have to
manufacture them, you would have to deploy them
Mr. NADLER. How long do you think it would take to do this?
Mr. FLYNN. I think you could set a clock, a reasonable clock, of
two to three years, and
Mr. NADLER. So we could require
Mr. FLYNN.graduated process.
Mr. NADLER. So we could require that in two to three years every
container be scanned in the foreign port before it gets put on a ship
bound for the United States?
Mr. FLYNN. I think that the marketplace could respond to that
requirement if it were set with that kind of time frame. What I
would say is that there is an opportunity I hear I think with this
controversy that the main operators would do it on their own if
they know that in fact the data they would produce is going to be
used and if basically they can apply a surcharge to cover the costs.
Mr. NADLER. Now, Mr. Ahern also said that we dont need to do
that, in effect, because we are on track, that we are going to be
scanning all the high-risk containers. Now, it is my contention, and
I sort of said this to him, that we dont really know what high-risk
containers are, that our low-risk container, the driver can be bribed
to take an extra long lunch hour and somebody can put an atomic
bomb in a container operated by a very reputable company, and no
one knows the difference.
So, in your judgment, is it necessary for the security of this
Country to really go on track toward scanning all the containers,
as opposed to somebodys judgment as to what high-risk containers
are?
Mr. FLYNN. I think the good news with the application in Hong
Kong is it is not possible to build it into the truck entry process
without scanning every container, including those who dont come
to the United States, that, basically, it doesnt make sense. You
cant create a traffic pattern for just U.S.-bound containers. That
means the cost of doing this is applied to everybody.
The issue becomes actually analyzing all those images, and the
time that that would take. Now, clearly I think, in time, you are
going to see computer-assisted tools that will so support that, but
the answerthe particular concern I share that you have, Congressman, which is how is it that Customs knows what is highrisk. And the fact is, as we know, our intelligence services are broken big time, and we are having a real struggle reorganizing that,
and I would say it is 10 to 15 years before we are probably going
to
Mr. NADLER. So we dont really know what is high-risk and what
is low-risk.
Mr. FLYNN. We dont. And, further, the assumptions about what
is risk is built around past efforts of criminality, which are ongoing
conspiracies. And there we can see that there is a tendency to

48
gravitate to the weakest links in the system, but terror is actually
likely to be a one-short deal
Mr. NADLER. Exactly.
Mr. FLYNN.and so penetrating a legitimate company once is doable in almost any circumstance.
Mr. NADLER. And, therefore, there is no definition of high-risk
and low-risk that makes sense in an anti-terrorist situation.
Mr. FLYNN. Well, I think you have to view every container as a
Trojan horse and as a high-risk.
Mr. NADLER. OK.
Mr. FLYNN. If we can verify it in the systems that we are talking
about here would provide to mean that low-risk is low-risk.
Mr. NADLER. So we should go to a system where we require
every container be scanned as rapidly as feasible.
Mr. FLYNN. I think we can go to that system, and it would be,
again, setting a reasonable time frame so the market could respond.
Mr. NADLER. As rapidly as feasible.
Mr. FLYNN. And thenI do. And what I would set, though, is a
tiered system for analysis right now
Mr. NADLER. OK.
Mr. FLYNN.that would basically use
Mr. NADLER. Yes, you said that in your testimony.
Mr. FLYNN. Very good.
Mr. NADLER. Let me ask you a different question. Right now we
dont require seals on the containers that are tamper-proof and
that would notify, in effect, a GPS or somehow notify the United
States if that container was tampered with or opened after it was
scanned. Do you think it would be a good idea or a mandatory idea
to require such seals on all containers after they were scanned?
Mr. FLYNN. Yes, I think we have certainly got to do something
about the seal issue. Again, there are lots of ways one could defeat
the technology. You would want to have it checked. I would say one
thing about building this beachhead in an overseas terminal is if
you did have the seal and it had that information, it could be
downloaded before it enters the terminal. So that would work, I
think, well.
Mr. NADLER. OK.
Mr. FLYNN. There are still some kinks with these seals; the false
alarm issues and how you reconcile them and so forth. One thing
is the Operation Safe Commerce Initiative, but nobody knows what
the results are. You know, this has been treated as super-secret
stuff. We need to know what basically we learned as a Government
by doing lots of tests and figure out how we can improve on it. But
I think we will reach a point where seals are used on containers
for supply chain visibility and accountability purposes.
Mr. NADLER. Thank you. Finally, Congressman Oberstar, the
Ranking Member of the full Committee, and I yesterday introduced
the Sale Only If Scanned Act, the SOS Act, which essentially requiresthe bill said one year; maybe we will change it to two
yearsthat no container can be put on a ship bound for the United
States unless that container has been scanned with the latest
available technology as defined as you have been talking about
gamma radiation plusgamma ray plus radiation detectionand

49
has a proper tamper-resistant seal that will tell you if it is tampered with; and that we should require as a matter of law that no
container can be put on a ship bound for the United States until
that has been done.
Now, within this time frame of two to three years, do you think
that is reasonable legislation, that that would greatly enhance our
security, or not?
Mr. FLYNN. The key is the time frame.
Mr. NADLER. Within the time frame that you specified.
Mr. FLYNN. My sort of approach here right now is let us see if
we can get the four main terminal operators to jump forward and
do it here and work out the kinks, and then definitely set the requirements that would move. We want a universal system that gets
us there.
And I think there is an opportunity here for the terminal operators themselves to embrace this if they get the right signal from
the U.S. Government that we would use the data and move forward. There is some value in that, obviously, if the market takes
the ownership of the issue, but the signal from Congress that basically we need to have a trust-but-verified system and we need the
best
Mr. NADLER. And what we heard from the Administration this
morning is that they see no necessity of scanning any but the
highas they define the high-risk containers. Your testimony is we
dont really know what high-risk containers are because of a oneshot terrorist deal, and that we must go to a system where we will
scan every container as soon as feasible.
Mr. FLYNN. I think if we adopt that globally, we will also make
a big step forward on counter-proliferation, which is also another
critical issue of our time.
Mr. NADLER. Yes. Thank you very much.
Mr. LOBIONDO. Just one last question, Dr. Flynn. Is Hong Kong
able to do anything with chemical or biological scanning?
Mr. FLYNN. Let me be clear that what this pilot project that was
done by the private company was designed to show if it was possible to collect scanning data on every container, truck entering
into a busy terminal at 300 trucks an hour. No analysis was done
on this data because the private players dont make judgment
about the risk, it was they can make this available. So the answer
is no on the chemical and biological, there are not sensors in place.
It is a radiation portal, it is gamma ray technology. That is what
it would be focused on.
Mr. LOBIONDO. So that would be a whole separate problem we
would have to worry about.
Mr. FLYNN. It is a complicated problem, particularly when you
get to biological. The problems with biology, most of the tests we
use, like pregnancy tests, have very limited shelf life because they
actually have live agents in it to react to the agent. Chemical is
a little more straightforward.
But with the tools we have, I think you are able to do both the
imaging I think is important to see whether you are seeing things
in a shipment that is not supposed to be there. The notion is, if
it evolves, as you merge commercial data, you will start to have archival information what Nike sneakers look like repeatedly, and

