    [House Hearing, 107 Congress]
    [From the U.S. Government Publishing Office]

                                                              H. Hrg. 107-3

              H.R. 5005, THE HOMELAND SECURITY ACT OF 2002, DAY 3

    =======================================================================

                                    HEARING

                                   before the

                     SELECT COMMITTEE ON HOMELAND SECURITY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                       on

              H.R. 5005, THE HOMELAND SECURITY ACT OF 2002, DAY 3

                                   ----------

                                 July 17, 2002

                                   ----------

                                Serial No. 107-3

                                   ----------

        Printed for the use of the Select Committee on Homeland Security

              H.R. 5005, THE HOMELAND SECURITY ACT OF 2002, DAY 3

    =======================================================================

                                    HEARING

                                   before the

                              SELECT COMMITTEE ON
                               HOMELAND SECURITY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 17, 2002

                                   __________

                                Serial No. 107-3

                                   __________

        Printed for the use of the Select Committee on Homeland Security

     Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                     house

                                   __________

                          U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2004

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                     SELECT COMMITTEE ON HOMELAND SECURITY

                       RICHARD K. ARMEY, Texas, Chairman

    TOM DeLAY, Texas                     NANCY PELOSI, California
    J. C. WATTS, Jr., Oklahoma           MARTIN FROST, Texas
    DEBORAH PRYCE, Ohio                  ROBERT MENENDEZ, New Jersey
    ROB PORTMAN, Ohio                    ROSA L. DeLAURO, Connecticut

                                      (ii)

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
        The Honorable C.W. Bill Young, Chairman, Committee on
          Appropriations.............................................     7
        The Honorable David R. Obey, Ranking Minority Member,
          Committee on Appropriations................................    11
        The Honorable Ike Skelton, Ranking Minority Member, Committee
          on Armed Services..........................................    45
        The Honorable W.J. (Billy) Tauzin, Chairman, Committee on
          Energy and Commerce........................................    54
        The Honorable John D. Dingell, Ranking Minority Member,
          Committee on Energy and Commerce...........................    60
        The Honorable Dan Burton, Chairman, Committee on Government
          Reform.....................................................    70
        The Honorable Henry A. Waxman, Ranking Minority Member,
          Committee on Government Reform.............................    75
        The Honorable Porter J. Goss, Chairman, Permanant Select
          Committee on Intelligence..................................   125
        The Honorable Nancy Pelosi, Ranking Minority Member,
          Permanant Select Committee on Intelligence.................   130
        The Honorable Henry Hyde, Chairman, Committee on
          International Relations....................................   116
        The Honorable Tom Lantos, Ranking Minority Member, Committee
          on International Relations.................................   117
        The Honorable Sherwood L. Boehlert, Chairman, Committee on
          Science....................................................   141
        The Honorable Ralph M. Hall, Ranking Minority Member,
          Committee on Science.......................................   145
        The Honorable Don Young, Chairman, Committee on
          Transportation and Infrastucture...........................   169
        The Honorable James L. Oberstar, Ranking Minority Member,
          Committee on Transportation and Infrastructure.............   179
        The Honorable William M. Thomas, Chairman, Committee on Ways
          and Means..................................................   190
        The Honorable David M. Walker, Comptroller General, General
          Accounting Office..........................................   199
    Material Submitted for the Record:
        Opening Statements of Select Committee Members...............     7
        Statement of the Honorable Michael G. Oxley, Chairman,
          Committee on Financial Services............................   225
    Appendix--Recommendations of the Standing Committees:
        Committee on Agriculture.....................................   227
        Committee on Appropriations..................................   239
        Committee on Armed Services..................................   249
        Committee on Energy and Commerce.............................   269
        Committee on Financial Services..............................   297
        Committee on Government Reform...............................   303
        Permanant Select Committee on Intelligence...................   365
        Committee on International Relations.........................   371
        Committee on the Judiciary...................................   378
        Committee on Science.........................................   427
        Committee on Transportation and Infrastructure...............   454
        Committee on Ways and Means..................................   481

                                     (iii)

              H.R. 5005, THE HOMELAND SECURITY ACT OF 2002, DAY 3

                                  ----------

                            WEDNESDAY, JULY 17, 2002

                         U.S. House of Representatives,
                         Select Committee on Homeland Security,
                                                        Washington, DC.
        The committee met, pursuant to call, at 10:47 a.m., in Room
    345, Cannon House Office Building, Hon. Richard K. Armey
    [chairman of the committee] presiding.
        Present: Representatives Armey, DeLay, Watts, Pryce,
    Portman, Pelosi, Frost, Menendez, and DeLauro.
        Chairman Armey. The select committee will come to order.
    The Chair is advised that Chairman Young is on the way, and the
    Chair believes we can begin proceedings and have him join us in
    time for him to give his statement.
        Mr. Obey, we welcome you here this morning. It is the
    practice of this committee to have two opening statements, one
    on each side, and to have those remaining members on the
    committee place any opening statements they have in the record.
    So, without objection, we will place all the opening statements
    in the record, and the Chair will recognize the gentleman from
    Ohio, Mr. Portman, for a brief opening statement.
        Mr. Portman. Thank you, Mr. Chairman. Mr. Chairman, the
    shock of the September 11 attacks in New York and Pennsylvania
    and here at the Pentagon is still very much with us. In a
    single morning, 19 men bent on terror and destruction killed
    more innocent United States civilians than did all our previous
    foreign enemies combined. The grief of that sudden loss was
    overwhelming, and part of what prevents that national grief
    from healing is the reality that that threat is still very much
    with us.
        We are here today to do whatever we possibly can to counter
    that threat and to avoid more loss of innocent life. Our
    Federal Government and we as Members of Congress have no
    greater responsibility. The major problem I see with our
    current system of homeland security is that it is uncoordinated
    and spread too thin. Everyone is in charge, and no one is in
    charge. There is no accountability in such a system.
        The dangerous threat we all must now acknowledge requires
    new thinking and a new approach. That is laid out clearly in
    the National Strategy on Homeland Security we saw yesterday
    unveiled by the President. The strategy is the culmination of
    lots of work, years of thoughtful study, tracing back well
    before September 11. The Hart-Rudman Commission and other
    studies have helped us think about how government can best
    deploy assets to secure us here at home. The President's
    strategy also reflects the good work of many Members of
    Congress.
        Yesterday we heard from Representatives Mac Thornberry,
    Jane Harman, Ellen Tauscher, and Jim Gibbons, who introduced
    their own legislation to create a new agency. Senator Joe
    Lieberman has taken the lead in the Senate. Two members of our
    own select committee, Mr. Chairman, J.C. Watts and Bob
    Menendez, have both worked hard in this area, mindful of
    unspeakable tragedies that occurred so close to their own homes
    and so deeply affecting so many of their own constituents.
        Building on this good work, the President's National
    Strategy lays out three strategic objectives: prevention of
    attacks, reducing our vulnerabilities, and minimizing damage.
    This strategy provides us with a clear framework to align our
    resources, people, and capital and to align responsibility and
    accountability to the task of homeland security. Of course, Mr.
    Chairman, central to that new alignment is the creation of a
    new department. Putting the responsibility for homeland
    security within a single unified structure will make us more
    efficient and more effective against attacks. It won't make us
    immune from terrorism, but it will make us safer.
        Over the past several weeks this Congress has acted
    quickly, but thoughtfully, to pass legislation needed to create
    this new department. The standing committees of Congress have
    moved with dispatch on a bipartisan basis to mark up provisions
    of this legislation under their jurisdiction, and we will hear
    from them today. The select committee has heard thoughtful
    testimony from nine Cabinet Secretaries, the director of the
    Office of Personnel Management, and several of our colleagues.
        I have been struck by the emphasis in this testimony on the
    importance of creating a lean, agile 21st century agency with
    budget, organizational, and human resource flexibility to meet
    the challenge. We have done this before, including in 1998 when
    I worked with Senator Bob Kerry on reorganizing the Internal
    Revenue Service, a troubled Agency with over 100,000 employees.
    We gave the IRS needed flexibility on personnel and management,
    and they have used it fully to begin to change the culture and
    to improve service and morale.
        This new Department needs to have flexibility, too, for the
    challenge of consolidation and creating a new culture of
    urgency is great and the stakes couldn't be higher. Of course,
    Congress must retain oversight and can and should use it
    aggressively. What we are setting out to do is to create a new
    Agency, not for this administration but for our country, into
    the foreseeable future. And Congress will be absolutely key to
    its successful implementation.
        Today's witnesses bring with them a special expertise in
    the specific affected agencies. They have been the ones
    responsible for their oversight. We need their input and
    ongoing expertise.
        Finally, Mr. Chairman, I want to commend you, Minority Whip
    Pelosi, and my select committee colleagues for the
    extraordinary spirit of nonpartisanship that you have brought
    to these deliberations. We share a passion for fulfilling our
    fundamental responsibility to protect our country, our
    citizens, our families, from this new threat. We must not lose
    sight of that single goal as we work to bring this critical
    legislation forward to our colleagues.
        I look forward to today's testimony and I thank you for the
    time.

      PREPARED STATEMENT OF THE HONORABLE ROB PORTMAN, 2ND DISTIRCT, OHIO

        The shock of the September 11th attacks in New York, Pennsylvania,
    and here at the Pentagon is still very much with us. In a single
    morning, nineteen men bent on terror and destruction killed more
    innocent United States civilians than did all our previous foreign
    enemies combined. The grief of that sudden loss was overwhelming; and
    part of what prevents that national grief from healing is the reality
    that the threat is still very much there. We are here today to do
    whatever we possibly can to counter that threat and avoid more loss of
    innocent lives. Our Federal Government--and we as Members of Congress--
    have no greater responsibility.
        The major problem I see with our current system of homeland
    security is that it is uncoordinated and spread too thin--everyone is
    in charge and no one is in charge. There is no accountability in such a
    system. The dangerous threat we all now must acknowledge requires new
    thinking and a new approach.
        That is laid out clearly in the national strategy on homeland
    security unveiled recently by the President. The strategy is not new:
    it is the culmination of years of thoughtful study, tracing back well
    before September 11th. The Hart-Rudman Commission and other studies
    have helped us think about how government can best deploy assets to
    secure us at home from this new insidious threat.
        The President's strategy also reflects the good work of many of our
    colleagues: yesterday we heard from Representatives Mac Thornberry,
    Jane Harmon, Jim Gibbons, and Ellen Tauscher who had introduced their
    own legislation to create a new agency. Senator Joe Lieberman has taken
    the lead in the Senate.
        Two Members of our own Select Committee, J.C. Watts and Robert
    Menendez, have both worked long and hard in this area, mindful of
    unspeakable tragedies that occurred so close to their own homes and
    that so deeply affected so many of their own constituents.
        Building on this good work, the President's National Strategy for
    Homeland Security lays out three clear strategic objectives:
         Prevention of attacks;
         Reducing our vulnerabilities; and
         Minimizing the damage and maximizing the recovery should
    attacks occur.
        This strategy provides us with a clear framework to align our
    resources--people and capital, and align responsibility and
    accountability to the task of homeland security.
        Of course, Mr. Chairman, central to that new alignment is the
    creation of a new Department of Homeland Security. Putting the
    responsibility for our homeland security within a single, unified
    structure will make us more efficient and more effective against
    attacks. It won't make us immune from terrorism, but it will make us
    safer.
        Over the past several weeks, this Congress has acted quickly but
    thoughtfully to pass the legislation needed to create this new
    department. The standing committees of Congress have moved with
    dispatch on a bipartisan basis to mark up the provisions of this
    legislation under their jurisdiction, and we'll hear from them today.
        This Select Committee has heard thoughtful testimony from nine
    Cabinet Secretaries, and several of our colleagues. I have been struck
    by the emphasis in the testimony on the importance of creating a lean,
    agile 21 century agency with both organizational and human resource
    flexibility.
        We have done this before. In 1997 and 1998, I worked with former
    Senator Bob Kerrey on reorganizing the Internal Revenue Service--an
    agency with over 100,000 employees. We gave the I needed flexibility on
    personnel and management--and they have used it fully to improve
    service and morale. This new Department needs to have flexibility too,
    for the challenge of consolidation and creating a new culture of
    urgency is great and the stakes could not be higher.
        Of course, Congress must retain oversight, and can and should use
    it. What we are setting out to do is to create a new agency not for the
    current Administration but for our country into the foreseeable future,
    and Congress will be key to its successful implementation.
        Today's witnesses bring with them a special expertise in the
    specific affected agencies. They have been the ones responsible for
    their oversight, and we need their input and ongoing expertise.
        Finally, Mr. Chairman, I commend you, Minority Whip Pelosi, and my
    Select Committee colleagues for the extraordinary nonpartisan spirit
    you have all brought to these deliberations. We share a passion for
    fulfilling our fundamental responsibility to protect our country, our
    citizens, our families from this new threat. We must not lose sight of
    that single goal as we work to bring this critical legislation forward
    to our colleagues.
        I look forward to today's testimony and thank you for allowing me
    this time.

        Chairman Armey. Thank the gentleman from Ohio. The Chair is
    now pleased to recognize the gentlewoman, Ms. DeLauro.
        Ms. DeLauro. Thank you, Mr. Chairman. Mr. Chairman, since
    the attacks on September 11, Congress and the President have
    come together to ensure our Nation's security, reflecting the
    Nation's renewed unity. Together we have committed to do--.
        Chairman Armey. I wonder if the gentlelady will suspend for
    just a moment and we can invite the Chairman, who has arrived,
    to join Ranking Member Obey at the desk. Mr. Young, you have
    had illness in the family, and we appreciate your effort to be
    here and we want to welcome you to the desk. Ms. DeLauro is
    giving her opening statement, and we will be ready to proceed
    on conclusion of that statement.
        Mr. Young of Florida. Mr. Chairman, thank you very much.
    And I think there are several members of my family here. I
    don't know where they are.
        Chairman Armey. The gentlewoman from Connecticut is giving
    an opening statement and then we will cut to you. Thank you
    again.
        Ms. DeLauro. First of all, it is a pleasure to welcome the
    chairman and the ranking member, Mr. Young and Mr. Obey, here
    this morning.
        Since the attacks on September 11, Congress and the
    President have come together to ensure our Nation's security.
    Reflecting the Nation's renewed unity, together we have
    committed to do what is necessary to win the war on terrorism,
    and now we are prepared to do what is necessary for our
    homeland defense. We have no more solemn responsibility under
    this Constitution.
        I want to sincerely thank all of the chairmen and ranking
    members who will testify before us today for their hard work in
    the past few weeks. You have truly accomplished a Herculean
    task. You are asked to take on the most important issue facing
    our Nation today, protecting our homeland, and to come back in
    just a few weeks with your recommendations on how we should
    address that challenge.
        The committees responded to an historic calling with
    historic bipartisanship, working together to iron out the
    details and make a good idea better. I believe the select
    committee must give the committees' recommendations serious
    consideration as we officially begin to draft this legislation.
    These recommendations carry with them the expertise, the in-
    depth knowledge of each of their chairs and ranking members who
    understand perhaps better than anyone how to ensure that we
    successfully marshal our efforts to protect the homeland
    without harming nonsecurity-related duties, responsibilities
    that are equally important.
        As fellow Members, we know how hard you work all year
    round. We know that each of you has an unparalleled level of
    knowledge regarding the agencies in your jurisdictions, and we
    need to take that expertise and knowledge under advisement as
    we prepare to mark up this legislation on Friday.
        As I have said before, I support the creation of the new
    Department to coordinate our homeland security efforts to
    safeguard American citizens. However, I have a number of
    questions and concerns that I hope can be addressed and I
    believe that many of the committees have done so with their
    recommendations.
        I continue to be concerned that transferring the public
    health functions of the Centers for Disease Control and
    biomedical research efforts underway at the National Institutes
    of Health would adversely affect our world-class research
    centers. From a public health standpoint, there is no
    difference between the response to a naturally occurring
    outbreak and one that is deliberately caused. The same labs,
    the same investigators, the same scientific methods, are used
    in either case. Furthermore, the research underway at the NIH
    is the envy of the world, and scientists at the National
    Institutes of Allergy and Infectious Diseases have already
    implemented a strategic plan to guide their bioterrorism
    research. I see no reason to transfer budget control oversight
    or the power to set priorities regarding these responsibilities
    to the new Department. I strongly support the Commerce
    Committee's recommendation to keep those responsibilities where
    they are, while ensuring coordination with the new Department.
        I also have a number of concerns regarding the good
    government provisions in this legislation. We all understand
    the need to safeguard sensitive information relating to our
    national security, but I continue to be concerned about the new
    FOIA exemption which comes despite statements by Ronald L.
    Dick, director of the FBI's National Infrastructure Protection
    Center, that--and I quote--``We believe there are sufficient
    provisions in the FOIA now to protect information that is
    provided to us,'' end quote. If it works for the FBI, the CIA,
    and the Defense Department, why do we need a broader exemption
    for the new Department? Unfortunately, this exemption was
    broadened by the Government Reform Committee, and I hope we are
    given the opportunity to address that problem at a later time.
        The proposal also includes an unnecessary check on the
    Inspector General to investigate and report to Congress on
    issues that might arise. The Defense Department, Justice
    Department, and other agencies already handling sensitive
    information require the Inspector General to report to Congress
    if his or her access to information is impeded. In this
    proposal, the Secretary reports if he or she impedes an
    investigation, a clear conflict of interest. Both the Judiciary
    Committee and the Government Reform Committee have addressed
    this issue, and I am optimistic that we can bring this language
    in line with current Defense Department regulations.
        I pose these questions precisely because we stand firmly
    with the President and the administration on ensuring security.
    We face enemies who leave us no room for error, and we owe the
    American people nothing less. We have a responsibility to get
    this right the first time without compromising the ideals that
    make this country strong.
        I thank the chairman and I thank ranking member Pelosi for
    this opportunity, and I look forward to hearing from our
    colleagues. Thank you, Mr. Chairman.
        Chairman Armey. Thank you.

              PREPARED STATEMENT OF THE HONORABLE ROSA L. DeLAURO

        Thank you, Mr. Chairman. Since the attacks on September 11th,
    Congress and the President have come together to ensure our nation's
    security. Reflecting the nation's renewed unity, together we have
    committed to do what is necessary to win the war on terrorism. And now
    we are prepared to do what is necessary for our homeland defense. We
    have no more solemn responsibility under this Constitution.
        I want to sincerely thank all of the Chairmen and Ranking Members
    who will testify before us today for their hard work in the past few
    weeks. You have truly accomplished a herculean task. You were asked to
    take on the most important issue facing our nation today--protecting
    our homeland--and to come back in just a few weeks with your
    recommendations on how we should address that challenge.
        The Committees responded to a historic calling with historic
    bipartisanship, working together to iron out the details and make a
    good idea better. I believe the Select Committee must give the
    Committees' recommendations serious consideration as we officially
    begin to draft this legislation. These recommendations carry with them
    the expertise and in-depth knowledge of each of their Chairs and
    Ranking Members, who understand perhaps better than anyone how to
    ensure that we successfully marshal our efforts to protect the
    homeland, without harming non-security related duties responsibilities
    that are equally important.
        As fellow Members, we know how hard you work all year round. We
    know that each of you have an unparalleled level of knowledge regarding
    the agencies in your jurisdictions. And I hope that we will take that
    expertise and knowledge under advisement as we prepare to mark up this
    legislation on Friday.
        As I have said before, I support the creation of the new Department
    to coordinate our homeland security efforts to safeguard American
    citizens. However, I have a number of questions and concerns that I
    hope can be addressed, and I believe that many of the committees have
    done so with their recommendations. I continue to be concerned that
    transferring the public health functions of the Centers for Disease
    Control and biomedical research efforts underway at the National
    Institutes of Health would adversely affect our world-class research
    centers. From a public health standpoint, there is no difference
    between the response to a naturally occurring outbreak and one that is
    deliberately caused--the same labs, the same investigators, and the
    same scientific methods are used in either case.
        Furthermore, the research underway at the National Institutes of
    Health is the envy of the world, and scientists at the National
    Institute of Allergy and Infectious Diseases have already implemented a
    strategic plan to guide their bioterrorism research. I see no reason to
    transfer budget control, oversight, or the power to set priorities
    regarding these responsibilities to the new department. I strongly
    support the Commerce Committee's recommendation to keep those
    responsibilities where they are, while ensuring coordination with the
    new department.
        I also have a number of concerns regarding the 'good government'
    provisions in this legislation. We all understand the need to safeguard
    sensitive information relating to national security. But I continue to
    be concerned about the new FOIA exemption, which comes despite
    statements by Ronald L. Dick, director of the FBI's National
    Infrastructure Protection Center, that '[W]e believe there are
    sufficient provisions in the FOIA now to protect information that is
    provided to us.' If it works for the FBI, the CIA, and the Defense
    Department, why do we need a broader exemption for the new department?
    Unfortunately, this exemption was broadened by the Government Reform
    Committee, and I hope we are given the opportunity to address that
    problem at a later time.
        The proposal also includes an unnecessary check on the Inspector
    General to investigate and report to Congress on issues that might
    arise. The Defense Department, Justice Department and other agencies
    already handling sensitive information require the Inspector General to
    report to Congress if his or her access to information is impeded. In
    this proposal, the Secretary reports if he or she impedes an
    investigation--a clear conflict of interest. Both The Judiciary
    Committee and The Government Reform Committee have addressed this
    issue, and I am optimistic that we can bring this language in line with
    current Defense Department regulations.
        I pose these questions precisely because we stand firmly with the
    President and the Administration on ensuring security. We face enemies
    who leave us no room for error, and we owe the American people nothing
    less. We have a responsibility to get this right the first time,
    without compromising the ideals that make this country strong. I thank
    the Chairman and Ranking Member Pelosi for this opportunity, and I look
    forward to hearing from our colleagues.
              STATEMENT FOR THE RECORD OF THE HONORABLE DICK ARMEY
        Today we continue our effort to consider how we can best transform
    our government to address the threats we face in the 21st Century. When
    people wonder how Congress can possibly complete such a large task in a
    short amount of time, they forget the strength that can be found in our
    committee system.
        Each of the committees that we welcome here today-as well as the
    Judiciary Committee from whom we heard yesterday-has met the challenge
    and provided us with their legislative recommendations. They each
    considered portions of the President's proposal that matched their
    jurisdictions and areas of expertise, assuring that the job would be
    done thoroughly.
        That they could also complete this task so swiftly is evidence that
    the Select Committee will likewise be able to finish its work on time.
        Later today we will also extend our welcome David Walker,
    Comptroller General of the United States. As head of the General
    Accounting Office, he will add his experience with the workings of the
    federal government to the detailed presentations we will hear today.
        With so many able speakers, it's obvious that this will be a long,
    but productive, hearing. It is an essential part of our effort to
    provide an open and deliberative process. Every committee of
    jurisdiction will have the opportunity to argue their case and help the
    committee frame its judgments on the key issues at hand.
        This is a common effort against a common enemy--those who hate the
    freedoms and personal liberty that America embodies. As we discuss many
    different points of view on key elements of this proposal, we should
    continue to proceed in the same spirit of cooperation and
    bipartisanship that has made the past several hearings a success.
            STATEMENT FOR THE RECORD OF THE HONORABLE DEBORAH PRYCE
        Thank you Mr. Chairman.
        Today, the Select Committee begins its final day of hearings in
    anticipation of our Friday mark-up of this historic legislation.
        Today's hearing is arguably the most important we have undertaken
    with regard to our ability to produce an effective and mutually
    satisfactory bill for consideration on the House floor. The twelve
    standing committees that reviewed the homeland security legislation
    have given us the benefit of their expertise and long experience with
    the issues under their jurisdictions, and they have done so in a
    bipartisan and collaborative fashion. Today, we will hear directly from
    the committee chairmen and ranking members.
        I am pleased that this select committee has also proceeded in a
    cooperative manner. As Members on both the majority and minority on
    this committee have noted, protecting our nation cuts across party
    lines, and it is a requirement of this process that we work in a
    bipartisan fashion and produce a bill that can gain overwhelming
    support on the floor. Passage of this legislation not only takes us a
    step closer to a vital government reorganization, it sends a message to
    those who would threaten us that we, as a nation, are ready and able to
    rise to this challenge.
        I know that we have all taken great pride in the way that the
    American people have responded following the tragedy of September 11.
    Our government must continue to reflect their spirit and will as we
    undertake difficult tasks to make our nation safe. There are hard
    choices to be made in the times ahead. With regard to this
    reorganization, the committees have already begun tackling these tough
    decisions, and I look forward to learning from their experience, as
    well as from the Comptroller General of the GAO, so that we can perfect
    and create the new Department of Homeland Security.
        Thank you Mr. Chairman.

        Chairman Armey. Gentlemen, let me tell you how pleased we
    are to have the chairman and ranking member of Appropriations
    here this morning. We will, of course, put your written
    statements in the record and we would like to invite you in
    your turns to give your opening statements. We will start with
    you Mr. Young.

     STATEMENT OF THE HON. C.W. BILL YOUNG, CHAIRMAN, COMMITTEE ON
                             APPROPRIATIONS

        Mr. Young of Florida. Mr. Chairman, thank you very much for
    giving us the opportunity to be here. You all have a tremendous
    and awesome responsibility. Protecting the homeland and the
    people who live in our homeland is a major responsibility, and
    it is probably not going to be easy to get a legislative
    package together that everyone is going to agree on. As you
    prepare the bill, I think you will find that out, but it has to
    be done and I strongly support the President's effort to do
    this.
        I will be brief, Mr. Chairman, because I know you have a
    lot of other witnesses to hear from today, and we also have an
    appropriations bill on the floor which we would like to get
    completed as soon as possible.
        I think Mr. Chairman, this is going to be the largest
    restructuring of our government that most of us can recall, but
    certainly the largest since Pearl Harbor when we reorganized
    the Department of Defense and created the Joint Chiefs and the
    structure that we basically have now in the Executive Branch.
        The Appropriations Committee reported its recommendations
    to the Select Committee last Thursday. We have limited our
    specific recommendations to matters directly affecting the
    jurisdiction of the Appropriations Committee and not to the
    progeam elements of the bill that the President has suggested
    to the House. Namely, we dealt with the transfer authority that
    the Administration is seeking to establish the Department of
    Homeland Security. I hope you have had a chance to review this
    document, because I believe it speaks directly to the
    constitutional authority of the Congress, and not only the
    authority but also the responsibility of the Congress, and the
    separation of powers between the executive and legislative
    branches.
        The Appropriations Committee has been in the forefront of
    strengthening the Nation's capacity to fight terrorism. After
    the attack on September 11, the Appropriations Committee
    brought to the floor a $40 billion supplemental to respond to
    the tragedy that the country was facing. Three days after the
    attack, the bill was passed and it was sent to the President on
    the same day. We worked around the clock to put this
    legislation together. We recognized that there was an immediate
    need and, frankly, we met that need immediately.
        As far as giving flexibility to the President--and I think
    he has done an outstanding job and continues to do so in
    protecting America and fighting the terrorists--I think you all
    recall that the Appropriations Committee recommended giving the
    President $20 billion with no strings attached. The second $20
    billion of that $40 billion bill, did have a requirement to go
    through the appropriations process. I would also suggest to you
    that as of today, according to the budget director of OMB, 46
    percent of that money hasn't been spent or obligated.
    Regardless, the Appropriations Committee did recognize the need
    and we moved quickly and provided the funding necessary to do
    whatever had to be done to meet this tremendous threat: the
    massive recovery effort in New York City, the immediate need to
    increase security both here and abroad, and the war that we
    were about to undertake against the Taliban and al Qaeda.
        The Appropriations Committee is still addressing the needs
    of our country. We are trying to complete the second war
    supplemental to give money to our troops to maintain their
    readiness, to the Intelligence Community, to law enforcement
    and to other agencies for our safety and the security of the
    American people, and for the victims of New York.
        We have tried to provide rescources to promote U.S. Foreign
    policy as we form our coalitions with allies to join together
    in the fight against terrorism. We strongly support efforts to
    improve the management and efficiency of the Nation's homeland
    security activities. In fact, the current administrative
    difficulties troubling a number of key homeland security
    agencies would argue for even more congressional scrutiny and
    oversight. And I can give examples about that if you are
    interested.
        We believe we can accomplish this without sacrificing the
    constitutional process that has served the Nation well for over
    two centuries and the pledge that we all take when we swear our
    oath of office.
        Our recommended amendment to H.R. 5005 is a bipartisan
    proposal. In our view the administration's transfer proposal is
    overly broad and unprecedented and would undermine the
    appropriations that the committee and this Congress carefully
    deliberate every year. H.R. 5005 includes permanent transfer
    authority which would allow the head of the Agency to rewrite
    appropriations bills that were enacted by Congress.
        It is important to support the President in establishing
    this new Department, but we believe this can be accomplished
    under existing law and existing practices.
        Our recommendation does the following: It replaces the
    open-ended transfer authority with a restatement of transfer
    authority that exists in current law, and it provides for
    additional authority, as needed, in subsequent appropriations
    acts.
        We have been told by the administration that they need the
    broad transfer authority to skim enough money off the agencies
    to set up a new departmental entity and to have the flexibility
    to move money around between the agencies in the event of an
    emergency. The committee recommendation relies on existing
    procedures to handle these requirements and would ensure that
    the constitutional prerogatives of the Congress are not
    degraded.
        Our proposal would recommend that we allow the agencies
    which are moved under this new Department to bring with them
    the money and assets we have appropriated to them and the
    reprogramming authority they have been granted.
        It requires the executive to propose and obtain
    congressional approval to increase funding levels or change the
    uses of appropriated funds.
        If money is needed to set up a new department
    superstructure, we can provide transfer authority in any one of
    our 2003 appropriations bills to do just that. We just need to
    have an idea of how much they need for fiscal year 2003.
        If there is an emergency, current law will allow them to
    move money within the agencies and Economy Act reimbursement
    agreements can be executed among the various agencies to cover
    unforeseen requirements.
        This process is very similar to the process used when the
    Department of Energy was created in 1977 and when the
    Department of Education was created in 1979. In both cases,
    legislation establishing the new Departments provided for
    transfer of appropriations balances along with the functions
    being transferred, but only for the purposes for which the
    funds were originally appropriated.
        Mr. Chairman, I don't think we have a major disagreement on
    what we need to accomplish here, but we are concerned about the
    constitutional responsibilities of the Congress in dealing with
    the public funds.
        And I just would read one sentence from Article I of the
    Constitution that says: No money shall be drawn from the
    Treasury but in consequence of appropriations made by law, and
    a regular statement and account of the receipts and
    expenditures of all public money shall be published from time
    to time.
        I think we can work within current law to do what the
    President needs to do, and I certainly intend to strongly
    support the creation of an Agency that would have the
    authority, the ability, and assets to protect our people and to
    fight the war against terrorism wherever it might be.
        And I thank you very much for the opportunity to make these
    comments.
        Chairman Armey. Thank you, Chairman Young.
        [The statement of Mr. Young of Florida follows:]

      PREPARED STATEMENT OF HON. C.W. BILL YOUNG, CHAIRMAN, COMMITTEE ON
                                 APPROPRIATIONS

        Mr. Chairman and Members of the Select Committee on
    Homeland Security, I am pleased to appear before you today
    regarding the recommendations of the Appropriations Committee
    on H.R. 5005, a bill to establish the Department of Homeland
    Security.
        I will make my remarks brief because I know you have a
    number of witnesses to hear from and as you know our Committee
    has a bill on the floor today.
        I would like to start by saying that I believe your
    Committee has a formable task ahead. The creation of the
    Department of Homeland Security will be the largest
    restructuring of government that most of us can recall, but
    certainly the largest reorganization since Pearl Harbor. At
    that time, we reorganized the Department of Defense and created
    the Joint Chiefs.
        Our Committee reported its recommendations to the Select
    Committee last Thursday. We have limited our specific
    recommendations to matters directly affecting the jurisdiction
    of this Committee--namely the transfer authority the
    Administration is seeking to establish the Department of
    Homeland Security. I hope you have had a chance to review this
    document, because I believe it speaks directly to the
    constitutional authority of the Congress and the separation of
    powers between the Executive and Legislative Branches.
        The Appropriations Committee has been in the forefront of
    strengthening the nation's capacity to fight terrorism. Three
    days after September 11, 2001, the Appropriations Committee
    brought to the floor a $40 billion supplemental to respond to
    the tragedy our country was facing. We worked around the clock
    to pull this legislation together, to ensure that all the
    concerns were addressed--the massive recovery effort in New
    York City, the immediate need to beef up security both at home
    and abroad, and the war we were about to undertake. And now,
    the Appropriations Committee is still at the helm of addressing
    the needs of this country. We are trying to complete the second
    War Supplemental to give money to our troops to maintain their
    readiness, to the intelligence community, to law enforcement
    and other agencies for our safety and security, to the victims
    of New York and to promote U.S. foreign policy. And we are in
    the process of working through 13 appropriations bills for FY
    2003, all of which will include substantial funds for homeland
    security and the war.
        We also strongly support efforts to improve the management
    and efficiency of the nation's homeland security activities. In
    fact, the current administrative difficulties troubling a
    number of key homeland security agencies would argue for even
    more intense Congressional scrutiny and oversight. However, we
    believe we can accomplish this without sacrificing the
    constitutional processes that have served the nation well for
    two centuries.
        Our recommended amendment to H.R. 5005 is a bi-partisan
    proposal. In our view, the Administration's transfer proposal
    is overly broad and unprecedented. It would undermine the
    appropriations that our Committee and this Congress carefully
    deliberate each year. H.R. 5005 includes permanent transfer
    authority, which would allow the head of this agency to rewrite
    Congress' enacted appropriations laws.
        It is important to support the President in establishing
    this new Department, but this can be accomplished under
    existing law and practices.
        Our recommendation does the following:
         it replaces the open-ended transfer authority with
    a restatement of transfer authority that exists in current law;
    and
         it provides for additional authority as needed in
    subsequent appropriations acts.We have been told by the
    Administration that they need broad transfer authority for the
    following reasons:
         to skim enough money off the agencies to set up a
    new Departmental entity; and
         to have the flexibility to move money around
    between the agencies in the event of an emergency.The Committee
    recommendation relies on existing procedures to handle these
    requirements and would ensure that our constitutional
    prerogatives are not degraded. Our proposal would allow:
         the agencies which are moved under this new
    department to bring with them, the money and assets we have
    appropriated to them and the reprogramming authority we have
    granted them;
         it requires the executive to propose and obtain
    congressional approval to increase funding levels or change the
    uses of appropriated funds;
         if money is needed to set up a new Department
    superstructure, we can provide transfer authority in any of our
    FY 2003 bills to do that, we just need to have an idea how much
    they need for FY 2003; and
         if there is an emergency, current law will allow
    them to move money within the agencies and Economy Act
    reimbursement agreements can be executed among the various
    agencies to cover unforeseen requirements.
        This process is very similar to the process used when the
    Department of Energy was created in 1977 and when the
    Department of Education was created in 1979. In both cases,
    legislation establishing the new departments provided for
    transfer of appropriations balances along with the functions
    being transferred--but only for the purposes for which the
    funds were originally appropriated. In both cases, further
    transfers were allowed only to the extent specifically
    authorized in appropriations legislation. And as I mentioned
    earlier in my testimony, when we reorganized the Defense
    Department after the attack on Pearl Harbor, Congress did not
    provide such extensive transfer and reprogramming authority. To
    this day, the Secretary of Defense must obtain approval of
    Congress to reprogram funds and he is very limited in his
    ability to transfer appropriations from one appropriation to
    another.
        Our goal is a regular order appropriations process for this
    new Department. We expect that if legislation to set up this
    new Department is enacted this year, the FY 2004 President's
    budget will request funds for the new Department and its
    agencies. The Appropriations Committee will be prepared to
    appropriate funding for this new Department and its agencies in
    whatever form is enacted into law.
        That concludes my testimony, and I will be happy to address
    any questions you may have on our recommendations.

