The Subcommittee on Coast Guard and Maritime Transportation. Hearing on. Port Security: Shipping Containers

Transcription

1 Port Security: Shipping Containers The Subcommittee on Coast Guard and Maritime Transportation Hearing on Port Security: Shipping Containers TABLE OF CONTENTS(Click on Section) PURPOSE BACKGROUND WITNESSES PURPOSE The purpose of this hearing is to investigate the security of containers used to ship goods imported into and exported out of the United States by water. The Subcommittee will receive testimony from the Administration, cargo shippers, (1 of 7) [4/16/ :38:10 AM]

2 Port Security: Shipping Containers vessel operators, as well as freight terminal owners and operators. Overview BACKGROUND The United States maritime borders include 95,000 miles of open shoreline, 361 ports and an Exclusive Economic Zone that spans 3.5 million square miles. The United States relies on ocean transportation for 95 percent of cargo tonnage that moves in and out of the country. Each year more than 7,500 commercial vessels make approximately 51,000 port calls, and over six million loaded marine containers enter U.S. ports. Current growth predictions indicate that container cargo will quadruple in the next twenty years. Standard sizes of cargo containers allow cargo to be quickly transferred from ships to trucks or railcars and transported immediately to anywhere in the country. This rapid transfer of cargo is a possible conduit and target for terrorist activities. Prior to September 11th, the primary focus of intermodal transportation was the safe movement of containers in a timely manner. As a result of the terrorist threat, the United States must develop a security regime that minimizes the risks and consequences of a terrorist attack without slowing the movement of cargo. International Efforts to Improve Shipping Container Security The International Maritime Organization (IMO) is a specialized organization within the United Nations established for the purpose of developing international maritime standards, promoting safety in shipping, and preventing marine pollution from ships. In response to the terrorist attacks, the IMO s Assembly adopted a resolution entitled review of measures and procedures to prevent acts of terrorism which threaten the security of passenger and crews and the safety of ships. The various IMO Committees were directed to review, on a high priority, the instruments under their purview to determine if they need to be updated and to determine if there is a need to adopt other maritime security measures that may be appropriate. (2 of 7) [4/16/ :38:10 AM]

3 Port Security: Shipping Containers On January 15, 2002, the United States submitted a number of proposals to the IMO Maritime Safety Committee for consideration at its meeting in May. These proposals call for a number of specific actions that the United States believes will improve maritime security worldwide. The concepts put forward by the United States to improve container security include port of origin mandatory container examinations and the establishment of international measures to improve the security of cargo movement. The IMO Maritime Safety Committee Intersessional Working Group met in London this February to consider the United States maritime security proposal. At this meeting, the Group agreed to revisit a previous IMO decision to not require mandatory inspection of containers due to the increased worldwide concerns about container security. The Group also agreed to work with the World Customs Organization (WCO) to develop an international plan to secure containerized cargo. The goals of an IMO and WCO cooperative agreement would be to expand container inspections, make threat assessments, and increase cooperation between all those involved in the container transport chain. In addition, the Working Group supported the United States proposal to improve the exchange of information between the international maritime community. Interagency Container Working Group Recommendation of Action The Secretary of Transportation established an interagency Container Working Group to address the security issues surrounding the movement of marine cargo containers through the international and intermodal transportation system. This effort is co-chaired by the Departments of Transportation and Treasury. The Container Working Group s activities are focused on information technology, security, business practices, and international affairs. On February 1, 2002, the Group made recommendations to the Office of Homeland Security on ensuring the security of cargo container transportation. The recommendations addressed improving the coordination of government and business container security activities, enhancing cargo data collection, and improving the physical security of containers. The recommendations also support international container security efforts and the increased use of advanced technologies to improve the profiling of containers. U.S. Coast Guard Security Authorities and Activities (3 of 7) [4/16/ :38:10 AM]