50
the software will automatically check and say there is a big something in here which doesnt belong; it could be a weapon, it could
be components for a weapon of mass destruction, or it could be
chemicals or whatever.
That would be helpful obviously for dealing with the counterdrug issue as well. A lot of the chemicals, for instance, that are
used for methamphetamine are coming out of a place like India.
Legitimate companies and transactions end up in Mexico. We cant
see that right now, and that feeds that problem. The more transparency and visibility we can advance from the system, a lot of
public goods will be served beyond just a terror threat.
Mr. LOBIONDO. Mr. DeFazio, Dr. Flynn was trying to catch a
plane. I dont know, if you have got questions, if you will be able
to
Mr. DEFAZIO. I alwaysI have read his book. I appreciate his
comments. Mr. Chairman, sorry, I have been back and forth with
the Aviation Transportation Security Administration markup.
And I dont know if this would be repetitive, but, if you could,
Dr. Flynn, I have seen your comments in the press regarding the
Dubai transfer and where it doesnt raise to a level of concern, but
you are raising other points about security at the ports. I dont
know if you were here for the first panel.
Mr. FLYNN. I was, yes.
Mr. DEFAZIO. You know, II mean, do you think that some of
those issues I raised, the fact that we really dont track ships as
they move, I mean, something could feasibly be on-loaded, even if
we had secure containers? And my understanding from the testimony is we dont have secure containers.
I mean, are you looking outward and sort of moving back into the
U.S. in terms of your ideas? Because, I mean, the idea that we
screen 1 percent of containers overseas and the rest here seems a
problem, because, once it is here, they dont necessarily have to deliver it to a predesignated spot to cause mayhem.
Mr. FLYNN. I am, and I think all those scenarios are there.
Again, the honor system we have in place right now for a very
scary scenario, which is a bit crazy, I think. But certainly in terms
of every ship crossing the Pacific and the Atlantic Ocean that is legitimate and is of a legitimate size is using MARSAC to communicate with their home office.
You cant talk to a satellite without giving away where you are.
It would be possible to use existing technology of commercial networks here to track most of the ships moving across the ocean at
a nominal cost. And why we are not there, why we are building a
whole system to see line-of-sightthe Coast Guard is not out there
patrolling every bit of the time around the clock.
Twenty miles at 20 knots is an hour in a very big ship. I dont
think a plane will fall out of the sky when you shoot at it, you have
got to stop something with a lot of momentum. And that is not
going to happen if there is nobody there.
There was a sea marshal program, as you may recall, early after
9/11. The Coast Guard ran out of money, so it stopped doing it. So
now it is relying on risk data and intelligence. Well, this is an area
that we dont exactly haveit wasnt at the top of the intelligence
food chain to monitor what was going on in the maritime transpor-

51
tation industry, so how we miraculously, after 9/11, had such good
intelligence we could run a risk-based approach, without having
any verifications in the system, I think is a bit of a stretch.
We need the best intelligence we can get, but we need verification on the way, and there is lots in the transportation logistic industry that makes that required. But, again, I think one of the
things is I dont know the nitty gritty and certainly not part of the
classified review on DP World, but they will be the third biggest
terminal operator in the world. And if we are talking about deploying a global system, you want to be able to work with the operators
in that system.
So the challenge here is obviously legitimate concerns about
what this means for U.S. ports, but in the context that if we are
pushing the borders out, we need all the partners we can get. And
I think we should leverage this moment to get DP World, along
with the other terminal operators, to do more on improving security, instead of throwing them out of the club, essentially being
here, and then we have got to work with them in any event.
I am trying to be pretty pragmatic about this, and I know it is
not what is driving
Mr. DEFAZIO. Right. Well, I mean, I guess I question whether the
UAE would be the partner I would look for in having a global system of security.
Mr. FLYNN. They will have the system, so, in my view, you dont
look at the ownership issue, you say will you put in place this
equipment and do you let us access to the data, is it maintained?
And when they are not, then there is some leverage that you use
there. So you work with the partners you have.
Mr. DEFAZIO. But I am just intrigued by your comments about
an honor system, which seems to meI mean, we are so reliant
upon essentially the bills of lading. You know, I mean, I dont know
if you are familiar with the crew issue, but it was sort of the
Mr. FLYNN. It is an honor system there as well.
Mr. DEFAZIO. Right.
Mr. FLYNN. I mean, 96 hours you list the crew. We hope they put
them all in and they spell them right; and these are complicated
names, often, to spell. And, again, there is no underlying intelligence that supports most of that, so it is a problem.
The real issue is not so much that we will have a single incident.
The real issue for me is we will have an incidentit is almost inevitableand our reaction, because these programs arent as robust
as they need to be, will we have these cascadingwe will pull up
the drawbridge and we will end up causing ourselves much more
harm than the terrorist cause themselves.
So we need to keep that duality in mind here. It is both trying
to deal with the threat, but also the threat ourselvesthe threat
of damage that we will do to ourselves by not having adequate systems in place that will pass the smile test for the American public
post the event.
Mr. DEFAZIO. Thank you.
Thank you, Mr. Chairman.
Mr. FLYNN. Thank you.

52
Mr. LOBIONDO. OK, thank you, Dr. Flynn, very much. We appreciate it. Thank you for continuing to be such a strong advocate.
Please keep shouting.
Mr. FLYNN. My apologies to the rest of the panel for taking your
time.
Mr. LOBIONDO. Dr. Carafano.
Mr. CARAFANO. Thank you, Mr. Chairman. I have submitted a
statement for the record, and, if I could, I would just like to make
five very brief comments. And thank you for trying to accommodate
my schedule. I hope to get over to the White House for the signing
of the Patriot Act, which I think is something that will make us
a lot safer.
I share and I validate the Congresss concerns and frustrations
with the manner in which the Administration handled the Dubai
World Ports deal and particularly the lack of notification and infrastructure. And I think we all share the good news here, that we
have Americas attention, and I think simply most Americans dont
realize that global maritime system is simply the lifeline of the
American economy. I mean, the internet could crash; we could
ground all the airplanes tomorrow; and pretty much the U.S. economy would still be there. But if we stop moving goods and services
out of this Country by sea, this economy would simply grind to a
halt.
And I admire and commend the Chairman and everyone on this
Committee for all the work they have done, realizing the number
of vulnerabilities that are out there and the spade work that is required to close them and the enormous amount of work that is left
to be done.
My approach to maritime security has been the same with my
approach to all the aspects of strategy in the long war, and I have
always argued there are four components that you have to have in
every aspect of your long war strategy, that is: security, promoting
economic growth, protecting the civil society and civil liberties, and
winning the war of ideas.
And if you have any security solution that doesnt meet all four
of those criteria equally well, then you have got a bad answer and
you need to go back and start over. And I would hope that the Congress would use this kind of criteria as they look forward to determine what are the next and most important steps to take.
I have three, my top three on the list of what I would do in maritime security. Number one is simply fix the Coast Guard first. The
Coast Guard is involved in every aspect of maritime security, and
unless they are fully funded and have all the resources they need,
everything else really hangs on that skeleton. And I think this is
not just about funding Deepwater, which I think if the Administration funds this at anything less than $1.8 billion a year, it is inadequate.
But I think it is time to have the conversation about building the
kind of robust, specialized law enforcement capability tracks in the
Coast Guard, building specialized special operations capabilities in
the Coast Guard that are equivalent of every other services, building, of course, security professionals, a degree of expansion in the
Coast Guard that we simply havent seen, and actually bringing to
fruition some of the concept of maritime domain awareness.