        Chairman Armey. Congressman Obey, we would be happy to hear
    from you.

     STATEMENT OF THE HON. DAVID R. OBEY, RANKING MINORITY MEMBER,
                      COMMITTEE ON APPROPRIATIONS

        Mr. Obey. Thank you, Mr. Chairman. Mr. Chairman, let me
    congratulate Chairman Young for the statement he has made. I
    agree with virtually every word of it. Secondly, I am sure that
    you all understand that on an issue like this, there will be no
    Democrats, no Republicans, no liberals, no conservatives. We
    are all, I hope, just legislators trying to do our
    constitutionally sworn duty, and in that sense I hope we are
    all constitutionalists.
        I have two sets of concerns: one, the financing of this
    Agency which Chairman Young has just referred to; and secondly,
    the organization itself.
        Let me point out that the Magna Carta--or since the Magna
    Carta was signed in 1215, one of the driving principles that
    has been a key underpinning of Western democratic societies is
    the idea that the power of the purse shall remain outside of
    the hands of the executive and firmly in the hands of the
    legislative body. At the Constitutional Convention, this was
    not even disputed. There was virtually no debate on the issue.
    It was accepted by everyone. And that undiminished authority
    remained intact during the war of 1812 when the U.S. Capitol
    was burned, during two world wars, and I would hope and expect
    it would remain intact now. That is our principal duty in
    putting together alterations to the White House's proposal. And
    the fact is that no member of the executive branch at any time
    in history has ever had the authority to terminate programs, to
    sell assets, or to redirect resources without the prior
    agreement of the Congress. And I hope it will remain so.
        This bill provides four sweeping abdications of the power
    of the purse. Chairman Young has mentioned them. It gives the
    Agency in effect a totally free hand to set up this new
    Department any way they want, without any significant
    congressional financial oversight. Now, if you think that is a
    great idea, then I would urge you to review the history of the
    newly created Transportation Security Administration. They
    created an Agency of over 70,000 people. They proposed an
    average salary in the headquarters office in Washington of
    $90,000. Now, this is not an average salary of the executives.
    This is counting everybody, including the clerks, the
    messengers, everybody, average salary $92,000.
        That is higher than the average salary in the White House,
    it is higher than the average salary in the Supreme Court. They
    recommended an absurd salary structure at local airports that
    started by planning to have guards paid $85,000 a person. That
    information came out from the Agency and one day afterwards,
    when the press laughed it to death, they said oh, you are using
    old information, because by then they had changed their
    recommendations and they had scaled down those salaries. That
    does not suggest to me a quality of analysis that could survive
    even rudimentary scrutiny.
        This is going to be a huge bureaucracy. They are going to
    have 16 Assistant Secretaries, if we listen to these
    recommendations. It is going to be incredibly bloated. It is
    going to have the extraordinary authority to sell assets
    without the approval of the Congress, and instead of putting
    the money from those assets into the Treasury, as is now the
    requirement, they would have the authority to keep those moneys
    themselves and use them for any purpose they wanted.
        That should not be allowed to go forward. We have seen many
    corporations in this country in big trouble because they gutted
    the ability of their boards of directors to provide strong
    oversight over the chief executive officers of the company. We
    should not make that same mistake in the Federal Government.
    The Congress is supposed to be an active, caring, alert, and
    aggressive board of directors and we cannot walk away from that
    responsibility.
        Some other points: It is a spectacular misnomer to call
    this a Homeland Security Agency. If you take a look at
    departments that are supposed to be folded into this Agency
    under the recommendations, they contain 133 agencies and
    offices. Only 22 of them are actually transferred into this
    Agency, leaving 111 still outside the tent.
        I would do three things. I would first of all keep the
    Office of Homeland Security in the White House, and make sure
    that the executive order that created that Agency is converted
    to statute so that it has the prestige and the clout needed to
    coordinate all of these other agencies, along with the 22 that
    are being dumped into this new Agency.
        Secondly, I would elevate the director in prestige to the
    same level at least enjoyed by the drug czar, by the science
    advisor, by the OMB director, by making them confirmed by the
    Senate. That does not damage his position. That strengthens it
    because they are on an equal footing. They have been ratified
    by the entire system, and they would have the necessary clout
    to knock heads together and see that people cooperate.
        Thirdly, I would give that officer the power to decertify
    budget recommendations from OMB if they do not meet the
    standards that were laid out by the Agency in order to assure
    the security of the homeland. I believe that the debate on this
    issue so far has been far more sterile than it should be and
    far less substantive, and I do not believe that is the fault of
    Congress in either party. I think Members of both parties have
    been thoughtful and expressive concerning their terms about
    this product.
        I do believe that the position of the executive branch has
    been far too dominated by OMB whose world view and knowledge
    about security matters is certainly not commensurate with their
    knowledge about domestic budgets, and I think we need to face
    that.
        There are a number of questions I think you ought to ask
    yourself. Whatever you recommend, will it increase the focus on
    antiterrorism or not? A department that has to care about
    earthquake recovery, about dealing with pet stores, about oil
    spills, about protecting wine producers from the glossy wing
    sharpshooter, is spread too widely to really do a decent job of
    focusing on antiterrorism.
        I think we should focus on putting together the agencies
    that have the most to do with providing security at the borders
    and in our ports: the immigration side of INS, the Customs
    Service, the Transportation Security Administration--if we can
    ever get that baby put together right--but should we add AFIS
    in all of its glory with its 8,000 employees? I don't believe
    so.
        And there is one other terrible example. That is the area
    of bioterrorism, and the gentlewoman from Connecticut has
    already mentioned it. Last fall the Nation discovered that we
    have a fantastic asset in the National Institute of Infectious
    Diseases at the National Institutes of Health. That is the
    Agency that does world-class research on AIDS, on agents like
    Ebola, West Nile virus. They are headed by a brilliant
    director, Dr. Tony Fauci, as you all know. Nothing would be
    more destructive or idiotic than to take the dollars that have
    been bestowed upon that Institute by the Congress and instead
    make it a freestanding isolated research program. We need to
    piggy-back on the knowledge and the synergy that exists by
    having that Agency within NIH. We don't need to fragment it in
    any way or give it conflicting lines of authority. In short, we
    don't need to screw it up. It is working terribly well.
        Thirdly, we cannot let new administrative costs eat up
    frontline activities like cargo inspection and the
    identification of illegal entrants into this country. CBO has
    estimated that this is going to cost at least $3 billion in new
    administrative costs. I would personally be flabbergasted if it
    is not at least double that, based on my experience and based
    on the analysis of previous organizations. I would also ask you
    to remember, there was a good reason why the defense
    establishment was organized in 1947 and not 1944; because in
    1944, we were in the middle of a war. We were kind of busy, and
    the last thing we want to do is to so overreach in the
    reorganization we provide that we ignore the fact it is going
    to take an immense amount of time to move into new offices, to
    get new telephone numbers, to get new desks, to get new bosses,
    to understand what your relationship with those new bosses and
    colleagues, and these administrators are going to be tempted to
    sit on their duffs and hold back and take a look at the lay of
    the land for months and months, until they know what they can
    do without getting their heads shot off.
        So I would urge you to recognize there is a fantastic
    potential for disruption which we have a mortal duty not to
    ignore.
        And then there are other problems. We have the gratuitous
    and, in my view, ill-advised exemption from civil service law
    and whistle-blowing protection and freedom of information.
    People will say oh, you can't release information about
    national security. The Freedom of Information Act already has
    exemptions for national security and for critical law
    enforcement material. There is no need to provide the kind of
    blanket authority provided in this legislation. If you do what
    this legislation says, it would be very easy for agencies and
    industries with whom these agencies work to simply launder a
    whole lot of information that the public has a right to know,
    through this Agency, on issues such as public health and
    safety, thereby shielding it from public awareness. We cannot
    let that happen.
        In my view, there are two major problems that we have to
    deal with and that this proposal before us does not address.
    When Bill Young and I and our staffs interviewed every single
    intelligence agency virtually during the 5 days when we were
    locked out of here because of anthrax, we talked to the NSA, we
    talked to the CIA, we talked to the FBI, CDC, HHS, you name it.
    What struck me--and I was thunderstruck by this--is that there
    were literally thousands of pages of raw information on the
    floor, sitting on desks and filing cabinets, unreviewed by
    anybody. And for two reasons: number one, because we do not
    have the systemic ability to separate the wheat from the chaff
    in these agencies. We don't have the technology up to speed,
    and we don't have the organization down. And secondly, we do
    not have the language translation capacity that we need. We
    need at least five times the capacity that we have right now if
    we are going to do a really thorough job of reviewing these
    intercepts.
        And then the second problem is the FBI. Now, this is no
    criticism of the FBI, but it is an analysis. The FBI today is
    structured to focus on thousands of individual acts of
    unrelated crime. That is their job. But by being organized that
    way, as the FBI director has said, you do not have a mindset in
    that Agency or a capacity to analyze over the broad field,
    looking for patterns. And that is what you need to be doing if
    you are trying to uncover potential terrorist activities. So we
    need to focus on reshaping the FBI to be able to do that job,
    and that is I think far more important than any other
    organizational--or recommendations that we have here today.
        In short, I would simply say, as Chairman Young has been
    saying, don't throw away the precious separation of powers
    arrangement just because some hotshots in this town tell you it
    will make it easier to catch bin Laden. It won't. It won't.
        I would just urge you to recognize that corporations are in
    trouble because they decided to run only with the wisdom of
    their CEOs and their close advisers, and they didn't allow
    boards of directors to conduct aggressive activities to review
    their conduct, and I think we have to avoid that. So, in short
    I would ask you, don't salute the first draft that you get from
    downtown. Think about it and then think about it some more,
    because the country you will be protecting is your own and our
    own. Thank you.
        [The statement of Mr. Obey follows:]

      PREPARED STATEMENT OF THE HONORABLE DAVID R. OBEY, RANKING MINORITY
                      MEMBER, COMMITTEE ON APPROPRIATIONS

        Mr. Chairman and Members of the Committee, I appreciate the
    opportunity to testify before you today. I know you understand
    that on this issue there can be no Democrats and no
    Republicans, no liberals and no conservatives. We are only
    American legislators with the sworn duty to do what is best for
    the country, what is consistent with the Constitution.
        My thoughts on Homeland Security are expressed in the
    recommendations of the Appropriations Committee and in the
    letter that Congressman Waxman and I sent to Governor Ridge
    last week as well as in the testimony that I am about to
    deliver.
        I will divide my remarks today into two segments. First, I
    would like to discuss proposals regarding a new Department of
    Homeland Security that would affect the role of the Congress in
    appropriating money. Secondly, I would like to talk about how
    the government's broad responsibilities with respect to
    homeland security could be better coordinated and structured
    and how the creation of a new Department would fit within that
    restructuring.

       protecting the constitution and our system of checks and balances

        Since King John signed the Magna Carta in 1215, the notion
    that the executive should not have power of the purse has
    become increasingly central to the structure of Western
    Democracies. In the three months of passionate debate, conflict
    and compromise that led to crafting the U.S. Constitution,
    there is no evidence of any debate whatsoever over clause 7 of
    Section 9 of Article I, which states, ``No Money shall be drawn
    from the Treasury, but in Consequence of Appropriations made by
    Law.'' Every one of the thirteen colonies had already adopted
    constitutions that gave their individual legislatures ``the
    power of the purse.'' Providing to the Congress the central
    authority over spending was simply so universally agreed to it
    was not even a topic of discussion.
        Congress was quick to use those powers and to specify in
    great detail how appropriated funds could and could not be
    spent in connection with the establishment of a standing army
    to defend against a possible invasion by France in the late
    1790s. Those powers were undiminished during the War of 1812
    when the nation was attacked and both the Capitol and the White
    House were burned. The Congress' authority over spending
    remained intact through the Civil War and through two World
    Wars. It is therefore surprising and disturbing that the
    administration would choose to revisit a decision so central to
    our Constitutional heritage.
        Simply put, no member of the executive branch at any time
    in the history of this country has ever had the authority to
    terminate programs, sell assets and redirect resources without
    consultation with the Congress that the legislation before this
    Committee would grant the new Secretary of the Department of
    Homeland Security. The proposed legislation provides four basic
    authorities:
        First, Section 803(c ) of H.R. 5005 provides that the
    President may upon enactment and prior to the actual transfer
    of existing agencies and activities to new Department, transfer
    5% of the funds appropriated to those agencies and activities
    for use in setting up the bureaucratic superstructure envisaged
    in the act. What this essentially provides is a totally free
    hand to the Secretary and his staff in structuring the new
    Department without consultation or involvement of the Congress.
        The record of the last six months in setting up new
    homeland security activities should give the Congress and the
    American people serious pause about providing such authority.
    The new Transportation Security Administration has put forth
    plans indicating that it plans to employ more than 70,000
    people simply with respect to the airline safety portion of its
    mission. Many of us were deeply concerned when we learned that
    the agency planned to locate more than 800 of those people here
    in their Washington headquarters. Adding to that concern was
    the fact that they planned an average salary for the employees
    of that huge headquarters of more than $90,000 a year. That is
    not the average for the senior managers but for all employees
    including stock clerks and secretaries. That is a higher
    average salary than is paid by the Executive Office of the
    President within the White House and it is higher than the
    average salary paid at the Supreme Court.
        Those concerns grew further when it was learned that the
    size of the contemplated headquarters of this operation had
    grown from the original 800 employees to more than 1200 even
    after the agency had been criticized for being top heavy.
    Certainly nothing spoke more clearly to the lack of
    administrative and fiscal discipline than the decision by the
    agency to spend more than $400,000 for redecorating the offices
    of the Director and his staff at the same time they were
    claiming to be critically short of funds.
        The broader strategic decisions have also been replete with
    examples of poor judgment. Initial salary schedules would have
    resulted in the guards employed to protect the passenger and
    baggage screening operations being paid more than $85,000 a
    year-more than the airport managers, mayors or police chiefs in
    many of the communities they would be located in. Equipment for
    baggage screening was ordered without any attention to the
    facilities that would have to be constructed to house the
    equipment. Since facilities take longer to construct than it
    takes to manufacture equipment we are almost certain to have
    baggage-screening equipment sitting in warehouses for some
    extended period of time waiting for a decision to be made with
    respect to where it will be installed. Plans also called for,
    and still do call for the hiring of 3500 ``shoe carriers'' to
    collect and scan shoes that set off magnetometers. This is in
    spite of the fact that magnetometers that are sensitive enough
    to screen out the false alarms caused by shoes can be purchased
    for a fraction of the first year's salary of the ``shoe
    carriers.'' And while decisions like this were being made, the
    agency failed to request funds which would allow the full
    strengthening of cockpit doors on schedule or permit sky
    marshals to communicate with their superiors on the ground.
        These are only some examples of the kinds of decisions that
    we have already seen with respect to the organization of
    homeland security activities. We would be naive to expect that
    we have seen the last of these and we would be derelict in our
    duty as a Congress if we did not maintain close vigilance about
    how tax dollars are used in this department. This is
    particularly true given the grandiose nature of the hierarchy
    called for in the Administration's proposed Department. H.R.
    5005 would create a Secretary and Deputy Secretary, 5 Under
    Secretaries, up to 16 Assistant Secretaries, a Director of
    Secret Service, a Commandant, an IG, and a CFO and on and on-
    making it one of the largest sub cabinet operations in
    Washington.
        Even more disturbing is the authority requested in Section
    803(e) of the bill, which states that appropriations balances
    shall be transferred to the Secretary of Homeland Security for
    appropriate allocation ``notwithstanding the provisions of
    section 1531(a)(2) of title 31, United States Code.'' This in
    effect provides the Secretary with the authority to terminate
    any program or activity contained within any agency or office
    transferred to the new Department and to spend the funds on any
    activity within the very broad jurisdiction of this Department
    without regard to law or act of Congress. If he unilaterally
    concludes that headquarters staffing at the Transportation
    Safety Administration is a higher priority than control of boll
    weevils or other agriculture pests those programs could be
    eliminated before the Congress ever had a chance to enter the
    discussion. If he decided that marine safety instruction
    programs or maintenance of right of way programs at the Coast
    Guard would make a good bank for funding his own private
    intelligence operation, we would simply have to accept his
    decisions. We have never done business this way in the past and
    there is no reason to start now.
        Another authority requested is the on going authority to
    transfer funds between accounts even after fiscal 2003. Section
    733(b) permits up to 5% of appropriated funds to be transferred
    between programs within the Department. While there is
    precedent for providing limited transfer authority among
    accounts within a number of agencies and Departments they are
    generally confined to transfers between activities that have
    relatively similar objectives and purposes. This provision
    would permit transfer of funds intended for international
    adoption programs to be used for pet store regulations or funds
    intended for counter narcotics operations to be used for
    hurricane cleanup. Because of the proposed size of this
    Department, the total amounts that could be made available for
    activities that the Congress might find low priority would be
    huge.
        Finally, the Administration requests the extraordinary
    authority to sell assets without prior approval, to withhold
    the proceeds of those sales from the Treasury of the United
    States and to then spend them on priorities which they alone
    would identify and which would require no appropriations from
    Congress. This would include for instance an extensive
    portfolio of Coast Guard properties-some of which are quite
    valuable-that could be sold off and used for any acquisition or
    activity that the Congress for whatever reason had been
    reluctant to provide funding for. This again is aimed at
    weakening the checks and balances that have served this country
    well for more than two centuries. It is akin to the thinking
    that led corporate managers in the United States over the past
    several decades to seek boards of directors that would serve as
    little more than rubber stamps for the decisions of CEOs and
    their appointed minions. It was the wrong direction for
    American business and it is certainly the wrong direction for
    American government.

     maintaining government coordination and creating a department that is
                          lean, mean and well focused

        While I feel strongly about how this new Department might
    be financed, I feel equally strongly about how it will be
    composed and about how we will structure and coordinate the
    overall war against terrorism and protection of the homeland.
        The first point I want to make-and I think it is an
    extremely important point for every member of this Committee to
    grasp-is that calling this proposed entity the ``Department of
    Homeland Security'' is a total misnomer. Even if we put every
    agency, office and activity that the White House has proposed
    for transfer into the new Department, it would represent a tiny
    fraction of overall government activities with respect to
    ``homeland security.''
        If we look at the organization chart prepared by the White
    House when this proposal was originally announced we see that
    there are currently a total of twelve departments of the
    federal government involved in various aspects of protecting
    the homeland. The agencies and offices contained in those
    departments and identified on that chart total 133.

        This is our best effort to represent what the government-
    wide Homeland Security efforts would look like if a Department
    along the lines proposed by the White House were created.

        Of the 133 agencies and offices listed on the first chart,
    22 have been moved to the new department. But 111 are still
    outside the department! Furthermore, the most important
    agencies and offices in protecting the homeland are in most
    instances on the outside. These include the new Northern
    Command, the National Guard, the Federal Bureau of
    Investigation, the Central Intelligence Agency, along with the
    National Security Agency and National Imagery and Mapping
    Agency, the Centers for Disease Control and key elements of the
    Energy Department and the Drug Enforcement Agency.
        This means that no matter what we do with respect to
    creation of a new Department, even if we move every agency and
    activity that has been proposed, the bulk of the government
    activity directed at protecting the homeland will still be
    outside this Department. Therefore, we will continue to need to
    find way of strengthening interdepartmental coordination at the
    level of the White House. In my opinion, this is more important
    than whether or not we create a department.
        I would propose three things to accomplish this. First, I
    would retain the Office of Homeland Security and make the
    executive order that President Bush signed creating that office
    statutory.
        Secondly, I would elevate the director of that office to
    the same level within the White House as the Drug Czar, the
    Science Advisor and most importantly, the Director of OMB. That
    would require that he be subject to Senate confirmation.
        Thirdly, I would give him the authority to decertify OMB
    budget submissions if they were inconsistent with the overall
    homeland security plan. In other words, OMB would not be able
    to go forward with budget submissions to the Congress without
    the signoff of the Director of Homeland Security. If the two
    directors cannot reach agreement, then the argument gets passed
    up to the President. That would place a check on the OMB
    director but it would also ensure that any decision involving a
    tradeoff between the security of the American people and
    additional spending would be decided at the highest level.
        I think that the debate that we have been having in this
    town over how we restructure government and expand our capacity
    to protect ourselves has been far more sterile and far less
    substantive than the nation deserves. That by and large has not
    been the fault of the Congress. I think members of both parties
    have for the most part been very thoughtful and have brought
    good ideas to the table. But I think the position of the
    executive branch has been far too dominated by analysts at OMB
    whose overall worldview and knowledge about security issues is
    not commensurate with their knowledge about budgets. We need
    both perspectives in order to make the right choices and we
    need both perspectives to be considered at both ends of
    Pennsylvania Ave.
        Having said that, I would support the creation of a new
    department to handle some portion of the security problems
    facing the country. If done properly, such a department could
    increase the efficiency and coordination between certain key
    activities needed to protect us against future terrorist
    attack. On the other hand, I would urge the committee to
    carefully weigh the fact that consolidation of disparate
    agencies and activities into single huge department could
    create a bureaucratic morass that not only would waste large
    sums of taxpayer money but also would seriously impede existing
    efforts to protect the American people.
        There are three principles that I think the Congress should
    look to in attempting to decide the size and shape of the new
    department if there is to be one.
        First, does a proposed transfer of an agency or activity to
    the new Department increase the focus and coordination of
    government counter terrorism activities?
        As I already pointed out, H.R. 5005 moves less than two
    dozen of 133 agencies and offices involved in homeland security
    into the new department. The overwhelming majority of such
    agencies and activities are outside the proposed department.
    The question that must be asked is whether the agencies
    proposed for transfer form a good cluster from a management
    perspective. Can the proposed department manage these various
    programs and maintain a strong focus or are they going to have
    to maintain so many unrelated programmatic objectives that no
    one will really understand what is going on inside the
    Department?
        I think any Department that must deal with earthquake
    recovery, licensing pet stores, cleaning up oil spills,
    protecting our wine producers from the Glassy Winged Sharp
    Shooter, international adoption policies, ice breaking and
    collection of tariffs has got too much on its plate before it
    even begins to think about combating terrorists.
        I think there is a need in this government to more tightly
    weave the activities of the various agencies involved with
    security at our borders and at ports of entry. There is a
    portion of the programs proposed for inclusion in this
    Department that is already largely focused on that set of
    issues. The immigration side of the INS, the Customs Service
    and the Transportation Security Administration all fit that
    description.
        Once you get past those three activities you start dealing
    with agencies that are only partially involved in border
    security. They are agencies that have very large and important
    responsibilities that have little or nothing to do with counter
    terrorism. For instance, APHIS has some inspectors in airports,
    but that is only a fraction of the 8,000 employees who are
    attempting to control plant and animal diseases that are
    already here. APHIS needs to work more closely with customs and
    immigration on cross border issues but they also must remain
    close to the farm community and they will probably always spend
    the large majority of their time on diseases that are already
    in the country than those that are on the outside.
        Like APHIS, most of these agencies will have a wide range
    of problems that will inject their own set of nightmares into
    the management of the new department. As a result, inclusion of
    such agencies will likely increase administrative requirements,
    increase overhead expenditures and make it difficult for the
    leadership of the department to maintain a clear focus on
    security issues.
        Finally, there are a number of activities that are slated
    for this Department that will be much more successfully managed
    where they are currently located than they could possibly be
    within this Department.
        Last fall when we started thinking about bioterrorism, we
    realized that we had a huge resource with respect to dealing
    with that threat. That resource is the National Institute for
    Allergy and Infectious Diseases. That is where most of the
    basic work on AIDS research is taking place. That is where our
    work on the fundamental mechanisms of diseases such as Ebola
    and West Nile Virus is being preformed.
        We are much further along in understanding infectious
    disease mechanisms and how the body defends itself against
    them, how we can aid in that defense and what the weaknesses of
    these various viruses and bacteria than we were twenty years
    ago when we were thinking about biological warfare in the
    context of the Cold War. We have one of the most brilliant
    Institute directors in the long and distinguished history of
    NIH, Dr. Tony Faucci, now running that institute. We realized
    that we could piggyback our concerns about bioterrorism on top
    of this wealth of new knowledge. We have the resources there to
    jump-start a program and be years ahead of where we might
    otherwise be in identifying and combating these kinds of
    agents. I can't think of anything that would be more idiotic
    than taking the bioterrorism money that we put into NIAID last
    year and moving it as a free standing research program to a
    newly created Department.
        The second test that a new department should be expected to
    meet is that it can be managed with a reasonable allocation of
    administrative resources. This committee and the Congress
    should ask: Can this amalgamation of programs be managed
    without a massive diversion of resources from front line
    activities such as containerized cargo inspections or the
    identification, apprehension and deportation of illegal
    entrants in order to pay for a sprawling Washington-based
    bureaucracy?
        In the Defense community this question is referred to as
    the relationship between the tooth and the tail (what portion
    of the budget supports real on the ground war fighters and what
    portion is dedicated to the bureaucracy that supports them.) It
    is easily possible to organize government activities in such a
    way that the cost of coordinating the activities becomes more
    expensive than the activities themselves. There is ample reason
    to be concerned that H.R. 5005 could seriously erode resources
    needed to sharpen the tooth.
        This is particularly true if the administration maintains
    its stated intention to fund all activities of the Department
    within the existing budgets for those activities. If that
    policy is followed, it will mean that most of the resources
    necessary to fund the activities of the Secretary, nearly 30
    proposed sub cabinet positions and the staffs for each will
    have to be met through cuts in border inspectors, immigration
    enforcement and local level first responders.
        There will also be costs associated with moving and costs
    associated buying land and constructing new buildings. CBO
    estimates those costs will run at least $3 billion--I would be
    amazed that if in the end they are not double that and all of
    it will be paid out of front line efforts if we are not
    realistic about the price tag from the outset.
        Thirdly, will the reorganization disrupt highly sensitive
    security functions during critical threat periods?
        There is a reason that the Executive Reorganization Act of
    1947 took place in 1947 and not 1944. The consolidation of the
    War Department and the Navy may have created more efficiency
    and better coordination of defense activities in the long term
    but it certainly had significant short-term costs with respect
    to both of these goals. Similar disruptions are inevitable in
    any reorganization.
        The severity of such disruptions and time lost resulting
    from reorganization will vary based on the amount of
    administrative change envisaged for a particular program or
    activity. Simply changing the chain of command involves a
    relatively small loss of work effort. Changing network servers
    and phone systems and phone numbers adds to the loss in terms
    of short-term performance. Relocating facilities, restructuring
    personnel assignments and lines of authority often entail
    dislocations that can take months or even years to fully
    recover from. If there is a clear case for greater focus and
    long term efficiency these costs may be acceptable so long as
    they do not reduce performance during periods of potential
    threat.
        Any reorganization should carefully weigh these factors
    with respect to both the entities to be transferred to the new
    department and the timing of that transfer.

                              other considerations

        In addition to commenting on the structure of the
    department, I would also point out that this proposal contains
    ill-advised exemptions from good government laws, Civil Service
    laws, whistle-blower protection, and procurement rules, and it
    contains an exemption from the Freedom of Information Act.
    There is no reason to do that as the Freedom of Information Act
    already provides exemptions for national security information,
    for sensitive law enforcement information, and for confidential
    business information. Agencies and industries could deny the
    public needed access to basic information about health and
    safety by simply laundering that information through this new
    agency.
        On another front, this bill also deals with the question of
    the organization of our collection and analysis of
    intelligence. I think we clearly have a problem in that area,
    but I am not convinced that setting up another parallel
    organization will solve that problem. I think the problem can
    be best resolved by taking it head on and solving it at its
    core. Our biggest need right now is not a new organization
    table. We have knitted together a group of organizations that
    can meet our needs relatively well if we honestly assess their
    failures and make the appropriate adjustments.
        One adjustment that we need to make as rapidly as possible
    is a much greater language capability than we now possess.
    There are literally thousands of pages of information that we
    have collected that is sitting on floors, in files, and on
    desks throughout the government unread because we lack adequate
    resources to screen the raw material and adequate language
    skills to do the translating. There is also a great deal of
    intelligence which we have only partially exploited or we
    derive inaccurate intelligence from because the language skills
    we have are not good enough to get a really accurate
    translation.
        Another adjustment is to recognize that our most important
    agency in terms of countering threats from within the country,
    the FBI, currently has three serious weaknesses. First, the FBI
    has been more focused on law enforcement than counter-terrorism
    and it does not have the analytical capabilities that you need
    if you are going to put together the massive amounts of
    information that is now flowing through the system. That is not
    a critical need when you are dealing with thousands of largely
    unrelated criminal acts. It is a critical need when combating
    large-scale terrorist networks. The second weakness is the
    totally dysfunctional information technology systems at the
    Bureau. The third is a general lack of skilled investigators,
    particularly in certain areas such as cyber-crime.
        We can't create an organization to do the FBI's job. We
    have to fix the FBI. If we create a parallel organization that
    does domestic threat analysis we may be compounding the
    difficulty of fixing the FBI.
        In closing, I would strongly urge you not to overreach. Do
    what is essential, get our strategy in place first for dealing
    with terrorism, then make whatever additional adjustments are
    needed down the line. Don't grab the first tomato out of the
    box. Reorganization will only improve our capability to protect
    ourselves if it is done well. It can easily damage that
    capability if it is done poorly.
        And don't throw away our separation of powers and our
    system of checks and balances because some hotshot downtown
    says it will help catch Bin Laden. It won't. It is the same old
    prescription that some of these people have offered for one
    problem after another. Leave it all up to the executive branch
    and the problem will get solved. That has not happened with
    respect to transportation security and it won't happen
    elsewhere. Good agencies welcome Congressional interest and
    Congressional input. Good policy comes from open discussion and
    the fusion of different viewpoints.
        Corporations got in trouble because the CEOs, the CFOs, and
    the accountants ran amuck without adequate restraint by
    corporate boards. In government, the President is the CEO, OMB
    and the agencies are the rough equivalent to the CFO and the
    management team. Congress is the board of directors. We need to
    do our duty.
        Don't salute the first draft you get. Think about it then
    think about it some more. Listen to advocates then listen to
    devil's advocates. The country that you will be protecting is
    your own.

