Statement Of Anthony Coscia

Committee on Commerce, Science and Transportation

 

October 4, 2007

 

 

Chairman Inouye, Vice Chairman Stevens, Senator Lautenberg, members of the Committee, thank you for the opportunity to testify on the importance of maritime and port security and the implementation of the SAFE Port Act.   My name is Anthony Coscia.  I am the Chairman of The Port Authority of New York & New Jersey.

 

The tragic events of September 11^th have focused our collective attention on the need to protect our borders at major international gateways like the Port of New York and New Jersey and small ports alike.  The Maritime Transportation Security Act of 2002 and the SAFE Port Act are two pieces of landmark legislation that have had a positive impact on our homeland security. However, as we all know, more remains to be done. We commend the entire Senate, and this Committee in particular, for its work on the SAFE Port Act in devising a layered approach to enhance maritime security.   

 

At the Port Authority we feel that maritime and port security is such an essential matter that we assembled a Task Force of independent non-partisan business and government leaders interested in identifying critical port and supply chain security concerns and promoting ways to resolve or mitigate these concerns.  The Task Force issued a report in November 2006 containing our recommendations.

 

I would like to briefly discuss seven key points relevant to the SAFE Port Act and our Port Security Task Force: 1) the vital nature of our ports; 2) cargo security; 3) credentialing; 4) command and control; 5) response and recovery; 6) research and development; and finally, 7) funding and resources.

 

 

Ninety-five percent of the international goods that come into the country come in through our nation’s 361 ports; approximately 13% of that volume is handled in the Port of New York and New Jersey alone, the third largest port in the country. The Port generates over 230,000 jobs and $12.6 billion in wages throughout the region. Additionally, the Port contributes $2.1 billion in state and local tax revenues and more than $3.8 billion in federal tax revenues.  Cargo that is handled in the Port is valued at over $150 billion and serves 80 million people, or thirty five percent of the entire US population.  In 2005, the port handled over 5,500 ship calls, 86 million tons of general cargo, 852,297 autos, and 2.9 million containers, approximately 8,200 containers each day.  Today, international trade accounts for approximately thirty percent of the US economy. Considering all this, it is easy to understand how a terrorist incident in one of our ports would have a devastating effect on our nation and its economy.

 

 

America’s consumer-driven market depends upon a very efficient logistics chain, of which the nation’s ports are a single link. US ports provide the platform for the transfer of imported goods from ships to our national transportation system — primarily trucks and trains — that ultimately deliver those products to local retail outlets or raw goods to manufacturing plants.  Historically, that goods movement system has had one overall objective: to move cargo from Point A to Point B as quickly, reliably and cheaply as possible.  Today, a new imperative — national security — has been introduced into that system.  The ports themselves are not the lone point of vulnerability.  Rather, the potential for terrorist activity stretches from the cargo’s overseas point of origin or place of manufacture to where the cargo is placed into a container to any point along the cargo’s route to its ultimate destination.  

 

Our goal should be to increase our level of confidence that we know exactly what is in each container before it is loaded on a ship destined for a US port.  It is simply not possible to physically examine the contents of each of the 8,200 containers that arrive each day in the Port of New York and New Jersey alone without seriously impacting the efficiency of the logistics chain. And we remain concerned about a requirement that 100% of all containers entering the country be scanned, before the technology, business processes and sovereignty issues have been addressed.  The key, rather, is to identify a way to separate high-risk cargo from the vast majority of legitimate containers and then deal with the exceptions.  This approach requires a thorough understanding of the existing logistics chain that moves containers from any place in the world to our nation’s distribution system. 

 

A typical container movement includes 14 different nodes, involves 30 organizations, and generates as many as 30-40 different documents with over 200 data elements. This is a complex process in which the physical movement of a container is only one dimension of the system.  There are three other important components that must also be understood: the flow of money, the flow of information concerning that shipment, and, finally, the transfer of accountability for the shipment, all of which must occur seamlessly in order for the cargo to be delivered to its final destination. 