4 Port Security: Shipping Containers The U.S. Coast Guard currently has primary responsibility for the protection of life and property at sea, as well as the enforcement of all applicable Federal laws on, under, and over the highs seas and United States waters. The agency also is charged with protecting the marine environment, conducting icebreaking activities, maintaining aids to navigation, and securing the safety of vessels, ports, waterways, and their related facilities. Federal law authorizes the Coast Guard to board any vessel subject to the jurisdiction, or operation of any law, of the United States in order to make inquiries, examinations, inspections, searches, seizures, and arrests for the violations of U.S. laws. The Coast Guard may order and force any vessel to stop and may engage in land, water, and air patrols. Federal law also authorizes the Coast Guard to control the anchorage and movement of vessels in the navigable waters of the U.S. The Coast Guard is also authorized to regulate the handling of dangerous cargo at waterfront facilities, the use of dangerous cargos on inspected vessels, and the carriage of certain specified liquid bulk cargoes by vessels. The Secretary of Treasury, at the request of the Secretary of Transportation, may refuse or revoke the clearance to enter a port of the United States when he believes a vessel carrying liquid bulk dangerous cargo or other hazardous materials has violated U.S. law. Vessels carrying dangerous cargoes are built and inspected to Coast Guard standards. Coast Guard marine inspectors conduct annual inspections to ensure these vessels meet and maintain these standards and make unannounced boardings to monitor transfers of dangerous cargos. Currently, the U.S. Coast Guard is enforcing a wide range of security measures on all ships entering U.S. ports. The Coast Guard has changed the 24-hour Notice of Arrival requirement for ships entering U.S. ports to 96 hours before arrival at the first U.S. port. New special rules apply for all vessels carrying dangerous cargoes and additional information is also required in the Advance Notice of Arrival. The notice must now include a listing of all persons on board, crew and passengers, with date of birth, nationality, along with the appropriate passport or mariner s document number. The notice must also include the vessel name, country of registry, call sign, official number, the registered owner of the vessel, the operator, the name of the classification society, a general description of the cargo, and the date of departure from the last port along with that port s name. (4 of 7) [4/16/ :38:10 AM]

5 Port Security: Shipping Containers In addition, each Coast Guard Captain of the Port may employ any security measures that he deems necessary to ensure the safety and security of the port. For example, the Coast Guard has required several facilities handling dangerous cargo to provide additional security personnel and other security improvements. Facilities not addressing Coast Guard security concerns may have their operations suspended or be subjected to civil penalties. U.S. Customs Service Security Authorities and Activities The U.S. Customs Service has the primary Federal responsibility to ensure that all imports and exports comply with U.S. laws and regulations. The Customs Service provides the Nation with its second largest source of revenue. Last year, more than $22 billion in duties were collected on imports. The agency is responsible for enforcing more than 600 laws and 500 trade agreements dealing with imported and exported cargo transactions. The Customs Service physically inspects two percent of imported, and one percent of exported cargo. However, the majority of containers selected for intensive inspection are not randomly chosen. The Customs Service uses information from a database on shipping and trade activities called the Automatic Manifest System (AMS). Using a targeting system that operates within AMS, the Customs Service is able to pick out cargo manifests that appear unusual, suspect, or high-risk, for further evaluation. Although 97 percent of ocean manifests are filed electronically with the Customs Service, the advanced filing of shipping manifests is voluntary. The Customs Service is currently developing two new information systems, the Automated Commercial Environment and the International Trade Data System. These systems are needed to replace numerous antiquated systems. In addition, these systems will allow for advanced collection of information for the targeting of high-risk cargo. These new systems will also allow other Federal agencies with an interest in cargo data to have access to the pertinent information. The Customs Service has announced two initiatives to improve container security, the Customs Trade Partnership Against Terrorism and the Container Security Initiative. Both of these initiatives focus on the goal of checking the security of cargo before its reaches the United States. The Customs Trade Partnership Against (5 of 7) [4/16/ :38:10 AM]

6 Port Security: Shipping Containers Terrorism establishes partnerships with importers, carriers, brokers, warehouse operators, and manufactures to improve security along the entire supply chain. The Customs Service, along with its partners, will look at where goods originate, the physical security and integrity of the foreign suppliers, the background of the personnel involved with the transaction, as well as the means by which goods are transported to the U.S. The goal of the Container Security Initiative is to reduce the vulnerability of cargo containers being used to smuggle terrorists or terrorist weapons while accommodating the need for efficiency in global commerce. This initiative will establish criteria for identifying high-risk containers, pre-screen containers before they are shipped to the United States, use technology to pre-screen high risk containers, as well as develop smart and secure containers. The Customs Service plans to focus on the largest foreign seaports that are responsible for shipping the greatest number of sea containers to the United States. WITNESSES PANEL I Captain Anthony Regalbuto Chief of Port Security U.S. Coast Guard PANEL II Christopher Koch President & CEO World Shipping Council Richard Larrabee Director of Port Commerce Port Authority of New York and New Jersey Basil Maher President (6 of 7) [4/16/ :38:10 AM]

7 Port Security: Shipping Containers Maher Terminals, Inc. representing the National Association of Waterfront Employers and the United States Maritime Alliance Wayne Gibson Senior Vice President Global Logistics representing the International Mass Retail Association and the West Coast Waterfront Coalition The Home Depot, U.S.A., Inc. (7 of 7) [4/16/ :38:10 AM]