        Chairman Armey. I want to thank both gentlemen. It is the
    practice of this committee to question the witnesses under the
    5-minute rule. I should make it clear that the Chair interprets
    the 5-minute rule to apply to both the question and the answer.
    I expect both to be in the 5-minute rule. We are all aware of
    the process here. We know the drill and remind the witnesses
    that you can read the time clock from your side as well as
    ours. If we are all parsimonious in our use of time, I think we
    can make sure that at least every member of the panel gets one
    round of questions of these witnesses.
        And with that, I would recognize the gentleman from Texas,
    Mr. DeLay.
        Mr. DeLay. Thank you, Mr. Chairman. I have no questions. I
    just congratulate both gentlemen on their testimony, and I am
    very impressed with the thought that has been put in both your
    testimonies, and I think this select committee should take it
    to heart and your testimony to heart and make sure that we do
    this right and do it right with the thoughtful recommendations
    that you have made. Thank you.
        Chairman Armey. The gentlelady from California, Ms. Pelosi.
        Ms. Pelosi. Thank you very much, Mr. Chairman. Another
    historic day. I wish to associate myself with the remarks of
    Mr. DeLay. Mr. DeLay?
        Chairman Armey. Mr. DeLay, you have a rare moment here.
        Ms. Pelosi. I want the record to show and I want you to
    acknowledge that I am associating myself with your remarks.
        I do wish to congratulate both of you. It is always
    wonderful to see how you operate on the committee. Masters at
    work, Mr. Chairman, working in a very bipartisan way for our
    country. And it is important for our country for us to maintain
    our separation of powers, our checks and balances, so we don't
    want the terrorists to have any victories in undermining the
    foundation of our own democracy in that respect and in respect
    to privacy and other issues as well.
        Your testimony spoke for itself. It was excellent. I
    believe, Mr. Obey, that those are your charts over there, and I
    wondered if you wanted to shed any light on them, because for
    those of us of a certain age, it looks like a lot of ants
    crawling on a page. And that is quite a statement about what
    this organization would do.
        Mr. Obey. The fact that I forgot to mention them
    demonstrates that I am not used to testifying before
    congressional committees. But what they show is simply this:
    The chart on the left is the administration's description of
    what the existing structure is within the government for all
    the agencies and offices that have anything whatsoever to do
    with homeland security responsibilities.
        The chart on the right is our best efforts to explain how
    that organizational chart would look after the reorganization.
    As you can see, there are more offices, not less. The area in
    red represents the agencies that have been pulled from anywhere
    on the left graph under the new Agency named the Homeland
    Security Agency. But as you can see, there are still a
    tremendous number of agencies and offices involved, not under
    that rubric, not under that umbrella. So this may be a lot of
    things, but it is not a streamlining. It is not a
    simplification.
        Ms. Pelosi. Thank you very much.
        Chairman Young and Ranking Member Obey, you both have
    raised serious concerns about the administration's legislation
    that would undermine the role of Congress in the appropriations
    process, and I was pleased to associate myself with Mr. DeLay
    in commending you for your presentation. We will be writing a
    bill, and you have made suggestions.
        You have an alternative. I wish you would be a little more
    specific in saying what you think the appropriate role is for
    the Appropriations Committee in funding the new Department of
    Homeland Security. Is there any aspect of the new Department
    that should not be subjected to the regular appropriations
    process?
        Mr. Young of Florida. If I could respond to the
    distinguished gentlelady from California, the existing law
    works very well. Our recommendation does not get into the issue
    of the structure of this new Homeland Security Agency. That was
    not our role or our mission when we were assigned this bill.
        But I would like to ask that we submit for the record a
    very long list of transfer authority provisions that are in the
    fiscal year 2002 appropriations bills. The committee and the
    Congress, agreeing with those recommendations, have provided a
    lot of transfer authority but to the Executive Branch agencies
    we have maintained our oversight capability in doing so, and I
    think this works very well.
        And we also, of course, have the reprogramming requests
    which we deal with quickly. There are those occasions when we
    immediately approve a reprogramming. There are other occasions
    we may have a question, and it is amazing how often the agency
    requesting the reprogramming will say, they, I never thought
    about that. We really ought to decide what is the right thing
    to do here.
        Congress playing an oversight role does a good job. If I
    could submit this for the record, I think you will be impressed
    with how the Congress has dealt with transfer authority in the
    past, and I would be happy to give you a copy of the law that
    created the Department of Education as an example of the
    transfer authority we are suggesting in our presentation. So I
    think this type of transfer authority will work.
        If you transferred 10 agencies, 20 agencies, or 30 agencies
    into the new Homeland Security Agency, this transfer authority
    will work.
        Chairman Armey. If I may mention to the gentlelady, the
    record is open for that submission and, without objection, it
    will be accepted.

     Department of Commerce Statutory Transfer Authorities Found in Annual
                              Appropriations Acts

    Departments of Commerce. Justice, and State, the Judiciary, and Related
                       Agencies Appropriations Act, 2002

        NOAA:
        The Operations, Research and Facilities account receives transfers
    from the Promote and Develop Fishery Products and Research Pertaining
    to American Fisheries (P&D) Account and the Coastal Zone Management
    Fund (CZMF)
        Text:
        P&D
        Provided further, That, in addition, $68,000,Q00 shall be derived
    by transfer from the fund entitled Promote and Develop Fisher Products
    and Research Pertaining to American Fisheries':
        CZMF
        Of amounts collected pursuant to section 308 of the Coastal Zone
    Management Act of 1972 (16 U.S.C. 1456a), not to exceed $3,000,000
    shall be transferred to the `Operations, Research, and Facilities'
    account to offset the cost. Of implementing such Act.
        NIST:

        N1ST is authorized to transfer funding to the NTST Working Capital
    Fund.
        Text: For necessary expenses of the National Institute of Standards
    and Technology, $321, 111,000, to remain available until expended, of
    which not to exceed $282,000 may be transferred to the Working Capital
    Fund'.

        GENERAL PROVISIONS:
        ``Sec. 204. Not to exceed 5 percent of any appropriation made
    available for the current fiscal year for the Department of Commerce in
    this Act may be transferred between such appropriations but no such
    appropriation shall be increased by more than 10 percent by any such
    transfers: Provided, That any transfer to this section shall be treated
    as a reprogramming of funds under section 605 of this Act and shall not
    be available for obligation or expenditure except in compliance with
    the procedures set forth in that section.
        ``Sec. 205. Any costs incurred by a department or agency funded
    under this title resulting from personnel actions taken in response to
    funding reductions included in this title or from actions taken for the
    care and protection of loan collateral or grant proper shall be
    absorbed within the total budgetary resources available to such
    department or agency: Provided, That the authority to transfer funds
    between appropriations accounts as may be necessary to carry out this
    section is provided in addition to authorities included elsewhere in
    this Act: Provided further, That use of funds to carry out this section
    shall be treated as a reprogramming of funds under section 605 of this
    Act and shall not be available for obligation or expenditure except in
    compliance with the procedures set forth in that section.
        Transfer Provisions in fiscal year 2002 Department of Justice
    Appropriations Act

        TITLE I GENERAL PROVISIONS
        ``Sec. 107. Not to exceed 5 percent of any appropriation made
    available for the current fiscal year for the Department of Justice in
    this Act may be transferred between such appropriations but no such
    appropriations, except as otherwise specifically provided, shall be
    increased by more than 10 percent by any such transfers: Provided, That
    any transfer pursuant to this section shall be treated as a
    reprogramming of funds under section 605 of this Act and shall not be
    available for obligation except in compliance with the procedures set
    forth in that section.
        GENERAL ADMINISTRATION
        SALARIES AND EXPENSES
        Provided further, That the Attorney General is authorized to
    transfer, under such terms and conditions as the Attorney General shall
    specify, forfeited real or personal property of limited or marginal
    value, as such value is determined by guidelines established by the
    Attorney General, to a State or local government agency, or its
    designated contractor or transferee, for use to support drug abuse
    treatment, drug and crime prevention and education, housing, job
    skills, and other community-based public health and safety programs:
    Provided further, That any transfer under the preceding proviso shall
    not create or confer any private right of action in any person against
    the United States, and shall be treated as a section 605 of this Act.
        LEGAL ACTIVITIES
        SALARIES AND EXPENSES. GENERAL LEGAL ACTIVITIES
        Provided further, That notwithstanding any other provision of law
    upon a determination by the Attorney General that emergent
    circumstances require additional funding for litigation activities of
    the Civil Division the Attorney General may transfer such amounts to
    ``Salaries and Expenses, General Legal Activities'' from available
    appropriations for the current fiscal year for the Department of
    Justice as may be necessary to respond to such circumstances: Provided
    further, That any transfer pursuant to the previous proviso shall be
    treated as a reprogramming under section 605 of this Act and shall not
    be available for obligation or expenditure except in compliance with
    the procedures set forth in that section.
        SALARIES AND EXPENSES, UNITED STATES ATTORNEYS
        Provided further, That notwithstanding any other provision of law,
    the Attorney General shall transfer to the Department of Justice
    Working Capitol Fund unobligated all unexpended funds appropriated by
    the first heading of chapter 2 of title II of division B of Public Law
    l06-246 and by section 202 of division A of appendix H.R. 5666 of
    Public Law l06-554: Provided further, That the fourth proviso under the
    heading 'Salaries and Expenses, United States Attorneys'' in title I of
    H.R. 3421 of the 106th Congress, as enacted by section 1000(a)(1) of
    Public Law 106-111 shall apply to amounts made available under this
    heading for fiscal year 2002.
        SALARIES AND EXPENSES, COMMUNITY RELATIONS SERVICE
        and, in addition, up to $1,000,000 of funds made available to the
    Department of Justice in this Act may be transferred by the Attorney
    General to this account: Provided, That notwithstanding any other
    provision of law, upon a determination by the Attorney General that
    emergent circumstances require additional funding for conflict
    prevention and resolution activities of the Community Relations
    Service, the Attorney General may transfer such amounts to the
    Community Relations Service, from available appropriations for the
    current fiscal year for the Department of Justice, as may be necessary
    to respond to such circumstances: Provided further, That any transfer
    pursuant to the previous proviso shall be treated as a reprogramming
    under section 605 of this Act and shall not be available for
    obligations or expenditures except in compliance with the procedures
    set forth in that section.
        CITIZENSHIP AND BENEFITS, IMMIGRATION SUPPORT AND PROGRAM DIRECTION
        Provided further, That the Attorney General may transfer any funds
    appropriated under this heading and the heading ``Enforcement and
    Border Affairs'' between said appropriations not-withstanding any
    percentage transfer limitations imposed under this appropriations Act
    and may direct such fees as are collected by the Immigrations and
    Naturalization Service to the activities funded under this heading and
    the heading ``Enforcement and Border Affairs'' for performance of the
    functions for which the feed legally may be expired.
        FEDERAL PRISON SYSTEM
        SALARIES AND EXPENSES
        Provided, That the Attorney General may transfer to the Health
    Resources and Services Administration such amounts as may be necessary
    for direct expenditures by that Administration for medical relief for
    inmates of Federal penal and correctional institutions:
        BUILDINGS AND FACILITIES
        Provided further, That not to exceed 10 percent of the funds
    appropriated to ``Buildings and Facilities'' in this or any other Act
    may be transferred to ``Salaries and Expenses'', Federal Prison System,
    upon notification by the Attorney General to the Committees on
    Appropriations of the House of Representatives and the Senate in
    compliance with provisions set forth in section 605 of this Act.
        STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE
        For assistance authorized by the Violent Crime Control and Law
    Enforcement Act of 1994 (Public Law 103-322), as amended (``the 1994
    Act''); the Omnibus Crime Control and Sale Streets Act of 1968 as
    amended (``the 1968 Act''); the Victims of Child Abuse Act of 1990, as
    amended (``the 1990 Act''); and the Victims of Trafficking and Violence
    Protection Act of 2000 (Public Law 106-386); $2,403,354,000 (including
    amounts for administrative costs, which shall be transferred to and
    merged, with the ``Justice Assistance'' account), to remain available
    until expended as follows: . . .
        WEED AND SEED PROGRAM FUND
        For necessary expenses, including salaries and related expenses of
    the Executive Office for Weed and Seed, to implement ``Weed and Seed''
    program activities, $58,925,000, to remain available until expended,
    for intergovernmental agreements, including grants, cooperative
    agreements, and contracts, with State and local law enforcement
    agencies, non-profit organizations and agencies of local government
    engaged in the investigation and prosecution of violent crimes and drug
    offenses in ``Weed and Seed'' designated communities, and for either
    reimbursements or transfers to appropriation accounts of the Department
    of Justice and other Federal agencies which shall be specified by the
    Attorney General to execute the ``Weed and Seed'' program strategy:
    Provided, That funds designated by Congress through language for other
    Department of Justice appropriation accounts for ``Weed and Seed''
    program activities shall be managed and executed by the Attorney
    General through the Executive Office for Weed and Seed: Provided
    further; That the Attorney General may direct the use of other
    Department of Justice funds and personnel in support of ``Weed and
    Seed'' program activities only after the Attorney General notifies the
    Committees on Appropriations of the House of Representatives and the
    Senate in accordance with section 605 of this Act.
        COMMUNITY ORIENTED POLICING SERVICES
        Provided further, That all prior year balances derived from the
    Violent Crime Trust Fund for Community Oriented Policing Services may
    be transferred into this appropriation: Provided further, That the
    officer redeployment demonstration described in section 1701(b)(1)(C)
    shall not apply to equipment, technology, support system or overtime
    grants made pursuant to part Q of title I thereof (42 U.S.C. 3796dd et
    seq.)
        JUVENILE JUSTICE PROGRAMS
        For grants, contracts, cooperative agreements, and other assistance
    authorized by the Juvenile Justice and Delinquency Prevention Act of
    1974, as amended (``the Act''), including salaries and expenses in
    connection therewith to be transferred to and merged with the
    appropriations, for Justice Assistance, $286,403,000, to remain
    available until expended,. . .

        TITLE III--THE JUDICIARY
        General Provisions.
        ``Sec. 302. Not to exceed 5 percent of any appropriation made
    available for the current fiscal year for the Judiciary in Act may be
    transferred between such appropriations, but no such appropriation,
    except ``Courts of Appeals, District Courts, and Other Judicial
    Services, Defender Services'' and ``Courts of Appeals, District Courts,
    and Other Judicial Services, Fees of Jurors and Commissioners'', shall
    be increased by more than 10 percent by any such transfers: Provided,
    That any transfer pursuant to this section shall be treated as a
    reprogramming of funds under section 605 of this Act and shall not be
    available for obligation or expenditure except in compliance with the
    procedures set forth in that section.

        TITLE IV--DEPARTMENT OF STATE AND RELATED AGENCY DEPARTMENT OF
    STATE
        ADMINISTRATION OF FOREIGN AFFAIRS DIPLOMATIC AND CONSULAR PROGRAMS
        Provided, That, of the amount made available under this heading,
    not to exceed $4,000,000 may be transferred to, and merged with, funds
    in the ``Emergencies in the Diplomatic and Consular Service''
    appropriations account, to be available only for emergency evacuations
    and terrorism rewards
        EMERGENCIES IN THE DIPLOMATIC AND CONSULAR SERVICE
        For expenses necessary to enable the Secretary of State to meet
    unforeseen emergencies arising in the Diplomatic and Consular Service,
    $6,500,000, to remain available until expended as authorized, of which
    not to exceed $1,000,000 may be transferred to and merged with the
    Repatriation Loans Program Account, subject to the same terms and
    conditions
        REPATRIATION LOANS PROGRAM ACCOUNT
        For the cost of direct loans, $612,000, as authorized: Provided,
    That such costs, including the cost of modifying such loans, shall be
    as defined in section 502 of the Congressional Budget Act of 1974 In
    addition, for administrative expenses necessary to carry out the direct
    loan program,$607,000, which may be transferred to and merged with the
    Diplomatic and Consular Programs account under Administration of
    Foreign Affairs.
        GENERAL PROVISIONS-DEPARTMENT OF STATE AND RELATED AGENCY
            ``Sec. 402. Not to exceed 5 percent of any appropriation made
    available for the current fiscal year for the Department of State in
    this Act may be transferred between such appropriations, but no such
    appropriation, except as otherwise specifically provided, shall be
    increased by more than 10 percent by any such transfers Provided, That
    not to exceed 5 percent of any appropriation made available for the
    current fiscal year for the Broadcasting Board of Governors in this Act
    may be transferred between such appropriations, but no such
    appropriation, except as otherwise specifically provided, shall be
    increased by more than 10 percent by any such transfers Provided
    further, That any transfer pursuant to this section shall be treated as
    a reprogramming of funds under section 605 of this Act and shall not be
    available for obligation or expenditure except in compliance with the
    procedures set forth in that section.
        TRANSFER LANGUAGE INCLUDED IN THE DEFENSE APPROPRIATIONS ACT
        Since at least 1986, the bills appropriating funds for the
    Department of Defense have carried a provision that allows for general
    transfer authority. The provision establishes a total amount that may
    be transferred and sets certain guidelines for these transfers. The
    general transfer authority applies to the transfer of funds for the
    fiscal year in which the provision was enacted. For example, the
    general transfer authority provision included in the Department of
    Defense Appropriations, 2002, is used for transfers only between fiscal
    year 2002 appropriations.
        In addition to the provision on general transfer authority, the
    Defense Appropriations bills contain specific transfer authorities for
    specific purposes. The most common specific transfer authorities are:
    environmental restoration, contingency operations, foreign currency
    fluctuations, and drug interdiction. When specific transfer authority
    is provided, it is provided in addition to other transfer authorities,
    including the general transfer authority, contained in the Act.
        The underlying statute for this transfer authority is contained in
    title 10 U.S.C. Section 2214. In addition, Section 2215 of title 10
    prohibits the transfer of Department of Defense funds to any other
    department or agency without a certification from the Secretary of
    Defense that transferring such funds is in the national security
    interest of the United States.
        Section 8005 of the fiscal year 2003 Department of Defense
    Appropriations Act includes the following transfer of funds language:
        ``Sec. 8005. Upon determination by the Secretary of Defense that
    such action is necessary in the national interest, he may, with the
    approval of the Office of Management and Budget, transfer not to exceed
    $2,500,000,000 of working capital funds of the Department of Defense or
    funds made available in this Act to the Department of Defense for
    military functions (except military construction) between such
    appropriations or funds or any subdivision thereof, to be merged with
    and to be available for the same purposes, and for the same time
    period, as the appropriation or fund to which transferred: Provided,
    That such authority to transfer may not be used unless for higher
    priority items, based on unforeseen military requirements, than those
    for which originally appropriated and in no case where the item for
    which funds are requested has been denied by the Congress: Provided
    further, That the Secretary shall notify the Congress promptly of all
    transfers made pursuant to this authority or any authority in this Act:
    Provided further, That no part of the funds in this Act shall be
    available to prepare or present a report to the Committees on
    Appropriations for reprogramming of funds, unless for higher priority
    items, based on unforeseen military requirements, than those for which
    originally appropriated and in no case where the item for which
    reprogramming is requested has been denied by the Congress: Provided
    further, That a request for multiple reprogrammings of funds using
    authority in this section must be made prior to May 1, 2003.''
        TRANSFER LANGUAGE INCLUDED IN THE FOREIGN OPERATIONS APPROPRIATIONS
    ACT
        The annual appropriations Act for Foreign Operations includes a
    provision, section 509, which reads:
        ``None of the funds made available by this Act may be obligated
    under an appropriation account to which they were not appropriated,
    except for transfers specifically provided for in this Act, unless the
    President, prior to the exercise of any authority contained in the
    Foreign Assistance Act of 1961 to transfer funds, consults with and
    provides a written policy justification to the Committees on
    Appropriations of the House of Representatives and the Senate.''

                   TRANSFER AUTHORITIES IN THE INTERIOR BILL

        Appropriations Accounts
        Department of the Interior:
        Bureau of Land Management, Central Hazardous Materials Fund -
    allows transfers to other accounts to pay for clean-ups.
        Bureau of Land Management, Wildland Fire Management - allows
    transfers to repay wildfire suppression transfers from other accounts.
        National Park Service Historic Preservation Fund - allows transfer
    of Save America's Treasures funds to accounts of Federal grant
    recipients.
        National Park Service, Construction - allows transfers to the Army
    Corps of Engineers (related to Everglades water projects).
        Bureau of Indian Affairs, Operation of Indian Programs - allows
    transfer of forestry funds to tribal trust accounts.
        Bureau of Indian Affairs, Construction - allows transfer of Navajo
    Indian Irrigation Project funds to the Bureau of Reclamation.
        Office of Special Trustee for American Indians, Federal Trust
    Programs - allows transfer of trust management improvement funds to the
    Bureau of Indian Affairs and Departmental Management.
        Office of Special Trustee for American Indians, Indian Land
    Consolidation--allows transfer of trust management improvement funds to
    the Bureau of Indian Affairs and Departmental Management.
        Departmental Offices, Natural Resource Damage Assessment and
    Restoration--allows transfers to other accounts to carry out activities
    under the Comprehensive Environmental Response, Compensation, and
    Liability Act (CERCLA).
        Department of Agriculture:
        Forest Service, Wildland Fire Management--allows transfers to repay
    wildfire suppression transfers from other accounts and for State and
    volunteer fire assistance and for forest health management, etc., and
    for reimbursement for Endangered Species Act consultation.
        Administrative Provisions, Forest Service--allows transfers from
    other accounts for to wildland fire management and transfers to other
    agencies for Forest Service activities (work performed by others).
        General Provisions
        Section 101--allows transfers to repair facilities damaged by
    fires, floods, storms, etc.
        Section 102--allows transfers from no-year accounts to respond to
    wildland fires and various other specifically enumerated emergencies.
        Section 113--allows transfer of Bureau of Indian Affairs and Office
    of Special Trustee appropriations for trust management activities
    pursuant to the High Level Implementation Plan.
        Section 116--allows transfers within Tribal Priority Allocation
    funds (Bureau of Indian Affairs) to address funding inequities.

           TRANSFER AUTHORITIES LABOR, HHS AND EDUCATION SUBCOMMITTEE

        DEPARTMENT OF LABOR
        Appropriation Act Transfer Authorities - Discretionary
        Section 102 of the fiscal year 02 Labor, HHS, Education
    Appropriations Act allows the Secretary to transfer up to 1 percent of
    funds between appropriations so long as no account is increased by more
    than 3 percent as the result of the transfer.
        Section 501 of the fiscal year 02 Labor, HHS, Education
    Appropriations Act allows the Secretary to transfer unexpended balances
    of prior appropriations to accounts corresponding to current
    appropriations in the LHE bill for the same purposes and periods of
    time for which they were originally appropriated.

        DEPARTMENT OF HEALTH AND HUMAN SERVICES
        Appropriation Act Transfer Authorities--Discretionary Funds
        Secretary's One (1) Percent Transfer Authority HHS agencies
        General Provisions Title II Section 207: Not to exceed 1 percent of
    any discretionary funds (pursuant to the Balanced Budget and Emergency
    Deficit Control Act of 1985, as amended) which are appropriated for the
    current fiscal year for the Department of Health and Human Services in
    this or any other Act may be transferred between appropriations, but no
    such appropriation shall be increased by more than 3 percent by any
    such transfer: Provided, That an appropriation may be increased by up
    to an additional 2 percent subject to approval of the House and Senate
    Committees on Appropriations: Provided further, That the Appropriations
    Committees of both Houses of Congress are notified at least 15 days in
    advance of any transfer.

        DEPARTMENT OF EDUCATION
        Appropriation Act Transfer Authorities
        Section 304 of the fiscal year 02 Labor, HHS, Education
    Appropriations Act allows the Secretary to transfer up to 1 percent of
    funds between appropriations so long as no account is increased by more
    than 3 percent as the result of the transfer.
        Section 501 of the fiscal year 02 Labor, HHS, Education
    Appropriations Act allows the Secretary to transfer unexpended balances
    of prior appropriations to accounts corresponding to current
    appropriations in the LHE bill for the same purposes and periods of
    time for which they were originally appropriated.
        Authorizing Statute Transfer Authorities
        Section 411 of the Department of Education Organization Act allows
    the Secretary or any officer or employee of the Department to exercise
    any legislative authority (including appropriations Acts) to carry out
    any function transferred from a predecessor agency through the
    Organization Act.
        Section 424 of the Department of Education Organization Act allows
    the Secretary, when authorized in an appropriation Act, to transfer
    funds from one appropriation to another within the Department so long
    as no account is either increased or decreased by more than 5 percent
    or beyond its authorization level as a result of the transfer.
        Section 501 of the Department of Education Organization Act
    provides that all contracts, unexpended balances, allocations and other
    funds connected to programs transferred by the Organization Act shall
    be transferred to the Secretary. It further requires that unexpended
    funds transferred must be used only for the purposes for which they
    were originally authorized and appropriated.

    United States Department of Agriculture Statutory Transfer Authority in
                              Appropriations Acts

    ----------------------------------------------------------------------------------------------------------------
              STATUTORY CITATION/DESCRIPTION                                     BRIEF TEXT
    ----------------------------------------------------------------------------------------------------------------
    General Miscellaneous Provisions                    ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Permits the Secretary to transfer discretionary funds made
     VII, Sec. 704). Transfer of discretionary           available by this Act, as well as other available
     unobligated balances of the Department of           unobligated discretionary balances of the Department, to
     Agriculture to the WCF.                             the WCF for the acquisition of plant and capital equipment,
                                                         with prior approval from the agency administrator.
    ----------------------------------------------------------------------------------------------------------------
    Treasury and General Government Appropriations      Authorizes the head of each Executive department and agency
     Act, 2002 (P.L. 107-67, Title VI, Sec. 629).        to transfer to the Policy and Operations account, GSA, with
     Authorizes the transfer of funds made available     0MB approval, funds made available for fiscal year 2002,
     for fiscal year 2002 to the GSA, including          including rebates from charge cards and other contracts for
     rebates from charge cards and other contracts.      use to support Governmentwide financial, information
                                                         technology, procurement, and other management innovations,
                                                         initiatives and activities, as approved by 0MB. Transfers
                                                         only to be made 15 days following notification of the House
                                                         and Senate Committees on Appropriations by the Director of
                                                         0MB. Total funds transferred shall not exceed $17,000,000.
    ----------------------------------------------------------------------------------------------------------------
    Farm Service Agency--Farm Loans and Other Programs  ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    ``Provided further, That other funds made available to the
     I, Farm Service Agency, Salaries and Expenses).     Agency for authorized activities may be advanced to and
     Merging of other funds into this account.           merged with this account:''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2001 (P.L. 106-387, Title   ``Provided further, That this amount shall be transferred to
     I, Farm Service Agency, Dairy Indemnity Program).   the Commodity Credit Corporation: Provided further, That
     Transfer to the Commodity Credit Corporation.       the Secretary is authorized to utilize the services,
                                                         facilities, and authorities of the Commodity Credit
                                                         Corporation for the purpose of making dairy indemnity
                                                         disbursements.''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides that, ``for administrative expenses necessary to
     I, Agricultural Credit Insurance Fund). Transfer    carry out the direct and guaranteed loan programs,
     of funds for administrative costs.                  $280,595,000, of which $272,595,000 shall be transferred to
                                                         and merged with the appropriation for ``Farm Service
                                                         Agency, Salaries and Expenses''.'
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides that, ``Funds appropriated by this Act to the
     I, Agricultural Credit Insurance Fund). Transfer    Agricultural Credit Insurance Program Account for farm
     of funds among operating and direct loans.          ownership and operating direct loans and guaranteed loans
                                                         may be transferred among these programs: Provided, That the
                                                         Committees on Appropriations of both Houses of Congress are
                                                         notified at least 15 days in advance of any transfer.''
    ----------------------------------------------------------------------------------------------------------------
    P.L. 480                                            ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    ``In addition, for administrative expenses to carry out the
     V, P1. 480 Title I Program Account). Transfer of    credit program of title I, Public Law 83-480, and the Food
     funds for administrative costs.                     for Progress Act of 1985, to the extent funds appropriated
                                                         for Public Law 83-480 are utilized, $2,005,000, of which
                                                         $1,033,000 may be transferred to and merged with the
                                                         appropriation for ``Foreign Agricultural Service, Salaries
                                                         and Expense'', and of which $972,000 may be transferred to
                                                         and merged with the appropriation for ``Farm Service
                                                         Agency, Salaries and Expenses.'' '
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    ``.. Provided, That funds made available for the cost of
     V, P.L 480 Title I Ocean Freight Differential       agreements under title I of the Agricultural Trade
     Grants). Interchange of funds within Title I.       Development and Assistance Act of 1954 and for title I
                                                         ocean freight differential may be used interchangeably
                                                         between the two accounts with prior notice to the
                                                         Committees of Appropriations of both Houses of Congress.''
    ----------------------------------------------------------------------------------------------------------------
    Commodity Credit Corporation                        ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides that, `.. $3,224,000 may be transferred to and
     V, Commodity Credit Corporation Export Loans        merged with the appropriation for ``Foreign Agricultural
     Program Account). Transfer of funds for             Service, Salaries and Expenses'', and of which $790,000 may
     administrative costs.                               be transferred to and merged with the appropriation for
                                                         ``Farm Service Agency, Salaries and Expenses''.'
    ----------------------------------------------------------------------------------------------------------------
    Rural Development                                   ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides that oif funds made available for rural utilities
     III, Rural Community Advancement Program [RCAP],    programs under RCAP, ``not to exceed $24,000,000 shall be
     115 STAT. 719). Provides for three transfers.       for water and waster disposal systems for rural and native
                                                         villages in Alaska pursuant to section 306D of such Act,
                                                         with up to 1 percent available to administer the program
                                                         and up to 1 percent available to improve interagency
                                                         coordination may be transferred to and merged with the
                                                         appropriation for ``Rural Development, Salaries and
                                                         Expenses;'' '
                                                        Provides that any prior year balances for high cost energy
                                                         grants authorized by section 19 of the Rural
                                                         Electrification Act of 1936 shall be transferred to and
                                                         merged with the ``Rural Utilities Service, High Energy
                                                         Costs Grants'' account.
                                                        Provides that of the funds appropriated by this Act to RCAP
                                                         for guaranteed business and industry loans, funds may be
                                                         transferred to direct business and industry loans as deemed
                                                         necessary by the Secretary and with prior approval of the
                                                         Committees on Appropriations of both Houses of Congress.
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides that any balances available from prior years for
     III, Rural Development Salaries and Expenses, 115   the Rural Utilities Service, Rural Housing Service, and the
     STAT. 721). Provides for prior year balances to     Rural Business-Cooperative Service salaries and expenses
     be transferred.                                     accounts shall be transferred to and merged with this
                                                         appropriation.
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides for administrative expenses necessary to carry out
     III, Rural Housing Service, Rural Housing           the direct and guaranteed housing loan programs to be
     Insurance Fund Program Account, 115 STAT. 721).     transferred to and merged with the appropriation for
     Provides for transfer of administrative expenses.   ``Rural Development, Salaries and Expenses.''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    A combined amount is appropriated for these loans and grants
     III, Rural Housing Service, Farm Labor Program      and the Appropriations Act states the funds are ``for
     Account, 115 STAT. 723). Provides funds for loans   direct farm labor housing loans and domestic farm labor
     and grants.                                         housing grants and contracts.'' Use of funds is explained
                                                         at 42 U.S.C. 1806 and it states that loans can be forgiven
                                                         under certain circumstances; thus, loan funds would become
                                                         grant funds.
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides for administrative expenses necessary to carry out
     III, Rural Business-Cooperative Service, Rural      the direct Rural Business--Cooperative Service loan
     Development Loan Fund Program Account, 115 STAT.    programs to be transferred to and merged with the
     723). Provides for transfer of administrative       appropriation for ``Rural Development, Salaries and
     expenses.                                           Expenses.''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides for administrative expenses necessary to carry out
     III, Rural Utilities Service, Rural                 the direct and guaranteed electric and telecommunications
     Electrification and Telecommunications Loan         loan programs to be transferred to and merged with the
     Program Account, 115 STAT. 724). Provides for       appropriation for ``Rural Development, Salaries and
     transfer of administrative expenses.                Expenses.''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides for administrative expenses, including audits,
     III, Rural Utilities Service, Rural Telephone       necessary to carry out the loan programs to be transferred
     Bank Program Account, 115 STAT. 725). Provides      to and merged with the appropriation for ``Rural
     for transfer of administrative expenses.            Development, Salaries and Expenses.''
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Provides for administrative expenses necessary to carry out
     III, Rural Utilities Service, Local Television      the guaranteed loan programs to be transferred to and
     Loan Guarantee Program Account, 115 STAT. 725).     merged with the appropriation for ``Rural Development,
     Provides for transfer of administrative expenses.   Salaries and Expenses.''
    ----------------------------------------------------------------------------------------------------------------
    Animal and Plant Health Inspection Service          ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107--76, Title   Provides that, in emergencies which threaten any segment of
     VII, Sec. 704). Transfer of funds from agencies     the agricultural production industry of this country, the
     or corporations of the Department for use in        Secretary may transfer from other appropriations or funds
     plant and animal disease emergencies                available to the agencies or corporations of the Department
                                                         such sums as may be deemed necessary, to be available only
                                                         in such emergencies for the arrest and eradication of
                                                         contagious or infectious diseases or pests of animals,
                                                         poultry, or plants, and for expenses in accordance with the
                                                         Act of February 28, 1947, and section 102 of the Act of
                                                         September 21, 1944, and any unexpended balances of funds
                                                         transferred for such emergency purposes in the preceding
                                                         fiscal year shall be merged with such transferred amounts.
    ----------------------------------------------------------------------------------------------------------------
    Agriculture. Appropriations Act, 2002 (P.L. 107-    Of the total amount available under this heading in fiscal
     76, Title I). Makes Agricultural Quarantine         year 2002, $84,813,000 shall be derived from user fees
     Inspection user fees available by appropriation.    deposited in the Agricultural Quarantine Inspection User
                                                         Fee Account.
    ----------------------------------------------------------------------------------------------------------------
    Departmental Administration                         ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Allows the funds appropriated to the Department for
     I) Transfer of unexpended balances for Hazardous    hazardous materials management to be transferred to
     Materials Management.                               agencies of the Department as required.
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Permits transfers to or from the rental payments account
     I) Transfer of unexpended balances for              based on changing space requirements.
     Agriculture Buildings and Facilities and Rental
     Payments.
    ----------------------------------------------------------------------------------------------------------------
    Office of the Secretary                             ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    Allows a portion of the funds appropriated to the Office of
     I) Transfer of unexpended balances for the Office   the Assistant Secretary to be transferred to agencies.
     of the Assistant Secretary for Congressional
     Relations.
    ----------------------------------------------------------------------------------------------------------------
    Food and Nutrition Service                          ............................................................
    ----------------------------------------------------------------------------------------------------------------
    Ag. Appropriations Act, 2002 (P.L. 107-76, Title    ``For necessary expenses to carry out the National School
     IV, Child Nutrition Program) Authorizes the         Lunch Act (42 U.S.C. 1751 et seq.), except section 21, and
     transfer of Section 32 Funds to Child Nutrition     the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.),
     for Use in School Lunch Programs.                   except sections 17 and 21;'' $10.1 billion ``, to remain
                                                         available through September 30, 2003, of which'' $4.9
                                                         billion ``is hereby appropriated and'' $5.2 billion ``shall
                                                         be derived by transfer from funds available under section
                                                         32 of the Act of August 24, 1935 (7 U.S.C. 612c):''
    ----------------------------------------------------------------------------------------------------------------