53
Number two would simply be we need better commercial information into the targeting process before containers are loaded on
ships. And I think that commercial information is available. I think
it would make high-risk targeting a lot more efficient. And that, I
think, would be my second priority.
And my third would be international cooperation. I really think
that we lost the bubble and that we are not focusing on the weakest link in the system, which is the shippers and ports in the developing world, which are the entre into the system that I think terrorists are most likely to use.
I think there are legislativewith regard to foreign ownership,
I think there are legislative remedies that the Congress could do
to give more confidence to the American people that these issues
are being addressed, and I would point out two very quickly. One
is MTSA and the other is the law that governs the CFIUS process.
MTSA was simply not designed to think about the notion of changing of ownership and changing foreign ownership.
And I think we have to ask what appropriate amendments could
be made to the law that could strengthen our degree of confidence
when maritime infrastructure is transferred between foreign ownership or to foreign ownership. And I think there are some common
sense things that we could add to the law.
Number one is a requirement that the security officer of the company be a U.S. citizen and have a suitable background check. And
I have listed these in my testimony. I will just summarize some of
the ones here. Number two is a mandatory review of the security
plan by the Coast Guard on notice of an application.
Also, there would be a mandatory requirement, after the application has been approved, that ownership is taken a mandatory requirement that changes have been made to the plan. Mandatory
commitments to assist in law enforcement investigations. And,
most important, penalties for non-compliance with these measures.
In regard to CFIUS, I think the problem with CFIUS is that the
process is just too informal, and that what it needs is a stronger
set of regulatory requirements as to exactly what the CFIUS process is supposed to accomplish. I think there should be mandatory
regulatory requirements for agencies to obtain commitments where
there is significant national security interest involved.
I think there should be penalties in the law established for noncompliance with those commitments. I think that where there is a
significant national security interest identified, I think the CFIUS
approval should be based on the joint conclusions of DOJ, Department of Homeland Security, and DOD, not a consensus agreement
by the committee as a whole. And I think there should be very firm
and clear and specific reporting requirements to Congress.
And I look forward to your questions.
Mr. LOBIONDO. Thank you very much. Do youI am taking that
you do share Dr. Flynns assessment about doing something on foreign shores before containers are actually loaded?
Mr. CARAFANO. I do, but I really oppose this notion that this is
about pushing the border out. I think that is really the wrong impression, because that really doesnt actually get you anything. OK,
let us say we have pushed the border out and we are 100 percent

54
confident between Singapore and the United States that we are
good to go.
Well, you know what? Singapore is one of the key hubs of global
commerce in the world, and if the terrorists get to Singapore and
they do something in Singapore or Hong Kong, that is going to affect all of us almost as badly as if something happened in Los Angeles. So we need to get over this notion that it is about pushing
security out. That is exactly the wrong impression. What we need
to be talking about is about securing the global commons, securing
the domain that we all use, that makes us all healthy and well.
Now, you know, in regards to specific solutions, I have to admit
I have a predisposed dislike of security screening as a measure, because what you wind up doing is spending 99 percent of your time
and resources on things that are not a problem. I mean, this is the
problem we have in the aviation realm. We screenwe spend $6
billion a yearthat is the budget of TSAscreening people that
get on planes every day that we almost know for a fact are no security risk.
And I much prefer security regimes that put the majority of the
security resources against the threat, as opposed to mass screening,
which I think is very, very inefficient. I have no problem with the
mass screening scenario. The problem I have with a specific technology, if somebody can make a sound business case for these technologies, Steve and I totally agree that there has to be two fundamental requirements if we are going to do this. One is that there
has got to be a business case for it and two is it has got to be global
so it is a level playing field for everybody.
But in terms of where screening of cargo, mass screening of cargo
fits in my list of priorities, I, quite frankly, think it is not high, one,
because I think mass screening is inefficient, it has high false
positives and false negative rates; it puts a lot of drag on the system and actually doesnt give you a lot of security in the end because in a global supply chain, there are so many intervention
points that mass screening secures one intervention point, but you
get on either side of that point, you are vulnerable again.
So it is a system that can be relatively easily defeated and I
think the scenarios that we use to justify it, which is the nuke in
the box, I think is among the most implausible of terrorist scenarios. If a terrorist has a nuclear weapon, then he wantsand
this is true of every terrorist attack. Terrorists have limited assets,
and they like predictability. They like predictability in knowing
what they are going to face and they like predictability in knowing
the outcome of their attack. And if you look at every terrorist tactic, it is based on trying to gain that predictability.
Well, what is wrong with a nuke in a box scenario is if I have
one nuclear weapon, why would I put it on a cargo container which
I had no control over in environmental conditionsand there are
when you have a nuclear weapon, or any kind of bomb, you are
concerned about environmental conditionsand send it off out of
my control?
If I had a nuclear weapon or a deadly biological weapon or a
dirty bomb that I wanted to get into the United States or a U.S.
port, I would do it the way smugglers do it: I would take it on a
noncommercial vessel, I would land in Mexico and I would drive it

55
across the border. Or I would take it on a non-commercial vessel
and I would land it between a port of entry, which is totally unguarded and I would walk it in. Or if I really wanted to blow up
the port itself, I would take it on a non-commercial vessel, I would
take it into the port and I would blow up the port.
So this notion that we are going to do 100 percent screening to
keep the nuke in a box out of the United States I think is just simply silly. You know, if you have an infinite number of
vulnerabilities and you take one away, you have infinite number of
vulnerabilities minus one. That doesnt really make you much
safer.
Mr. LOBIONDO. Do you share the confidence that Customs and
Border Patrol indicated in their process of identifying high-risk and
then running it through
Mr. CARAFANO. No, sir, I dont. I think thatI agree with highrisk analysis and screening of high-risk cargo. I dont think that
they have access to the kind of information they need to do to do
a quality high-risk assessment. And I think Steve and I agree on
this, that you have to have information that goes to the beginning
of the supply chain.and I have listed some of these requirements
in my testimonybut you have to know the shipper, the country
of origin, who packed it. And that kind of commercial information
needs to be part of the risk assessment before the container is loaded on the ship.
Now, the other thing I think is very, very important to realize
is will risk assessment give you 100 percent confidence? And the
answer is no, of course not. But the other thing people have to realize is you are not depending on the risk assessment as your last
line of defense. Risk assessment, in conjunction with robust law enforcement and auditing capabilities, that gives you real security.
You know, it is like we dont ask the police to stop every car they
see; we say stop the people that break the law. And I think that
is what we want here. What you want is you want a high-risk assessment that is going to give a degree of you some confidence in
the system, but you cant trust the system. And I think any part
of the system that is based on honor is stupid.
I mean, Reagan had it right when he said trust but verify, which
meant dont trust anybody. So you have a system which provides
high-risk assessment, which gives you some clues, but that is
backed up by robust law enforcement and auditing. That is what
gives you the confidence that the system is secure, not the screening process itself.
Mr. LOBIONDO. And that is where the critical nature of funding
the Coast Guard comes into play?
Mr. CARAFANO. Absolutely. I mean, this is simply silliness. I
mean, quite frankly, I mean, to make an analogy, there is a burglar
in the neighborhood. You know, Steves solution is let us wall up
all the houses. If there is a burglar in the neighborhood, let us tell
everybody to lock their doors and then let us hire some cops to go
out and get the burglar.
That is the right answer. And so I think you are right, if there
is an Achilles heel or the emperor has no clothes in this, it is that
the one institution which really links all this stuff together and
makes the system that we have credible is the Coast Guard, be-

