1. Transportation & Cargo Security Threats and Solution

2. KEEPING THE GLOBAL SUPPLY CHAIN MOVING 3. INTRODUCTION The trucking, mass transit, and oil pipeline industries are facing daunting challenges regarding the implementation of appropriate security measures. They have unique needs and unique issues. Trucking is the back-bone of the nations short and long haul delivery mechanism; mass transit operators carry millions of passengers everyday and the oil operators have thousands of miles of pipeline to protect. 4. IMPORTANCE OF THE TRUCKING COMPONENT Trucking represents a huge portion of U.S. freight revenue. The industry is composed of private carriers, regulated carriers, exempt services, and independent truckers. They have relatively low fixed costs but the cost of fuel has skyrocketed and the profit margin for the industry is very small, leaving little room for costly security expenditure. History and Development 5. FACILITIES/INFRASTRUCTURE Local governments maintain the vast numbers of roads in the system. State highways, including the interstate system, fall within the purview of State authority. The federal government actually administers only a small percentage of the roads (federal parks and reservations). The federal government does however place controls on the system via the distribution of funds. Bridges and tunnels present very distinct security problems. 6. The industry is regulated by the Motor Carrier Act , which in the early 1980s attempted to open up the industry to more firms. The rising volume of freight moved by motor carriers and its linking function with rail, sea, and air make it important to both the economy and the national defense. REGULATION/DEREGULATION 7. EMERGENCY FUNDING Heightened rules regarding carrying hazardous materials have been initiated but any additional security measures have progressed very slowly. Efforts to complete background checks on drivers have also moved at a leisurely pace due to cost considerations. 8. In May 2006, the American Trucking Associations unveiled a new Security Council. The groups security focus had previously been housed within its Safety & Loss Prevention Management Council but, given the growing and intense focus on security, ATA determined it was appropriate to establish a separate entity dedicated solely to trucking security issues and operations. Congress has set in motion an overhaul of the nation's truck driver licensing system and new restrictions on non-U.S. truckers. Legislation ordering the U.S. DOT to verify the citizenship status of all 11 million commercial driver's license holders was approved late September 2006 Update: 9. TRUCKS BRING IT! 10. IMPORTANCE OF THE MASS TRANSIT COMPONENT Mass transit generally refers to municipal or regional public shared transportation, such as buses, streetcars, ferries, and subways open to the public on a no-reserved basis. Mass transit vehicles carry a far higher passenger load per unit of weight and volume than do private vehicles. They also offer fuel savings, not only because of the relative reduction in weight transported, but also because they are large enough to carry more efficient engines. By the late 1890s, mass transit had become indispensable to the life of large American cities but efforts to upgrade mass transit systems have experienced mixed results. History and Development 11. FACILITIES/INFRASTRUCTURE The congestion and pollution caused by automobiles and trucks created a renewed interest in mass transit in the 1970s. Privately owned transit systems do exist but publicly owned systems possess over 90% of the transit vehicles. By the end of 1979, there were 463 publicly owned transit systems with operating revenues of over $2 billion. 12. REGULATION/DEREGULATION The Federal-Aid Highway Act in 1973 increased levels of support to mass transit and for the first time, Federal Highway Trust Fund money was usable toward mass transit construction and maintenance. The Act actually authorized $19.9 billion over a three-year period and later the National Mass Transportation Assistance Act of 1974 directly authorized the use of federal subsidies for mass transit systems. 13. The overall costs of adequately protecting a mass transit system are astronomical and the public will have to support Congress in efforts to finance the needed enhancements. The government plans on re-examining the Transportation Equity Act for the 21st Century (TEA-21) EMERGENCY FUNDING 14. EMERGENCY FUNDING CONTINUED in order to authorize more funding for security improvements. In August 2002, $15 million in federal grants was appropriated to the TSA for commercial bus security. The funds are expected to be dispersed in the form of security grants to operators to assist in the development of security programs and training. 15. The U.S. Department of Homeland Security (DHS) announced in October 2006 a $150,000 grant to C-TRAN in Vancouver, Wash. to improve intercity bus security. This award is part of $136 million in grants to cities across the nation to protect transit systems. Update: 16. CANT GET THERE (CHEAPLY) FROM HERE 17. IMPORTANCE OF THE PIPELINE COMPONENT The concept of pipelines falls under the category of a specialized means of transportation. They have been in use in the U.S. since the Civil War and have been characterized as those that carry petroleum, natural and synthetic gas, and those used to transfer chemicals, coal, wood, and milk. Water is specifically not included in the list. The cost structure for pipelines is similar to that for the railroads: both are high fixed cost ventures. The high fixed cost characteristic of oil and gas lines limits the number of competitors willing to build the infrastructure. History and Development 18. FACILITIES/INFRASTRUCTURE Total pipeline mileage is approximately 430,000 miles in which about one third-carry liquid, and the remainder moves natural gas. Texas contains the most mileage even though all contiguous lower 48 states have some segment of the overall system. 19. FACILITIES/INFRASTRUCTURE CONTINUED The U.S. liquid pipeline industry is large, diverse, and vital to the economy. Comprised of approximately 200,000 miles of pipes in all of the 50 States, during 2001, liquid pipelines carried more than 40 million barrels per day, or 4 trillion barrel- miles, of crude oil and refined products. 20. REGULATION/DEREGULATION The history of pipeline regulation reflects a mixed and inconsistent approach. In spite of Standard Oils obvious monopoly and the courts recognizing the lack of competition, from 1906 to 1914 the major pipeline companies generally evaded regulation. This evasion continued throughout the 1920s and 1930s. 21. REGULATION/DEREGULATION CONTINUED The Hepburn Act of 1906 gave the Interstate Commerce Commission jurisdiction over the interstate transportation of oil and other commodities by pipeline. The Act stated that pipelines were common carriers by definition. Therefore, they could be required to carry oil at reasonable rates for any shipper. 22. In response, the Bush Administration passed the Pipeline Infrastructure Protection to Enhance Security and Safety Act (HR 3609) on December 17, 2002. One of the biggest challenges to verify the security of the pipeline system is conducting patrols along the 200,000 miles of line. EMERGENCY FUNDING 23. EMERGENCY FUNDING CONTINUED During the weeks following the attacks of September 11, 2001, the FAA placed stringent limits on certain general aviation activities that hampered pipeline operators ability to patrol portions of the pipeline by air. 24. Industry and government agencies generally assert that efforts to promote U.S. pipeline security are on the right track. Nonetheless, TSAs current funding for pipeline security will provide only limited capability for inspections and enforcement of any future regulations. The Presidents FY2005 budget request does not include a line item for TSAs pipeline activities; they will be funded from the agencys general operational budget. Update: 25. ENERGY PRODUCTION AT THUMS ISLAND IN LONG BEACH, CA 26. CONCLUSION The government has taken positive steps to move from improving not only the aviation component to the maritime and border crossing aspects of transportation security. More efforts in mass transit, railroads, and oil pipeline security are sure to follow and are certainly warranted. Close cooperation between individual stakeholders and the government will be essential for any meaningful changes to be made. Private ownership of these assets necessitates a complementary effort between government regulation and the desire to make for corporate profit. Thank you for giving me the tools to make this presentation better. DCW