8 Regalbuto Statement DEPARTMENT OF TRANSPORTATION UNITED STATES COAST GUARD STATEMENT OF CAPTAIN ANTHONY REGALBUTO ON CONTAINER SECURITY BEFORE THE SUBCOMMITTEE ON COAST GUARD AND MARINE TRANSPORTATION U.S. HOUSE OF REPRESENTATIVES MARCH 13, 2002 Good afternoon Mr. Chairman and distinguished members of the Committee. As the Director of Port Security for the Office of Marine Safety, Security and Environmental Protection, I want to thank you for the opportunity to appear before you today to discuss the Department of Transportation and Coast Guard s container security strategy following the attacks of September 11 th Before September 11 th, those in aviation knew that commercial aircraft were symbols of commerce and prosperity. Commercial aviation helps build economies, ties the world together and improves our quality of life. On September 11 th, terrorists turned these tools of commerce into weapons of hate. The targets were symbols of American economic and military strength. One of the biggest lessons learned from the attacks is that the nature of the threat facing all nations has changed dramatically. What we saw was new; hijackers taking over commercial flights for the sole purpose of turning them into (1 of 6) [4/16/ :38:33 AM]

9 Regalbuto Statement guided weapons of mass destruction. Recognizing this, we must translate the terrorist s thought pattern and recognize the vulnerability of our maritime environment. We are absolutely convinced that our maritime sector is one of our nation s transportation systems that is the most valuable and the most vulnerable. We must change many of our assumptions underlying maritime security. If terrorists found a way to use the US aviation industry against our country, they are potentially capable of exploiting vulnerabilities in our Marine Transportation System as well. As a nation that depends so heavily on the oceans and sea lanes as avenues of prosperity, we must protect our ports, waterways, intermodal connectors and vessels. The Marine Transportation System of the United States handles more than 2 billion tons of freight, 3 billion tons of oil and 6 million containers, transports more than 134 million passengers by ferry, and entertains more than 7 million cruise ship passengers each year. Our Marine Transportation System is linked to our surface transportation system via intermodal connectors; passengers travel via air to embark on cruise ships. Ferry passengers use surface transportation modes traveling to and from water transit facilities, and cargo moves from ships and barges to trucks, rail and pipeline and vice versa throughout the transportation system. Although much attention was rightfully focused on aviation following the September 11 th attacks, the Department of Transportation took decisive steps to address the issue of (2 of 6) [4/16/ :38:33 AM]

10 Regalbuto Statement security in all the surface modes of transportation as well. In addition to the U.S. Coast Guard s quick response to guard the security of American ports and waterways, Secretary Mineta established the National Infrastructure Security Committee (NISC). Through several direct action groups, the NISC was tasked with evaluating transportation infrastructure vulnerabilities, security protocols and processes and recommending changes to improve security. I am pleased to report that through the various NISC direct action groups, the Department came together with transportation associations and with the private-sector transportation industry to explore issues related to port security, the movement of hazardous materials, security of pipelines, highway, transit, and rail systems all of which are integral to the security of our nation s maritime infrastructure. From the direct action group process, other groups have been formed to tackle very specific security issues. Among these is the Container Working Group established through the NISC in December. The Container Working Group is tasked with providing recommendations to improve the secure movement of the six million marine containers that enter our nation s port and the eleven million trucks and rail containers that cross the Mexican and Canadian borders into America each year. The Container Working group is co-chaired with the U.S. Customs Service and includes representatives from the Departments of Defense, Energy, Commerce, Justice, (3 of 6) [4/16/ :38:33 AM]

11 Regalbuto Statement Agriculture, Health and Human Services (FDA) and others. The group has oversight from the Office of Homeland Security. In order to address individual aspects of container security, four subgroups of the Container Working Group are studying information systems, security technologies, business practices, and international affairs. The subgroups are making every effort to provide recommendations that improve security but at the same time ensure safety and efficiency in our intermodal transportation system. The Container Working Group issued its first initial report to the Office of Homeland Security on February 1 st of this year. On the front lines of container security is the U.S. Customs Service as well as other federal agencies and the Container Working Group is studying technologies and business practices that will enable Customs and others to prevent high-risk containers from entering the United States or to ensure that they are properly inspected before they pose a threat to the United States. Although the Customs Service utilizes a thoughtful riskbased selection method, preventing a container from being used as a weapon requires a more complex strategy, enhancing the non-intrusive inspection technology and information used for selection. We are very supportive of the new Customs Container Security Initiative because it builds upon previous work with our international trading partners to improve container security throughout the world s global supply chain. Likewise, the Department of Transportation through the new (4 of 6) [4/16/ :38:33 AM]