56
cause they touch every aspect of maritime security, whether it is
law enforcement or screening or maritime domain awareness, and
they simply do not have the resources to make this system legitimate.
Mr. LOBIONDO. You mentioned the Deepwater program, which is
certainly near and dear to me, and the funding of it, which certainly has been inadequate, and each year we seem to fight that
battle. You, I think, mentioned anything less than $1.5 billion is
really a bad mistake. Was I correct?
Mr. CARAFANO. Yes. And I think that is a very modest number.
Mr. LOBIONDO. Have you had an opportunity, up to this point,
to review and study how they are spending the money? In other
words, with all the challenges of replacing the assets, some of how
they are choosing to replace these assets, have you looked at that?
Mr. CARAFANO. Quite franklyand I think this is actually true
for all the services. In many sense they are making poor choices.
What they are doing is they are making choicesthey are making
the choices they can make as opposed to the choices that over the
long term would be the most cost-efficient.
You know, for example, if this was a private sector firm, they
would say, you know, spending a $5 billion over three years buys
you a heck of a lot more than spending $10 billion over 10 years,
because, you know, replacing older equipment more quickly, in the
long term, just saves you a lot of money. So I think what they are
doing is because we havent accelerated the acquisition of the program, what they are doing is they are not making the cost-effective
choices, they are making the most operationally-effective choices.
In other words, they are trying to keep the car from falling apart.
You really ought to buy a new car, so instead what they are doing
is they are doing things like, well, they are fixing the brakes, you
know, just to keep things running. But in the long run that just
costs you more money.
So I think that many of the choices that they are doing are grossly sub-optimal because they are dealing with the fiscal realities of
having to go out and do their job every day, and they cant buy the
stuff they would want to because the stuff they have got has got
to work tomorrow.
Mr. LOBIONDO. I understand that. What I am actually trying to
get at is I think some of their decisions to spend money on the biggest ticketed items in the range of what they have to do is what
I question when they are spending all this money on a couple of
huge ships, and they could, you know, be spreading it out and getting a whole lot more bang for the buck.
Mr. CARAFANO. But I think that is part of theI agree with you,
and it is part of the same problem, is they are forcing and making
these sub-optimal choices. You know, as we know, the big ticket
items get peoples attention, and the big ticket items are easy to
get funded, and the littleif you have 15 little things, you are
much likely to get whittled to death than if you have one big thing.
So I think that we have just given them an impossible job, we
have told them to figure out how to do all this, and then we
haventand then we have kept the checkbook in the drawer and
kept them on an allowance. I just cantit is just unfair to ask

57
these guys to make smart decisions on the amount of money we are
giving them.
Mr. LOBIONDO. The last question, I think, how do we improve
the quality and quantity of information that comes into the Customs and Border Patrol through the advance submission?
Mr. CARAFANO. I think thatI mean, that simply has to be done
through the international agreement, and I just dont think that we
have been aggressive enough in terms of pushing the envelope on
this, and I think that Steve is right, the United States has an enormous stick because we are one of the worlds largest global traders,
and I just think we should be much more aggressive.
Mr. LOBIONDO. OK, Dr. Carafano, thank you very much.
We are now going to move to Mr. Nagle. Thank you for joining
us.
Mr. NAGLE. Thank you, Mr. Chairman. Good afternoon. Thank
you for inviting us to testify before your Committee on areas where
additional efforts are needed to meet the objectives of MTSA. I ask
that my full written testimony be placed in the record.
Enhancing maritime security and protecting Americas seaports
from acts of terrorism and other Federal crimes is a top priority for
AAPA and our member U.S. port authorities. Ports handle 99 percent of our overseas cargo by volume, enable the deployment of our
military, and serve as departure points for millions of cruise passengers each year.
Let me begin by some comments on the proposed DP World acquisition of P&O ports.
In reviewing a transaction of this type, it is the appropriate role
of the Federal Government to determine if there are national security concerns with any proposed business arrangement involving
non-U.S. interests, whether that involves port operations or any
other business. There should be a rigorous process to appropriately
consider and resolve those questions.
AAPA believes that the current 45-day process underway regarding the Dubai Port Worlds acquisition of P&O ports should be allowed to run its course prior to Congress taking any action either
on this proposed arrangement or on any blanket prohibition
against a foreign government-affiliated company from providing
terminal operating services at U.S. ports.
With regard to individual business arrangements, public port authorities often have leases with terminal operating companies to
operate port-owned facilities. These leases typically provide that
any assignment of a lease to a successor company in the event of
a merger or acquisition must be approved by the port authority.
Leases generally cannot be transferred or assigned without permission.
The recent focus on port security has made many question what
else this Country needs to do to secure our ports. My testimony
today will focus on three areas: one, the Port Security Grant Program; two, the Transportation Worker Identification Credential,
TWIC, that has been mentioned this morning; and, three, adequate
resources for the Federal agencies primarily responsible for port
and maritime security.
Soon after September 11th, Congress established the Port Security Grant Program to provide much needed help to port facilities