 

Today, no mandatory security standards apply when loading a container at the manufacturer or when it is consolidated in a warehouse, often well inland of a seaport.  No security standards exist for the seals placed on containers.  Cargo is transferred from one mode of conveyance to another and there are neither standards governing how that conveyance occurs, nor accountability for the integrity of the container as it changes hands.   

 

We believe that efforts must be taken to verify the contents of containers before they are even loaded on a ship destined for a US port.  The process must include certification that the container is free of false compartments, and was packed in a secure environment and sealed so that its contents cannot be tampered with; that there be an ability to verify along the route that neither the container nor cargo has been tampered with; that the container is transported under the control of responsible parties; and that the integrity of the information and information systems associated with the movement of the cargo has not been compromised.

 

We support Section 204 of SAFE Port, which requires “minimum standards and procedures for securing containers in transit to the United States.”   However, we also believe that we need to go one step further and make those container security standards minimum and mandatory.  Voluntary cargo security measures such as those established under the Customs-Trade Partnership Against Terrorism (C-TPAT) program are helpful but are not sufficient by themselves in order to protect our homeland.  Rather, all containers destined to the United States should be subject to a new and higher security standard. Then and only then, should importers that choose to go above and beyond the minimum standards reap tiered benefits such as those currently available through C-TPAT participation.  The incentives to go above and beyond the minimum standards would be commensurate with the level of investment in and effectiveness of security measures and should include a number of security and commercial benefits including a reduction in cargo loss, fewer Customs exams, an adjustment to insurance premiums and bonding requirements and greater cargo visibility to support just-in-time inventory pressures.  Those that don’t meet the minimum standards would receive a “red lane.”

 

The Department of Homeland Security is working on the development of functional requirements for Container Security Devices (CSD).  Based on comments that Customs and Border Protection (CBP) Commissioner Ralph Basham made before the Center for Strategic and International Studies in July, it appears that the CSDs will be required only of Tier 3 C-TPAT participants.  We are concerned that this approach only makes the secure shippers more secure and fails to address the vast majority of shippers that have chosen not to participate in the voluntary C-TPAT program. 

 

The SAFE Port Act also required DHS to collect more data on cargo shipments before lading in order to improve their risk targeting. We support this advanced information effort, which is affectionately known as “10+2”, and applaud CBP for collaborating with trade in the identification of the appropriate data elements and reporting methods.  We join with our industry partners in eagerly anticipating the release of the Notice of Proposed Rule Making later this year. We are very concerned, however, about plans to develop a third party data warehouse or what is referred to as the “Global Trade Exchange” without appropriate consultation with industry and before the effectiveness of “10+2” can be evaluated.  We respectfully request that through the Commercial Operators Advisory Committee (COAC) on which the Port Authority has a seat, that DHS involve industry in the development of the Global Trade Exchange concept, before any segment of it is developed outside the established consultative process. 

 

Radiation detection is yet another line of defense but radiation detection in the United States after cargo has arrived on our shores should be our last line of defense, not our first.  We fully support the deployment of radiation detection equipment at the 22 highest volume ports in the country to scan all containers for radiation.  However, as the technology is improved and resources allow, this program should be expanded beyond the highest volume ports.  Not doing so would allow exploitation of the path of least resistance.  In the Port of New York and New Jersey 98% of our import containers are currently scanned for radiation by CBP.  Those that are not scanned today represent only the lowest risk containers that move inland by rail. We are monitoring the progress of the rail pilot project in the Port of Tacoma, which, if successful, will help us devise a solution for capturing that remaining 2% of rail cargo.