12 Regalbuto Statement Transportation Security Administration (TSA) will be making every effort to ensure the security of cargo including containerized cargo as it moves throughout America s intermodal transportation system. With its congressional mandated deadlines, TSA has been focusing primarily on aviation related security issues. However, in the months ahead, the new organization will be devoting substantial attention to maritime and surface transportation related security. The U.S. Coast Guard, following the September attacks, also reorganized its security programs, which were dispersed throughout the Office of Marine Safety, Security and Environmental Protection, and consolidated them under a new port security directorate. This included the movement of our modest container inspection program, which was focused on the structural integrity of containers and the proper shipment of hazardous materials. This was done to add a security element to our safety inspections. Our Container Inspection Training Assistance Team (CITAT) was deployed to New York City following the attacks and assisted in inspecting numerous containers following the just in time training they received from the U.S. Army. Equally important in improving port security has been our partnering efforts with the international community. At a recent International Maritime Organization assembly and intersessional working group meetings, the Coast Guard, as the lead agency for the U.S. delegation, introduced numerous security measures for (5 of 6) [4/16/ :38:33 AM]

13 Regalbuto Statement consideration including vessel, facility and offshore platform security plans, early implementation of automatic identification system transponders for certain international ships and designation of and training for ship, company and facility security officers. The U.S. Government also introduced some preliminary container security measures for consideration with the promise to provide more detailed papers for the Maritime Safety Committee meeting in May 2002 based upon the recommendations of the interagency container working group and Customs Container Initiative. In summary, the vast volume of trade and traffic through our nation s seaports has put immense pressure on our ability to enforce the nation s laws while facilitating international trade, even before September 11 th. After September 11 th, our challenge has risen to a new level. Notably maritime trade, which is critical to this country s economic strength, continues to move through ports with minimal interruption. It is no surprise that sustaining mobility will come at a higher cost to all of us as we harden our borders. The reality is we are an open society and we cherish our freedoms. Ultimately, it is incumbent upon our government and our transportation industry partners to find the balance between appropriate security measures and the unimpeded movement of goods, people and services. (6 of 6) [4/16/ :38:33 AM]

14 Koch Statement Testimony of Christopher Koch President & CEO of the World Shipping Council Before the House Transportation and Infrastructure Committee I. Introduction March 13, 2002 America is a free nation that generally aspires to free trade. Our (1 of 25) [4/16/ :38:36 AM]

15 Koch Statement international transportation and trading system reflects that relative openness and freedom, and we all benefit from it. But today we face a serious, new challenge: How best to design and implement effective maritime security measures that will successfully defend our trading and transportation system from terrorism while preserving the efficiencies and benefits which consumers, businesses and every national economy derive from today s system. Meeting that challenge is not a simple task. Maritime security covers a variety of different, distinct industries and elements, including: inland waterways, port facilities, marine terminals, non-maritime facilities located on navigable waters, bridges, cruise ships, tankers of various types, and the liner industry. This testimony will address only the liner shipping [1] aspects of this agenda, which, while representing only a portion of the issues this Committee is reviewing, are substantial enough to have produced multiple container security initiatives within the Executive Branch. In 2001, the international liner shipping industry carried approximately 18 million TEUs (twenty-foot equivalent units) of containerized cargo in America s international trade roughly $480 billion dollars worth of goods. That represents slightly over two-thirds of the value of all of the nation s oceanborne commerce. It represents approximately 4.8 million containers of U.S. export cargo and 7.8 million containers of import cargo. [2] (2 of 25) [4/16/ :38:36 AM]

16 Koch Statement Over 800 ocean-going liner vessels, mostly containerships and roll-on/roll-off vessels, make more than 22,000 calls at ports in the United States each year. That s more than 60 vessel calls a day providing regular scheduled services to and from virtually every country in the world. Liner shipping makes it easier and cheaper for U.S. exporters to reach world markets, and provides American businesses and consumers with inexpensive access to a wide variety of goods from around the world strengthening our economy and enhancing our quality of life. The members of the liner shipping industry who comprise the World Shipping Council [3] carry over 90 percent of this volume. They truly are Partners in America s Trade, and they recognize that this partnership requires the industry to work effectively with the government to address the new threat that terrorists might try to use or attack our transportation system. The immediate challenges are (1) to design the security process and deploy the capabilities necessary to minimize, detect and intercept security risks as early as possible before they are loaded aboard a ship for delivery to their destination, and (2) to have the systems and international protocols in place to ensure the efficient flow of international commerce during all possible security conditions. We must protect the system that facilitates world trade, and prevent transportation assets from becoming means of delivering destruction. We must protect the lives of people who make the international trade system operate and who work and reside in areas through which trade flows. We must protect the nation s ability to continue its trading (3 of 25) [4/16/ :38:36 AM]