58
to harden security to protect these vital ports of entry from acts of
terrorism. While the program has provided much needed funding,
it still has several problems. Let me begin with the funding level.
From its inception, the Port Security Grant Program has been
dramatically underfunded. DHS has been able to fund only about
20 percent of the identified needs through the applications. AAPA
recommends an annual funding level of $400 million for this program. Limited funds have placed huge burdens on port authorities
as security projects compete with funds required for maintenance
of facilities, channel dredging, and other port expansion projects to
meet growing international trade. The biggest impact of funding
limitations, however, is a delay in making security enhancements.
Limited funds means slower progress.
This low level of annual funding has resulted in DHS limiting
the eligibility of the program. Last year, DHS decided to limit eligibility, leaving nearly half of our member ports ineligible to even
apply. We support a risk-based system; however, we believe that
each port facility that must meet the requirements of MTSA should
be able to apply. We are also concerned that limits on eligibility
might leave a class of perceived underprotected ports.
The Administration, also as has been mentioned this morning,
has sought to eliminate the Port Security Grant Program during
the last two years by lumping port security into a broader targeted
infrastructure protection program. This is not the time to dilute the
focus on port security; it should remain as a separate dedicated
program. AAPA is also concerned by the slow pace in making the
funds available. For fiscal year 2006, we are still waiting for the
application process to open for the port security grants, nearly six
months after the appropriation bill became law.
A second priority for AAPA related to port security is quicker implementation of the TWIC. Four years after this requirement was
enacted in MTSA, we are still far from implementing a TWIC system nationwide.
The third area AAPA believes should be a priority for port security is ensuring that adequate resources are available for the Federal agencies with primary responsibility for port and maritime security. Again, there has been a significant discussion of this both
this morning and in this panel.
The U.S. Coast Guard and Customs and Border Protection are
the two key agencies that need adequate resources to address port
security. Both have done a great job to address these new challenges post9/11. Projections on container and passenger volumes,
however, show a huge increase at seaports in the coming years.
Congress needs to take a careful look at whether these agencies
will have the manpower and resources to handle this growth in
their security responsibilities.
In conclusion, our Nation and its public ports have made great
progress in enhancing port security since September 11th, in large
measure due to the actions of this Committee and your leadership
in moving forward MTSA legislation. However, we continue to need
to make progress in this area. On behalf of the American Association of Port Authorities and our member ports, thank you for the
opportunity to be here this afternoon, and I am willing to answer
any questions at your time, Mr. Chairman. Thank you.

59
Mr. LOBIONDO. Well, thank you very much. There are so many
different areas to talk about. The port security grant issue is one
that has disturbed us a great deal. Depending on what numbers we
use, the current requested level of funding from DHS I think last
week looked like it would take some 60 years before we come to
even the bottom line of what was required.
In the meantime, you are expected to continue to do more, you
are just given more and more mandates. And we are hoping that
we can get someones attention or the secretary and Mr. Baker carries back this message. He heard some pretty strong messages last
week in Armed Services, and I think he did hear again today.
But I would like to ask you some specific questions about how
do you interact with the Coast Guard and other DHS agencies to
carry out the common mission of the port security?
Mr. NAGLE. I think as was relayed this morning, certainly with
Representative Cobles discussion as far as the four-legged stool, it
definitely is a partnership effort between the Federal agencies.
Again, certainly Customs on the cargo security side and Coast
Guard on the vessel and facility security side have primary responsibility. However, the public port authorities have a role in that,
the terminal operators have a role in that, as well as the private
sector that are involved.
As indicated, all of the facility operators, whether they are public
agencies or private, do need to prepare and provide a facility security plan that is reviewed and approved by the Coast Guard. And
thenso you have a facility security plan process that is approved
and in place and ongoing. You then also have essentially a local
port area maritime security program that is chaired by the Coast
Guard captain of the port, and the local port authorities are part
of that local security committee that looks at the broader, beyond
the individual facilities, to generally the port area. And there are
also as part of that there are studies, analysis, et cetera, to determine and make recommendations as far as what security or enhancements are required to address security in the broader port
area.
Mr. LOBIONDO. Do you receive sensitive or classified information
from the Coast Guard or any other Federal agency regarding potential threats to homeland security at our ports?
Mr. NAGLE. We, as AAPA, do not receive sensitive security material. If there areand in many cases at the local port authority the
facility security officers or others that may well have security clearances would be able to receive that information, but as a general
course of matter, and certainly through the Association, no. We are
on certainly the correspondence with Department of Homeland Security regarding security sensitive information that they are able
to provide that we can provide through the Association to our local
individual members, but not secure information.
Mr. LOBIONDO. I take it from your testimony that the top two
items that you would suggest the Federal Government needs to get
on quickly would be additional port security grants and then the
TWIC card?
Mr. NAGLE. I would say from the port authoritys perspective, I
think all three of the areas areI would certainly indicate as
equal, the two you mentioned as well as the additional resources

60
for Coast Guard and Customs. Again, the first two are principally
looking at the security of the port facilities and making sure that
the people that are on that facility are who they say they are and
have authorization to be on that facility and to take cargo either
onto or off of that facility as appropriate.
The third area as far as the Coast Guard and Customs is in the
essentially outside of the terminal gates responsibility regarding
cargo and vessels that are entering the U.S. And as has been mentioned, whether you defining it as pushing the borders out or however you define that process, certainly there is significant value
and interest in moving the determination of any either vessels or
cargo at risk before it reaches the U.S. port. As Mr. Oberstar mentioned earlier, certainly, while it is the last layer of defense, doing
something, radiation portals at the U.S. port in many instances
that could potentially be too late.
Mr. LOBIONDO. Could you say what is the biggest risk, exposure,
threat because of lack of port security grants? What gaping hole is
that leaving that the private side is not able to pick up? We know
there is an enormous number of dollars that are necessary to even
come up close. How would you rank what are the areas that are
most at risk because of lack of port security clearance?
Mr. NAGLE. The areas that our members tell us are the areas
that they have identified as still requiring significant enhancements at the funding because of lack of funding is being at least
delayed, if not being able to be done, period, are in the areas of access controlagain, whether that is physical access controls or
credentialing systems, et cetera, that, again, are in many having to
wait to be implemented because of the TWIC, not knowing what
their requirements are going to be from the Federal TWIC to make
sure that they are compatible with what a local port authority
would do in terms of credentialing, et cetera.
But access controls. Perimeter security, whether, again, that is
the physical perimeter security by personnel or by fencing, lighting,
video surveillance, certainly utilizing technology to better being
able to provide surveillance of the facility. Communication systems,
being able to communicate amongst the variouswhether it is the
port authority security personnel, local law enforcement. In general, those would be the first responders in any incident related to
a port or maritime environment. Communications command and
control systems are certainly recognized as very important.
And probably the final area that again is still a subject of particular interest is water-side security. Again, the Coast Guard has
primary responsibility for that, but with their limited resources,
they are obviously not able to be at every single facility at all
times. So looking at the opportunity of either patrol boats and either radar or sonar detection devices that help provide a level of
security regarding any intrusion from the water side. Those are, I
would say, the four areas that our members have identified as most
in need of additional funding.
Mr. LOBIONDO. So are you saying that if we had an incident with
one of your members at one of the ports, that there would be an
inability for the different entities involved to communicate directly?
Mr. NAGLE. I would say that there are still cases that you are
still looking at the compatibilityI think that was certainly given