 

Starting in 2003 the Port Authority has worked closely with the Department of Homeland Security (DHS) on a Counter Measures Test Bed (CMTB) program at the New York Container Terminal to test and evaluate the performance of commercially available and advanced radiation detection equipment in real world situations. These efforts have led to the further development and selection of manufacturers for the Advanced Spectroscopic Portal (ASP) program. To date CBP has installed ASPs at two of our seven container terminals. Those ASPs are currently undergoing field-testing and have not been fully commissioned yet.  CBP’s cooperation in accommodating local operational constraints and schedules has been outstanding.

 

We recognize that concerns that have been raised by the Government Accountability Office, the National Resources Defense Council and others about the ability of the ASPs to detect shielded nuclear material and support the additional testing, evaluation and certification that is underway.  If requested, the Port Authority will continue to make its facilities and personnel available for any additional testing that may be necessary.  Further, because of the limited ability of the ASPs to detect shielded material, we strongly support the Secure Freight Initiative, which integrates radiation detection and container imaging. We must continue urgently to pursue a solution that is easy to administer by the supply chain workforce; that is fast, accurate and reliable; and that is affordable. 

 

CREDENTIALING

 

In 2002, Congress mandated that all transportation system workers who are permitted “unescorted access” to restricted areas carry a Transportation Worker Identification Credential, or TWIC.  TWIC is a tamper-resistant identification card with biometric capabilities that can be issued only after a successful criminal history background check.  TWIC provides the operators of critical infrastructure with the ability to positively identify an individual seeking to gain access to a secure area.  We fully support the need for positive access control at port facilities and the creation of a national identification program. 

 

Since TWIC has been and will be the subject of several other hearings, I will limit my comments to just two issues relating to the SAFE Port Act. 

 

The first is the provision requiring DHS to establish a pilot program to test TWIC card readers at five geographic locations in order to evaluate business processes, technology and operational impacts.  While the SAFE Port Act mandated these pilot projects, the Department has not funded them.  We and other port authorities and vessel operators are committed to assisting the Department in achieving its goals relative to the implementation and deployment of TWIC in the maritime industry.  Accordingly, we have agreed to work with TSA to use our facilities and vessels, as well as use a portion of our federal grant monies (FY 2006 and FY 2007), to test the equipment that will be used to read the TWIC cards.  The federal grant monies, however, require a 25% cash match.

 

In order to devise a meaningful pilot project, considerable initial disruption will occur at each participating facility and vessel and both capital and operating funds will be expended that will not be recoverable at the end of the pilot, whether or not it is successful.  We would suggest that the cost to the participants to plan, manage and implement this program already represents a significant contribution, even without an obligation for a cash match. Therefore, mandating a 25% cash match for purchase of infrastructure and equipment required for participation in the pilot project will place an undue burden on us, and will only serve to reduce the amount of resources we will have at our disposal to ensure that a complete implementation of TWIC is a success.  We have therefore requested that Secretary Chertoff recognize the in-kind contribution that our organizations will be making and waive the cash match requirement pursuant to his authority under 46 USC 70107, section (c), (2), (b).  We would appreciate the Committee’s support of this request as well.  All previous TWIC pilot projects were fully funded by the TSA, and the pilot project required under the SAFE Port Act should receive the same level of support. 

 

The second issue is the prescreening of port truck drivers.  Under Section 125, DHS was required to implement a threat assessment screening for all port truck drivers with access to secure areas of a port and who possess a commercial drivers license but not a hazardous materials endorsement.  This program would be very similar to the interim screening program in which all facility owners and operators were required to participate in early 2006.  Although this program hasn’t been rolled out yet, we feel strongly that DHS comply with this requirement so that industry has a better understanding of what the impact of TWIC might be on the truck driver community.  Current estimates indicate that anywhere from 10-40% of truck drivers may not be eligible for a TWIC, which could seriously impact port productivity and ultimately security. 

 

 

In the president’s National Strategy for Maritime Security, Maritime Domain Awareness (MDA) is defined as “an effective understanding of anything in the maritime environment that can affect the safety, security, economy, or environment of the United States.”  MDA is heavily dependent upon information fusion.