17 Koch Statement relations in the event terrorists do attack. And, we must recognize that this terrorist threat is not going to go away, but only become more challenging to address as world trade volumes grow. For that reason, what is at issue is not just maritime security, or the even the global, intermodal transportation system, but the flow of international trade and the world s economic health. Government officials have clearly stated their concern over the possibility that our international transportation system might be used as a conduit for terrorism. Accordingly, governments must devise and implement effective strategies to reduce and manage such risks, and carriers, shippers, ports, marine terminals, importers and third parties need to support what is necessary to achieve those objectives. At the same time, government officials have indicated that, if terrorists were to attack this system, the government response might be to shut down trade. [4] That, however, would allow the terrorist threat to strangle international trade. It would be extremely damaging to the American and world economy. The government must have a strategy and the capability to ensure that trade continues to flow, even if there is an incident. The alternative would create an even greater incentive for terrorists to target the transportation industry, because the consequences would be so destructive. (4 of 25) [4/16/ :38:36 AM]

18 Koch Statement There is no single solution for this problem. No single government agency that can solve this problem. No single government that can solve this problem on its own. Every commercial party involved in the transportation of goods has a role to play. Every government has a role to play. Shippers, consignees, carriers, ports and terminal operators all fear that in the endeavor to address these security concerns, the free and efficient flow of commerce will be impeded, and that requirements may be imposed that unnecessarily impede commerce and raise operating costs, but do little to improve security. This is an entirely legitimate concern. The answer, however, is not to delay action. What is needed is for the government to clearly identify the new security requirements, and for the industry to work cooperatively and quickly with the government to determine the best, most efficient way to meet them. After September 11, the World Shipping Council established a Security Advisory Committee in order to consider how the liner industry could assist the government in the effort to improve security and protect the flow of commerce. On January 17, the Council issued a White Paper, which was provided to the Department of Transportation, the Customs Service and this Committee. Based on that paper and the continuing commitment of the liner industry to help the government develop effective responses to these challenges, I d like to offer the following comments to the Committee. II. The Challenges (5 of 25) [4/16/ :38:36 AM]

19 Koch Statement Designing and implementing an effective maritime security program will require cooperation, information sharing, and coordination between government and industry. At the outset, the Council recommends that the federal government s strategy and actions should be consistent with certain principles. First, there must be a unified, coordinated strategy to address the issue. We recognize that the Department of Transportation oversees transportation and the Customs Service oversees trade, but improving the security of intermodal, containerized cargo shipments requires a tightly integrated approach and clear responsibilities. This is particularly true when considering information requirements for cargo shipments, which I will discuss later. It also requires government agencies to effectively share the information that they require. Second, there should be clear, mandatory rules informing each responsible person in the transportation chain what is required of them. Voluntary programs designed to provide enhanced security levels and to expedite the transportation of low risk cargo are important and should be pursued. But, effective security against terrorist threats also requires clear requirements, with clear accountabilities, which are uniformly applied and enforced. Third, the security regime must allow for the efficient flow of trade. Efficient transportation and secure transportation are not incompatible. (6 of 25) [4/16/ :38:36 AM]

20 Koch Statement Fourth, international cooperation is necessary to effectively and comprehensively extend enhanced security to international supply chains. We all recognize that there are both legitimate concerns about unilateral U.S. actions that have international implications and about the need for international standards on many of these issues, rather than a crazy quilt of differing national laws, and legitimate concerns that the international community may not act with the urgency and determination that the U.S. government regards as essential. This tension may be unavoidable, but it need not be destructive. It requires sensitivity and effective communication on all sides. It also requires action by the governments of all trading nations, because the United States cannot effectively undertake security screenings outside its jurisdiction without international cooperation. III. Various Aspects of Containerized Cargo Shipping A. Ships: On the issue of ship security, we fully support the various initiatives undertaken by the Coast Guard to address vessel security, both using their existing authority and in leading the initiative at the International Maritime Organization to obtain international agreement. (7 of 25) [4/16/ :38:36 AM]