61
the experience in September 11th, the inability of the various responders to be able to communicate
Mr. LOBIONDO. What I am getting at.
Mr. NAGLE. Yes. Certainly there has been progress made in that,
but I would not say that there has been certainly conclusive determination of what that interoperability between systems is between
all those local responders. In many cases they are outside the control, obviously, of either the port authority or the Federal, say, Customs, Coast Guard, et cetera, because you are coordinating with
the local and State agencies that would have their own communications systems. So it is a matter of trying to coordinate all of those
various potential first-responders and be able to communicate
amongst themselves. That is still an issue.
Mr. LOBIONDO. I have a hunch you are being pretty kind in your
description of how that has come together and where we are with
all that. Last question I have, do you have any estimate of what
your members have spent, either on their own initiative or mandated, in port security that has been non-governmental help?
Mr. NAGLE. I cant give you an actual figure, but essentially we
have been able to determineI would say it is beyond what is provided in the Port Security Grant funding, which has been, to date,
actual, $707 million, and then with the additional $175 million that
will be coming out in this upcoming round, so roughly a little over
$880 million. In general, it looks like there has been, I would say,
hundreds of millions of dollars spent by the port authorities in addition to that figure.
I think the numbers that were referenced this morning, the $5.4
billion estimate was only for facility security. There was some intimation that that was for a broader level of security beyond facilities. The estimate, when Coast Guard looked at the costs of implementing MTSA on facility security was $5.4 billion over 10 years.
The first five rounds of grants, there has been a total identified
needs applied for of $3.8 billion, and only $700 million has been applied. That is the 20 percent that I was referencing in the reference
that you made as far as how little has been provided to public
ports.
So I think there has been some level of correspondence between
the level of identified needs that have been applied for and that
Coast Guard estimate that gives us the general feeling that that
total figure of $5.4 billion seems to be certainly within the ballpark.
Mr. LOBIONDO. I thank you very much. We apologize and we
thank you for adjusting your travel schedule. We understand that
you have missed your original flight and had to reschedule, and we
very much appreciate that. And if in fact you need to go, please feel
free.
Mr. NAGLE. At this point, because of the switch, I am fine, and
if you would prefer for me to stay for the panel, I would be happy
to do that.
Mr. LOBIONDO. Might be an additional question.
Mr. NAGLE. OK, sure.
Mr. LOBIONDO. OK.
Mr. Scavone, please.
Mr. SCAVONE. Thank you, Mr. Chairman. I have submitted my
comments for the record. I know that you, sir, heard my remarks

62
at the Armed Services Committee last week. I will mention a few
points relative to my comments today and try not to be repetitive.
In addition to being also responsible for security at P&O, I also
serve on the Board of the National Association of Waterfront Employers, who did submit comments on port security to the Senate
Commerce Committee today, and with your permission, sir, I would
like to send those into this Committee for its record.
Mr. LOBIONDO. Without objection.
Mr. SCAVONE. I would like to offer first a few comments on the
security of the global supply chain.
Of late, we have become accustomed to hearing that our ports in
the U.S. are the most vulnerable points of entry. This tends to lead
to the conclusion that the ports themselves are the location where
security needs most to be enhanced.
That is not a correct conclusion. Our ports in the U.S. are already the one point in the supply chain over which we have the
most control. It would be more accurate to say that if the security
of the supply chain in a foreign location should fail, the place
where we in the U.S. will be first exposed to that failure would be
in the U.S. port. However, no amount of security on the part of the
terminal operator in that U.S. facility will change that fact.
Therefore, the enhancement of the security of our U.S. ports and,
by extension, our homeland, is best accomplished by improving the
security at the point of origin. We have heard today about programs like the 24-hour rule, C-TPAT, the CSI program, which have
all contributed to that goal. If efforts will be made to continually
improve our security, this is where the focus must remain, to include such matters as the integrity of container seals, the improved
capability to conduct non-intrusive inspections at port of loading,
ideally at the direction of U.S. Customs, and the upgrading of Customs Automated Targeting System.
Some of these objectives will experience substantial progress via
the simple decision to devote more resource to them, which has
been discussed already today. Others would require a global program joining the governments of virtually every trading company
with carriers, terminal operators, technology vendors, and international standards bodies such as the International Standards Organization, or ISO, which leads me to a few points about foreign
ownership.
The fact that foreign interests own many of the companies that
manage our terminals in the U.S. has recently, as we know, become a major point of discussion. The focus has been on the extent
to which such ownership may impact the security inside our terminals. The answer is it does not impact the security function at all.
We have already heard that the Coast Guard, Customs, and the
port itself continue to be responsible for that security. We, as terminal operators, do have responsibility to have access controls to
our facilities, but that function is approved, monitored, audited,
and enforced by the Coast Guard.
The terminal operator has no role in verifying or inspecting the
declared contents of any container entering the United States. A
terminal operator does not open a container to verify its contents.
Inspection is performed exclusively by U.S. Customs under its own

63
supervision. And no container leaves a U.S. facility until U.S. Customs indicates that it is free to go.
In every case of which I am aware, foreign ownership of terminal
operating businesses in the U.S. is conducted by U.S. subsidiaries
employing predominantly U.S. citizens and U.S. labor. However,
under no circumstances does this permit the foreign shareholder to
control any port or terminal in the U.S. Obviously, the shareholder
will control indirectly the overall business strategy of the company,
but like any business, it will be subject to the laws of the countries
in which it operates, and it may only exercise its influence within
those limits.
If you accept that the security at the originating end of the supply chain is the area most requiring attention, you will then recognize that the participation inside the U.S. of the major global terminal operating companies of the world, alongside our U.S. terminal operating companies, permits us to have a much broader global
cooperative effort to address the ways and means to enhance the
security of that supply chain.
For example, the global operators who also have a U.S. presence
represent possibly the single greatest resource in the effort to deploy scanners in foreign countries and to supply to U.S. Customs
the scans of every container they move onto a vessel bound for the
U.S., which in turn addresses the question of intervention that Dr.
Carafano raised, where you could potentially intervene at any point
along the way. But if you check the box before it is actually loaded
onto the vessel heading for the U.S., there is no additional intervention after that.
A question was raised about the impact of DP World deal on the
security of the New York cruise terminal. By agreement with the
Coast Guard at the New York cruise terminal, the role of the facility security officer is actually filled by Michael Stapleton Associates, a private security firm composed of ex-NYPD detectives and
officers. That firm, in cooperation with the Coast Guard, prepared
our facility security plan and they operate it.
The Coast Guard has been highly complimentary of our security
measures there, which include measures beyond those required by
the regulations, such as canine patrols, and nothing about that is
going to change. Further, we do not have access to passenger lists
or crew lists; those are kept by the cruise lines and CBP. The sailing schedules are on the cruise line Web sites; thus, the sale of the
P&O parent company in London would have no impact on the security at this terminal.
In Beaumont, Texas we load military vehicles on vessels chartered by the military. We use longshoremen to do it. Numerous
military personnel are always present to supervise that operation.
The only information we receive about the cargo is a written list
of equipment to be loaded. If anyone wanted access to this information, they would only have to stand outside the terminal fence and
count what goes in and out, the point being the information we
have is not confidential to begin with.
In conclusion, Mr. Chairman, when we discuss risk in the supply
chain, I believe it is important to distinguish between risks that
exist today and risks that might somehow be created if P&O is
sold. I believe we have seen that those who know how security real-