 

Additionally, one of the principal outcomes of the work of the 9/11 Commission was its determination that information sharing and collaboration at all levels of government are less than adequate. As such, we support the SAFE Port Act requirement for the development of interagency port security operations centers in key U.S. ports to facilitate operational coordination, information sharing, incident management and effective response.  We would caution, however, that since the maritime industry does not operate in a vacuum but rather is largely dependent on surface transportation (road and rail) and requires the involvement of multiple levels of government and public safety agencies, these operations centers should not be limited to maritime and cargo security alone but be a single focal point and provide for the integration of all Homeland Security related functions among local, state and Federal agencies in a given region.  It must also not just be a single operations center but one of multiple coordinating nodes in a regional and national information- sharing and collaboration network. 

 

One of the cornerstones of effective maritime domain awareness and command and control is the Coast Guard’s Command 2100 program, which regrettably hasn’t received sufficient funding and resources yet.  Therefore in the Port of New York and New Jersey we applied for and received federal funding to develop the concept of operations and functional requirements for what might become the Joint Port Operations Center in our Port.  It is our hope that our work locally will help inform the development of national functional requirements under Command 2100.

 

The basis for the local con ops and functional requirements will be the Port Authority’s Joint Situational Awareness System (JSAS), formerly known as the Regional Information Joint Awareness Network or RIJAN.  JSAS is a DHS-funded, DoD managed and Port Authority-led multi-agency project to build an information sharing and collaboration network among key operations centers in the New York and New Jersey port region.  Regional partners include the States of New York and New Jersey and the City of New York.  DHS sponsorship is via the Domestic Nuclear Detection Office (DNDO).  Our DoD program manager and developer is the US Army’s Armament, Research, Development and Engineering Center from Fort Monmouth New Jersey.

 

 

While most of our focus since 9/11 has rightly been on preventing another terrorist attack, we must develop comprehensive programs to address response and recovery as well.

 

A large-scale terrorist attack at a Port such as ours would not only cause local death and destruction, but could paralyze maritime commerce and economies nationally and globally.  Before such an event occurs, we must have plans in place to ensure an efficient and effective response in order to avoid critical delays in recovery and expedite business resumption.  Agencies in the Port of New York and New Jersey know better than anywhere else in the country how to respond to suspected terrorist activities and catastrophic events. What is not entirely clear is how private sector resources could be leveraged to strengthen the response, what the economic impact of a protracted port closure would be, and how the private sector would be kept informed to facilitate critical business decisions as an event unfolds. We must collaborate today on developing localized plans and procedures to ensure a timely and effective recovery from an incident at our Ports and to inform the private sector as an incident develops and response and recovery takes place.

 

The Strategy to Enhance International Supply Chain Security, released by DHS in July, does a credible job of outlining the plan and considerations for resumption of trade.  However, those considerations still need to be translated into port specific recovery and trade resumption plans. 

 

Through the Area Maritime Security Committee, the Port of New York and New Jersey has developed a draft port recovery plan.  We have also established a Recovery Advisory Unit to counsel the Captain of the Port and Unified Command on the priorities, requirements and limitations for an effective and efficient recovery.   We await the release of a Navigation and Vessel Inspection Circular later this year, which will provide the necessary guidance to local Coast Guard Sectors for the development of port specific recovery plans.  A crucial element however, before we can finalize our port recovery plan is the release of both CBP and USCG’s tactical plans for recovery and resumption of trade, which hasn’t been done yet. 

 

The SAFE Port Act creates a prioritization for reestablishing the flow of commerce in the aftermath of an incident.  We applaud the Department for recognizing that a port’s ability to re-establish the flow of commerce will be incident-dependent and be dictated by ongoing response or clean up activities, current threat information and the availability of transportation infrastructure and resources (pilots, tugs, rail cars, barges, labor, cranes, tankage, container storage, etc.).  Local port officials must have maximum flexibility to respond to their specific circumstances according to the dictates of the immediate situation.  The recovery plan for New York and New Jersey makes life safety and public health, such as home heating oil in the winter, a priority; thereafter, vessels will move on a first-in, first-out basis depending on the availability of infrastructure and resources. 