21 Koch Statement The Coast Guard immediately after September 11 th implemented several measures to improve tracking vessels destined for U.S. ports and the crews and passengers onboard these vessels. Through its sea marshal program, implementation of safety and security zones around vessels and escorting certain types of vessels, the Coast Guard is also taking steps to prevent vessels from becoming terrorist targets or from being used by terrorists as weapons. The Coast Guard has submitted to the International Maritime Organization (IMO) additional proposals pertaining to vessel security. Among the proposals are the designation of security officers on every vessel and in every company that owns or operates vessels; the availability of alarms or other means on a vessel to notify authorities and other ships of a terrorist hijacking; and the expedited installation on all vessels of the Automatic Identification Systems (AIS) by July 1, 2004, instead of the existing target date of AIS provides, among other things, a ship s identity, position, course and speed. The Coast Guard has also proposed to the IMO an international system for the issuance of verifiable seafarers documents and background checks of individual seafarers. These and other proposals were discussed at a recent U.S. initiated working group meeting of the IMO. Additional IMO meetings are scheduled for later this spring and summer with a view to approving new international vessel security measures at a special IMO session in December. It is too early to be certain which measures will be approved (8 of 25) [4/16/ :38:36 AM]

22 Koch Statement later this year by the IMO and thus become internationally binding requirements, but the Coast Guard s report on the IMO effort was very optimistic. As an international industry operating liner vessels with multinational crews, and under the jurisdiction of many different flag administrations, and calling ports in many different countries, the Council s member companies would prefer that, to the greatest extent possible, mandatory vessel security measures be agreed to at the international level. Clear and uniformly applied and enforced rules would create certainty and clarity for our vessels and their crews and help protect against breaches in, and of, the international supply chain. B. Marine Terminals: The security of ports and marine terminals in this country was analyzed in the Report of the Interagency Commission on Crime and Security in U.S. Seaports (Fall 2000) and found wanting. This issue served as an impetus for the Senate legislation (S.1214) on this issue, which we have supported. The Coast Guard, using existing statutory and regulatory authority and working with terminal owners and operators, has already implemented certain measures to increase security in and around waterfront facilities. Earlier this year, the U.S. Coast Guard Commander for the Pacific Area issued guidelines for the individual Captains of the Port for the inspection and maintenance of adequate security measures for waterfront facilities in the Pacific Area. Developed in cooperation with industry stakeholders, these guidelines are intended for all types of maritime terminals and facilities. They (9 of 25) [4/16/ :38:36 AM]

23 Koch Statement cover areas such as physical property security, personnel security, passenger security, vehicle access and rail security, and are differentiated according to three risks levels. As guidelines, they do not replace or supersede existing regulations. Rather they are intended to assist the individual Captains of the Port and the operator of a facility in evaluating the security of that facility and taking corrective measures, if necessary. The guidelines are a constructive first step, but further actions are needed. For example, these guidelines do not address the issue of credentials and access controls for people at marine terminals. The U.S. Coast Guard included in its submission to the IMO a proposal that all port facilities be required to develop and maintain security plans, and that these plans would have to be approved by the government in whose jurisdiction the facility is located according to internationally agreed standards. In addition to this proposal, the Coast Guard has also proposed that IMO agree to a mandatory requirement that every port undergo, by the government in whose jurisdiction it is located, periodic port vulnerability assessments based on internationally agreed vulnerability assessment standards. We fully support the efforts of the Coast Guard to raise enhanced terminal security at the IMO. The Coast Guard has also begun the process of preparing to conduct vulnerability assessments of U.S. ports, and, towards that objective, is developing a so-called Model Port security concept. C. Personnel: We support legislative and Department of Transportation efforts to establish a national credentialing program, with uniform, minimum federal standards for (10 of 25) [4/16/ :38:36 AM]

24 Koch Statement credentialing, with a federal background check process using criminal history and national security data, and smart card technology for the credentialing of appropriate transportation workers. It should cover people with access to restricted marine terminal areas and to vessels, the truckers hauling the container, and other security sensitive positions. America s seaports should have systems to ensure and record that only approved people who are supposed to be there are there, and only when they are supposed to be there. Many foreign ports have more developed security procedures than U.S. ports, and the institution of credentialing, background checks, and positive access controls at U.S. ports would be a constructive step to show the U.S. government s resolve. We also support the Coast Guard s initiative at the IMO to establish an international credentialing and background check system for seafarers of all nations. The Coast Guard estimates that 200,000 seafarers a year come to the United States. The agency s IMO proposal is a good-faith proposal to establish an internationally accepted system that would provide enhanced security and ensure the desired freedom of movement for seafarers. D. Containerized Cargo: Containerized cargo transportation presents distinct and clearly complex challenges from a security perspective (1) because of the number of different entities in different jurisdictions involved in a shipment those involved in loading and sealing the container, documentation of the shipment, storage, trucking, railroads, (11 of 25) [4/16/ :38:36 AM]