64
ly works are virtually unanimous that this sale is not an issue from
a security standpoint.
Thank you, Mr. Chairman, for the opportunity to submit these
comments today.
Mr. LOBIONDO. Thank you.
Mr. Brown, thank you for your patience. Thanks for making a
very long trip, and I am waiting for your remarks.
Mr. BROWN. Thank you, Chairman LoBiondo. And thank you,
Member Filner and the rest of the members of the Committee. I
want to thank you for having the opportunity to come and speak
here and for the invitation.
My name is Gary Brown. I am a third generation longshoreman
in the Port of Tacoma, Washington; roughly 37 years down there.
I am also privileged to serve as the security liaison officer for the
International Longshore and Warehouse Union. And in this capacity I have received numerous security certificates and certifications
from the Coast Guard. I have taken my class with FEMA and I
was very fortunate to have taken a class that was sponsored by the
U.S. Attorneys Office for anti-terrorists. So that is a little bit of my
background.
Also, on February 14th and 16th of this year, I organized a port
security training session for the ILWU and its members in conjunction with the Pacific Maritime Institute, which is one of the few
government recognized and organizations institutes. I had
longshore workers from every local up and down our coast, the
whole International, including two members from Hawaii, and they
were trained on a facility, company and vessel security regulations
required by the Coast Guard.
I had the distinct pleasure of having retired Captain Danny Ellis,
Coast Guard, and Assistant Chief AD Vickery, Seattle Fire Department, who has been involved in severalI guess he is the grandfather, as they say, or the founding father for the Marine Terrorist
Response Program in Puget Sound, and which is going to be nationwide. They have helped me with my program and were nice
enough to have the Coast Guard send two people to speak at the
class, Customs sent two people, and along with, like I said, the Fire
Department, first responders, and a gentleman that was retired
from the Treasury Department to speak on some anti-terrorist
things for us to be watching out for.
So it was a very good class. All the members were certified and
this was totally funded by and paid for by the ILWU. We paid and
initiated for this because our employer had failed to conduct a
proper training course which is required by the Coast Guard. And
on that note there, that is where we are at with our training, and
if we could get any help with any funding, we would appreciate it.
Just to touch on the Dubai Ports deal as far as the International
Longshore and Warehouse, where we stand is that we fully support
the bipartisan calls in Congress for the Bush Administration to direct a committee on the foreign investment to conduct a full 45-day
investigation, because our seaports are part of our global economy.
The ILWU believes that we should not rush to open the doors for
such assets to companies owned or operated by foreign countries
where there were serious concerns with existing terrorist activities
and funding. Therefore, we are urging that the decision for the ap-

65
proval be based on national security interests of the United States,
and not on commercial interests of any one company or one country.
We also urge the Federal Government, including Congress, to
focus its attention beyond the controversy over the one future commercial contract and to recognize and correct immediate major deficiencies of the security that exists today in American ports. It is
the current lack of effective port security since the terrorist attacks
of 9/11 that is the real concern of all the dockworkers and millions
of Americans who live within close proximity of our Nations ports.
To touch on that, you have heard several discussions from everybody today on panel one and the gentleman here was on seals.
Seals was something that we as longshoremen used to conduct,
physically check the seals, and now they are done via the cameras,
and the cameras, you cant see the number and you cant tell if it
is secured. It is a severe problem.
Another problem is empties. This is something that was brought
up and a lot of people wonder why empties are such a problem.
Empties are a perfect example of an access for somebody to use to
put something in to transport something in, because they are not
examined. We used to examine them for several reasons: number
one, to make sure they were empty; number two, to make sure they
were clean, because a lot of the customers require a certain type
of container; and we also checked for structural damage, which is
a safety factor.
And not only that, but we have foundI personally found 25
Chinese in a container one night that was an empty, and, fortunately, the only reason we found it was because we were getting
ready to stack it in the storage area, which is where it would have
probably stayed for about four or five days. And for some reason
it was close to lunch time, so I told my driver just leave it on the
ground, and within five minutes I got calls on the radio that there
were people running all over the terminal down there, so I caught
one of them and that is what I found out, that they had been in
that container, it was an empty.
And another problem we have is we dont have, like on our shipping list. They talked aboutthe gentleman earlier talked about
the honor system, and we work with several of those companies
that are on this honor system, but these same companies we have
containers, if we get a discharge list of approximately 450 containers, we have 462 come off. That is 12 extra. And they are not on
the list.
Well, according to regulations, and if everybody was to follow the
rules, you call Customs, because now you have got a break in security; you have got 12 extra containers. Unfortunately, the companies response is just write those numbers in and worry about it
later on. And this is something that we deal with every day, and
this is not acceptable.
We talk about rules and regulations, and they are not being followed. And like I said, with the seals, with the loads, with the
empties, we have loads coming off ships now and it is such a fast
paced business that we are gettingif you happen to look at some
of these manifests on there, they are listed as dummy, D-U-M-M-

66
Y, because they dont want to take the time to stop and verify that
container, so they come through as dummies.
And I have had several meetings with the companies and I said,
you know, what is the process with that, because you have these
dummy containers? Well, what they will do is they will run it
through and the computer will pick it up, where, in the old days,
I hadI am a marine clerk, and I had the manifests, I would verify
these things; I would verify the seal, I would verify the container,
and at one time we knew what the contents were. And we dont
have access to any of that anymore, and this is all done through
the computer process, and this is what our concerns are at, because
we dont have access to that anymore.
And we have had several where there was an incident in Long
Beach where the container blew up. Had we had access like the old
days, what we are supposed to do is check that container, we would
have found out that it had propane in it. But on this list that was
set out, it was FAK, freights of all kinds/dummy. And luckily nobody was killed, but it blew the container doors off and, my understanding, it blew things about 40 feet behind it. And these are our
concerns, you know, the empties, loads, and, of course, now we
have at our gates now we haveto give you a quick incident, if I
could.
We used to be down in the lanes. When a driver would pull in,
he would give us his manifest, we would double check to make sure
the container was right, the seal number was right, plus it was
locked; you would physically grab it and pull it. And if it was placarded with Hazardous, you would walk around and make sure it
has all the placards on it because of Coast Guard regulations.
Well, now a driver pulls up and he gives you the seal number
over the phone. And, of course, your camera on it showsyou look
in your camera and the density and stuff, it just shows a glob.
There is no way you can verify the number; there is no way you
can verify if that seal is actually secure.
And in this one incident, the gentleman came out of Canada and
it was hazardous, and he pulled up to the lane down there and I
asked him the seal number, and he gave me a seal number. Well,
he had had placards on it, so I had to go down and walk around
it.
Well, when I got to the rear of the container, there was no seal.
And I walked up to the driver and I said, you gave me a seal number over the radio; there is no seal on the door. And he just shook
his shoulders. And I said, did you check the container before it left
the dock in Canada, and he goes no. And, of course, he didnt stop
because he used a NAFTA lane coming across the border, where he
doesnt have to stop.
And I said, did you stop anywhere along the way? And he goes
no. And I said where is the seal? There is no seal on this. He says,
I dont know. So at this point I had just finished one of my classes,
and, of course, that was a red flag, foreign container, hazardous,
no seal, breach of security. And so the response was the protocol
is to call Customs.
Well, unfortunately, when I called the terminal operator and explained to themthat is their job to call Customstheir response
was throw another seal on it, it is going to miss the ship. And I