        Ms. Pelosi. I thank the gentleman.
        Mr. Obey. Basically what we are recommending is four
    things: to strike from the bill the provision that overrides
    existing law to allow funds transferred to the new Department
    to be spent for any purpose; to strike the provision that
    allows the President to deduct up to 5 percent of
    appropriations made for agencies scheduled to be moved to that
    Department; to strike the provision that allows the Secretary
    of Homeland Security to sell off real estate and other assets
    without congressional supervision; and to strike the provision
    that grants the Secretary permanent authority to transfer funds
    among accounts within his Department. And instead, as the
    chairman said, we substitute existing procedures, those which
    are very similar to those that were provided when the
    Department of Energy and the Department of Education were
    created.
        Ms. Pelosi. I thank the distinguished chairman, and I thank
    you.
        Chairman Armey. The gentleman from Oklahoma, Mr. Watts.
        Mr. Watts. Mr. Chairman, I am going to be brief. And I want
    to start by echoing what the gentlelady from California said. I
    think you all have put a lot of thought into this and, Mr.
    Obey, based on your charts--and I hope we all would consider
    the massive, massive undertaking that we are taking on in this
    effort, and I think when you talk about the appropriations
    process, you two are probably as knowledgeable about the
    appropriations process as any people in this House.
        And then the transfer authority, I had some questions about
    the transfer authority that you have actually answered based on
    what Ms. Pelosi has asked.
        So I appreciate your being here today, but I will ask one
    question. Chairman Young, you mentioned some other areas that
    the transfer authority applied to. Can you just kind of name
    some of those and give us some background, some reference on
    what you have actually submitted for the record, some things
    that the transfer authority has applied to in the past to kind
    of put the President's request in context?
        Mr. Young of Florida. Let me start on the first page and I
    think it is a very good question.
        The first page has to do with transfer provisions in the
    Fiscal Year 2002 Department of Justice Appropriations Act.
    Under General Administration, salaries, and expenses, we
    provided that the Attorney General is authorized to transfer,
    under such terms and conditions as the Attorney General shall
    specify, forfeited real or personal property of limited or
    marginal value at such value as determined by guidelines
    established by the Attorney General.
        The idea here is that we give the heads of the agencies the
    authority they need, but only after Congress has reviewed the
    requests and determined that they really should have that
    authority.
        Also on the first page, under legal activities, salaries
    and expenses, ther is basically the same provision, but again
    only after Congress reviewed the request and played its
    oversight role.
        There are three other items on that first page. On the
    second page, we provide a similar transfer authority for the
    Federal Prison System buildings and facilities account, also
    for State and local law enforcement assistance, the Weed and
    Seed program, community-oriented policing services, and
    juvenile justice programs. These are all requests that were
    made, the committee recommended favorably on what the agency
    requested, and they became part of the law.
        Mr. Watts. Mr. Chairman, you have adequately answered my
    question, but again I appreciate the thought that you all have
    put into this, and I hope that Congress will continue to
    understand its role in this new Agency, in the oversight role.
        And, Mr. Chairman, I yield back the balance of my time.
        Chairman Armey. Thank you. The gentleman from Texas, Mr.
    Frost.
        Mr. Frost. I thank the gentleman. The testimony by these
    two witnesses is very, very important. And Mr. Young, I would
    like to ask you a question, if I may. Despite the sympathetic
    statements that we heard from Mr. DeLay, if this committee
    ignores your recommendations and does not incorporate them in
    the bill that we report out on Friday, and if the Committee on
    Rules were to deny you a vote on your recommendations on the
    floor when this bill is considered, what would be your posture
    at that point?
        Mr. Young of Florida. Well, sir, that is a hypothetical
    question and I usually prefer not to respond to hypothetical
    questions. However, I can just say to you that I understand the
    awesome responsibility that this select committee has. That is
    why such very distinguished members such as yourselves are on
    this committee and have this responsibility. I am satisfied
    that you are going to recommend a workable bill, one that does
    what you have been charged with doing, and that will provide
    security for our homeland. And I think you would also report a
    bill that would be consistent with our constitutional
    responsibilities.
        The oath of office that we all take, basically is about
    supporting and defending the Constitution of the United States.
    Now, hypothetically, it is my strong desire and my strong hope
    that I am going to be just as excited about your proposal as
    you are going to be. That is my general attitude. Now, when you
    report that bill, I may come back and ask that you consider
    something different.
        My role is to be supportive of what this very select
    committee is going to recommend, but I think that I do not
    fulfill my responsibility, if you are suggesting something that
    I think is very inappropriate, and I don't remind you and give
    you what little advice I might have for you to consider. I
    think that is part of my responsibility, is to review what you
    are doing and suggest, if there is a reason to suggest, that
    maybe you should change something.
        So I will play that role, but think all of you know that I
    will play it in a very cooperative way. You and I have met on
    so many occasions at the Rules Committee, and I have always
    tried to be very direct and honest in answering your questions,
    and I would do the same thing on whatever bill you report.
        Mr. Frost. I would ask Mr. Obey the same question.
        Mr. Obey. Well, we can have reasonable disagreements about
    a lot of these pieces. But if in my view this package guts the
    principal protection that we have against tyranny and
    fundamental mistakes by government, namely the power of the
    purse, I would oppose it.
        Mr. Frost. And I would say to both gentlemen that it is the
    strong preference on our side of the aisle, that there be an
    open procedure, an open amendment procedure on the floor, and
    we hope that will be permitted by the Majority when our bill is
    sent to the Rules Committee.
        Mr. Obey. I will simply say that, like Mr. Young, I cannot
    believe that the top elected leadership of the greatest
    deliberative body in the Western world would in fact abdicate
    our historically long constitutional responsibilities on
    maintaining the control of the power of the purse.
        Mr. Frost. Thank you. One other question. Later today,
    probably much later today, we will hear from the Comptroller
    General of the United States, David Walker. We have a copy of
    his testimony already, and he points out the $3 billion issue
    raised by CBO. And let me just read you his recommendation:
        ``administration has urged that CBO estimates are inflated.
    More important than a precise cost estimate of the transition,
    however, is a recognition that there will be short-term
    transition costs and that these costs need to be made
    transparent. To fully recognize the transition costs, in fact,
    Congress should consider appropriating for them separately.'' .
        Do you agree with his recommendation?
        Mr. Obey. Well, it seems to me we ought to learn from what
    is happening with corporations these days. The market is in
    turmoil because people have lost trust. I think that they ought
    to be able to trust whatever Congress recommends to be honest
    in its accounting. And I am concerned that the reason we have
    these unprecedented and phenomenally dangerous grants of
    spending authority to the agencies is as a substitute for
    facing up to and as a method of hiding the true cost of these
    reorganization efforts.
        I don't think the American people will begrudge the
    President or any of us whatever funds are necessary to
    accomplish an intelligent reorganization of these functions,
    but I think they would be unforgiving if we sandbagged our
    constitutional processes or were not up front and honest with
    them about the actual costs about to be incurred.
        Mr. Frost. Thank you, gentlemen.
        Chairman Armey. The gentlelady from Ohio.
        Ms. Pryce. Thank you, Mr. Chairman.
        Gentlemen, welcome. Thank you for the hard work you have
    put into this. It is extremely important. Your committee is
    very busy this time of year, so we appreciate the efforts you
    put into this and your members as well.
        Mr. Obey. We welcome the relief from the floor activities.
        Ms. Pryce. Let me go in this direction. Your committee, by
    virtue of the process that we use here in the House of
    Representatives, works with every authorizing committee that we
    have. Do you believe that there is any reason that the normal
    authorization and appropriations process that we have used
    through the eons will not work if we put forth this bill? Do
    you think that it will, that it won't, that there are ways that
    we can streamline the process that would make it more efficient
    and come forward with a better product?
        Mr. Young of Florida. Government was intended to be
    inefficient. That is why there is a separation of powers; that
    is why there is a bicameral legislature. While we try for
    efficiency in expediting our business, it does not always work
    because of the way that our government was created.
        I would suggest to the gentlelady, that as a member of the
    Rules Committee she knows that usually the Appropriations or
    the respective subcommittees and the authorizing committees
    have a very good working relationship. We tend to be
    cooperative with each other.
        Now, you are dealing with something here that none of us
    have dealt with before. I was a young kid when Pearl Harbor was
    attacked, but I had no idea what ramifications the government
    went through in order to respond to Pearl Harbor and to fight
    and win one of our contruy's major wars. But I believe that the
    system that we have created does work.
        You have a different responsibility than most of our
    committees have been faced with. You are plowing new ground. I
    suggest that you have probably heard from a number of
    authorizing committee chairmen and ranking members, and if you
    haven't, I suspect that you will. You will probably find a lot
    of different opinions and a lot of different ideas, but that is
    why the brain trust that sits at your table is there, in order
    to filter through these ideas. And hopefully when you develop
    your product, you are going to have the support of the
    authorizing committees as well as the Appropriations Committee.
        Ms. Pryce. But the reason for the transfer authority and I
    think that the reason the administration wants to have it so
    badly is because of the inefficiencies that are built into our
    system that in most instances do protect us. But this is
    emergency-related. It is a fast response and a jolt is very
    important in this instance, so I am just wondering if--Mr.
    Obey, I can see you are eager to comment.
        Mr. Obey. Yes. I would like to comment. We have had a
    serious, serious problem develop in this country because of
    September 11. It is a very serious problem. But in my view, it
    is no more serious than the War of 1812 or World War I or World
    War II when we were in mortal combat to save the valleys of
    Western civilization, especially in World War II, and we did
    not use those dangers as an excuse to give away the main power
    that the Congress has to assure a sensible use of taxpayers'
    money and to protect freedom at the same time.
        When we come to this place the first time, all we have is a
    political license as politicians to become skilled,
    knowledgeable legislators over time. It is our service
    primarily on committees that turns us from politicians into
    politicians and legislators. And if this House does not take
    advantage of the knowledge and experience that the authorizers
    and the appropriators develop in their fields, then this House
    is not using its principal asset, and then we are making
    judgments that turn out to be almost solely political rather
    than substantive.
        So there is a reason that these processes have been
    developed over time. It is because virtually everything has
    been tried and these have been found to work. They are not
    perfect, but the Republic has gotten along pretty well for over
    200 years, and I don't think we have to do anything as drastic
    as gut the ability of Congress to fulfill its principal
    function of this country.
        Mr. Young of Florida. I would like to add that your
    responsibility and the threat that our country is dealing with,
    is different than the War of 1812, different than World War II
    and World War I, because for the first time we are not just
    dealing with an army on a battlefield or soldiers in trenches
    or in tunnels or in jungles, and our military organized as a
    military establishment. That is not what we are dealing with
    today. We are dealing with people who are hiding, cowards who
    come from behind the bush and do not attack a military
    institution or military production facility, but attack women
    and children. And we have watched this happen in Israel for
    many years, and that is the threat that America is facing
    today.
        So you have a challenge that is different than a committee
    like our armed services committees, that was preparing to fight
    a war. Instead you are preparing to fight an enemy, that you
    don't know where he is, but you have to provide the strength.
    This President has shown a strong leadership and we need to be
    as supportive as we can, but we can't do away with the
    Constitution in the process.
        And one other point I'd like to make that doesn't have to
    do with appropriations--you can't create a system that denies
    American people the freedoms that we are fighting to protect.
    If we legislate something that takes away these freedoms, we
    are almost as bad as the guy that takes them away by violent
    acts of terrorism.
        You have a tremendous responsibility, and I want to be
    there in a supporting role, but I still believe that the
    constitutional system works very well when dealing with the
    purse.
        Ms. Pryce. Thank you very much.
        Chairman Armey. I thank the gentleman for your comments,
    and the Chair recognizes the gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman. I want to thank Mr.
    Young and Mr. Obey for their insights. First, the committee
    voted out your recommendations on a bipartisan basis.
        Mr. Obey. Without objection.
        Mr. Menendez. Without objection. And from my perspective, I
    agree with that bipartisan decision.
        We have heard a lot from administration witnesses here
    speaking about flexibility, and that flexibility has been
    described in a variety of ways: budgetarily, personnel, and
    other ways.
        First of all, would you describe the provisions of the
    President's proposal on transfer authority and budgetary powers
    as extraordinary?
        Mr. Obey. Yes, and unprecedented.
        Mr. Menendez. Extraordinary and unprecedented. In that
    regard do you see, even though I agree with your position that
    you have stated, do you see anything that needs to be given in
    this regard to the executive branch to give them the
    flexibility they claim that they have, or do you believe that
    our process in and of itself will be able to guarantee the
    responses that may be unforeseen?
        Mr. Obey. The process is not going to guarantee
    flexibility. Maturity will guarantee flexibility. I mean, I
    think the record of this committee--let us take you back to day
    one. When we were hit, the executive branch's first request was
    to give them an unlimited amount of money for an unlimited
    amount of time. ``No Year money'' is what it is called. Both of
    us said, no way, we are not going to write a blank check. But
    by the end of the week, working together, we produced a $40
    billion package which gave the President greater flexibility.
        We are not arguing against flexibility, God knows we need
    it. What we are saying is don't use the argument about
    flexibility in order to throw out our protections and abandon
    our obligations. And we will give plenty of flexibility in the
    individual appropriation bills, flexibility that is appropriate
    to the specific programs. But you have different requirements
    for different kinds of programs. We recognize that it is a
    decentralized operation, but it works.
        Mr. Menendez. And lastly, do you believe that there should
    be some mechanism in this legislation that creates this new
    Department to ensure that nonsecurity missions that are being
    transferred into this Department should be preserved and
    enhanced; and, if so, do you have any suggestions as to how
    that could be accomplished?
        Mr. Obey. I personally don't think nonsecurity issues
    should be transferred into this Department, and I still think
    whatever you do on reorganization, the most important thing you
    can do is to upgrade the prestige and the strength and the
    clout of the White House Adviser on Homeland Security because
    as that chart demonstrates, you can have a Cabinet Secretary
    handling all the boxes in red. You have got to have somebody at
    the White House who has got enough clout and enough authority,
    official authority, so that the Congress and the agencies alike
    will respect his judgment in dealing with that whole universe.
        Mr. Menendez. But if I may just pursue that question, I
    understand your view, Mr. Obey; but, for example, if the Coast
    Guard ultimately gets transferred into this Department, it will
    by its nature have nonsecurity missions such as search and
    rescue, maritime environmental enforcement, navigational
    issues. Do you not think there should be mechanisms to ensure
    that those other missions that, whether voluntary or not, get
    transferred in here are preserved?
        Mr. Obey. Well, I would want them to. I think that is going
    to be very, very hard to do. I would hope that you could. I
    think it would be preferable to leave the Coast Guard in a
    different position than this legislation suggests, but I am
    open on that. But I think it is going to be very hard to do
    what you are talking about. It ought to be done. I doubt it
    will be. That is my concern.
        Mr. Young of Florida. I would like to offer a word of
    caution. You mentioned the responsibilities of the United
    States Coast Guard, and they have a tremendous responsibility.
    A lot of Members really aren't aware of what the Coast Guard
    does and what they are called on to do. Those of us who live in
    areas where the Coast Guard functions every day, understand
    this.
        I think you want to be careful. As you transfer the
    authority or responsibilities of an agency like the Coast
    Guard, you shouldn't disband it. Don't turn the Coast Guard
    into something that it was never intended to be. The Coast
    Guard is a military organization. When America goes to war, the
    Coast Guard goes to war. When we were in Bosnia we had Coast
    Guard port security units in the ports along the coastlines of
    the Baltic States. They are responsible for drug interdiction,
    search and rescue, and environmental issues in our ports. And
    they have been called on now to do a tremendous program of
    interdicting shipping coming into our ports, something we have
    not been able to do in the past because the Coast Guard has not
    had enough assets. But we don't want to divide up the Coast
    Guard so it can't do all of these things, and I wouldn't
    suggest creating a new agency either to do that, because nobody
    does it as well as the United States Coast Guard.
        One more thought. I have always felt that the Department of
    Transportation is not the right home for the Coast Guard. I
    believe they should be in the Department of Defense because
    they are a military organization.
        Chairman Armey. Mr. Chairman, I am afraid I am going to
    have to cut you off. Complete your thought.
        Mr. Young of Florida. Just don't divide up the Coast Guard.
        Chairman Armey. I thought it was a thought well taken, and
    I do appreciate it but I do feel we must get on. We have other
    panels waiting.
        The gentleman from Ohio.
        Mr. Portman. I thank the Chair, and I appreciate the
    testimony this morning from two members who put a lot of
    thought into this and had a lot of experience. I am tempted to
    get off on some of these issues about organization and
    structure, Mr. Obey, that you mentioned and, Chairman Yound,
    you mentioned with the Coast Guard; but I think it is more
    important to try to stay on the issues of your committee's
    appropriations responsibilities. If we have time I would love
    to get into that.
        All these boxes we see on the left and the right must be
    made more efficient, and therefore more effective, if this is
    to work. And the way the new Agency would be structured,
    according to what has been proposed to us, would be that there
    be one Border and Transportation Security Division of the
    Agency, which would include, as you know, Customs, Coast Guard,
    INS and so on. And that notion is consolidation simplification
    and keeping a good organization like the Coast Guard intact.
        A key worry as you know of the new Department is that they
    are going to be different from some other departments. And
    Chairman Young mentioned the agility of our enemy and the
    immoral nature of the threat. They think that the
    unpredictability of their mission will be as great or greater
    than the other department as a percentage of their budget. And
    I think we acknowledge there is a tremendous amount of
    unpredictability because of the nature of the threat.
        They are also worried that they are going to be heavy with
    regular full-time employees, so at the end of the year they are
    not going to have a lot to move around. And that is, primarily
    on the border side which is where most of the employees will
    be, they are not going to have an unobligated balance at the
    end of the year.
        A third concern is that without some transfer authority
    that is fairly substantial, their unanticipated needs may be
    met by moving within the same account, and may have the effect
    that Mr. Menendez just expressed concern about; in other words,
    taking away from nonhomeland security functions. All of those
    are reasons to give them more flexibility.
        I guess my question to you would be: Is there a middle
    ground between what the administration asked for, which was 5
    percent transfer authority, and where we have come out? I look
    at the Department of Energy organization bill, Department of
    Agriculture, what we already give DOD; and the chairman has
    been very good about talking about what actually happens year
    to year, that you do provide more flexibility.
        Mr. Portman. Given the extraordinary nature of the threat,
    is there any flexibility on your part in terms of meeting them
    part way up front and then being--you would be responsive as
    needs come in?
        Mr. Young. Well, first let me apologize to the gentleman
    for getting off on the Coast Guard. A question was asked that
    related to the Coast Guard, and I had the opportunity to say
    what I had to say.
        The proposal that we have recommended allows for the normal
    reprogramming procedures. Now, the way a reprogramming works
    is, the agency with the Administration's approval, sends a
    request to the Congress. We take a look at it, and we may sign
    off on it, an it is done. Or if we have questions, we will ask
    the agency, and as I said earlier, oftentimes they will say,
    that they haven't thought about that or may want to send a
    revised reprogramming that changes the source of funds, for
    example So we have some oversight.
        I have been here with the President since Richard Nixon was
    President, and I can say that they all want to get Congress off
    their back. They all want to be able to do whatever they want
    to do without Congress providing any oversight; and that is
    okay in a different form of government, but ours is a
    constitutional form of government.
        I think with the reprogramming provisions and the transfer
    authority that we have already provided on a regular basis; and
    the fact that we responded to September 11th with a $40 billion
    supplemental appropriation which provided no strings attached
    for the first $20 billion--and I am not sure that was even a
    good idea--but we did it because we wanted the President to be
    able to move quickly anywhere that he had to move, shows.
        I believe, that flexibility is already there in our system,
    but I think we have got to maintain the constitutional
    perogative of the Congress being responsible for the
    appropriation of funds and learning and knowing about how those
    funds are used. That is what I read to you from the
    Constitution earlier.
        Congress appropriates, and Congress will make sure that
    there is accountability for the money that has been spent. That
    is the way the system is supposed to work. It is what the
    Constitution intended, and that is what we are recommending
    here, that we stay within the Constitution.
        Mr. Obey. If I could just make the point, in all of the 33
    years I have been here, no Congress has ever changed any
    President's budget by more than 2.5 percent. That 2.5 percent
    is the difference between a monarchy and a democracy, and as
    the chairman indicated, we have immense flexibility now through
    the processes; and those processes are individualized so that
    different agencies are treated in different ways depending upon
    the nature of control that must remain in legislative hands in
    order to prevent abuse and the needs of the agencies involved.
    That has been worked out over time.
        But if you want an example of what will happen if we don't
    hang on to our constitutional responsibilities, look at that
    Transportation Security Administration. Five months after they
    were created, they still had not sent a budget down to the
    Congress. When they did send one down, it was so outlandishly
    ridiculous, that it became the laughing stock of the country.
    We can't afford that.
        Chairman Armey. I thank the gentleman for his cogent
    observation and thank the gentleman from Ohio, recognizing the
    gentlelady from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman, and let me
    just use a word of my kids. When I listen to your testimony, it
    is awesome; and I will just say to you, thank you both for
    being skilled and knowledgeable legislators. You do us all
    proud here today as Members of this great institution.
        Let me--Ranking Member Obey, let me ask you a question. The
    issue of cost, that was raised in the letter that you
    coauthored with Representative Waxman, and have you seen any
    evidence to support the administration's contention that the
    cost of the new department, including its administration and
    the new entities that it creates, can be funded from savings
    achieved by, and I quote, ``eliminating redundancies in the
    current structure''?
        Mr. Obey. I have seen absolutely no evidence. In fact, to
    the contrary, people in this town who are the most skilled at
    making those evaluations have said just the opposite, including
    CBO.
        Look it, you have got 170,000 employees. Nobody can
    convince me they are all going to stay in the same buildings
    that they are located in now. Nobody can convince me you are
    not going to have new office buildings built as a result of
    this agency. Nobody can convince me that it isn't going to cost
    a lot of money to put in a whole new phone system, a whole new
    computer system, to move people; and I think it is pretty
    obvious that one of the reasons this added flexibility is being
    requested is simply so that the agencies can use program money
    to pay for those costs that are not being admitted up front.
        That is a classic OMB action; I don't care what
    administration you are talking about. And, to me, that means
    that you run the risk of having fewer port inspections, less
    border protection, less aggressive action in getting illegal
    entrance under control and out of the country.
        In the military, it is called ``tooth to tail,'' the ratio
    of tooth to tail. How much do you have to spend on the tail in
    order to provide a set of teeth up front? And there are
    obviously, in this kind of arrangement, going to be tremendous
    administrative costs. We will damage a lot of the substantive
    activities of these agencies if we don't admit up front what
    the administrative costs are going to be; and the best way to
    keep those costs down is to admit what they are up front and
    appropriate what is necessary and make judgments about whether
    there are unnecessary activities that should be curtailed or
    not.
        But no administrator in the history of this country has
    ever had the kind of authority that is being requested in this
    legislation to disregard existing law, spend money for purposes
    not provided by law. Never done it. No reason to do it now.
        Ms. DeLauro. Mr. Chairman, do you share that view, Mr.
    Obey's view of the--.
        Mr. Young. The question is, do I share that view?
        Ms. DeLauro. Yes.
        Mr. Young. Yes, I do. And if I might.
        Mr. Young. --say one thing that neither one of us has
    mentioned regarding flexibility--the Economy Act provides great
    flexibility. I would recommend that you have your staff review
    the Economy Act and advise all of you on just how much
    flexibility there is for executive branch agencies under the
    Economy Act to get reimbursements for activities that they
    believe need to be done in an emergency situation.
        We could go into a lot of detail about it today, but I
    think your staff could provide you with a review what the
    Economy Act provides for executive branch agencies.
        Ms. DeLauro. Thank you.
        Let me just ask, Mr. Chairman--Mr. Obey, in his comments,
    talked about his thoughts on the issue of CDC and NIH and
    moving out of the funding. I mean, there has been a tradition
    on the Labor-HHS subcommittee. We don't dictate to the NIH
    where they should spend the funds that are given to them. I
    think that that has been a very good practice, and both sides
    of the aisle have agreed that scientists know where these funds
    ought to be spent better than politicians.
        What is your sense--as I say, I have heard from Mr. Obey on
    this issue--about the proposal to allow the DHS Secretary to
    set priorities that affect NIH research?
        Mr. Obey. Me or--.
        Ms. DeLauro. I will ask Chairman Young first, and then I
    will ask Mr. Obey to comment.
        Mr. Young. I didn't hear part of your question.
        Ms. DeLauro. The point of the question is, how do you feel
    about the Secretary of the new department being able to set
    priorities that would affect the NIH research, given what we
    have prided ourselves on in the Appropriations Committee on
    Labor-HHS of not taking on the role of the scientists?
        Mr. Young. Well, let me say this. We have colleagues who
    believe that we should micromanage everything that every agency
    does, including the Department of Defense and NIH. We resist
    that. We resist that in our--and you are a member of our
    committee and you know that we do resist the attempts to
    micromanage. And so I believe that the Secretary of Homeland
    Security, if that is the title that that person is given,
    should be dealing with homeland security and should not be
    disrupting existing agencies that are going about the normal
    business of the Nation.
        But I would also suggest that the Secretary of Homeland
    Security should certainly be able to call on any of the
    agencies, whether they are within the jurisdiction of the new
    agency or not, for aid and assistance in providing security for
    the homeland.
        It is very much like the Central Command, for example, that
    is managing the war in Afghanistan. Central Command does not
    have a huge military organization under the command of Central
    Command, but they have the ability to reach out to other
    military organizations of all of the services for what they
    need as they go about their function.
        And so I would think that the ability to reach out and get
    the assistance certainly should be there for the Secretary of
    Homeland Security, but it should not be disruptive of the
    existing ongoing activities of those agencies.
        Mr. Obey. Why should we take the institution that has more
    credibility than virtually any other in government and screw it
    up?
        Ms. DeLauro. Thank you.
        Thank you, Mr. Chairman.
        Chairman Armey. Gentlemen, the Chair reserves the final 5
    minutes for himself. I am going to use my time to give you a
    few reassurances, and then I will save the remainder of my time
    for you, each of you, to make any final statement you would
    like to make before the committee.
        I would like to thank you for your excellent testimony. It
    is as I expected. But let me say, Mr. Young, I think you will
    see that this committee does understand, has a deep respect for
    our constitutional separation of powers. We are acutely aware
    of how important that is and how important, it be preserved.
        You will also see, I think, Mr. Obey, that this committee
    has not just saluted the first iteration that has come along.
    Indeed, the next two iterations of Homeland Security that you
    all see will be the chairman's mark, which will be completed
    sometime, I would guess, in the wee hours of tomorrow morning;
    and you will see, I think clearly, there that the chairman's
    mark reflects the respectful consideration of that which has
    been brought to us by all our committees of jurisdiction, as
    well as that which was initially introduced by the President.
        The next iteration you will see of the Homeland Security
    Act, following that, will be the report of this committee, and
    I dare say, judging by the people on this committee, you may
    see some difference between that and the chairman's mark as
    well, because there is a process that I think is deeply
    thoughtful and committed, and yet one where there will be
    divergent points of view that will be, I think, in the final
    analysis, worked out through the process of voting in this
    committee. So please take confidence in that as you watch the
    next few days.
        Finally, on the particular jurisdictional concern of your
    committee, the whole question of transfer authority
    flexibility, it is the Chair's understanding and hope that
    there are still ongoing discussions between your committee and
    the White House. If those are not going well, let the Chair
    offer whatever resources we have at the disposal of this
    committee to facilitate further discussion.
        It would be most advantageous, I think, to all concerned if
    indeed this very important committee of jurisdiction and the
    White House could come to some agreement that could be seen as
    satisfactory with respect to the need for flexibility on the
    part of the White House and the clear and certain commitment
    that your committee has to its constitutional mandates. And we
    would like to see that worked out and facilitate that, if at
    all possible.
        If not, then I am afraid both the White House and your
    committee will have to find a way hopefully to accept the
    communal judgment of this committee as we try to find out. It
    is far better that you work it out to your satisfaction first.
    We would like to help with that.
        With those observations, let me just then concede the
    remainder of my 5 minutes to the two gentlemen from the
    Appropriations Committee for your final observations before
    this committee. And I thank you again. Mr. Young.
        Mr. Young. Well, Mr. Chairman, first, thank you for again
    letting us be here to give you our thoughts on some of these
    important issues. And I want to emphasize what you just said,
    Mr. Chairman. It is important that the Congress and the
    President of the United States work together, and the Members
    of both political parties need to work together.
        On September 11th, the Pentagon had Republicans and
    Democrats who lost their lives. On September 11th, nearly 3,000
    people died in the World Trade Center. I would bet that there
    were both Republicans and Democrats in the World Trade Center,
    and I know some of them, because I lost some friends on that
    day.
        The people of America do not want to live in fear of
    terrorism, and they insist that we, the Congress, and the
    administration, work together to protect the people of this
    great country in our homes, in our places of business where we
    work, where we pray, and where we have recreation. I think that
    is essential, and I know that that is exactly what your
    committee is going to do; and our committee is going to do the
    same thing to work together with you and the President to do
    what is right for the people of America.
        Chairman Armey. Thank you. Mr. Obey.
        Mr. Obey. Well, Mr. Chairman, I also want to thank you and
    the committee for the opportunity to testify here today, and I
    would simply have one observation.
        We can all have legitimate arguments about structure, and
    some of those can be very important, and some of them can be
    minor; and we all have to make judgments about that. The one
    thing that is not minor and the one thing that in my view
    should not be compromisable is the willingness of this
    institution to maintain the power of the purse against the
    desires that are routinely expressed by every administration we
    have ever had in this country.
        There has never been a President, there has never been an
    OMB Director who hasn't wanted to use whatever incidents of the
    moment that they could find in order to get out from under the
    nuisance aspects of democracy. But Congress is maintaining the
    integrity of the power of the purse so that we can assure that
    taxpayers' dollars are never spent for any purpose other than
    that for which they were appropriated. That is a core value
    that we cannot compromise away.
        Mr. Young. Mr. Chairman, if I could just take 30 more
    seconds. I will tell you that in a lot of our conversations,
    when we are talking about responsibilities and authorities and
    the Constitution, we are not talking about the Appropriations
    Committee or only those of us who are appropriators. We are
    talking about the Congress of the United States.
        The Constitution doesn't say a darn thing about the
    Appropriations Committee, but it does say a lot about the
    Congress, and that is what we are trying to do--to represent
    the prerogatives and the responsibilities of the United States
    Congress.
        Chairman Armey. Thank you. I thank you again, gentlemen,
    and the witnesses are excused.
        The committee is now very excited and anxious to hear from
    the Armed Services Committee. I see that Ranking Member Skelton
    is here.
        Mr. Skelton--the Chair may introduce Ike Skelton. One of
    the wonderful pleasures we have in Congress is always
    introducing one another to people who already know one another,
    but we all do know Ike Skelton, that you are an acceptable
    spokesman for this committee to Republicans and Democrats
    alike. The collegial relationship and mutual dedication to the
    Nation's defense that you share with the chairman is clearly
    recognized throughout the House, and I believe--I daresay, on
    behalf of the Armed Services Committee and this committee that
    in the absence of Chairman Stump, that Ike Skelton, as ranking
    member, can speak for the entire committee; and we should
    receive your testimony without doubt or reservations.
        So, Mr. Skelton, it is my pleasure to welcome you before
    the committee. Our procedure is to give you, and we would hope
    for, a 5-minute opening statement. Also we would encourage you
    that your recorded statement will be entered in the record,
    your formal statement; proceed to the 5-minute rule, where we
    will anticipate the inclusion of both questions and answers
    within the individual committee member's 5 minutes.
        Mr. Skelton, please proceed.