25 Koch Statement inland terminals, marine terminals, and the ocean carrier, (2) because of the current lack of a clearly defined and coordinated information system to receive, analyze and act on the data determined by the government to be necessary to pre-screen containerized shipments before they are loaded aboard a ship, and (3) because of the lack of an established or coordinated global capability to inspect containers, when warranted, before they are loaded aboard ships. Accordingly, we believe that it may be helpful to look at separate, but complementary, aspects of addressing this issue. 1) Operations: We support the government establishing: a legal requirement that the shipper must seal a container originating in or destined for the United States upon stuffing it, and record the seal number on all shipping documents; the standards that such seals must meet (preferably an internationally accepted standard); a requirement that the party receiving the container at each interchange (e.g., trucker, railroad, ocean carrier) check and record the seal and its condition upon receipt; a requirement that when persons having custody must break the seal for legitimate reasons, they be responsible for affixing a new one, noting the reason, and recording the new seal number on the documentation; procedures for when a container is received with no seal, a broken seal, or a seal discrepancy; and (12 of 25) [4/16/ :38:36 AM]

26 Koch Statement a requirement that no loaded container be stowed aboard a vessel without an intact, conforming seal. While the industry recognizes that seals will not by themselves solve security concerns, the Council believes the above requirements would be an appropriate step to ensure a more secure chain of custody. 2) New Equipment Technologies: Council members have offered their support for government efforts in the research, testing, development and evaluation of cost-effective new technologies that could help provide enhanced security, such as electronic seals, and container tracking and intrusion detection technology. While such technologies have not yet been sufficiently proven to have government standards and be required, carriers will continue to work with the government in testing and evaluating such possibilities. Because there are roughly 11 million existing containers serving as instruments of international commerce involving multiple national jurisdictions, it is very important that any technology standards or devices be internationally available and accepted. 3) Cargo Documentation and Government Information Requirements: Customs Commissioner Bonner and Admiral Loy have both spoken clearly about the need for container security initiatives to push the nation s borders out, so that the government can acquire essential cargo shipment data in time to analyze the information and (13 of 25) [4/16/ :38:36 AM]

27 Koch Statement determine if further inspection of that container is needed before it is loaded aboard ship. The logic is clear and unarguable. The port of discharge is not the place or the time to check for terrorism. If the vision of earlier, more effective container security is to become a reality, it requires better, earlier information about cargo shipments, and the capability to effectively inspect containers before they are loaded aboard ships. Let me turn to these issues. The government s objective is to obtain and analyze shipment information early enough to implement more timely and effective screening. The first step is for the government to establish its information requirements specifically, what information does it need, from whom, when, electronically delivered to what information system? Each person in the shipping process has a role and information: the importer who has ordered and is purchasing the goods, the shipper who is loading the goods into the container, the carriers who are transporting the goods, and the brokers and forwarders who assist in the cargo information process. Today, the earliest information required by the government is the ocean carriers cargo manifests. Most cargo manifests are electronically transmitted 48 hours in advance of arrival, but they are not required to be filed electronically and can still legally be filed in paper form at the time of vessel arrival. [5] (14 of 25) [4/16/ :38:36 AM]

28 Koch Statement Importers are not required by law to provide cargo information and make entry of the goods until five days after they have been unloaded (even more time is allowed if the goods are moving in bond ). This is not the information process that is going to support accomplishing the government s objective. Ocean carriers are willing to do their part. They understand that the cargo manifest is a relevant source of information, and they will submit those manifests to the Customs Service when required. It is important to recognize that this cargo information is necessarily, in the case of a sealed container, the shipper s declared cargo description. If the government determines that it needs more detailed information than is on the bill of lading and the cargo manifest, then it must obtain it from the appropriate cargo interests who possess that information. Mr. Chairman, we recognize that your Committee does not have jurisdiction over the Customs Service. However, we strongly believe that any legislation that deals with this issue must recognize the extensive programs currently being undertaken by the Customs Service and the information systems that they are presently operating and upgrading. It would make no sense to consider the creation of a new cargo information system without addressing how it relates to the Customs Service s programs and without ensuring that what is produced is a single, logical system that meets defined, coordinated objectives. Neither shippers, carriers, nor the government would be well served (15 of 25) [4/16/ :38:36 AM]

