WASHINGTON, D.C. (March 9, 2006) – Kurt J. Nagle, president and CEO of the American Association of Port Authorities (AAPA), testified today on seaport security before the House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation. On the issue of the proposed acquisition of P&O Ports by DP World, Mr. Nagle indicated that 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.”
Mr. Nagle urged Congress to allow the current 45-day investigation of the transaction to run its course “prior to 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.” He also noted that, with regard to individual business arrangements, “Public port authorities often have leases with terminal operating companies to operate port-owned facilities. Those 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.”
On other port security issues, Mr. Nagle said that while the federal Port Security Grant program has provided much-needed assistance to pay for seaport facility security, it still had several problems, including (1) an inadequate amount of Congressional appropriations; (2) limits on eligibility; (3) the port industry’s concern about the Administration’s proposals to lump port security into the larger Transportation Infrastructure Protection program (TIP); and (4) the slow release of the federal funds. “Limited port security funds have placed burdens on ports as security programs compete with general maintenance of facilities, channel dredging or port expansion projects,” said Mr. Nagle. “The biggest impact of these limited funds, however, is a delay in making security enhancements. Limited funds means slower progress.”
Mr. Nagle’s testimony, available on-line at /govrelations/nagle_3-09-06.htm, also stressed the need for quicker implementation of the Transportation Worker Identification Credential (TWIC), as well as the need to ensure that adequate resources are available for federal agencies with responsibility for port security, particularly the U.S. Coast Guard and Customs and Border Protection.
The U.S. Public Port Industry
The American Association of Port Authorities (AAPA) represents more than 80 public port authorities in the United States. These state, county and city government agencies own and develop seaport facilities to handle both domestic and international maritime commerce being imported to or exported from the United States. U.S. ports and waterways handle more than 2.5 billion tons of trade annually. The majority of our nation’s overseas cargo flows through AAPA member ports’ facilities.
While some public ports operate their own cargo terminals, many serve as “landlord” ports, leasing portions of their facilities to private terminal operating companies. While some of the private companies operating terminals in the United States are U.S. corporations, many are non-U.S. businesses that operate terminals worldwide or are affiliated with the foreign flag steamship lines that carry the cargo. All terminal operators, whether public or private, must comply with Maritime Transportation Security Act of 2002 (MTSA) and must have facility security plans reviewed and approved by the U.S. Coast Guard, as indicated below.
Port security is the top priority for AAPA members. Protecting this vital part of our transportation infrastructure is critical to our nation’s economic growth and vitality.
The federal government takes the lead in protecting America’s ports. The Department of Homeland Security, primarily through the activities of Customs and Border Protection (CBP) and the U.S. Coast Guard, run many programs to secure our ports. The U.S. Coast Guard is responsible for maritime security and reviewing and approving security plans for vessels, port facilities and port areas which are required by the MTSA. Customs and Border Protection is responsible for cargo security, and screens and inspects cargo entering the U.S. through every U.S. port.
Other cargo security programs include the Container Security Initiative (inspection of U.S. import cargo by CBP prior to leaving the outbound foreign port), use of radiation detection equipment to screen for weapons of mass destruction, use of other non-intrusive inspection devices, and the Customs Trade Partnership Against Terrorism (C-TPAT) which encourages maritime stakeholders to verify their security measures. The Port Security Grant program and the pending implementation of the Transportation Worker Identification Credential (TWIC) are also important parts of America’s port security portfolio to provide layered security.
While the federal government takes the lead on waterside and cargo security, overall security is a shared responsibility with port authorities, facility and vessel operators, and state and local police providing additional security. The MTSA also establishes local security committees to evaluate and make improvements in each port.
DP World Acquisition of P&O Ports
P&O Ports is a terminal operating company that operates marine terminal facilities worldwide, including several terminals in the United States owned by public port authorities. Some press accounts have not accurately stated the nature of the business transaction involved or the resulting impact on U.S. port operations. DP World’s purchase of P&O Ports would involve the operation of specific terminals or provision of stevedoring services (vessel loading/unloading) at some ports, but DP World would not “own,” “control,” or “take over” those ports (which would continue to be owned by the port authorities). DP World would not be solely responsible for facility security at any of the involved terminals, and the federal government would continue to be primarily responsible for maritime and cargo security.