       STATEMENT OF THE HONORABLE IKE SKELTON, RANKING MINORITY
                  MEMBER, COMMITTEE ON ARMED SERVICES

        Mr. Skelton. Mr. Chairman, Ms. Pelosi, I do thank you for
    this opportunity to make recommendations to the Select
    Committee from the Armed Services Committee on H.R. 5005.
        The members of the Armed Services Committee voted on a
    bipartisan basis to support the President's efforts to create a
    Department of Homeland Security, and I agree with my colleagues
    that establishing this Homeland Security Department is
    appropriate. Let me give this caveat, if I may. I only wish
    that the administration's proposal had been presented in a way
    that put forward a central homeland security strategy first.
        Mr. Chairman, the strategy which was presented only
    yesterday would have been more helpful to the standing
    committees--not just ours, but to the others--had we been given
    the opportunity to review it before making recommendations.
        I am glad that this committee, this Select Committee, will
    have the opportunity to review the strategy document that--
    homeland security document that has been set forth, and I urge
    you to review it in light of your very arduous duties. I don't
    envy the work that you have cut out for yourselves.
        The Armed Services Committee was asked to examine those
    areas of this bill within its jurisdiction, mainly the
    functions being transferred from the Department of Defense and
    the national security elements of the Department of Energy,
    actually, two very narrow areas.
        The administration's proposal requests only modest
    transfers, and by and large, we did support those requests. We
    did, however, amend the underlying legislation in places to
    ensure that the capabilities of this new department were
    enhanced while not doing harm to the critical national security
    activities of the Department of Defense, Department of Energy.
        For example, our committee authorized the Under Secretary
    of Homeland Security for Chemical, Biological, Radiological and
    Nuclear Countermeasures to stand up an intelligence
    capability--I think this is very important--within the new
    department, focusing on those particular types of threats.
        The committee strengthened the new department by
    recognizing the importance of a coordinated research and
    development program to achieving our homeland security goals.
    We designated these functions as a core mission for the
    Secretary. The committee also called for the establishment of a
    center to serve as the primary location for carrying out
    research and development, a national security laboratory.
        The committee debated whether or not to put this in the
    statute, the location of this center of this laboratory, and
    although the administration has repeatedly mentioned the
    Lawrence Livermore Laboratories as its preferred site, we left
    the specifics of that selection up to the new Secretary of
    homeland defense.
        This effort to provide a centralized location for research
    and development activities, I think is critical. There are
    superb scientific capabilities throughout our national
    laboratory system, and this new department must be able to
    access the very best of those capabilities to secure the
    American people. The committee recommends that a primary
    research and development location with secondary locations at
    other national laboratories is needed.
        The committee believes these changes strengthen the new
    department while preserving the national security capabilities
    of the Departments of Defense and Energy. All told, the
    transfers from the Defense Department only amount to about 90
    people. It is a good thing, given the disastrous policies the
    Defense Department is now considering--and hear me out on
    this--considering with regard to the size and strength of our
    military forces.
        The Baltimore Sun published an article on July the 10th,
    indicating that the Pentagon is planning in fiscal year 2004 to
    drastically reduce the number of men and women in uniform,
    including 20,000-25,000 Army soldiers, 40,000 airmen, 20,000
    sailors, and 5,000 Marines; in total, over 90,000 servicemen
    and women may be forced to leave the services according to the
    Baltimore Sun. Such a reduction, in my opinion, is totally
    unacceptable, particularly while our Nation is at war.
        Now, I bring this to the Select Committee's attention,
    because these cuts, if undertaken, will do enormous damage to
    American national security. The administration's homeland
    security strategy contemplates the expanded use of military
    forces for homeland security missions.
        This proposal raises serious questions about the existing
    law, including the 1878 Posse Comitatus Act, which would have
    to be carefully considered. But in general terms, the strategy
    underlines the importance of a strong U.S. military to homeland
    security, because what the military does at home or through the
    National Guard, through the civil support teams or abroad, is
    very, very important. If we are successful in Afghanistan and
    other places, then the homeland security is all the better off.
        Beyond the United States, the President has publicly stated
    numerous times that the war on terrorism will continue for some
    time. And yet, while we have people searching for terrorists in
    Afghanistan, helping fight terrorism in the Philippines,
    training military forces in the Republic of Georgia, equipping
    and training government forces in Colombia, aiding the peace
    process throughout the Balkans, the Defense Secretary has
    contemplated reducing our troop strength. My position on this
    Armed Services Committee, in the work that I have done, causes
    me to seriously question that.
        Right now, we have over 85,000 Guard and Reservists doing
    active duty work. You wear these young people out, and yet
    there is--and this will have a direct effect on the legislation
    that you will pass out of your committee.
        Well, I could tell you, and my statement reflects the fact,
    that in recent days the Army Chief of Staff, the Navy Chief of
    Naval Operations, air force chief of staff, and the Commandant
    of the Marine Corps all have recommended additional soldiers,
    Marines, sailors, airmen; and my statement will reflect that.
    That was the reality before September the 11th, and the place
    of operation for our troops has only increased and been
    expanded since then.
        So I hope that that background will give you an idea of how
    a good many of us on the Armed Forces Committee feel with our
    relation to what you do, because all of this has to work
    together. You cannot isolate what you do from what many do in
    uniform, whether it be Guard, Reserve, active duty, aboard
    ship, or whenever it is. The security of the United States and
    the security of the young folks, senior citizens, and those
    that are our neighbors depends upon everybody working together.
        Your work product must dovetail with those in uniform,
    whether they be active duty, Guard, Reserve or the like. Thank
    you for this opportunity.
        [The statement of Mr. Skelton follows:]

       PREPARED STATEMENT OF HON. IKE SKELTON, RANKING MINORITY MEMBER,
                          COMMITTEE ON ARMED SERVICES

        Thank you, Mr. Chairman and Ms. Pelosi. I appreciate the
    opportunity to explain the recommendations made by the Armed
    Services Committee in its amendments to H.R. 5005.
        The members of the Armed Services Committee voted on a
    bipartisan basis to support the president's efforts to create a
    Department of Homeland Security. I agree with my colleagues
    that establishing a homeland security department may be
    appropriate. I only wish the president's proposal had been
    presented in a way that put forward a central homeland security
    strategy first. The strategy, presented yesterday, would have
    been more helpful if the standing committees had been given the
    opportunity to review it before making their recommendations. I
    am glad that the Select Committee will have that chance.
        The Armed Services Committee was asked to examine those
    areas of H.R. 5005 within its jurisdiction-namely the functions
    being transferred from the Department of Defense and from the
    national security elements of the Department of Energy. The
    administration's proposal requested only modest transfers in
    these areas and the committee, by and large, supported those
    requests.
        The committee did, however, amend the underlying
    legislation in places to ensure that the capabilities of new
    Department were enhanced while not doing harm to the critical
    national security activities of the Departments of Defense and
    Energy. For example, the committee authorized the Under-
    Secretary of Homeland Security for Chemical, Biological,
    Radiological, and Nuclear Countermeasures to stand up an
    intelligence capability within the new department focusing on
    these particular types of threats.
        The committee strengthened the new department by
    recognizing the importance of a coordinated research and
    development program to achieving our homeland security goals.
    We designated these functions as a core mission for the
    Secretary. The committee also called for the establishment of a
    center to serve as the primary location for carrying out
    research and development at a national security laboratory of
    the National Nuclear Security Administration. The committee
    debated whether or not to put in statute the location of this
    laboratory, as the administration has repeatedly mentioned
    Lawrence Livermore as its preferred site, but we have left the
    specifics of this selection to the new Secretary.
        The committee believes these changes strengthen the new
    department while preserving the national security capabilities
    of the Departments of Defense and Energy. All told, the
    transfers from the Defense Department only involve about 90
    people. This is a good thing, given the disastrous policies the
    Defense Department is now considering with regard to the size
    and strength of our military forces.The Baltimore Sun published
    an article on July 10 indicating that the Pentagon is planning
    in fiscal year 2004 to drastically reduce the number of men and
    women in uniform-including 20,000 to 25,000 Army soldiers,
    40,000 airmen, 20,000 sailors, and 5,000 Marines. In total over
    90,000 servicemen and women may be forced to leave the
    services. Such a reduction is totally unacceptable,
    particularly while our nation is at war.
        I bring this to the Select Committee's attention because
    these cuts-if undertaken-would do enormous damage to U.S.
    national security. The administration's homeland security
    strategy contemplates the expanded use of military forces for
    homeland security missions. This proposal raises serious
    questions about existing law-including the 1878 Posse Comitatus
    Act-that would have to be carefully considered. But in general
    terms, the strategy underlines the importance of a strong U.S.
    military to homeland security.
        Beyond the United States, President Bush has publicly
    stated numerous times that the war on terrorism will continue
    for some time. Yet, while we still have forces searching for
    terrorists in Afghanistan, helping fight terrorism in the
    Philippines, training military forces in the Republic of
    Georgia, equipping and training government forces in Colombia,
    and aiding the peace process throughout the Balkans, Defense
    Secretary Rumsfeld is contemplating reducing our troop
    strength.
        Such a consideration is more amazing if you consider what
    the chiefs of the military services have been saying for some
    time. In testimony before September 11, Army Chief of Staff,
    General Shinseki, told the Armed Services Committee that the
    Army needed 40,000 additional troops to meet its mission
    requirements. Admiral Clark, Chief of Naval Operations, told us
    he needed 14,000 more sailors. The Chief of the Air Force,
    General Ryan, and the Commandant of the Marine Corps, General
    Jones, testified that their services needed 10,000 more airmen
    and 4,000-5,000 more Marines respectively.
        This was the reality before September 11 and the pace of
    operations for our troops has only increased and expanded since
    then. The Congress must ask Secretary Rumsfeld to reverse this
    trend by increasing, and not dramatically reducing, the number
    of men and women in uniform. This is essential to our ability
    to defend the American people at home and to fight nation's
    wars abroad.
        Thank you for the opportunity to testify, Mr. Chairman. I
    hope the Select Committee is able to support the
    recommendations of the Armed Services Committee.

        Chairman Armey. Thank you. The Chair recognizes the
    gentlelady from Ohio.
        Ms. Pryce. Thank you, Mr. Chairman. I don't really have any
    questions at this point.
        It is a pleasure to have you here, Mr. Skelton. Thank you
    for your committee's hard work on this. It is one of the most
    important things that this Congress will have before it and,
    probably, many of us have looked at in our entire careers. So
    thank you for your assistance with our deliberations.
        Thank you, Mr. Chairman.
        Chairman Armey. The gentlelady--or gentleman from Texas,
    Mr. Frost.
        Mr. Frost. Well, thank you very much, Ike, and I want to
    underscore one thing that you said.
        On the document--in the document the President issued
    yesterday, Homeland Security, National Strategy, on page 48 in
    that document is one paragraph: ``Federal law prohibits
    military personnel from enforcing the law within the United
    States except as expressly authorized by the Constitution or an
    act of Congress. The threat of catastrophic terrorism requires
    a thorough review of the laws permitting the military to act
    within the United States in order to determine whether domestic
    preparedness and response efforts would benefit from greater
    involvement of military personnel, and if so, how.'' .
        This is the posse comitatus that you referred to. When you
    put that statement side by side with the statistics that you
    have included in your statement, quoting from the Baltimore
    Sun, saying that the administration is contemplating reducing
    our active duty force by over 90,000 people in 2004, it is
    ludicrous.
        It is ludicrous to think that we could reduce our standing
    force by 90,000, which is already fairly small and which has
    extraordinary demands being put upon it right now, as you
    indicated in your statement, and at the same time take some of
    that reduced force and have them patrol our borders. I don't
    understand this. I think you are absolutely correct to caution
    us on that point.
        I don't know where we go from here. This committee is not
    being asked at this point--if I understand correctly, there is
    nothing before us on the question of posse comitatus. Perhaps
    we would make a comment on that in any report that we would
    issue, but you are correct to sound the alarm about our
    situation and reducing our active duty forces, particularly if
    the administration is serious about the reports that it may--
    and I underscore may--invade Iraq anytime soon.
        Mr. Skelton. Our committee, in the base bill that we passed
    out and passed on the floor, actually increased the end
    strength of each of the services, reflecting testimony that--.
        Mr. Frost. The defense authorization bill?
        Mr. Skelton. Yes.
        Mr. Frost. Not what you sent to this committee, but the--.
        Mr. Skelton. No. Excuse me, our base bill, the
    authorization bill.
        Based upon testimony ranging back over 2 years, including
    testimony that year, where Admiral Blair, CINCPAC in the
    Pacific, Joe Ralston, the commander in chief in Europe, both
    said they didn't have enough personnel to meet their
    commitment, and General Buck down at the Forces Command said
    that the troops are stretched and strained today--and you see
    the active duty challenges that we have are being met by some
    85,000 Guard and Reservists. And the fewer Guard and Reserves
    that are available for the governors or for the civil support
    teams or for national disasters that come along, that are
    outside of any of what we are talking about today, would be a
    detriment to many Americans.
        So we have to consider this, and I raise it with this
    committee, because you should understand all of this works
    together. There is no singular part or parcel, separate from
    the other when you talk about homeland security or the security
    of our Nation.
        Mr. Frost. You are exactly correct, and I--I, as one
    Member, appreciate your bringing this to our attention.
        Chairman Armey. The gentleman from Ohio.
        Mr. Portman. Thank you, Mr. Chairman.
        Mr. Skelton, thank you for being here this morning to give
    us your learned perspective.
        Just a general point: This administration has made it a
    priority, as you know, to increase not just the number of
    people in our military, but also their pay and benefits,
    improve their equipment, improve their training; and I know
    they have worked closely with you and with Chairman Stump in
    that regard.
        As a result, we have a stronger military, and we are a
    flexible military.
        Mr. Skelton. We do.
        Mr. Portman. And I think it was interesting that they
    chose, in putting together this proposal to the Congress, not
    to include the military in the homeland security area. As you
    mentioned, 90 people would be transferred, and it is an office
    that Secretary Rumsfeld supports being moved, because it
    relates directly to homeland security.
        But you are absolutely right, there is a seamless
    relationship between homeland security and our national
    defense, and you see that clearly with the Coast Guard, but
    also with all of the other entities involved in protecting our
    borders and making sure that we have the right information so
    that we can react to this new threat.
        You said in your testimony that you were concerned about
    the strategy. You now have seen the strategy. Are you satisfied
    with the strategy as laid out yesterday by the President?
        Mr. Skelton. I must tell you, from a perusal of it, it is
    positive. To be right honest, receiving it only yesterday, I
    have not had the opportunity to fine-tooth-comb it, but
    basically it is in the right direction.
        I wish I had a better answer for you, but time has not
    allowed me to study it as each of us should.
        Mr. Portman. In our deliberations, we have talked a lot
    about flexibility, and in order to keep costs down and in order
    to be able to better respond to an agile enemy, we all want to
    be sure that there is flexibility and that this is a lean
    department.
        You actually gave the President more flexibility in your
    pro-
    posal. Instead of naming Lawrence Livermore Labs as the lead
    agency--.
        Mr. Skelton. No--.
        Mr. Portman. --the President--.
        Mr. Skelton. There is nothing wrong with that. I think we
    did right.
        Mr. Portman. Could you give us a little more background as
    to why you believe that it is not appropriate for the Congress
    and this committee to propose a specific lead, but rather, to
    put that decision at the President's level?
        Mr. Skelton. Well, we think it is important to have a
    central research and development operation, no question about
    that; and it ought to be at one of the laboratories. And I
    don't think you will find a major disagreement on that.
        The administration has recommended Lawrence Livermore as
    the site. However, there will be a serious discussion between
    those areas, the three particular laboratories, as to which one
    is best.
        Why tie the Secretary's hands? Although one is recommended,
    why should we put it into law? So what is wrong with
    flexibility? The end result would be the same, if not better.
        Mr. Portman. And the key is to get the best R&D and to have
    that flexibility?
        Mr. Skelton. The important thing is that you have a central
    system, a central place for research and development, because
    that will be a challenge for the various threats that are out
    there, some we haven't even dreamed of.
        Mr. Portman. Thank you very much, Mr. Skelton.
        Mr. Skelton. Thank you.
        Chairman Armey. The gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman.
        Mr. Skelton, thank you for your service to our country. It
    is really one of the exceptional people in the House and
    particularly in the context of our Armed Services and defense
    issues. Really, I think you are a giant in that regard.
        I really don't have a question, except to join with you and
    Mr. Frost in the strategy document that the administration put
    out yesterday. I am concerned about that section.
        I believe that the essence of what we want to ultimately
    achieve in homeland security starts with prevention, which
    means good intelligence, raw materials analyzed in real time,
    shared across the spectrum, so that we can then act when we
    need to in a preventive capacity. And thereby the military of
    the United States is an essential, if not the key, ingredient--
    after that, intelligence gathering--to perform that preventive
    function.
        I do not see them providing a role here domestically in, in
    essence, law enforcement functions; and I think that is a
    dangerous proposition for this country. If we were being--if we
    had ships coming up or armies crossing borders, of course that
    would be different, but in essence to suggest that the Defense
    Department would act in what are essentially law enforcement
    obligations, I think is a dangerous proposition.
        I think we need to reserve our capabilities and the risks
    of the challenges that we will face for the preventive aspects
    that we want abroad, and so I want to commend you for raising
    that issue. I know it is not part, physically, of the
    administration's proposal, but since the strategy is ultimately
    going to guide the future actions of the administration, it is
    important to raise our sabers now and start saying kind of what
    we think about this.
        So thank you for doing that, and I appreciate your service
    and your information.
        Mr. Skelton. Thank you for your comments. We should remind
    ourselves that there are, at the present time, some 27 national
    forward civil support teams which would help in the event of a
    disaster. There will be a proposal to establish a total of 51,
    is my understanding.
        Let me mention a concern with you. You mentioned
    intelligence. There are two aspects to intelligence. Number one
    is gathering it, which is sometimes very difficult and you rely
    on everything all the way from electronics on the one hand to
    HUMINT on the other. And the second is that of analyzing it;
    and I am concerned about there being too many layers of
    analysis, and while that happens, something bad comes to pass.
    So put that in the back of your mind so there will not be
    layers of bureaucratic intelligence analysis that would cause
    us to miss the boat in something untoward happening. That
    concerns me.
        I am not just sure how you would write it, or prevent that,
    but just put that in the back of your mind. I think that is a
    potential problem for all of this.
        Mr. Menendez. Well, I appreciate your comment. I am sure
    our distinguished ranking member on this committee and on the
    Intelligence Committee, Ms. Pelosi, is right on top of those
    issues and has been leading in that regard.
        I just want to comment on your part of the National Guard
    in the context of helping us respond. That is much different
    than the law enforcement aspect, and certainly that is one that
    we would embrace.
        Thank you for your comments. I yield back the balance of my
    time.
        Chairman Armey. Gentlelady from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman. I want to
    thank Ranking Member Skelton for being here and for being a
    continued advocate for our armed services. And I thank you for
    your years of service in this committee and the knowledge that
    you will bring to this.
        I think that there are questions that have to do with the
    relationship between the Department of Defense and the--how the
    Pentagon, which is charged with fighting terrorism abroad, will
    work with the new department that is fighting terrorism here at
    home; and I think one of the crucial areas to take a look at
    is, how do the two departments handle the competing demands of
    Coast Guard and National Guard? And I would love to have your
    views on this and your sense if there is any--what the process
    might be for coordination, and whether or not--get your opinion
    on whether or not the two Guard services will have the
    necessary capabilities to meet both departments' demands.
        Mr. Skelton. I don't think there is a problem regarding the
    National Guard. As you know, their commanders in chief on a
    day-to-day basis are the governors, and they perform many
    domestic duties--disaster, et cetera--on a Federal level,
    unless they are federalized to serve, as we have some 85,000
    Guard and Reservists serving on active duty today. The civil
    support teams, 27 of which exist to date, are the best
    examples, but I don't think that is a problem.
        The question, to which I don't have an answer, is the one
    dealing with the Coast Guard, because you have a bifurcated set
    of duties. One is search and rescue, which they do a phenomenal
    job. The other is drug interdiction, and they are first class
    now.
        On the other hand, you have antiterrorism-type of
    activities. I don't know how you are going to bifurcate that.
    That will be one of the biggest challenges your committee has.
    I don't have a solution for that, unless there is some sharing
    agreement between the Department of Transportation, which owns
    the Coast Guard, and the department head of Homeland Security;
    of maybe bifurcating the duties or certain sections of the
    Coast Guard. There is no easy answer to this.
        Now, I know this may be one of your biggest challenges, and
    I wish I had a good answer for you. There is none.
        Ms. DeLauro. I thank the ranking member.
        Thank you, Mr. Chairman.
        Chairman Armey. Gentlelady from California.
        Ms. Pelosi. Thank you very much, Mr. Chairman. I want to
    join you and our colleagues in commending the distinguished
    ranking member of the Armed Services Committee for his
    wonderful leadership and his very thoughtful statement today,
    which is very valuable to the committee.
        I appreciate the caution you recommend in your statement in
    terms of posse comitatus and the Posse Comitatus Act. Also your
    concerns that you raised, not directly related to our work
    here, but certainly related to the mission that we have, which
    is to protect the American people, to reduce risk to them. And,
    of course, force protection is a very important part of what we
    do on the intelligence side of it. So your insightful comments
    are very helpful.
        I also want to say that while it is not the work of our
    committee today, I look forward to--not now because the time
    does not permit, and it is a much longer discussion--to hearing
    some of your thoughts on transformation of the military, which
    will be very important to protecting the American people. I
    know that you will always be a leader in that regard.
        So I thank you for all that you have done for young men and
    women in the armed services. We are very, very, very proud of
    them, and thank you again for your leadership in helping them
    do their job, to do our constitutional duty to protect and
    defend the American people.
        Thank you very much, Mr. Chairman.
        Mr. Skelton. I appreciate your kind words.
        This intangible thing we call ``transformation of the armed
    services'' is real. It is looking ahead to potential threats
    and challenges so that we will have the Armed Forces prepared
    to face them in the years ahead. Each of the services is
    working on them, and I hope that it is about ongoing challenge,
    that the next several years will find us not only modernizing
    but transforming into the secure force that we need.
        It is a major challenge on our committee, but we appreciate
    your support and your help.
        Ms. Pelosi. Thank you very much, distinguished gentleman.
        Thank you, Mr. Chairman.
        Chairman Armey. Mr. Skelton, does your committee have any
    direct testimony from the Pentagon about the force reduction
    plans reported in the Baltimore Sun?
        Mr. Skelton. No.
        Chairman Armey. It is conceivable then that the Baltimore
    Sun can simply be wrong?
        Mr. Skelton. I don't believe it is.
        Chairman Armey. You do not believe it is. Would you not
    find it unacceptable, patently unacceptable, for the Baltimore
    Sun to have information regarding force strength that your
    committee does not have?
        Mr. Skelton. I don't think it is a good idea, but I do
    believe the reporter is a highly respected reporter, and I
    believe what it said.
        Chairman Armey. How would the Baltimore Sun have
    information about the force strength of the United States armed
    services that the House Armed Services Committee would not
    have? By what basis could a reporter have that information and
    your committee not have it?
        Mr. Skelton. I can only tell you to ask the reporter that.
        Chairman Armey. You know, I thank the gentleman for that
    suggestion. I believe I will ask the Pentagon that.
        Mr. Skelton. Good. I think you will receive an interesting
    answer.
        Chairman Armey. Thank you. Thank you for your testimony.
    And the witness is excused with great appreciation.
        The Chair now looks forward to hearing from the
    distinguished chairman and ranking member of the Energy and
    Commerce Committee. I believe it is--would be accurate for the
    Chair of the Select Committee to observe that both the chairman
    and the distinguished ranking member of the Energy and Commerce
    Committee understand, with a great deal of adeptness, the
    administration of the committee's business under the 5-minute
    rule.
        I think that you are both experienced before this chairman,
    so let me just remind you that it is indeed the practice of
    this committee to take testimony under the 5-minute rule. We
    would ask you to please submit your formal statement for the
    record, and if you could make your independent statements
    within the 5-minute rule, we will try to see to it that the
    committee addresses its questions within the context of that
    rule as well.
        And we do welcome you so much for your testimony here. We
    will begin with Chairman Tauzin.

       STATEMENT OF THE HONORABLE W.J. (BILLY) TAUZIN, CHAIRMAN,
                    COMMITTEE ON ENERGY AND COMMERCE

        Mr. Tauzin. Thank you, Mr. Chairman. First, let me indicate
    that we have had two days of full committee hearings, in which
    we heard from 40 different witnesses from Federal, State,
    local, academia, professors, all sorts of research communities,
    et cetera.
        We should also point out that after those 2 days of
    hearings, the work we presented to you was approved unanimously
    by our committee. It was constructed in a bipartisan fashion,
    just as was the bioterrorism preparedness bill, the sweeping
    $4.6 billion bill that our committee shepherded through
    Congress most recently, and was done in a true bipartisan
    fashion.
        I want to thank Ranking Member Dingell for that great
    effort that allows us to bring to you a bipartisan set of
    recommendations in regard to our committee's jurisdictional
    areas in this critical area of homeland security.
        There are four specific areas we want to address. First,
    with respect to biomedical research and emergency preparedness
    of the Department of Health and Human Services, in our
    committee we literally recognize the role of the department and
    actually enhance its capacity beyond that which the President
    originally proposed. But we want to make it clear that HHS
    would still maintain primary responsibility over human health-
    related research. Most of which is currently being conducted by
    the CDC and by the NIH. We understand the administration
    supports this clarification and does not wish to duplicate the
    research capabilities of NIH and CDC.
        We also understand from Governor Ridge's testimony that it
    was not the administration's intent to give a new Secretary the
    unilateral authority to direct these HHS programs or their
    priorities, but rather simply to ensure collaboration between
    the two agencies; and I think we concur in the need for that.
        However, we do not believe the new department should have
    primary authority, including budgetary authority, over
    bioterrorism programs that remain at HHS. Substantively, we
    don't believe the new Secretary should have primary control
    over the $1.9 billion in NIH grants relating to pathogens and
    countermeasures, or the $1.5 billion in public health emergency
    grants to State and local public health departments.
        We simply want to point out that this money spent by these
    agencies is spent not just to prepare the country for the
    possibility of bioterrorism, but it is for building up the
    infrastructure, such as surveillance, communications systems,
    our improved responses for all sorts of human health
    emergencies, whether they are naturally occurring or
    intentionally caused by some threat. We want to hopefully make
    sure that those programs don't get crippled by a new complex
    bureaucratic model.
        The administration recognized as much by leaving these
    programs at HHS, but the model that is put up, one that would
    put the programs in HHS. But subject it to the authority of
    Homeland Security, raises some real problems. For example,
    language that suggests the new Secretary could direct or manage
    public health emergency activities raises some very difficult
    questions.
        For example, who would declare the public health emergency?
    Who would issue quarantines? That is normally done through the
    authority of these agencies.
        Administratively, we believe it would be unnecessarily
    cumbersome and bureaucratic for the funds to first go to the
    Homeland Security Department and then be appropriated through
    these agencies for these ordinary, ongoing public health
    purposes.
        Last, with respect to HHS, the committee recommends
    retaining at HHS the Assistant Secretary of Public Health
    Emergency Preparedness. This is the office we created in the
    bioterrorism bill. Now, we support the transfer of several of
    its responsibilities, the operation of the Office of Emergency
    Preparedness, The National Disaster Medical System, and the
    Metropolitan Medical Response System, but we want to note
    something for you.
        If FEMA goes to the new department, then it makes sense to
    move these three functions over. But if you make a decision not
    to move FEMA, then we would question the appropriateness of
    even moving these three functions because they are more closely
    associated with the work of FEMA.
        Second, with respect to critical, physical, and cyber
    infrastructures, such as those that run telecommunications and
    electric power systems, we think the President's efforts on
    consolidation and increased coordination are right on the mark;
    but we have some concerns. The original language could have
    been construed to give the new Secretary regulatory authority
    over the security of critical infrastructures that are
    currently regulated by the Federal Government, or that are now
    regulated by other Federal agencies.
        We make it clear in our print to you that the creation of
    this new department does not include new regulatory powers for
    the Secretary to directly compel security improvements through
    regulations or mandates. Rather, you would work with the State,
    Federal and other agencies who have jurisdiction to enhance
    security and to work directly with the private sector in the
    collaborative fashion designed in the President's report.
        We also recommend the emphasis on cyber security within the
    new department be greatly enhanced. What we have done over the
    last 4 years, Mr. Chairman, is an extensive review of the
    vulnerability of America's agency cyber security weaknesses. I
    have to tell you, every system we looked at we used the GAO red
    teams to come in and challenge those systems and every single
    one demonstrated pervasive weaknesses.
        So we recommend to you the creation of the Federal computer
    security red teams in the new department to, in fact, test
    these systems out and provide information and recommendations
    to strengthen them. We think this needs to be a high priority
    of the new department.
        Third, in the area of research and development, we believe
    that the committee concurs in the need expressed by many of
    those in Congress to have this new department play a critical
    role in coordinating, accelerating and improving the focus on
    research and development in the new technologies that are going
    to be used to fight terrorism. For example, the things that are
    going to be included in our reports to detect the possibility
    of radiological material coming in.
        To address these needs, we recommend the new department
    serve as a focal point for technological research and
    development activities, and that it establish a Federal
    technology clearinghouse. Not to design the technology, but
    simply to go through the recommended technology improvements
    and recommend which ones work and which ones don't work for all
    the agents of government who may in fact use this technology to
    better protect our ports in our country.
        We think the current bill makes it unclear as to whether
    the new department could directly contract with the national
    laboratories. We make it clear they can't. They can directly
    task the national laboratories to do work for them in this
    regard.
        Fourth, with respect to the control of dangerous pathogens
    and select agents, in the bioterrorism bill, we set up the
    within CDC a department that has the capacity to track not only
    who has these agents, but when they transferred it, for what
    reason they transferred, and the license of the section and
    transfer of these agents. It is a critical component of that
    bioterrorism bill.
        We also set up something similar within the Department of
    Agriculture for pathogens and agents that might affect animal
    health; that has some relation to the section in CDC.
        If the CDC section is going to be transferred to this new
    agency, we would obviously be concerned that the section in
    Agriculture would similarly go with it. If the second doesn't,
    then we question whether the first should go. Otherwise, it is
    going to create some real problems in coordinating between
    pathogens that affect animals and may similarly affect human
    health in terms of bioterrorism threats.
        In closing, I want to again thank you for allowing us to
    come and make these recommendations and to thank my colleague,
    John Dingell, who has been an extraordinary partner in our
    committee's work in making these recommendations to you.
        Thank you, Mr. Chairman.
        [The statement of Mr. Tauzin follows:]