29 Koch Statement by competing cargo information systems at the Department of Transportation and the Customs Service. However your Committee decides to address this issue of cargo information, we believe that it is essential that any legislation on this issue must provide a single, coordinated strategy and assignment of responsibilities. Finally, Mr. Chairman, we believe maritime security legislation should address export cargo, as well as import cargo. Effective attention to export cargo will demonstrate to the international community that the United States is committed to addressing security risks in a coherent fashion, and not just the risks involved in one direction of foreign trade. 4) Container Inspection Capability: There can be no argument that non-intrusive container inspection equipment [6], operated by trained personnel, is necessary, and that this is a very important government competence. The Congress has increased funding for the Customs Service for this purpose; however, a strategy for enhancing such capability in ports around the world is needed. It is not feasible or necessary to physically inspect every container entering or leaving a port. It is necessary, however, for the government to have the capability to inspect those containers that it identifies as deserving further attention, whether that be on the basis of random selection or specific information. And the better the (16 of 25) [4/16/ :38:36 AM]

30 Koch Statement information about a shipment, the better the government will be able to identify which containers warrant such inspection. Unless such inspection equipment and competence is available to government authorities, not only at U.S. ports, but at overseas ports of loading, the government will have obvious difficulty accomplishing its objective. To be fully effective, an advanced security information system requires a way to check out a questionable container before it is loaded on a ship heading to or from a U.S. port. That s the point of advanced awareness. Perhaps the U.S. government can convince the IMO to address this issue. Perhaps bilateral agreements with our trading partners can provide for this. But, it is an issue that requires immediate inter-governmental planning and execution. Inspection equipment standards should be agreed upon, and inspection capabilities and international cooperation protocols established. Delay in having this capability means that the government will have one less effective tool to intercept dangerous cargo, and to keep commerce flowing in the event of a terrorist incident. 5) Sharing Information: While there are many aspect of addressing this issue, intelligence will be a key part of securing the transportation infrastructure from terrorist s threats. Appropriate means should be developed for sharing intelligence alerts and warnings on a timely basis with designated carrier personnel. (17 of 25) [4/16/ :38:36 AM]

31 Koch Statement III. Conclusion Mr. Chairman, the Coast Guard has done a magnificent job in responding to maritime security since September 11, as has the Customs Service. Maritime security has been improved because of their efforts, and their enhanced vigilance and intelligence efforts continue. The challenge is to build on those efforts and create a more complete, unified and permanent set of security procedures and systems that can better ensure the safety of America s foreign trade. As this Committee considers legislation on this issue, we hope that the positions outlined above will be of assistance. We also ask you to consider the four principles outlined in Part II of this testimony earlier, which I will address again. 1. First, there must be a unified, coordinated strategy to address this issue. The current governance structure is not adequate. The Commandant of the Coast Guard and the Commissioner of Customs have articulated a sound vision for the desired outcome. The vision is to have a system in place that allows the government to screen cargo containers before they are put on ships sailing for U.S. ports. This requires analysis of the shipment information in advance of loading and having the capability to inspect any container the government chooses to inspect. But the government s reluctance to establish with (18 of 25) [4/16/ :38:36 AM]

32 Koch Statement clarity who has responsibility for containerized cargo security is becoming increasingly troublesome. The Coast Guard has a clear mission and has performed exceptionally well in addressing ship security issues and in addressing port security issues. That is and should remain their jurisdiction. But when it comes to the movement of containerized cargo we see confusion and competition between Customs and the Department of Transportation resulting in an unclear governance structure to address the issues before us. For example, Customs handles the trade aspects of these international cargo movements, and the Commissioner of Customs has actively embarked upon the development of a Container Security Initiative and the Customs Trade Partnership Against Terrorism (C-TPAT). Ocean carriers are working with the agency in these efforts. But who is responsible for managing the trade consequences should there be an incident? And, if we are ever faced with a terrorist use of a container, who is responsible for determining what is done to keep international trade flowing? Customs Commissioner Bonner has indicated, as have Coast Guard officials, that the U.S. government response, presumably led by the Coast Guard, could well be to close U.S. ports. What would be required to reopen them and who would make the decision to do so? What would carriers, shippers, terminal operators and ports have to do to keep American trade flowing? What would the U.S. expect foreign ports to do, and what capabilities would we expect or require of them? When will those expectations and requirements been communicated to the relevant foreign governments? We believe that these (19 of 25) [4/16/ :38:36 AM]