 

 

 

Today, cargo security projects are being managed by various agencies within DHS as well as DOT, DOD and DOE.  There are also a number of private-sector cargo security initiatives.  From our vantage point, little coordination and collaboration takes place among these various initiatives.  As a result, we may be expending scarce research resources in duplicative efforts or pursuing technologies or devices in one program that have already been shown to be ineffectual in others.  We risk reinventing the wheel in developing solutions already addressed and solved in other efforts.  Erecting administrative barriers between these programs impedes the free exchange of information that could otherwise promote efficiency and effectiveness in improving security.

 

For these reasons, we believe it is absolutely critical to coordinate all cargo security research and development efforts through a single office.  We believe that office should be the Director of Cargo Security Policy, created under the SAFE Port Act.

 

There is an old saying that ignorance is bliss.  In the current context, however, ignorance is an obstacle.  Improving our national security is not a competition between government contestants seeking to conceal information in order to gain an advantage over other contestants.  Rather, individuals involved in these efforts should be players on the same team working for the common good.  In addition to project coordination through the Director of Cargo Security Policy, we would encourage the development of a Joint Program Office and a cargo security working group that includes private sector participation.       

 

We also support the development of a DHS Center of Excellence (COE) for maritime security and domain awareness by the Science and Technology Directorate.  This COE’s research will help DHS facilitate and defend maritime commerce and global supply chains, minimize damage and expedite recovery from attacks or catastrophic events impacting maritime interests, and protect coastal population centers and critical infrastructure through the COE. DHS also seeks maritime security research that will integrate public and private resources and expertise into a coordinated effort to address maritime threats systematically; align federal, state, local, foreign government, and private sector security efforts and activities; and support global maritime awareness and security.  The Port Authority is a member of Government and Industry Advisory Committee for a proposal that has been submitted for the COE on Maritime Security. A field visit is scheduled for next week and we expect to learn about an award before the end of the year.

 

 

Before September 11, 2001, port security was primarily focused on cargo theft and smuggling; it has since taken on new meaning and urgency.  However, there is an ongoing debate over whether port security is primarily a federal government or private sector responsibility. While that debate continues, the Port Authority and private terminal operators throughout the country have voluntarily taken significant steps to protect our seaports from the terrorism threat, because the consequences of not doing so are grave.  Since the September 11 terrorist attacks, ports such as ours have instituted heightened security measures and spent substantial resources to increase security, both with capital improvements and additional security and law enforcement personnel.  However, for every dollar that is spent on security, there is one fewer dollar available for the capital infrastructure necessary to accommodate the increasing volume of cargo our ports are expected to handle.  

 

By the end of this year, the Port Authority will have spent over $100 million on port security costs since the September 11 terrorist attacks.  While 30% of the total – about $30 million – has been spent on infrastructure improvements and security systems, the vast majority of our expenses are the result of a significant increase in the operational costs associated with maritime security. It is estimated that the annual operations and maintenance costs associated with the new security systems is on the order of magnitude of fifteen to twenty percent of the purchase price.  Additionally, ports and terminals have spent significant sums of money on personnel costs, including the hiring of new security officers, overtime, upgrading security forces to use more professional services, and providing extra training. The Port Authority’s port security operating costs have doubled since 9/11.  This does not include the extra police required at all Port Authority facilities every time the threat level increases, which amounts to approximately $500,000 per week.

 

 

Since June 2002, approximately $1.3 billion has been made available under the Port Security Grant Program to port and terminal operators and state and local law enforcement and emergency responders.  About 12 % or $104 million of the total has been awarded to entities in the Port of New York and New Jersey, arguably the highest risk port in the country.  The Port Authority has received $25 million of that share. 