    PREPARED STATEMENT OF HON. W.J. (BILLY) TAUZIN, CHAIRMAN, COMMITTEE ON
                              ENERGY AND COMMERCE

        Thank you, Mr. Chairman. I am pleased to join you and the
    ranking Member, Congresswoman Pelosi, to provide testimony
    regarding President Bush's historic proposal to create a new
    Department of Homeland Security. I believe the President's
    proposal reflects a sound framework for Congressional
    consideration, and I fully support creating a Cabinet-level
    department with an empowered Secretary to get this critical job
    done.
        I am here today to testify on behalf of the Members of the
    Committee on Energy and Commerce who convened last week and
    voted, without opposition, to support a Committee Print that
    preserves the President's key priorities in the areas within
    our Committee's jurisdiction. We did so while clarifying the
    new Department's powers and authorities, enhancing the
    functions and focus of the new Department, and improving the
    workability of the interface between the new Department and the
    Departments of Health and Human Services and Energy.
        Over the past three weeks, the Committee has given serious
    deliberation to the President's proposal. We held two days of
    hearings at which over forty witnesses from Federal, State, and
    local governments, the private sector, academia, and the
    scientific and research communities shared their views on the
    President's proposal. In addition, over the last year, the
    Members of the Committee helped to shepherd through Congress a
    sweeping $4.6 billion bioterrorism preparedness bill that the
    President recently signed into law. In both of these efforts,
    we were able to work in a bipartisan fashion to address
    homeland security, and I want to thank and praise the
    Committee's Ranking Member, John Dingell, for working with us
    to get this done.
        The Committee's recommendations to the Select Committee
    fall into four specific areas, which I will address in turn.
    First, with respect to the biomedical research and emergency
    preparedness activities of the Department of Health and Human
    Services, the President's proposal rightly recognizes what our
    Committee's oversight has revealed--that the Federal
    government's bioterrorism-related programs have been cumbersome
    to navigate and have been poorly coordinated in the past,
    leaving critical gaps unattended while being duplicative in
    other aspects. We agree with the President that the new
    Department should play an important role in changing that. In
    particular, given that the new Department will have important
    intelligence, threat, and vulnerability-related information
    necessary for the identification of program priorities, the new
    Department should develop our national strategic plan for
    bioterrorism activities and identify our most urgent national
    priorities, including priorities for programs at HHS. Our
    Committee Print not only recognizes this role of the new
    Department, but enhances it beyond what the President initially
    proposed.
        The Committee Print also makes clear that HHS will maintain
    primary responsibility over human-health related research, most
    of which is currently being conducted by CDC and the National
    Institutes of Health (NIH), and that this new Department will
    not engage in such R&D efforts. We understand that the
    Administration supports this clarification, and does not wish
    to duplicate the research capabilities of NIH and CDC at the
    new Department. We also understand, based on Governor Ridge's
    testimony before our Committee, that it was not the
    Administration's intent to give the new Secretary the
    unilateral authority to direct these HHS programs or their
    priorities, but rather simply to ensure collaboration between
    the two agencies. We concur with the need for such
    collaboration and our Committee Print adds an explicit
    requirement that the Secretary of HHS must collaborate with the
    Secretary of Homeland Security on setting the HHS research
    priorities related to countermeasures for terrorist attacks.
        However, we do not believe that the new Department should
    have primary authority--including budgetary authority--over
    bioterrorism programs that remain at HHS. Substantively, we do
    not believe that the new Secretary should have primary control
    over the $1.9 billion in NIH research grants relating to
    pathogens and countermeasures, or the $1.5 billion in public
    health emergency grants to state and local public health
    departments included in our recently enacted bioterrorism
    legislation. As GAO experts emphasized in testimony before the
    Committee, much of the terrorism-related research currently
    being performed through NIH and CDC is dual-purpose in nature--
    serving the priorities and needs of both counter terrorism and
    traditional public health. Similarly, the grants to state and
    local public health departments and hospitals are not just to
    prepare for the possibility of bioterrorism, but for building
    up basic infrastructures such as surveillance and communication
    systems to improve response to all sorts of public health
    emergencies, whether intentionally caused or naturally
    occurring. Unlike more conventional acts of terrorism or those
    involving radiological or chemical elements, a bioterrorist
    attack will look, at the beginning, just like a naturally
    occurring disease outbreak. The people, resources, and skills
    necessary to respond to bioterrorism will not likely be
    different than those necessary to respond to naturally
    occurring outbreaks of diseases. We cannot and should not
    separate either of these dual-purpose activities, or have them
    be under the under the control of two different departments.
        The Administration recognized as much by leaving these
    programs within HHS. But its model--one in which the programs
    remain in HHS but are subject to the authority of the Homeland
    Security Department--potentially creates more problems than it
    would solve. The Committee does not believe it is feasible to
    separate authority from responsibility, or to separate the
    officials charged with administering those responsibilities
    from the personnel required to do so. Moreover, any language
    suggesting that the new Secretary could direct or manage the
    public health emergency activities of HHS raises many difficult
    questions, such as who can declare public health emergencies or
    issue quarantines under the Public Health Service Act. The
    Committee believes that these activities are properly
    authorized and administered under the Public Health Service
    Act. Neither a wholesale transfer of these responsibilities,
    nor some unusual splitting of responsibilities, is warranted.
        Administratively, we believe it would be unnecessarily
    cumbersome and bureaucratic for the funds for such activities
    to be appropriated in the first instance to the new Department,
    only to be ``contracted'' back to HHS for further distribution
    to NIH, CDC, and the hundreds of grant recipients conducting
    such research and preparedness activities. The Committee
    supports the need to improve the coordination of funding on
    such activities across the Federal government, but we believe
    that such coordination can occur without the control of HHS
    funds. Under the Administration proposal, the new Secretary
    would not receive control over the substantial research funds
    of other agencies that conduct research activities similar to
    those of HHS, including the Departments of Defense, Veterans'
    Affairs, and Agriculture, the Central Intelligence Agency, and
    others. Given that fact, the Committee does not believe that
    budgetary control is necessary with respect to HHS research
    dollars to ensure such coordination.
        The type of budgetary maneuvering described in the
    Administration's proposal could also result in delays,
    hampering our efforts to get the money out the door and into
    productive use as quickly as possible. These grant programs are
    already in place at HHS and appear to working quite well. We do
    not believe it makes sense to potentially disrupt these
    programs now by routing them through the new Department, only
    to have the new Department contract back with HHS to manage
    them.
        Last with respect to HHS, the Committee Print recommends
    retaining at HHS the Assistant Secretary for Public Health
    Emergency Preparedness created by the recent bioterrorism
    response act, in order to coordinate remaining HHS emergency
    preparedness functions and to serve as a liaison to the
    Homeland Security Department. But we support the transfer of
    several of his responsibilities, including the operation of the
    Office of Emergency Preparedness, the National Disaster Medical
    System, and the Metropolitan Medical Response System. These are
    operations that currently work closely with the Federal
    Emergency Management Agency (FEMA). We note that if the Select
    Committee chooses not to transfer FEMA or its response
    functions to the new Department, it would no longer make any
    sense to transfer these emergency response activities of HHS to
    Homeland Security either. If FEMA is not transferred, I believe
    that most of Title V of the Administration's proposal would no
    longer be appropriate, including the transfer of the National
    Strategic Stockpile of vaccines and drugs run by HHS.
        Second, with respect to the protection of our Nation's
    critical physical and cyber infrastructures--such as those that
    run our telecommunications and electric power systems--the
    President's efforts at consolidation and increased coordination
    are right on the mark. The key to success in this area is to
    recognize that many of the most important critical
    infrastructures are privately owned and operated, and may not
    be subject to Federal security mandates or requirements. Thus,
    the only way to succeed in ensuring their protection is through
    a strong and effective public-private partnership for national
    security.
        The original language of H.R. 5005 could have been
    construed to give this new Secretary regulatory authority over
    the security of critical infrastructures that are not currently
    regulated by the Federal government, or that are regulated now
    by other Federal agencies. Based on testimony before our
    Committee by Governor Ridge, it is clear that such an
    interpretation was not intended by the Administration. Thus,
    the Committee Print makes an important clarification to ensure
    that the new Secretary's authority to assess vulnerabilities
    and support protective measures with respect to private sector
    critical infrastructures does not include new regulatory powers
    for the Secretary to directly compel security improvements
    through regulations or mandates. Rather, the Secretary will
    work with the other Federal, State or local agencies that have
    jurisdiction over such sectors to enhance security, and would
    work directly with the private sector in a collaborative
    fashion.
        The Committee Print also recommends that the emphasis on
    cyber security within the new Department be greatly enhanced.
    Over the past four years, our Committee has conducted extensive
    oversight of the cyber security practices of many of the
    agencies within our jurisdiction, including the Departments of
    Health and Human Services, Commerce, and Energy, as well as the
    Environmental Protection Agency. With the help of expert
    computer teams, sometimes known as ``red teams,'' from the
    General Accounting Office, we found that, without exception,
    the computer systems of these agencies were riddled with
    pervasive weaknesses. Our homeland security depends on building
    improved defenses to cyber attacks, which are occurring every
    day. As a result, our Committee Print proposes the
    establishment of a Federal cyber security program that will
    provide computer security expertise to other Federal civilian
    agencies to help improve protection of their critical
    information systems. This program will include a Federal
    computer security ``red team'' to test, and provide
    recommendations on, the security of key Federal information
    systems. It also will promote R&D on security enhancements for
    critical information systems, particularly the command and
    control systems that our Nation's critical infrastructures
    depend upon--called SCADAs ('ska-duhs'). The vulnerability of
    SCADA systems--such as those that control our electricity
    networks or the operation of our large dams and drinking water
    systems--needs to be a high priority for the new
    Department.Third, in the area of research and development, it
    is important for us to remember that new and improved
    technologies and American ingenuity and innovation are among
    the greatest advantages we have in fighting terrorism. Thus,
    the Committee concurs with the need expressed by many others
    within and outside of Congress for this new Department to play
    a critical role in coordinating, accelerating, and improving
    the focus of research, development, and implementation of new
    technologies in our fight against terrorism.
        Our country's top scientists are working through existing
    programs at our national laboratories to develop new methods
    for detecting and preventing terrorists attacks--such as
    improved sensors to detect radiological devices, and new
    scanners to screen luggage and cargo. But our oversight of
    these programs has shown that they are not well-coordinated. As
    a result, our Nation's current ability to detect radiological
    or nuclear materials that may be entering our ports or other
    border entry locations is woefully inadequate, and I strongly
    believe that the Federal government must improve both our
    research in these areas, as well as the speed of deployment of
    viable technologies to prevent illegal radiological devices
    from entering our country. We have heard from those on the
    front lines that they need guidance from the Federal government
    as to what types of technologies are available, what they
    should be looking for in such technologies, and how best to
    implement them. Yet today there is no single Federal agency
    they can turn to for help.
        To address these needs, the Committee Print recommends that
    the new Department serve as the focal point for such technology
    research and development activities within the Federal
    government, and that it establish a Federal technology
    clearinghouse to assist other Federal agencies, State and local
    governments, and the private sector in evaluating,
    implementing, and disseminating information about key homeland
    security technologies, such as radiation and bio-weapon
    detectors. We do not intend to create mandatory Federal
    standards for such technologies, or a Federally-approved list
    of technologies. Rather, the goal is to provide assistance and
    guidance to those on the front lines as they seek to evaluate
    and implement the use of such technologies, so as to accelerate
    deployment of useful technologies and better protect the
    American people from weapons of mass destruction.
        In addition, H.R. 5005 is unclear as to whether the new
    Department could directly contract with our national
    laboratories with respect to the transferred DOE functions and
    programs, or whether it would have to negotiate with DOE over
    such work through the traditional ``work for others'' program.
    The Committee Print ensures that direct tasking of the
    laboratories by the new Department would be permitted, and
    would indeed be the anticipated method. Such an approach will
    ensure that the new Department can carry out these important
    R&D responsibilities in the most direct and effective manner,
    and avoid the bureaucracy and extra costs involved in the
    current DOE ``work for others'' program.Fourth, with respect to
    the control of dangerous biological agents and toxins known as
    ``select agents,'' the Committee Members recently helped to
    enact a sweeping new registration, tracking, and security
    structure--both for those select agents regulated by the
    Centers for Disease Control and Prevention because of their
    potential human health threat, and for those agents regulated
    by the Department of Agriculture because of their potential
    threat to livestock and crops. While the Administration's
    proposal clearly transfers the CDC select agent program to the
    new Department, it is less clear with respect to the companion
    USDA program.
        The Committee recognizes that there are certain
    disadvantages to transferring the CDC select agent program. But
    if both the CDC and USDA programs are transferred to a single
    department, it will enhance the joint registration and
    regulatory system that is a key component of our recently-
    passed bioterrorism act. These are companion programs designed
    to serve as one national registration and regulatory system for
    tracking the possession and use of the most dangerous
    biological agents. If the agricultural select agent program
    remains at USDA, then the Committee views the transfer of the
    CDC program as only exacerbating existing coordination
    problems. We simply do not think it makes sense to transfer
    half of this program to the new Department, while leaving the
    other half at another Federal agency.
        In closing, I ask you to take into consideration and lend
    support to the recommendations of the Committee on Energy and
    Commerce when you mark up the President's homeland security
    proposal. We will be pleased to work closely with the Select
    Committee on the matters within our jurisdiction and ask that
    you continue to provide opportunities to do so. Thank you for
    inviting me to testify today, I would be happy to respond to
    any questions.

        Mr. DeLay. [Presiding.] Thank you, Mr. Chairman.
        Mr. Dingell, you are recognized for any statement that you
    want to make.

     STATEMENT OF THE HONORABLE JOHN D. DINGELL, RANKING MINORITY
                MEMBER, COMMITTEE ON ENERGY AND COMMERCE

        Mr. Dingell. Mr. Chairman, thank you for the privilege of
    being here. I join Chairman Tauzin in bringing the amendments,
    adopted unanimously by the Committee on Energy and Commerce.
    The committee functioned bipartisanly with both staff and
    members working together.
        I think this committee knows my grave doubts of the wisdom
    of much of the President's proposal. Quite frankly, I think it
    is a fine opportunity for confusion, for waste, for overlap,
    for duplication, and quite frankly, for a splendid amount of
    delay.
        Having said that, our committee has done its duty, and we
    have thought to bring you a sensible and workable way in which
    to address matters within our charge. I ask you to respect the
    expertise, experience and hard work that the committee has
    given to this matter when you consider what to recommend to the
    House.
        I want to praise my chairman and my colleagues on both
    sides of the aisle for the work that they have done, and done
    in a bipartisan fashion.
        Perhaps the most important element of our work is the
    protection of the important public health and biomedical
    research programs from potential inadvertent harm. We make it
    clear in title III that the Department of Health and Human
    Services will continue to control funds and priorities in human
    health-based research in collaboration with the new department.
        We also make it clear in title V that HHS will retain the
    primary responsibility for carrying out public health
    preparedness activities at the Federal, State and local levels,
    again in consultation with Homeland Security.
        Essentially, the Department of Energy--rather, the
    Committee on Energy and Commerce has responded to the concerns
    of the public health community, which overwhelmingly supports
    our recommendations to you. The General Accounting Office,
    bioterrorism experts and others have also supported what we
    have done, and we have tried, in consultation with them, to
    strike an appropriate balance.
        Another important element of our proposed amendment is a
    twofold savings clause. Absent specific authorities transferred
    to the legislation, the new Secretary will be given no new
    regulatory responsibility; and the legislation does not change
    or allow the new Secretary to override the regulatory authority
    of the existing agencies. This clause found in section 737
    ensures that we will not sacrifice regulatory certainty, slow
    down ongoing efforts to assess vulnerabilities for critical
    infrastructures, or jeopardize other vital programs if this new
    department is to be created.
        The committee's process goes into many more issues, and I
    know the staff on both sides of the aisle have been working
    closely with the staff of the individual members of this
    committee and of the committee.
        We are also doing our best to be constructive under a
    process that I find both objectionable and unduly constraining.
    I believe the haste shown here is counterproductive to the
    shared goal that we all have of improving this Nation's
    homeland security. I urge this committee not to make matters
    worse by ignoring or undoing the many improvements that have
    been developed, again on a bipartisan basis, in the Committee
    on Energy and Commerce.
        [The statement of Mr. Dingell follows:]

     PREPARED STATEMENT OF HON. JOHN D. DINGELL, RANKING MINORITY MEMBER,
                        COMMITTEE ON ENERGY AND COMMERCE

        I join Chairman Tauzin in presenting the amendments adopted
    unanimously by the Committee on Energy and Commerce. All of you
    know of my grave doubts about the wisdom of much of the
    President's proposal. And you have probably figured out that I
    am not a fan of this rushed and truncated process for
    addressing an issue of this magnitude. But our Committee has
    done its duty, and has brought to you a sensible and workable
    way to address the matters within our charge. I urge you to
    respect the Committee's expertise, experience, and hard work as
    you consider what to recommend to the House.
        Perhaps the most important element of our work is the
    protection of important public health and biomedical research
    programs from potential inadvertent harm. We make it clear, in
    Title III, that the Department of Health and Human Services
    (HHS) will continue to control the funds and set priorities in
    human-health related research in collaboration with the new
    Department. We also make it clear, in Title V, that HHS will
    retain the primary responsibility for carrying out public
    health preparedness activities at the federal, state, and local
    level--again in consultation with Homeland Security.
    Essentially, the Committee on Energy and Commerce has responded
    to the concerns of the public health community, the General
    Accounting Office, bioterrorism experts and others by striking
    an appropriate balance.Another important element of our
    proposed amendments is a two-fold savings clause. Absent the
    specific authorities transferred in the legislation, the new
    Secretary is given no new regulatory responsibility, and the
    legislation does not change, or allow the new Secretary to
    override, the regulatory authority of existing agencies. This
    clause, found in Section 737, ensures we will not sacrifice
    regulatory certainty, slow down ongoing efforts to assess
    vulnerabilities for critical infrastructures, or jeopardize
    other vital programs, if this new department is to be created.
        Our Committee's product goes into many more issues, and I
    know staff on both sides of the aisle have been working closely
    with the Select Committee Members' staff to explain what we
    have done and why. We are doing our best to be constructive
    under a process that I find objectionable. This haste likely
    will be counterproductive to the shared goal of improving this
    Nation's homeland security. I urge the Select Committee not to
    make matters worse by ignoring or undoing the many improvements
    developed on a bipartisan basis in the Committee on Energy and
    Commerce.

        Chairman Armey. [Presiding.] Thank you, gentlemen, for your
    statements, and we are going to operate under the 5-minute
    rule.
        We will begin with questions of the gentleman from Texas,
    Mr. Delay.
        Mr. DeLay. I thank you for your statements. I just have one
    quick question.
        One of the main objectives of the administration's bill was
    to get technology expedited into the hands of the first
    responders, the emergency responders, at the State and local
    levels.
        Do you have any ideas based upon your testimony that we
    could accomplish that?
        Mr. Tauzin. I have no doubt we can. The whole concept of
    setting up the technology clearinghouse within this department
    is designed to do that. What we have learned is that port
    authorities don't know whether or not to call to find out what
    kinds of equipment would really do the job of testing to see
    whether or not someone is trying to bring in something harmful
    to this country.
        One of our ports in Virginia has volunteered on their own
    and they spent a great deal of money installing equipment in
    some of their cranes to do that. But we had to rush in and give
    them advice because they had no one to turn to.
        This department needs to be tasked with the job of actually
    clearing what technologies work, what should be the standards
    to have a quality enough product out there so that it really
    does give us a measure of security; and then, hopefully, assist
    in the State and local grants that we provide in the
    bioterrorism bill to make sure that those technologies are
    deployed properly.
        Mr. DeLay. But I think the key word of my question is
    ``expedited.'' how do we get past what is the normal
    bureaucracy that takes sometimes more than a year to approve
    technology?
        We are in the process right now of--in the Transportation
    Security Administration, on baggage screeners, and it seems
    they want to buy old technology when new technology is almost
    ready, yet they want to go spend all this money for old
    technology and don't want to wait for the new technology.
        Mr. Tauzin. We include in here measures recommended by
    Heather Wilson that would actually invite those in the
    community who are inventing and improving technology to bring
    it to the Department so that it can be quickly reviewed for
    effectiveness, and then recommendations are issued from that.
        In other words, the Department would not actually tell
    anyone, you have to install this or that particular technology,
    but it could test quickly whether or not the manufacturer or
    the inventors' suggestions about the quality of his product are
    true or valid, and then make recommendations to folks in the
    private sector and in some public agencies on whether or not
    that technology might meet their needs.
        Expediting it obviously is going to be the role of the new
    Secretary and making sure this happens very quickly.
        Mr. DeLay. Mr. Dingell, do you have any comments on that?
        Mr. Dingell. I have nothing to add to what my chairman
    said.
        Mr. DeLay. Thank you and thank you for your testimonies.
        Chairman Armey. The gentlelady from California.
        Ms. Pelosi. I would like to follow up on Mr. DeLay's
    question.
        First, I want to welcome both of you and thank you for your
    excellent presentations and the hard work that went into
    developing your product today.
        On the intelligence side, we have needs and leads. We know,
    you know, what we need technologically and we try to go find
    that; or people come in with leads which are excellent. I spoke
    to a technology group a couple of weeks ago, and I said we had
    approximately 7,500 suggestions coming forward, and that
    morning they said, no, it is now up to 10,000. That was a few
    weeks ago.
        So this new department, as well as other agencies of
    government, are going to have to be very resourceful and agile
    in how we can accommodate what will help us technologically.
        I would have hoped that this department would have been
    more of a reflection of the advances in technology and used
    technology for coordination rather than attempting to establish
    a gigantic department, which I think is an old-fashioned way of
    approaching it, especially heeding the distinguished ranking
    member's caution about acting in haste, that we are going very
    fast.
        But hopefully, with all of the collective wisdom of our
    Chairs and ranking members and the receptiveness of our
    distinguished chairman to heed the recommendations, we will be
    able to produce something that will reduce risk to the American
    people and manage our resources judiciously, as the President
    spells out in his strategy.
        My question was one that you addressed, Mr. Dingell, in
    your comments, and that was an important part of your
    legislation, and that is section 337 relating to the regulatory
    authority of existing agencies.
        I asked some of the Cabinet Secretaries yesterday if they
    thought that any regulatory authority of an existing agency
    that was not spelled out to be given to Homeland Security, in
    their view, resided where it was to begin with, in the existing
    agency. They all said, yes.
        Would you spend a moment to tell the committee the basis of
    your putting forth this as a priority and why, therefore, it is
    important?
        Mr. Dingell. Thank you.
        This was a matter of very special concern in the committee
    to us. When you reorganize, you have to be sure that you know
    what you transfer and what you do not transfer. The best way of
    being sure that you transfer what you want, you don't create
    confusion and disorder later, is by being exquisitely precise.
    The functions of section 737 are to assure that.
        The section achieves two important results. First, it makes
    it clear that except for regulatory authority that comes with
    specific functions being transferred to the new department, no
    new regulatory authority is being created by the provisions of
    section 201 or other parts of the bill. That is H.R. 5005.
        I want to make it clear, we limit this to the sections
    within the jurisdiction of our committee, and I have sought to
    do nothing about the responsibilities of other committees. Oh,
    I think this committee, in its wisdom, may very well want to
    consider whether you want to apply something like section 737
    to the work of other committees, but I leave that to your
    wisdom and your discussion with those committees.
        Second, the rule of construction ensures that existing
    regulatory authorities of agencies, our part of agencies that
    are not being transferred to the new department are not changed
    or diminished in any other matter. For example, the Nuclear
    Regulatory Commission, the Environmental Protection Agency and
    other agencies have authority and responsibilities to assess
    vulnerabilities of critical infrastructures in their areas of
    expertise.
        This provision is important to ensure that those agencies
    can continue to exercise their authorities to protect the
    American people. And I want to make it very clear, if you
    transfer authorities from the existing agencies, Food and Drug,
    and NRC, EPA, the Department of Energy, you may very well find
    that you leave yourself in a situation where you have all of a
    sudden moved important public health or other concerns like
    that to an agency that really doesn't concern itself with those
    questions and is concerned with security.
        I would beg you to be exquisitely careful of that because
    there is great opportunity for mischief here.
        Ms. Pelosi. Thank you.
        Mr. Chairman, would you like to comment?
        Mr. Tauzin. Let me second Mr. Dingell's comments. Not only
    did we spend more time on section 737, which is a rule of
    construction that is going to be critical for agencies and
    courts to decide whether this new department has new authority
    to regulate, or whether it is taking authority from someone
    else who had it in our government structure.
        This rule of construction has been very carefully vetted
    with our counsel, and many of us who helped write it, to do two
    things. One is to protect against an inadvertent transfer of
    authority, or complications or confusions about that particular
    subject matter. And secondly, to make it clear, however, in our
    savings clause that is we don't mean by this reservation not to
    require the collaboration and the coordination of the
    Secretary, the roles he is given in respect to other sections
    of the bill.
        One final thought. Again, we cannot, obviously, recommend
    to you what you might do with sections not under our
    jurisdictional control. But if this works for the sections
    under our jurisdictional control, we urge you to seriously
    think about whether or not it might work for other areas not
    covered in our report to you.
        Ms. Pelosi. Once again, thank you very much for your very
    valuable contribution and for your leadership.
        Thank you, Mr. Chairman.
        Chairman Armey. The gentlelady from Ohio.
        Ms. Pryce. Thank you very much, Mr. Chairman. And Chairman
    Tauzin, I am very sorry, I missed your presentation. But I have
    a question about your committee's work in terms of changing the
    Department, the proposal the Department has to make the
    Division of Chemical, Biological, Radiological and Nuclear
    Countermeasures into a division focused primarily on research
    and technology. And I am sure you addressed that in your
    remarks.
        But many have criticized the administration's effort, up to
    now, of being too broad already. And broadening this aspect of
    it, I would like your thoughts about how this could, or perhaps
    may not, detract from the division's mission to prevent these
    chemical and nuclear, biological attacks on American soil.
        And do you think that broadening this part of the plan is a
    good idea in terms of how large it is already?
        Mr. Tauzin. Well, first of all, there is no question that
    in our hearings, as I say, we had 40 witnesses that came
    forward. We learned two things. One is that much of this work
    is already being conducted on very important areas of research
    and development. That is critical in the various authorities
    that currently exist in those departments, and we don't want to
    interfere with that.
        On the other hand, this department should have the right,
    for example, to specifically direct the laboratory to examine
    an issue that may affect the security of our homeland. So we
    have made it clear they have that power to specifically direct
    some laboratory research that may be necessary. But, as I said,
    we very much object to the notion that they ought to control
    the funding that eventually goes to these departments to do
    these kinds of things that currently are being done in research
    and development at NIH and CDC, that generally affect the
    public health or agricultural health of our country, when that
    work is customarily performed for nonterrorist activities. So
    we have tried to balance it very carefully.
        In structuring the bill, our recommendations has a
    requirement for collaboration and consultation in giving the
    new Secretary actual authority to direct research when he or
    she may need it for protection of our homeland, but
    nevertheless respecting the current role of these agencies who
    every day protect us from infectious diseases and outbreaks and
    who every day are working on cures for cancer and all the other
    things that are critically important to our country without a
    terrorist threat.
        Ms. Pryce. Does your committee's proposal put this under
    the new department?
        Mr. Tauzin. We leave to the HHS, as the President has
    recommended, these functions, but we give to the new department
    the right, in fact the obligation, to consult with, collaborate
    with these agencies in setting priorities that might affect
    homeland security. And we give them, as I said, specific
    authority to direct research at our labs when it is clear that
    research will yield some benefit to homeland security.
        Ms. Pryce. Thank you, Mr. Chairman. I yield back.
        Chairman Armey. The gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman. I want to thank both
    the chairman and the ranking Democrat on the work that they
    have done.
        I raised a series of questions with Secretary Thompson,
    Governor Ridge and others when they were here, based upon
    statements made by a variety of people on the whole question of
    our public health and research, and I think that you have
    addressed it; but I want to raise them again and have you tell
    me whether what you did in committee responds to these
    concerns.
        Dr. Margaret Hamburg of the Nuclear Threat Initiative said
    that if these programs, referring to public health research and
    work of the CDC, are carved out of their current habitats and
    moved into the new proposed department that the likely outcome
    would be to weaken and fragment our Nation's capacity to
    respond to infectious disease, whether occurring naturally or
    caused intentionally. Dr. Tara O'Toole of the Center for
    Civilian Biodefense at Johns Hopkins said that if this takes
    place, the country will be forced to create parallel work
    forces, one in Homeland Security for bioterrorism preparedness
    and another in HHS for normal public health functions. And the
    GAO found that the structure, as proposed, does not ensure both
    the goals of homeland security and public health will be met or
    how priorities for basic public health capacities currently
    being funded to the dual CDC programs will be maintained.
        Do you believe what you did in the committee--particularly,
    I saw your comments, Mr. Dingell, on title III. Do you believe
    that that responds to those concerns, as well as you, Chairman
    Tauzin?
        Mr. Tauzin. We think they do. We make it very clear, and we
    understand the administration supports us in this
    clarification. Those programs remain with the agencies that are
    conducting that research and development. Research and
    development does not move to the new department. The new
    Secretary does not have the power to set the priorities.
        Mr. Menendez. That is different than the administration's
    mark.
        Mr. Tauzin. That is a little different. We clarified it, I
    suppose is a better way to put it.
        What we made clear is that the new Secretary nevertheless
    has the right to collaborate with those agencies in defining
    priorities. So, in fact, the President and new Secretary
    determine that the work of these agencies can best be
    prioritized in an area that is critical to a new element
    affecting homeland security. Collaboration is then required to
    determine that new priority.
        Mr. Menendez. We would want all of our departments to
    collaborate in terms of suggesting what is the best course for
    public health in the Nation, including within a security
    context, but your committee made it very clear that HHS retains
    the power to make that decision at the end of the day.
        Mr. Tauzin. That is correct. Obviously, who controls the
    money has a lot to do with that. That is why our committee
    strongly recommends that the new Secretary not have primary
    control over the $1.9 billion that goes into NIH grants or the
    $1.5 billion that goes into public health emergency grants. We
    think that money needs to go to those agencies, so that they
    maintain their primary role in setting the priorities of those
    research and development projects, always giving the Secretary
    and the President the capacity to collaborate those agencies
    and reassessing priorities, if that is necessary.
        But controlling the money obviously does shift and lever
    the decisions and priorities; and we think not only would that
    be wrong, but that would be a much more cumbersome way in which
    to make the money flow expeditiously to the purposes intended.
        Mr. Menendez. Mr. Dingell, would you agree with that?
        Mr. Dingell. I agree absolutely.
        Mr. Menendez. And that vote that took place was bipartisan
    in your--.
        Mr. Tauzin. Yes.
        Mr. Menendez. Also, one thing: I want to commend you, Mr.
    Tauzin. Something we have not touched upon in this committee or
    looked at in the context of this department, but it is cyber
    security, and you make the point in your written statement that
    the vulnerability of some of these systems that control our
    electricity networks or the operation of large dams or drinking
    water systems is incredibly important and subject to attack. In
    the committee's mark, could you describe where within the new
    department you see such functions taking place?
        Mr. Tauzin. We actually recommend a special department
    within the new department. Those will be focused on cyber
    security. And the reason we recommend that is because our 4-
    year hearing process into this matter has quite disturbed us.
        We have had red teams from GAO come in and demonstrate in
    front of our committee members the ease with which they have
    been able to hack into sensitive government material, sometimes
    not into a government agency, but a government agency that is a
    link to a government agency. They have been able to compromise
    the security systems, and been able to take control of our
    microphones, they have been able to take control of the video
    cameras on top of computers in some of these agencies.
        And to see them do that in our committee, I think
    heightened all of our awareness. This new threat to our Nation,
    which we understand now from the Intelligence Committee
    information gathered and presented to us, very much includes
    cyber attack capabilities. It needs to be a high priority, a
    special unit within the new department focusing on
    strengthening and improving the security systems of our
    Nation's sensitive infrastructures, not just those that are
    public, but very importantly, as you point out, the private
    water systems or electric systems or utility systems that are
    critical to our Nation's health and economy.
        Mr. Menendez. Thank you.
        Chairman Armey. We can't help but observe how much more
    active these hackers will be when they all have broadband.
        Mr. Tauzin. Absolutely. But again you make a good point.
    With the slow-speed dial-up systems that currently exist, it is
    one thing to protect them, but when you get into digital
    broadband high-speed systems, we had better have a special
    department within this new department on top of these new
    systems because they are going to be extraordinarily
    vulnerable. And the technology has changed so rapidly that
    unless somebody is on it constantly, and as Mr. DeLay pointed
    out a minute ago, unless somebody is finding new technology,
    not the old technology, we are going to be in a lot of trouble.
        Chairman Armey. Thank you.
        Mr. Portman. Thank you, Mr. Chairman. I appreciate the
    testimony on Energy and Commerce. I appreciate the seriousness
    with which the Committee, on a bipartisan basis, has looked at
    its areas of jurisdiction and notwithstanding--so Mr. Dingell's
    larger concerns have given us some constructive changes. The
    big one is, I think, the funding issue.
        Secretary Thompson, as you know, testified before this
    committee that he believed that the administration's proposal
    is the proper way to go; in other words, taking some of these
    funding decisions of public health away from him and, instead,
    putting them in Homeland Security.
        You talk about a consultation process where the Secretary
    of HHS will continue to have that budget authority, but he
    would consult with the Homeland Security Department and that
    Secretary. Is there a way to strengthen that?
        In other words, can you see a way where, perhaps not a
    veto, but there would be more than simply consultation on
    behalf of the Homeland Security agency to be sure they are
    getting the public health information they need?
        Mr. Tauzin. Mr. Portman, I think we have literally tried to
    strike that balance. The original language required
    consultation. We went a great deal forward when we talked about
    collaboration to actually make the decisions together when it
    comes to homeland security priorities. But again I don't have
    to tell you, it is one thing to leave the program at HHS, CDC,
    or NIH and then have a new Secretary control the funding.
        How can you not agree with the man who has the money to
    decide whether or not you spend it?
        Mr. Portman. You are aligning responsibility and authority.
        The second question--and Mr. Dingell feel free to chime in
    here on these--there are in your draft section 503 changes with
    regard to the Secretary of Homeland Security and his ability to
    be able to respond to a threat of a nuclear incident. Your
    language, as I read it, says he must wait for an actual threat
    to occur before he can take charge of a nuclear incident
    response team. Is that accurate?
        Mr. Dingell. I don't think that is what we said, and I
    don't think that is what we have intended. I think we expect a
    certain amount--I think the language of this proposal
    indicates--an expectation is that the Department of Homeland
    Security will do the things it has to do on a participatory
    basis to provide the necessary security protection of the
    public interest here.
        We face a very major problem. A huge problem this country
    confronts is addressing problems of health, of biology, of
    risks from diseases and things of that sort. We have a
    wonderful mechanism set up to address that. If you make
    changes, you are liable to significantly adversely affect that
    capacity. We don't want that to be hurt any more than it has to
    be by the changes we are engaging in here.
        We are trying, at the same time, to see to it that the new
    agency gets the authorities it needs to address the concerns it
    confronts. Those will occur less frequently, but they will
    require considerable participation at the right time and
    fashion.
        We want to see both occur, but we don't want to lose what
    has been very valuable in this country, and that has been the
    ability to move forward on diseases and public health risks
    which are very severe, and we didn't want to see the shift of
    emphasis from public health to simply addressing the problem of
    a momentary exercise, which involved essentially addressing
    some kind of a terrorist act.
        It is a difficult balancing, but you have to understand you
    have to protect both capabilities.
        Mr. Tauzin. The staff indicates to me, Mr. Portman, that we
    didn't make any significant changes.
        Mr. Portman. So section 503 in terms of the nuclear
    incidents is pretty much the way the administration proposed
    it?
        Mr. Tauzin. Yes. My staff indicates to me that we have not
    materially affected the print that was offered in the bill.
        Mr. Portman. I do appreciate the fact that your committee
    has seen some inadequacies in our response to bioterrorism and
    taking advantage of this opportunity to try to streamline that
    approach, so that next time we are faced with such a threat, we
    can be better prepared; and I want to commend you for that. And
    I think, again, you have given the Select Committee some
    constructive suggestions along these lines over and above what
    the administration had proposed.
        One final quick question, Mr. Dingell: You were here when
    the Department of Energy was created. You were integral to
    that. What lessons did you learn from the creation of the
    Department of Energy that we could--.
        Mr. Dingell. Lessons? Well, the following--.
        Mr. Tauzin. Restrain yourself, John.
        Mr. Dingell. One, be very careful. Two, it is full of
    surprises. Three, you are liable to create enormous confusion
    and mess you can't anticipate. And last I would say be careful
    what you ask for because you are just liable to get it and you
    may be sorry.
        Mr. Tauzin. I will be more specific with you, Mr. Portman.
        The Department of Energy was, in many cases, an agency
    cobbled together with a lot of different things that were
    happening in our government. Many of those areas cobbled
    together not only don't get along, but are antagonistic to one
    another in many cases. It is an agency riddled with fiefdoms,
    and I believe one of the most unfortunate, badly cobbled
    together agencies of the Federal Government.
        And Mr. Dingell's advice to the President at the very
    beginning of this process, to look at what happened in the
    Energy Department when it was created.
        Mr. Portman. To be sure there was a clear mission, clear
    strategy--.
        Mr. Tauzin. And to make sure we don't repeat those mistakes
    has been a good message.
        Mr. Dingell. One of the things I learned--and I handled the
    legislation on the House side as the chairman of the
    subcommittee of jurisdiction--is that through a remarkable
    effort of cooperation, coordination, and so forth, led by a
    wonderful gentleman by the name of Frank Zarb for both
    President Ford and President Nixon, we were able to meet the
    serious character of the energy threat that we confronted.
        We did it without setting up a new department. We did it as
    a Nation by having the President fully behind the power, the
    prestige and capability of Mr. Zarp to address this; and he did
    it with an extraordinary level of understanding and
    cooperation, which he engendered among all who were concerned,
    including the private companies which were absolutely vital to
    the accomplishment of these goals.
        I didn't understand it at the time, but looking back in
    history, I can tell you, I do now understand what he did. I can
    telling you that when you have a crisis, you don't just
    manufacture a department to deal with it. You begin to bring in
    all the people that you have to bring in to do the work, and
    you get them to cooperate in America--public, private, ordinary
    citizens, all of them who will work together on this.
        I can tell you, you put them in a department, and then the
    warfare and the trouble starts. And I can just tell you that
    you should anticipate you are going to have a vast period of
    confusion when you set this agency up. It is going to be
    counterproductive.
        Mr. Tauzin. We are going to have to oversee every part.
        Chairman Armey. Let me thank both our witnesses and the
    gentleman from Ohio.
        The gentlelady from California.
        Ms. Pelosi. I have already had my questions. I want to join
    in thanking our distinguished witnesses for their excellent
    testimony, and I know you have the last word.
        Chairman Armey. I believe I heard the Chair--I heard the
    chairman have the last word, and I believe it is a good word
    for us, ``oversight.'' the agency and the Federal Government
    must be subjected, as all of our Federal Government must, to
    congressional oversight. I have no doubt that your mark is
    instructive on that as it is on other matters.
        I want to thank both of you gentlemen and your committee
    for a good mark. It is quite constructive to me as I prepare my
    chairman's mark. Thank you for your testimony, and we may
    excuse our witnesses with great appreciation.
        Without objection, the Select Committee will stand in
    recess until 2 o'clock.
        [Recess.][2:05 p.m.]
        Chairman Armey. The committee will come to order.
        The committee is delighted to hear from the Government
    Reform Committee. Gentlemen, we try to work with a 5-minute
    rule here. We will, without objection, place your written
    statements in the record, and we will ask you each in your
    turn, so far as you are able, to summarize your opening
    statements within the 5-minute rule; and then we will proceed
    from there to questioning under the 5-minute rule.
        With those admonitions, we will begin with Chairman Burton.