67
said, no, we have got a severe breach here, we have to call Customs. So I was chastised for that, but I called Customs and that
container was taken aside. So I dont know what happened at the
end of that, but this is just things we go through daily down there
as far as security. And it is of great concern because, like with the
empties, I like to touch back on that.
It is also the empties coming in from inside, not just the ones
coming off the ship, because we have found tons of things in there,
and the gentleman eluded earlier about the empty containers and
the drivers. Drivers come in and a lot of these companies the terminal operators, a couple of them own their own trucking companies
now, so they actually have a little kind of a card they put on their
dashboard, and they are just in and out of the terminals.
And there is no way you can monitor these guys. I have seen
drivers come in with giant sleepers, and just out of the corner of
my eye I catch them where they are parking in the terminal, and
I see two or three guys pile out of this sleeper. You know, they are
helping them with the container or they are lose on it. Those arent
being inspected and the drivers arent being I.D.d, you know. That
is another concern of ours. And since we arent checking empties
any more, you know, the people ask me, they say why would you
check an empty? Because I told them I found people in there, I
found cargo in there.
And, you know, the stuff thatwe are looking at loads and we
are looking at seals, you know, this is where we are concentrating,
but we have also got to concentrate on those empties because as
we know, you know, the people that want to do us harm are very
methodical, and they are very inventive, and if they can see we are
paying attention to loads and seals and all this stuff, but not on
empties, because these empties are loaded on the ship next to the
loads and the empties are loaded on and off trucks just as they do
as the loads, and if we are not paying attention to those empties,
it is a golden opportunity for these people.
And I say from the enemy within, because, as we all know, unfortunately, the terrorists that attacked us on 9/11, that attack occurred within the United States, within our States, and I believe
after some of the classes I have been and listened to some of the
people, that there are people in this Country that have pretty much
established themselves, and for them to putif their goal is to destroy or disrupt our docks, you know, they could very easily build
a bomb or whatever they want in Scottsdale, Arizona and ship it,
and once it is on the terminal ignite it. So the concern from inside
as well as outside is very sincere.
And like I said, you have my statement, and I thank you for the
time, if you have any questions.
Mr. LOBIONDO. Thank you. What would be in your order of priority? You mentioned a lot of things, but the top three things that
we need to do from your perspective to better secure the ports?
Mr. BROWN. Well, like I said, Mr. Chairman, the sad part is that
we used to do the job of, like I say, checking the seals and checking
empties. That is something we dont do any more. We actually had
letters from terminal operators that dont want it done any more.
I have been to several meetings on committees and stuff where
people have asked me, you know, why did you guys quit doing that,

68
and I said, well, it wasnt us. And they thought it was pretty silly.
And in this day and age, after what we have had happen, we
should be a little bit more vigilant and a little bit more checking
this stuff, and it has just gone backwards.
So actually the checking of the seals, the documentation, and
because, like right now, you cannotif a container pulls up to the
terminal, we are looking at the seal now with a camera, and you
cant tell the number; you have to take the drivers word for it.
And, unfortunately, you cant go find out if that thing isI did a
test with a news reporter up in our area about a year ago, and I
told them, and they said, well, what is the big hoopla about seals,
once they are sealed?
Well, there was a broken seal that had already been cut, and I
went over and put it on a container, used my chewing gum, put the
tip back on it and stood back and said, now look through your camera. Does it look like it is sealed? He said yes. So I went over and
popped it off. And when we were doing it, you know, you give it
a good yank and make sure and make sure the number matched,
all that stuff, and we would look for any abnormalities on that
stuff.
And we are just not doing that anymore, and that is the big concern, because, you know, peoplelike I said, people in there, if they
wanted to store something in therebut the seals and the empties
and probably the drivers that come, the truck drivers. A lot of
these guys are around the terminal, they are notyou know, they
are not monitored. And you get on a busy terminal down there and
you have got a couple thousand people rolling around there, it is
impossible, absolutely impossible to catch.
And the only time we come across, like I mentioned earlier with
the empties coming off the container ship, that is when I call or
have my members call Customs or Coast Guard, and they will respond. But we have to catch them. And on a busy day, you know,
like I mentioned before, the Coast Guard and Customs, those people are very thin; they cant be at every port, they cant be at every
ship.
And this is kind of like whenthat is what we are down there
for. And with this training and stuff, you know, we figure, you
know, we are down there daily, we know who belongs or who
doesnt, you know, and we are a valuable resource working with
the first responders.
To give you a quick instance of why we want to enhance our
training and be there to help is they had a ship fire up in Seattle,
and the Fire DepartmentI mean, it was an intense fire, and they
stood on the dock and they werent going to go aboard because
there was a container right on the middle of the deck and it had
placards on it. And they were waiting for that. They didnt want
to get on board and have that thing blow up and then kill a whole
bunch of people.
And nobody knew what to do, but the longshore, one of our members had gone back up in the crane and hoisted that container out
of the fire, got it off the ship they were in. So this kind of brought
on our program, because I had worked with a lot of first responders
and like the fire chief says, he says, I dont know how to drive a
crane and you dont know how to drive a fire truck, but together,

69
if there is an incident, an event, you know, we will make a hell of
a partnership. And that is kind of where our program has gone.
Mr. LOBIONDO. Thank you.
Mr. Scavone, if the acquisition of P&O ports by Dubai Port World
is approved, would Dubai Port World also have direct control over
stevedoring operations in these 16 additional ports?
Mr. SCAVONE. Yes. Well, P&O Ports, which would remain a place
as a U.S. company with U.S. employees operating in the U.S., yes.
They would be the ultimate owner of that company, about five or
six corporations up the chain.
Mr. LOBIONDO. And how does P&O Ports involvement at U.S.
ports where it operate terminals differ from its operation as a stevedore in the 22 U.S. ports?
Mr. SCAVONE. The 22 locations I think you are referring to, Mr.
Chairman, include the 6 where we actually manage terminal facilities. All this information is on our Web site and has been for a long
time. In most ports we serve purely as a stevedore, simply to remove the cargo from a vessel and put it down in the terminal.
But in those cases the terminal itself is operated by, for instance,
a port authority that is an operating port authority like Houston
or Norfolk, and that entity would be the one responsible for the security of the terminal facility and for the preparation of the facility
security plan with the Coast Guard; whereas, in places like Port
Newark, we also operate the terminal itself.
So in addition to stevedoring the vessel, we manage the terminal
facility and then it becomes our responsibility to agree with the
Coast Guard a facility security plan, which is primarily the access
controls to that facility for people and vehicles under the supervision and direction and enforcement of the Coast Guard.
Mr. LOBIONDO. OK, gentlemen, I thank you very much. It has
been very helpful and informative. We appreciate your patience.
And the Committee stands adjourned.
[Whereupon, at 1:37 p.m., the subcommittee was adjourned.]

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