The vast majority of the $1.3 billion in port security grants has been allocated to critical security projects for individual terminals and vessels.  Since all US port terminals and vessels are now compliant with the Maritime Transportation Security Act, we must shift our attention from “my” security needs to “our” security needs.  We therefore support the provision to make grants available to address port-wide vulnerabilities identified in the Area Maritime Security Plans.  Under the Fiscal Year 2007 Supplemental Port Security Grant Program, FEMA is requiring all Tier I and II ports to develop a 5-Year Port Wide Strategic Risk Management Plan, which will form the basis for future grant funding requests.  We would like to see this requirement extended to Tier III and IV ports, to ensure that all federal port security funding is distributed based on risk and in a coordinated fashion.  The Port of New York and New Jersey has already developed a Port-Wide Strategic Risk Management Plan and is prepared to help other ports create theirs.

 

 

Physical, technological, personnel and law enforcement enhancements at port facilities, many of which were mandated by new federal regulations, have created a financial drain on the operators that run them. During its initial rulemaking process for the port security grants, it appears that the federal government grossly underestimated the operating costs for security. These security operating costs have not been eligible for port security grants and, as a result, have become unfunded mandates that industry has had to bear.  Thus, while the federal government has provided $1.3 billion in port security grants over the past five years, this represents only a small fraction of the security costs that the industry has incurred over that same period.

 

In the absence of a consistent stream of federal funding for port and cargo security, many ports around the nation have been forced to impose customer fees to cover federally mandated port security expenses. While the federal government has implemented standard regulations, there is no uniformity or consistency of user fees. The general concern reverberating throughout the maritime industry is that this haphazard approach to fee implementation could put U.S. seaports at a serious disadvantage in relation to ports in Canada and Mexico.

 

Together with a shift in supply chain security measures from our nation’s ports to those abroad, we believe the expenses associated with the implementation of a more secure goods movement delivery system should be offset by the reallocation of revenue from the various user fees already collected from the maritime industry. We eagerly await the report on user fees that was required under the 9/11 Commission Bill.  To supplement any shortfalls, the federal government should adopt legislation establishing a uniform, nationwide Port Security User Fee to help offset growing port security costs and resources for our federal partners. In all cases, the revenues generated through such a fee should be dispersed according to a risk-based formula.

 

 

 

Clearly the responsibilities of both the Coast Guard and Customs and Border Protection (CBP) staff have increased exponentially in the wake of 9/11.  Unfortunately, the level of resources and personnel needed to support this awesome responsibility has not grown at a commensurate rate.   It is widely believed that the advent of technology reduces our reliance on personnel.  To the contrary, technology does not eliminate the need for personnel but rather requires additional personnel for intervention and resolution of alarms or concerns generated by the technology.  In the Port of New York and New Jersey alone, CBP needs approximately 10% more staff to conduct its port security missions.  In FY08 our local CBP staffing levels are actually been reduced. The problem is even more acute on the aviation side, which I am also concerned about.  One area of the Coast Guard’s mission is operating at a 1996 staffing level despite a 139% increase in volume of activity.  Left unaddressed, these staffing limitations will adversely impact the free flow of commerce, safety and security.

 

 

Addressing the issue of port and maritime security is an enormous challenge given the complexity of the international transportation network.  Devising a system that enhances our national security while allowing the continued free flow of legitimate cargo through our ports cannot be accomplished through a single piece of legislation, or by a single nation.  It requires a comprehensive approach with coordination across state and national lines and among agencies at all levels of government as well as the cooperation of the private and public sectors and the international community.  It also requires that we periodically step back, measure our performance and identify areas requiring improvement, be it through new legislation, executive regulations or programmatic changes.

 

I hope my comments today have provided with some helpful insight into this complex matter.  The Port Authority of New York & New Jersey is prepared to offer any additional assistance that you may require.    Thank you.