     STATEMENT OF THE HONORABLE DAN BURTON, CHAIRMAN, COMMITTEE ON
                           GOVERNMENT REFORM

        Mr. Burton. Thank you, Mr. Chairman. I would like to say at
    the outset that I probably will go a little bit over the 5
    minutes, and that is because we had the whole bill, not just
    parts of it, and there were 40-some amendments that we dealt
    with. So I will try to be as brief as possible.
        First of all, I would like to say how proud I am of what
    the committee did on this bill. We marked it up last Thursday.
    We started working at 10:00 in the morning and finished close
    to 2:00 the next morning, a 16-hour marathon. We had almost 40
    amendments, and when we were through, even though we had a lot
    of discussions and disagreements, the bill was passed by a vote
    of 30 to 1.
        At the beginning of the meeting, I said that I wanted this
    to be bipartisan. And I have to say to my colleague, Mr.
    Waxman, who is here, it was bipartisan; and we had
    disagreements and long debates, but I think things were handled
    in a pretty fair way, and we all worked together.
        I am especially proud of the fact that we voted together to
    keep the main building blocks of the President's plan, as some
    of the other committee's did not. And I am a strong supporter
    of President Bush's plan. We voted to keep the Coast Guard in
    the bill. We voted to keep the INS in the bill. We voted to
    keep the Secret Service and FEMA in the bill, and those are
    very important votes.
        Without those agencies, the Department of Homeland Security
    simply won't work. You cannot have a department that focuses on
    border security without the Coast Guard. You cannot have a
    permanent department that focuses on recovery from terrorist
    attacks without FEMA.
        The fact remains that we weren't prepared to prevent what
    happened on September 11, and we weren't prepared to recover
    from a terrorist attack of that magnitude. We need to have
    these agencies working together in a coordinated way to prevent
    the next terrorist attack. By creating this new department, we
    think we are going to improve upon that coordination.
        Let me say a few words about management flexibility.
    Putting together this department is going to be a huge
    undertaking. They are going to need some flexibility to get the
    job done. We did not give the administration everything that
    they asked for; however, we put together proposals on
    procurement and property and personnel that I think are
    balanced and fair. I think these provisions are sound, but at
    the same time, we are open to further discussions. People may
    have ideas that will improve on what we have done, and
    obviously what you decide will be the final decision.
        I want to emphasize two specific personnel issues, first,
    the Morella amendment. I have a lot of respect for Connie
    Morella. We worked together on a number of issues, but I
    disagree with her on this amendment. Her amendment would limit
    the President's authority to restrict collective bargaining at
    the Homeland Security Department on national security grounds.
    I think this would be a very big mistake.
        First of all, there is no evidence of a problem here. This
    is a power that has been used sparingly by Republican
    Presidents and Democratic Presidents, so I don't understand
    what problem we are trying to fix.
        Secondly, we are in a war. The Homeland Security Department
    is a central part of our strategy to win that war. Why would we
    want to give the President less authority over Homeland
    Security, in that department, than he has over any other
    department?
        This was probably the most controversial issue we dealt
    with last week, and by the way, we had members of the committee
    who are strong supporters of Federal employees speak against
    this amendment as well. It was approved by only one vote.
        I think it is a mistake to limit the President's national
    security authorities right now, since we are in a war; and I
    would ask the Select Committee to reconsider that issue.
        The second issue I want to raise in this area is pay
    ceilings. At one time or another, almost every Federal agency
    has come to our committee and asked that they have these pay
    ceilings lifted for the senior executives. I think that is a
    mistake. We have had agencies come to us and ask that they be
    allowed to pay their managers more than the head of an agency.
    That does not make sense from a management standpoint and
    doesn't make sense from a fiscal standpoint either. When you
    look at those agencies that have been given exemptions from the
    pay ceilings, I think you will find that their costs have gone
    up and that their management has not necessarily improved.
        So I would ask that you would follow our example and not
    remove the pay ceiling.
        Now, regarding indemnification, the indemnification
    provisions that we added to the bill are very important. There
    are high tech companies across the country that are developing
    cutting-edge technology to help prevent terrorist attacks, but
    in some cases, they cannot sell them to the government because
    they can't get enough insurance. The risks of liability from
    major terrorist attacks are so great that insurance companies
    cannot, or will not, afford to insure these products.
        We need these new technologies to protect the country and
    critical infrastructures. Right now we are vulnerable.
        We put together a very responsible proposal to deal with
    this problem. It would allow the Federal agencies to indemnify
    contractors for antiterrorist technology after they purchased
    as much private insurance that they can get. In other words, if
    they buy insurance up to a certain level that is the maximum
    level they can get, they are worried about their exposure, the
    government will be able to provide a hold harmless clause above
    that.
        The Secretary of Homeland Security could also indemnify
    contractors on behalf of State and local governments on the
    same terms. The Director of OMB would have a very strong role
    to play in the process to protect the interests of the
    taxpayers.
        This proposal has bipartisan support, and I hope you will
    include this in the bill you send to the floor.
        Finally, I would like to make a few brief comments on the
    issue of visas. I believe very strongly that the authority for
    issuing visas belongs at the Homeland Security Department. I
    think this is part of our first line of defense against
    terrorists trying to get into this country. The State
    Department has never taken security concerns very seriously in
    this area. Many of my colleagues agree with me, including the
    chairman of the Judiciary Committee, Mr. Sensenbrenner.
    Unfortunately, we did not prevail last week and I want to give
    you a couple of examples.
        Charles Parish worked in Beijing. He granted visas to
    people because of sexual favors and money. He took the Fifth
    Amendment before my committee. After he took the Fifth
    Amendment, he got four separate raises, was promoted, and they
    put him in charge of checking out visas for Iran and Iraq in
    the Middle East; and here is a guy who sold visas for sex and
    money. Now, I just can't understand how the State Department
    could allow that.
        We had visa fraud in Qatar. Just last week it was reported
    that an employee there was selling visas for $10,000 or more
    apiece. He sold one visa to a person who was involved or linked
    to the September 11 tragedy.
        We had fraud cases in other countries. In Guyana, a fellow
    got 21 years in prison for selling 800 visas for over $10,000
    apiece and 26 of the individuals he sold visas to committed
    crimes in the U.S. including gang rape and other crimes. In
    Juarez, Mexico, a consular officer was recently arrested for
    selling visas. Also, a DEA embassy staffer was recently
    convicted for bribery for helping Nigerians obtain fraudulent
    visas.
        This has to be tightened up, and I don't see the State
    Department tightening it up.
        Now, they also failed to investigate the September 11
    tragedy. This is something most people don't know. We learned
    that GAO interviewed a number of the consular officers over in
    Riyadh, Saudi Arabia, and when they asked the consular officers
    about the visas they were dealing with before the tragedy on
    September 11, they said the people from GAO were the first
    people to ask them about that. And this was just recently;
    nobody from the investigative arm of the State Department ever
    went over and checked that out, and you would have thought that
    would have been the first thing they would have done.
        They also had a process over there called Visa Express
    where you could go get a visa from a travel agent, and it was
    just rubber-stamped at the embassy. Three of the hijackers
    received their visas through the Visa Express program; and that
    should be eliminated right now. And the State Department still
    has that ongoing, even though that is a tragedy.
        Let me just end up by saying I am disappointed that we had
    a compromise on that. We did work with our colleagues on the
    Democrat side. In particular, we worked with Representative
    Lantos on this. We did come up with a compromise where there
    would be a person from Homeland Security in each embassy to
    oversee that. That is a giant step in the right direction, but
    I still feel personally, and I think many of my colleagues do,
    that we ought to take the visa situation completely out of
    State and put it under Homeland Security. That is the first
    line of defense.
        And finally let me just say once again that I think the
    committee did an outstanding job. I compliment my colleague,
    Mr. Waxman, and his colleagues for their cooperation; and I
    hope that you will look favorably on almost everything we did.
        [The statement of Mr. Burton follows:]

       PREPARED STATEMENT OF THE HON. DAN BURTON, CHAIRMAN, COMMITTEE ON
                               GOVERNMENT REFORM

        Good afternoon. Thank you for inviting me to testify before
    you today.
        Before I talk about the substance of the bill, I want to
    say a few words about the Government Reform Committee. I'm very
    proud of the work that our Committee did on this bill. We
    marked it up last Thursday. We started working at 10:00 in the
    morning, and we went straight through until 1:00 the next
    morning. We voted on nearly 40 amendments. At the end of that
    process, we approved that bill by a vote of 30 to 1.
        At the beginning of our meeting, I said that I wanted us to
    have a bipartisan process--and it was. We had some
    disagreements. We had some long debates. But we handled every
    issue in a fair and open way. At the end of the day, we wound
    up with a good bill that Republicans and Democrats voted for.

                          keeping the structure intact

        I'm especially proud of the fact that we voted to keep
    together the main building blocks of the President's plan. I'm
    a strong supporter of this plan.
         We voted to keep the Coast Guard in this bill.
         We voted to keep the INS in this bill.
         We voted to keep the Secret Service and FEMA in
    this bill.
        Those were very important votes. Without these agencies,
    the Department of Homeland Security won't work. You cannot have
    a department that focuses on border security without the Coast
    Guard. You cannot have a department that focuses on recovery
    from terrorist attacks without FEMA.
        The fact remains that we weren't prepared to prevent what
    happened on September 11. And we weren't prepared to recover
    from a terrorist attack of that magnitude. We need to have
    these agencies working together in a coordinated way to prevent
    the next terrorist attack. By creating this new department,
    we're going to improve that coordination.

                             management flexibility

        Let me say a few words about management flexibility.
    Putting this department together is going to be a huge
    undertaking. They're going to need some flexibility to get the
    job done. We didn't give the Administration everything they
    asked for. However, we've put together proposals on procurement
    and property and personnel that I think are balanced and fair.
    I think these provisions are sound, but at the same time, I'm
    open to further discussions if people have ideas that will
    improve what we've done.
        I want to emphasize two specific personnel issues. First--
    the Morella Amendment. I have a lot of respect for Mrs.
    Morella. We've worked together on a number of issues. But I
    disagree with her on this amendment. Her amendment would limit
    the President's authority to restrict collective bargaining at
    the Homeland Security Department on national security grounds.
    I think this would be a mistake.
        First of all, there's no evidence of a problem here. This
    is a power that's been used very sparingly, by Republican
    Presidents and Democratic Presidents. So I don't understand
    what problem we're trying to fix. Secondly, we're in a war. The
    Homeland Security Department is a central part of our strategy
    to win that war. Why would we want to give the President less
    authority over the Homeland Security Department than he has
    over any other Department?
        This was probably the most controversial issue we dealt
    with last week. And by the way, we had Members of the Committee
    who are strong supporters of Federal employees speak against
    this amendment. It was approved by only one vote. I think it's
    a mistake to limit the President's national security
    authorities right now, and I would ask the Select Committee to
    reconsider this issue.
        The second issue I want to raise in this area is pay
    ceilings. At one time or another, almost every Federal agency
    has come to my Committee and asked to have the pay ceilings
    lifted for their senior executives. I think this is a mistake.
    We've had agencies come to us and ask that they be allowed to
    pay their managers more than the head of the agency. That
    doesn't make sense from a management standpoint. And it doesn't
    make sense from a fiscal standpoint. When you look at those
    agencies that have been given exemptions from the pay ceilings,
    I think you'll find that their costs have gone up, but that
    their management hasn't necessarily improved. So I would ask
    you to follow our example and not remove the pay ceiling.

                                indemnification

        The indemnification provisions that we added to the bill
    are very important. There are high-tech companies across the
    country that are developing cutting-edge technology to help
    prevent terrorist attacks. But in some cases, they can't sell
    them because they can't get enough insurance. The risks of
    liability from a major terrorist attack are so great that
    insurance companies can't afford to insure these products.
        We need these new technologies to protect critical
    infrastructures. Right now, we're vulnerable. We've put
    together a very responsible proposal to deal with this problem.
    It would allow Federal agencies to indemnify contractors for
    anti-terrorist technology after they've purchased as much
    private insurance as they can get. The Secretary of Homeland
    Security could also indemnify contractors on behalf of state
    and local governments on the same terms. The Director of OMB
    would have a very strong role to play in the process to protect
    the interests of the taxpayers. This proposal has bipartisan
    support, and I hope you'll include this in the bill you send to
    the floor.

                              authority over visas

        Finally, I'd like to make a few brief comments on the issue
    of visas. I believe very strongly that the authority for
    issuing visas belongs at the Homeland Security Department. I
    think this is part of our first line of defense against
    terrorists trying to get into this country. The State
    Department has never taken security concerns very seriously.
    Many of my colleagues agree with me, including the Chairman of
    the Judiciary Committee. Unfortunately, we didn't prevail last
    week.
        I'm disappointed in that, but I do think that the
    compromise we've arrived at is better than the Administration's
    proposal. It would give the Homeland Security Department the
    authority to have employees on site at every consulate to
    monitor visa activity. And it would clarify that the final
    authority to reject a visa application rests with the Secretary
    of Homeland Security. I hope the Select Committee will adopt
    this language. I also hope that you'll adopt an additional
    amendment that we approved that would terminate the Visa
    Express program in Saudi Arabia. Fifteen of the 19 September 11
    hijackers came from Saudi Arabia. Three of them got their visas
    through the Visa Express program. Given those facts, I can't
    imagine why we would have a program in that country that let's
    people apply for their visas through a travel agent. It doesn't
    make any sense. The fact that the State Department continues to
    defend it speaks volumes about why this responsibility belongs
    at Homeland Security.
        Thank you again for allowing me to testify. That concludes
    my statement. I'd be happy to take any questions.

        Chairman Armey. Thank you. Mr. Waxman.

     STATEMENT OF THE HONORABLE HENRY A. WAXMAN, RANKING MINORITY
                 MEMBER, COMMITTEE ON GOVERNMENT REFORM

        Mr. Waxman. Members of the Select Committee, thank you for
    inviting me to testify today.
        It is clear we need homeland security legislation. Federal
    departments are not working together as they should to protect
    our Nation. Unfortunately, the bill proposed by the President
    has serious flaws; in fact, I think it may well cause more
    problems than it solves.
        Last week, I joined with Representative David Obey, the
    ranking member of the Appropriations Committee, in sending a
    letter to Governor Ridge outlining a number of serious concerns
    with this bill; and I ask that that letter be part of the
    record.
        Chairman Armey. Yes. The record is open, and without
    objection, it will be in.
        [The information follows:]
                                                          July 9, 2002.
        Dear Governor Ridge: Congress is considering the President's
    proposal to create a new Department of Homeland Security on an
    accelerated schedule. But now that Congress has received the
    legislative language that would implement the President's plan. Many
    issues have arisen about the details of the proposal. We are writing in
    the hope that you will be able to provide expeditious responses to
    these concerns.
        The issues fall into ten main areas. First, the new Department will
    inherit a vast array of responsibilities that have nothing to do with
    homeland security. These include administering the National Flood
    insurance Program, cleaning up oil spills at sea, and eradicating pests
    like the boll weevil. Giving the new Department dozens of
    responsibilities unrelated to homeland security risks bloating the size
    of the bureaucracy and diluting the new Department's counterterrorism
    mission.
        Second, the legislation lacks an effective mechanism to coordinate
    the activities of the many federal agencies that have major homeland
    security functions. The President's submission to Congress listed 153
    different agencies, departments, and offices involved with homeland
    security.\1\ After the creation of the proposed new Department, this
    number actually will increase to 160 agencies, departments, or offices
    with security roles. But the draft bill does not include a mechanism
    for developing and implementing a unified homeland security strategy
    across the entire government.
    ---------------------------------------------------------------------------
        \1\ President George W. Bush, The Department of Homeland Security
    (June 2002) (hereinafter ``White House Briefing Document'') (on line at
    http://www.whitehouse.gov/deptofhomeland/).
    ---------------------------------------------------------------------------
        Third, there are inefficiencies and coordination problems that will
    arise when parts of agencies are removed from their existing
    departments and moved to the new Department. The goal of the
    legislation is to make government more efficient, but some of the
    proposed changes could have exactly the opposite effect. For example,
    GAO has testified that programs transferred from the Department of
    Health and Human Services include ``essential public health functions
    that, while important for Homeland Security, are critical to basic
    public health core capacities.'' \2\
    ---------------------------------------------------------------------------
        \2\ General Accounting Office. Homeland Security: New Department
    Could Improve Coordination but May Complicate Public Health Priority
    Setting, 6 (June 25, 2002) (GAO-02-883T).
    ---------------------------------------------------------------------------
        Fourth, despite prior assurances that the Administration supported
    reforms of the Immigration and Naturalization Service (INS) that were
    passed by the House, The President's proposal would import the INS into
    the new Department of Homeland Security wholly intact and without these
    needed internal reforms.
        Fifth, the legislation includes broad exemptions from our nation's
    most basic ``good government'' laws. The legislative language would
    allow the new Secretary, in conjunction with the Office of Personnel
    Management, to waive all provisions of our civil service laws. These
    laws have evolved over many decades to ensure that our government has a
    professional civil service hired on the basis of merit rather than
    political favoritism. Yet the proposed legislation would allow the new
    Department to waive all of these protections, including those that
    prohibit patronage, protect whistle blowers, provide for collective
    bargaining rights, and ensure health and retirement benefits.
        A similar approach has been taken with procurement and the
    management of real property. Under the proposal, the Secretary does not
    have to comply with cornerstone procurement principles, such as open
    and competitive bidding. Moreover, basic government in sunshine laws,
    such as the Freedom of Information Act and the Federal Advisory
    Committee Act, have been limited in their application to the new
    Department.
        Sixth, the President's proposal would give the new Department
    extraordinary powers to avoid meaningful congressional oversight. Not
    only would the new Department be able to exempt itself from civil
    service, procurement, and property laws, it would also be able to
    rearrange functions, eliminate offices, and transfer large amounts of
    appropriated funds without having to seek prior Congressional approval.
        Seventh, the proposal does not address the potential for disruption
    in the nation's war against terrorism. According to David Walker, the
    Comptroller General of GAO:
            [R]eorganizations of government agencies frequently encounter
            start up problems and unanticipated consequences that result
            from the consolidations, are unlikely to fully overcome
            obstacles and challenges, and may require additional
            modifications in the future to effectively achieve our
            collective goals for defending the country a terrorism.\3\
    ---------------------------------------------------------------------------
        \3\ U.S. General Accounting Office. Homeland Security: Proposal for
    Cabinet Agency Has Merit, But Implementation Will Be Pivotal to
    Success, 5 (June 25, 2002) (GAO-02-886T).
    ---------------------------------------------------------------------------
    Although Administration officials have compared this restructuring to
    the formation of the Department of Defense in the 1940s, that
    reorganization was not attempted until after the war was over, and even
    then it caused confusion and inefficiencies for decades.
        Eighth, there is no comprehensive national strategy for combating
    terrorism to guide the new Department. Logically, a major bureaucratic
    reorganization like this should be proposed as part of a comprehensive
    national strategy for providing homeland security. But in this case,
    the reorganization is occurring in a vacuum. There is no national
    strategy that identifies the major threats the nation faces and
    explains how the new Department will meet them. Nor is there a
    comprehensive threat and risk assessment that identifies and
    prioritizes threats in a coherent manner.
        Ninth, the costs of this proposal have not been identified.
    Although the Administration has stated that the creation of this new
    Department ``would not 'grow' government,'' \4\ this is not credible.
    According to the nonpartisan Congressional Budget Office, even the less
    ambitious reorganization proposed by Senator Lieberman will cost
    taxpayers over $I billion over the next five years.\5\ Costs for the
    Administration's plan inevitably will be higher.
    ---------------------------------------------------------------------------
        \4\ House Briefing Document, supra note I, at 17.
        \5\ Congressional Budget Office, Cost Estimate: S. 2452, National
    Homeland Security and Combating Terrorism Act of 2002, 1 (June 17,
    2002).
    ---------------------------------------------------------------------------
        Finally, the Administration's proposal was developed in secret by a
    small group of White House advisors, without substantive input from the
    agencies that handle homeland security. It is being rushed through
    Congress on an accelerated schedule. This is not normally an approach
    that produces sound policy. The potential for making grave mistakes as
    a result of this truncated process should be a serious concern for all
    Americans.
        We need to work together to address the concerns raised in this
    letter and to make improvements in the legislation. Your response to
    the issues and questions raised in the body of this letter will be an
    important step in this process. For this reason--and given the short
    time frame Congress has for consideration of the legislation--we urge
    you to respond by July 15, 2002.

        I. TRANSFER OF FUNCTIONS NOT RELATED TO HOMELAND SECURITY
        According to the White House briefing document issued on June 7,
    2002, the Department of Homeland Security ``must be an agile, fast and
    responsive organization.'' \6\ Transferring functions that do not
    involve homeland security to the new Department, however, interferes
    with this goal. Giving the new Department unnecessary responsibilities
    inevitably will expand the size of its bureaucracy and dilute its
    counterterrorism mission.
    ---------------------------------------------------------------------------
        \6\ White House Briefing Document, supra note 1, at 16.
    ---------------------------------------------------------------------------
        At the same time, giving vital but unrelated government
    responsibilities to the Department creates the risk that these
    responsibilities will be neglected and performed poorly. As GAO has
    concluded, many of the unrelated functions being given to the new
    Department ``represent extremely important functions executed by the
    federal government that absent sufficient attention, could have serious
    implications for their effective delivery and consequences for sectors
    of our economy, health and safer research programs and other
    significant government functions.'' \7\ Despite these risks, many
    important government functions that are not related to homeland
    security are being transferred to the new Department. In fact, the new
    Department will have to carry out over three dozen completely unrelated
    missions under the President's proposal.
    ---------------------------------------------------------------------------
        \7\ GAO-02-886T, supra note 3, at 19.
    ---------------------------------------------------------------------------
        Section 402(3) of the President's proposal would transfer the
    Animal Plant Health inspection Service (APHIS), which is now currently
    part of the Department of Agriculture, into the new Department. APHIS
    has nearly 8,000 full-time employees (FTEs), but few have
    responsibility for inspecting plants and animal products at the border.
    The other APHIS employees perform functions that are critical to
    various sectors of the economy, but are not related to homeland
    security. For example, APHIS is responsible for:
         Eradicating pests, such as the boll weevil, the citrus
    canker, the gypsy moth, and various noxious weeds through detection and
    control strategies throughout the United States;
         Approving animal drugs that are made from biological
    materials, such as animal vaccines;
         Approving field trials of genetically modified crops; and
         Maintaining the missing pet network at www.missingpet.net.
        Section 502(1) of the President's proposal would transfer the
    Federal Emergency Management Agency (FEMA) into the new Department. To
    date, however, FEMA has had a limited role in counterterrorism.
    According to former FEMA director James Lee Witt, ``[o]ver the last
    decade FEMA has responded to more than 500 emergency and major disaster
    events. Two of those were related to terrorism (Oklahoma City and New
    York City).'' \8\ In Mr. Witt's view, ``[f]olding FEMA into a homeland
    or national security agency will seriously compromise the nation's
    previously effective response to natural hazards.'' \9\ Major FEMA
    responsibilities that are unrelated to homeland security include:
    ---------------------------------------------------------------------------
        \8\ James Lee Witt and Associates, Department of Homeland Security
    and FEMA (white paper) (June 19, 2002).
        \9\ Id.
    ---------------------------------------------------------------------------
         Providing flood insurance and mitigation services
    (including pie-disaster mitigation, the Hazard Mitigation Grant
    Program, and flood mapping);
         Conducting various programs to mitigate the effects of
    natural disasters, such as programs to assist states in preparing for
    hurricanes and the National Earthquake Hazards Reduction Program;
         Providing temporary housing and food for homeless people;
    and
         Operating the National Fire Data Center and the National
    Fire incident Reporting System to reduce the loss of life from fire-
    related incidents.
        Section 402(4) of the President's proposal would transfer the
    United States Coast Guard out of the Department of Transportation and
    into the new Department. The Coast Guard describes itself as a ``multi-
    mission, military, maritime'' agency. Although it performs some
    security-related functions, it also conducts many others unrelated to
    homeland security. For example, Coast Guard responsibilities include:
         Providing navigational tools to ensure that vessels can
    navigate the nation's waterways;
         Promulgating and enforcing boating regulations to ensure
    that oceangoing vessels are safe;
         Protecting the nation's fishery resources, as well as its
    endangered species, by enforcing prohibitions against illegal and
    excess fishing;
         Protecting the maritime environment by preventing oil
    spills in the nation's waters and ensuring that spills are cleaned up
    expeditiously if they happen: and
         Maintaining a fleet of ships that is capable of breaking
    ice in order to maintain maritime mobility and monitors the movement of
    glaciers.
        These Coast Guard functions are essential, but they could be
    jeopardized by the transfer to a new Department focused on homeland
    security. Indeed, the effects of the shift in the Administration's
    priorities are already being felt. According to the Administration's
    homeland security budget justification for fiscal year 2003, ``[a]fter
    September 11, the Coast Guard's port security mission grew from
    approximately 1-2 percent of daily operations to between 50-60 percent
    today.\10\ Without a sustained commitment to its core marine and
    fishery functions, the Coast Guard's ability to protect boaters and the
    marine environment will be jeopardized.
    ---------------------------------------------------------------------------
        \10\ President George W. Bush, Securing the Homeland; Strengthening
    the Nation, 18 (undated) (hereinafter ``fiscal year 2003 Budget
    Justification') (on line at http://www.whitehouse.gov/homeland/
    homeland--security--book.html).
    ---------------------------------------------------------------------------
        There are many other examples of unrelated functions being
    transferred to the new Department. The transfer of the Environmental
    Measurements Laboratory from the Department of Energy (DOE), for
    example, will make the new Department responsible for maintaining the
    Human Subjects Research Database, which contains descriptions of all
    projects involving human subjects that are funded by the DOE, as well
    as the program that assesses the quality of 149 private laboratories
    that measure radiation levels. Radiation measurement quality control
    undoubtedly will seem like a small item to the new Department of
    Homeland Security, but assuring that the laboratories make accurate
    measurements is important, as mistakes potentially could affect public
    health and cause large unnecessary public expenditures at DOE
    facilities.
        Appendix A contains a list of 40 unrelated functions that would be
    transferred to the new Department by the President's proposal. While it
    may be impossible to create a new Department without transferring some
    unrelated functions, there would seem to be serious dangers inherent in
    the wholesale transfer of unrelated functions as contemplated in the
    Administration's proposal.

        II. LACK OF EFFECTIVE COORDINATING MECHANSMS
        At the same lime that the Administration's proposal transfers
    numerous unrelated functions to the new Department, the proposal also
    fails to include provisions that would ensure the coordination of the
    more than 100 federal entities that will continue to have significant
    homeland security functions.
        According to the Administration, ``responsibilities for homeland
    security are dispersed among more than 100 different governmental
    organizations.'' \11\ Indeed, an organizational chart provided by the
    White House listed 153 different agencies, departments, and offices
    with a role in homeland security (see Figure 1). The White House argues
    that the President's proposal would solve this problem by
    ``transforming and realigning the current confusing patchwork of
    government activities into a single department.'' \12\
    ---------------------------------------------------------------------------
        \11\ House Briefing Document, supra note 1, at I (emphasis in
    original).
        \12\ Id.
    ---------------------------------------------------------------------------
        IMAGE HERE (Should see if same scan as prior image (put it in
    again).
        In fact, however, the President's proposal will not simplify this
    patchwork and may even make it worse. Even after all of the changes
    proposed in the President's legislative language, the federal
    government would continue to have well over 100 agencies, departments,
    and offices involved in homeland security. According to an analysis by
    the minority staff of the Appropriations Committee, the total number of
    departments, agencies, and offices with a role in homeland security
    actually will grow under the President's proposal, from 153 to 160 (see
    Figure 2) \13\
    ---------------------------------------------------------------------------
        \13\ A post-transfer organizational chart provided by the White
    House Office of Management and Budget shows the number of federal
    agencies, departments, and offices dropping to 134. The While House
    chart, however, lists the new Department of Homeland Security as having
    only six offices involved in homeland security. The White House chart
    omits major components of the new Department that will have homeland
    security functions, including the Coast Guard, the Office of Threat
    Analysis, and the office responsible for stale, local, and private
    sector coordination.
    ---------------------------------------------------------------------------
        IMAGE HERE (See if same as prior image)
        One example of the continued need for coordination across agencies
    involves providing emergency response. According to the Administration:
        Currently, if a chemical or biological attack were to occur,
    Americans could receive warnings and health care information from a
    long list of government organizations, including HHS, FEMA, EPA, GSA,
    DOJ, OSHA, OPM, USPS, DOD, USAMRIID, and the Surgeon General - not to
    mention a cacophony of local agencies.\14\
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        \14\ White House Briefing Document, supra note 1, at 5.
    ---------------------------------------------------------------------------
        But under the President's proposal, all but one of these 11 federal
    agencies (FEMA) would continue to exist, and this one agency would be
    replaced by the new Department. The potential for confusion--and the
    need for effective coordination--remains as great after the creation of
    the new Department as before.
        In fact, in some cases, the reorganization will actually create
    confusion. Currently, three separate federal agencies are in charge of
    protecting the food supply: the Food and Drug Administration (FDA),
    which prevents adulteration of fruits, vegetables, processed foods, and
    seafood; the Environmental Protection Agency (EPA), which regulates
    environmental contaminants, such as pesticides; and the Department of
    Agriculture, which regulates the safety of meat and poultry for human
    consumption, as well as the spread of plant and animal pests through
    food products. Leading experts, such as the National Academy of
    Sciences, have called for consolidating these diffuse authorities into
    a single agency.\15\
    ---------------------------------------------------------------------------
        \15\ National Research Council. Ensuring Safe Food from Production
    to Consumption, National Academy Press (1 998) (recommending a major
    overhaul of food safety laws and appointment of a single federal
    official to oversee food safety). See also U.S. General Accounting
    Office, Food Safety and Security : Fundamental Changes Needed to Ensure
    Safe Food (Oct. 10, 2001) (GAO-02-47T) (recommending a single food
    safety agency).
    ---------------------------------------------------------------------------
        The Administration's proposal, however, would further fragment
    regulation of the food supply by transferring some of Agriculture's
    responsibilities to the new Department, creating a fourth food safety
    agency. APHIS, which is charged with inspecting imports to ensure that
    pests and bugs that could harm crops or livestock do not enter the
    United States, would become part of the new Department. But the Food
    Safety inspection Service of the Department of Agriculture, which
    inspects domestic and imported meat and poultry for threats to human
    health, would remain at Agriculture. The nonsensical result, as GAO has
    observed, is that ``the focus appears to be on enhancing protection of
    livestock and crops from terrorist acts, rather than on protecting the
    food supply as a whole.'' \16\
    ---------------------------------------------------------------------------
        \16\ GAO-02-886T, supra note 3, at 18.
    ---------------------------------------------------------------------------
        One area in which coordination is urgently needed is among law
    enforcement and intelligence agencies, in particular the Federal Bureau
    of Investigation (FBI) and the Central Intelligence Agency (CIA). How
    the new Department would relate to these agencies is not clear,
    however. One of the primary missions of the new Department is to
    ``[p]revent terrorist attacks within the United States.'' \17\ The
    Administration says that a new department with this mission is needed
    because ``[t]oday no one single government agency has homeland security
    as its primary mission.'' \18\ But the FBI has also just undergone a
    major reorganization. Now, it's primary mission is also ``[p]rotecting
    the United States from terrorist attack'' \19\--identical to that of
    the new Department of Homeland Security. As a result, rather than
    having no single federal agency with homeland security as its mission,
    the Administration seems to be proposing two.
    ---------------------------------------------------------------------------
        \17\ White House Briefing Document, supra note 1, at 8.
        \18\ Id. at 1.
        \19\ Statement of Robert S. Mueller, III, before the Senate
    Committee on the Judiciary (June 6, 2002) (on line at http://
    judiciary.senate.gov/testimony.cfm?id=279&wit--id=608).
    ---------------------------------------------------------------------------
        Under the Administration's proposal for a new Department of
    Homeland Security, there will be a new office for intelligence and
    threat analysis. This office will assist in ``pulling together
    information and intelligence from a variety of sources.'' \20\
    Similarly, under FBI Director Mueller's reorganization proposal, there
    will be a new office in the FBI called the Office of Intelligence that
    will also assist in ``pulling together bits and pieces of information
    that often come from separate sources.'' \21\ The Department of
    Homeland Security's intelligence office would ``have the ability to
    view the dangers facing the homeland comprehensively, ensure that the
    President is briefed on relevant information, and take necessary
    protective action.'' \22\ Similarly, the FBI's intelligence office will
    be charged with ``providing analytic products to policy makers and
    investigators that will allow us to prevent terrorist acts.'' \23\ This
    does not appear to be a recipe for a unified approach.
    ---------------------------------------------------------------------------
        \20\ House Briefing Document, supra note 1, at 14.
        \21\ Mueller Statement, supra note 19.
        \22\ White House Briefing Document, supra note 1, at 14.
        \23\ Mueller Statement. supra note 19.
    ---------------------------------------------------------------------------
        The investigation of the September 11 attacks has already revealed
    serious lapses in the analysis and sharing of intelligence information.
    In July 2001, an FBI special agent in Phoenix reported to his
    supervisors that followers of Osama bin Laden might be training at U.S.
    aviation schools and suggested a nationwide canvass of the schools.\24\
    But this warning was apparently ignored. As early as January 2001), the
    CIA obtained information that two of the September 11 assailants--Nawaz
    al Hazmi and Khalid al-Midhar--met with al-Qaeda agents in Malaysia.
    But this information was not provided to the INS until August 2001, by
    which lime al-Hamzi and al-Midhar had already entered the United
    States.\25\
    ---------------------------------------------------------------------------
        \24\ FBI Whistle-Blower Assails Bloated Bureaucracy, Washington
    Post (June 7, 2002).
        \25\ Terrorism ``Watch List'' Was No Match for Hijackers,
    Washington Post (Sept. 23, 2001); Can We Stop the Next Attack?,
    Time.com (March 3. 2002). The CIA has claimed that it provided
    information on al-Midhar as early as January 2001, but the FBI has
    asserted that the information provided contained little detail.
    Sources: CIA Warned FBI About Hijacker, CNN.com (June 4, 2001); FBI and
    CIA Fight It Out Over Who Was to Blame for September 11 Blunders, The
    Guardian (June 5, 2002).
    ---------------------------------------------------------------------------
        The Administration's proposed bill, however, does not adequately
    address these problems. Although the bill gives the Secretary of
    Homeland Security rights of access to reports, assessments, and
    analytical information from other agencies that relate to threats and
    vulnerabilities, the Department remains primarily a ``consumer'' of
    intelligence information collected by agencies outside its control
    after that information is already processed by those agencies. This
    passive role will not ensure that the new Department obtains access to
    information that the collecting agencies deem insignificant, such as
    the warning from the FBI agent about flight schools. Although the
    Administration's bill allows for the transmittal of ``raw''
    intelligence from outside agencies to the Department of Homeland
    Security, the Department is not given the resources to cope with the
    volume and complexity of this information.\26\ Moreover, the new
    Department has no ``tasking'' authority to direct what intelligence is
    collected, making it difficult for the new Department to ensure that
    possible threats it identifies are properly pursued.
    ---------------------------------------------------------------------------
        \26\ Of the 1,000 people slated to staff the new Information
    Analysis and Infrastructure Protection Division, 800 reportedly will
    come from the FBI's National Infrastructure Protection Center(NIPC).
    These individuals, however, are already fully occupied with their
    current responsibilities, which involve protecting critical
    infrastructure, particularly with respect to computer and information
    technology. If given the new role of processing all raw intelligence
    information from the FBI, CIA, and other intelligence agencies, the
    existing NIPC staff would be both overwhelmed and diverted from its
    current tasks.
    ---------------------------------------------------------------------------
        Another concern is the potential for confusion and interference in
    the actual response to bioterrorist incidents. The FBI will bring a law
    enforcement focus to the scene of a bioterrorist event, while the new
    Department will be concerned with the emergency response. Under the
    President's proposal, it is unclear which will prevail. Under
    Presidential Decision Directive 62, which was signed during the
    previous Administration, the FBI was designated as the lead agency for
    ``crisis management,'' which included efforts to anticipate, prevent,
    and resolve terrorist attacks. FEMA was designated the lead agency for
    ``consequence management,'' which included broader measures to protect
    public health and safety. The President's proposal seeks to ``clarify''
    these responsibilities by ``eliminating the artificial distinction
    between `crisis management' and `consequence management.' '' \27\ But
    it does not describe how the new Department and the FBI will handle the
    scene of a bioterrorist attack if they both arrive at the same time
    with fundamentally conflicting interests and goals.
    ---------------------------------------------------------------------------
        \27\ White House Briefing Document, supra note 1, at 12.
    ---------------------------------------------------------------------------
        There are many other instances of coordination problems that the
    President's proposal does not address. It is unclear in the President's
    proposal, for instance, how the Department of Homeland Security would
    organize and coordinate the various different police forces that exist
    among federal agencies. The Administration's proposal would transfer
    some of those forces (the Federal Protective Service, which protects
    buildings belonging to the General Services Administration (GSA)), but
    not others (the security forces protecting Department of Energy,
    Veterans, and judicial buildings). Moreover, removing the Federal
    Protective Service from GSA creates its own problems because, as GAO
    has observed, ``security needs to be integrated into the decisions
    about location, design and operation of federal facilities.'' \28\
    ---------------------------------------------------------------------------
        \28\ GAO-02-886T, supra note 3, at 18.
    ---------------------------------------------------------------------------
        What is urgently needed is an effective entity at the While House
    level that can unify the disparate federal agencies with homeland
    security functions behind a comprehensive national strategy. This is
    supposed to be the mission of the White House Office of Homeland
    Security, which President Bush created in October 2001, and which you
    head. But the proposal does nothing to give the head of the office the
    kinds of authority needed to succeed.

        III. PROBLEMS WJTB EXTRACTING CERTAIN AGENCIES
        The sections above have raised concerns with transferring functions
    unrelated to homeland security and the lack of coordinating mechanisms
    regardless of whether agencies are inside or outside the structure of
    the new Department. Also of concern are the potential effects of
    removing certain functions from their home agencies.
        This is a particular problem for the functions being transferred
    from the Department of Health and Human Services (HHS). Section 502(5)
    of the President's proposal would move the Office of the Assistant
    Secretary for Public Health Emergency Preparedness and ``the functions
    of the Secretary of Health and Human Services related thereto'' to the
    new Department of Homeland Security. This provision makes little sense.
    In the Public Health Security and Bioterrorism Preparedness and
    Response Act of 2002, Congress created the Office of the Assistant
    Secretary for Public Health Emergency Preparedness in recognition of
    the need to have a central office in HHS to coordinate how the various
    agencies within the Department respond to public health
    emergencies.\29\ Moving this office to another department will not
    eliminate the need for a coordinating office within HHS. It will simply
    recreate the same problems within HHS that Congress was attempting to
    fix.
    ---------------------------------------------------------------------------
        \29\ According to the Public Health Security and Bioterrorism
    Preparedness and Response Act of 2002 (Pub. Law 107-588), the Assistant
    Secretary coordinates all agency interfaces on emergency preparedness
    between HHS and ``other departments, agencies and offices of the United
    States.'' This person also ``[i]nterfaces between the Department and
    State and local entities with responsibility for emergency
    preparedness.'' As part of this person's duties, he or she also
    ``coordinate the efforts of the Department to bolster State and local
    emergency preparedness for a bioterrorist attack or other public health
    emergency.''
    ---------------------------------------------------------------------------
        Richard Falkenrath, director of policy at the White House Office of
    Homeland Security, was asked about this problem during a briefing for
    staff on July 1,2002. He answered that the challenge of coordinating
    emergency preparedness and response activities within HHS could be
    handled by ``a couple of people'' in the Secretary's office. Obviously,
    this cavalier attitude is seriously misinformed.
        Section 505 is also problematic. It transfers control over HHS
    programs to provide assistance for state and local preparedness from
    HHS to the new Department. These funds, which total over $1 billion,
    allow states and localities to enhance their surveillance,
    communication, and laboratory abilities, all of which are essential for
    responding to numerous public health threats, including threats that
    are not related to terrorism. As GAO has stated, these programs
    ``include essential public health functions that, while important for
    homeland security, are critical to basic public health core
    capacities.'' \30\ As a result, GAO made the following conclusions:
    ---------------------------------------------------------------------------
        \30\ GAO-02-883T, supra note 2, at 6.
    ---------------------------------------------------------------------------
        We are concerned that this approach may disrupt the synergy that
    exists in these dual-purpose programs. We are also concerned that the
    separation of control over the programs from their operations could
    lead to difficulty in balancing priorities. Although the HHS programs
    are important for homeland security, they are just as important to the
    day-to-day needs of public health agencies and hospitals, such as
    reporting on disease outbreaks and providing alerts to the medical
    community. The current proposal does not clearly provide a structure
    that ensures that both the goals of homeland security and public health
    will be met.\31\
    ---------------------------------------------------------------------------
        \31\ Id. At 8.
    ---------------------------------------------------------------------------
        Section 403 also creates uncertainties by transferring to the new
    Department vague authorities over visa processing. Currently, approving
    and denying visas is an important activity of the State Department,
    which processes about 400,000 immigrant visas and over six million non-
    immigrant visas annually. To perform this function, the State
    Department employs thousands of foreign service officers skilled in
    hundreds of languages. Section 403(1) transfers to the Secretary of
    Homeland Security ``exclusive authority'' over this function, but this
    authority would be exercised ``through'' the Secretary of State. As a
    result, it is unclear whether the State Department must concur in
    policy decisions, or whether this is merely an administrative function.
    Additional statements by the Administration have not clarified this
    provision. The Administration has stated that consular officers will
    remain employed by the State Department, but that the new Secretary of
    Homeland Security will delegate back to the Secretary of State some
    visa functions unrelated to security.
        Similar problems affect the provisions transferring portions of the
    Department of Energy. The provisions in the bill are ambiguous and
    potentially very broad. For example, section 302(2)(G) of the
    President's proposal would transfer ``the advanced scientific computing
    research program and activities'' at Lawrence Livermore Laboratory to
    the new Department. Although the exact scope of this provision is
    unclear, it appears to encompass parts of the Lawrence Livermore
    Laboratory's Computation Directorate, which supports other programs at
    the laboratory by providing computing capacity and capability, as well
    as research, advanced development, and operations and support related
    to computing, computer science, and information technologies. Such a
    transfer could harm the laboratory's ability to support its key
    mission--safeguarding the stockpile of nuclear weapons--as well as
    other core laboratory activities.
        Section 302(2)(E) gives the President authority to transfer from
    DOE to the new Department any life science activity within the
    biological and environmental research program that is related to
    microbial pathogens. The result would be that ongoing DNA sequencing of
    harmful microbes could be transferred to the new Department, while
    virtually identical work on microbes with beneficial uses (such as
    microbes that break down pollution) would stay at DOE. Splitting this
    highly specialized work risks weakening the effectiveness of both.

        IV. LACK OF RECOGNITION OF DISPARATE IMMIGRATION FUNCTIONS
        In April, the House passed legislation (H.R. 3231) recognizing the
    two distinct functions of the INS: an immigration services function and
    an enforcement function. As part of this reform effort, the bill would
    split the INS into a Bureau of Citizenship and Immigration Services and
    a Bureau of Immigration Enforcement, both under the supervision of an
    Associate Attorney General for Immigration Affairs within the
    Department of Justice. The legislation aimed to correct longstanding
    and widely- recognized systemic problems within the INS by separating
    out its distinct and often conflicting service and enforcement
    functions.
        When the House immigration bill was being considered, the
    Administration expressed its support. In addition, when the White House
    issued its briefing document regarding the new Department of Homeland
    Security, that support was reiterated. The briefing document stated the
    following:
        The new Department of Homeland Security would include the INS and
    would, consistent with the President's long-standing position, separate
    immigration services from immigration law enforcement.\32\
    ---------------------------------------------------------------------------
        \32\ White House Briefing Document, supra note 1, at 10.)
    ---------------------------------------------------------------------------
        Despite these assurances, however, the legislative language
    proposed by the President would import the INS into the new Department
    of Homeland Security intact and unreformed. There are no details
    whatsoever regarding the structure of the INS after it is transferred
    to the new Department. As a result, the Administration's proposal fails
    to address internal structural and coordination problems that hamper
    the effectiveness of the INS.

        V. EXEMPTION FROM ``GOOD GOVERNMENT'' LAWS
        The Administration's proposal would create broad exemptions to the
    nation's ``good government'' laws. It would make the civil service,
    procurement, and property acquisition and disposal laws essentially
    optional for the new Department. In addition, the President's proposal
    would weaken valuable sunshine laws, such as the Freedom of Information
    Act and the Federal Advisory Committee Act. The bill would also create
    a weak management and oversight structure by not fully applying the
    Chief Financial Officers Act, the law governing Chief information
    Officers, and the Inspector General Act.

        A. Exemptions from Civil Service Protections
        The nation's civil service laws have evolved over many decades to
    ensure that the government has a professional civil service hired on
    the basis of merit rather than political favoritism. Section 730 of the
    President's proposal, however, would give the Secretary the authority
    to create an alternative personnel system. The only limitation in the
    statute is that the system should be ``flexible, contemporary, and
    grounded in the public employment principles of merit and fitness.''
        Under the President's proposal, employees of the new Department
    could be exempted from essential provisions of title 5 of the United
    States Code. No rationale has been offered to explain why affording
    these basic protections for federal workers and their families would
    undermine the mission of the new Department The civil service
    provisions that become optional include the following:
         The prohibition on discrimination r employees on the basis
    of political affiliation and on coercing political activity (anti-
    patronage protection);
         The prohibition on hiring or promoting a relative (anti-
    nepotism protection);
         The prohibition on reprisal against employees for the
    lawful disclosure of information about illegal and wasteful government
    activity (whistleblower protection);
         The preferences for veterans in hiring and in reductions-
    in-force;
         The protection from arbitrary dismissal or demotion
    through due process appeal rights to the Merit Systems Protection
    Board;
         The right to organize, join unions, and bargain
    collectively with management over working conditions;
         Sick and annual leave for federal employees and family and
    medical leave;
         Retirement benefits, such as the Civil Service Retirement
    System and the Federal Employees' Retirement System; and
         Health insurance through the Federal Employees' Health
    Benefits Program.
        Moreover, important programs for ensuring diversity in the federal
    workforce, such as the requirement to recruit minorities, would also
    become optional under the proposed legislation.
        Another potential threat to the civil service laws is section
    732(b), which allows the Secretary to hire an unlimited number of
    employees through ``personal service'' contracts rather than through
    the civil service system. Although the rationale for this provision
    seems to be to allow the new Department to obtain certain specialized
    services in an emergency, there do not appear to be any limits on its
    use. For example, current law requires these types of contracts to be
    temporary (no longer than one year) and subject to salary caps (no
    higher than the GS-l5 level). The President's proposal would allow
    these contracts to go on indefinitelv and at any rate. In effect, the
    section provides an alternative vehicle for bypassing the protections
    and requirements of the civil service system.

        B. Exemption from Procurement Rules
        Under section 732(c) of the President's proposal, the new Secretary
    could waive any and all procurement statutes and regulations, and the
    Secretary would not be required to comply with the cornerstone
    procurement principles of open and competitive bidding. In a section-
    by-section analysis provided by the White House, the Administration
    asserts that ``normal procurement operations would be subject to
    current government-wide procurement statutes and regulations.'' \33\ To
    the contrary, however, the legislative language would add the new
    Department to the list of entities listed in 40 U.S.C. 474, such as the
    Postal Service, which would exempt entirely the Department from the
    federal government's normal acquisition laws.
    ---------------------------------------------------------------------------
        \33\ The White House, Analysis for the Homeland Security Act of
    2002, 11 (undated).
    ---------------------------------------------------------------------------
        As a result, there is no guarantee that the new Department would be
    getting the lowest prices, the best quality, or the best deals.
    Fundamental principles of federal procurement such as the following
    would not apply:
         The requirement that acquisitions be publicly advertised;
         The requirement that sufficient notice be given to allow
    companies to respond;
         The requirement that all responsible bidders be given the
    chance to compete for a given acquisition; and
         The requirement that all contractors be rated on the same
    criteria when competing for a given contract.
        These bedrock principles have helped to maintain competition in
    federal contracting, which history has proven to be the best way to
    ensure the best quality at the lowest prices while maintaining a system
    free of favoritism or abuse. In addition, long-standing preferences for
    small- and minority- owned businesses designed to encourage their
    development and access to federal contracts would no longer be
    guaranteed.
        Section 732(a) of the President's proposal would explicitly grant
    the new Department so-called ``other transactions authority'' for
    research and development contracts. This authority was given to the
    Defense Department to eliminate the open and competitive bidding
    process in order to attract nontraditional contractors. In fact,
    however, it has been used mainly by traditional contractors to
    negotiate contracts that waive the federal government's rights to
    review financial management and cost information, as well as its rights
    to use new inventions discovered through research funded by the federal
    taxpayer.\34\ In reviewing the use of this authority by the Defense
    Department, the inspector General found that these that types of
    contracts ``do not provide the government a number of significant
    protections, ensure the prudent expenditure of taxpayer dollars, or
    prevent fraud.'' \35\ .
    ---------------------------------------------------------------------------
        \34\ In general, for intellectual property developed with federal
    funding, the government normally retains a nonexclusive,
    nontransferable, irrevocable, and paid-up (royalty-free) license to use
    the intellectual property.
        \35\ Inspector General, Department of Defense, Comments on the
    Service Acquisition Reform Act (H.R. 3832), 11(Mar. 12, 2002)
    (concluding that ``other transactions have not attracted a significant
    number of nontraditional Defense contractors`` and that ``traditional
    protections for the public trust do not exist, for the most part, for
    other transactions'').

        C. Exemption from Property Rules
        The new Department will acquire a considerable inventor of federal
    property, particularly through the Coast Guard, which owns valuable
    real estate across the country. Sections 732(d) and (f) of the
    President's proposal, however, would give the new Department broad
    authority to acquire and dispose of both real and personal property.
    Specifically, the Department could acquire replacement real property
    through exchange or transfer with other agencies or through the sale or
    long-term lease to the private sector, in addition, the Department
    would be authorized to retain the proceeds of such transactions.
        Currently, under the 1949 Property Act, federal agencies must
    determine whether they own ``excess'' property they no longer need. GSA
    then screens this excess property for other federal uses. If there are
    no federal uses for the property, GSA declares the property ``surplus''
    and screens it for ``homeless'' or ``public benefit'' uses, such as for
    schools, correctional institutions, airports, and other entities. If no
    beneficial public use is found for the property. GSA may sell the
    property through negotiated sales at fair market value without
    restrictions on use. The property may also be sold to the public
    through a bidding process if a negotiated sale does not occur. Under
    the Administration's proposal, however, none of these procedures will
    apply.
        The Government Reform Committee reported a comprehensive reform of
    federal property laws earlier this year (H.R. 3947). This reform gave
    agencies more flexibility to manage their property, but it also
    included safeguards to ensure that agencies respond to community input,
    consider local zoning laws, and receive fair market value. None of
    these safeguards are incorporated into the Administration's proposal.

        D. Exemption from Freedom of Information Act
        Section 204 of the President's proposal would exempt the new
    Department from complying fully with the Freedom of information Act
    (FOIA). If nonfederal entities or individuals provide information
    voluntarily to the new Department that relates to infrastructure
    vulnerabilities or other vulnerabilities to terrorism, that information
    would not be subject to FO1A. This exemption would apply to information
    that ``is or has been in the possession of the Department.''
        FOIA was designed to preserve openness and accountability in
    government. In order to protect sensitive information, FOIA already
    contains sufficient exemptions from disclosure. These exemptions cover
    critical infrastructure information. FO1.A does not require the
    disclosure of national security information (exemption 1), sensitive
    law enforcement information (exemption 7), or confidential business
    information (exemption 4). Therefore, new exemptions to its provisions
    do not appear necessary.
        The danger in creating new exemptions to FOIA is that important
    information about health and safety issues could be withheld from the
    public. In fact, the provision is drafted so broadly that it could be
    used to ``launder'' embarrassing information through the new Department
    and thereby prevent public disclosure.
        One particular target of the new FOIA exemption appears to be the
    ``Risk Management Plans'' that chemical plants are required to file
    under the Clean Air Act. These plans inform communities about the
    dangers they would face in the event of an explosion or chemical
    accident in a nearby plant. Chemical industry officials argued that
    Congress should restrict public access to this information because the
    information could be used by terrorists to target facilities.
        Congress addressed this issue by carefully balancing the goal of
    informing emergency responders and the public about potential risks of
    chemical accidents with the goal of keeping sensitive information away
    from terrorists. In the Chemical Safer Information Site Security Act of
    1999, Congress concluded that information about potential ``worst
    case'' scenarios should remain available to the public, but with
    certain restrictions to prevent a searchable database from being
    readily posted on the internet. Congress ensured public access to basic
    information about the risk management plans, preserving the right of
    Americans to know about chemical accidents that could impact their
    families and communities. Under the President's proposal, however,
    chemical companies could now prevent the disclosure of all Risk
    Management Plans under FOIA simply by sending them to the new
    Department.

        E. Exemption from Federal Advisory Committee Act
        Section 731 of the President's proposal would exempt advisory
    committees established by the Secretary of the new Department from the
    Federal Advisory Committee Act (FACA). FACA requires that any committee
    formed to provide advice to the federal government, and which consists
    of members who are not federal employees, must follow certain rules in
    order to promote good-government values such as openness,
    accountability, and a balance of viewpoints. Generally, FACA requires
    that such committees announce their meetings, hold their meetings in
    public, take minutes of the meetings, and provide the opportunity for
    divergent viewpoints to be represented.
        To protect sensitive information, FACA includes exemptions for
    information that relates to national security issues or information
    that is classified. As a result, many agencies with homeland security
    missions, such as the Department of Justice, The Federal Bureau of
    investigation, and the Department of Defense, currently operate under
    FACA without difficulty. The President's proposal contains no
    explanation why the new Department could not also comply with FACA. In
    fact, the only two agencies that are exempt from FACA are the Central
    Intelligence Agency and the Federal Reserve.
        At least 27 advisory committees that currently exist would be
    transferred to the new Department under the President's proposal. These
    existing advisory committees, which are currently subject to FACA,
    include the Navigational Safety Advisory Committee at the Coast Guard,
    the Advisory Committee of the National Urban Search and Rescue System
    at FEMA, the Advisory Committee on International Child Labor
    Enforcement at the Customs Service, and the Advisory Committee on
    Foreign Animal and Poultry Diseases at APHIS. When rechartered under
    the Homeland Security Department, none of these advisory committees
    will be subject to the FACA requirement on balance and openness.
        In addition, the President's proposal waives important conflict of
    interest laws that apply to individuals serving on advisory committees.
    Under section 731, if an individual serves on an advisory committee,
    the individual will be exempt from the provisions of sections 203, 205,
    or 207 of Title 18. United States Code. These sections contain
    important protections. Section 207, for example, provides that a person
    who serves on a committee that is advising an agency on a specific
    matter cannot lobby the agency about the same matter after leaving the
    advisory committee. No rationale is provided for exempting members of
    advisory committees from these protections against conflicts of
    interest.

        F. Exemption from Chief Financial Officer Act
        Section 103(d)(4) of the President's proposal would authorize the
    President to appoint the Department's Chief Financial Officer (CFO)
    without Senate confirmation. Current law requires that a CFO of a
    cabinet department either be: (1) appointed by the President with
    Senate confirmation; or (2) designated by the President from among
    agency officials who are Senate-confirmed.\36\ In either case, current
    law requires that CFOs be Senate-confirmed.
    ---------------------------------------------------------------------------
        \36\ 31 U.S.C. Sec. 901(a)(l).
    ---------------------------------------------------------------------------
        In addition, the President's proposal contains no language making
    the CFO Act applicable to the new Department. The CEO Act contains core
    financial management, accountability, and reporting requirements that
    are at least as important for the new Department as they are for other
    covered agencies, which include all existing cabinet departments.
    Moreover, section 602 of the President's proposal provides that the CEO
    shall report to the Secretary or to another official of the Department
    as the Secretary may direct. This section is inconsistent with the CFO
    Act, which requires that the CEO report directly to the agency head
    regarding financial management matters.\37\
    ---------------------------------------------------------------------------
        \37\ 31 U.S.C. Sec. 902(a)(1).
    ---------------------------------------------------------------------------
        These exemptions from financial management requirements make little
    sense. According to GAO, ``[i]t is important to re-emphasize that the
    department should be brought under the Chief Financial Officers (CEO)
    Act and related financial management statutes.'' \38\
    ---------------------------------------------------------------------------
        \38\ GAO-02-886R, supra note 3, at 33.

        G. Exemption from Chief Information Officer Legislation
        The proposal does not appear to give the Chief information Officer
    (CIO) of the new Department the same status and responsibilities as
    ClOs at other agencies. Section 603 of the President's proposal
    provides that the ClO shall report to the Secretary or to another
    official of the Department as the Secretary may direct. The Clinger-
    Cohen Act, however, requires that the ClO report directly to the agency
    head.\39\
    ---------------------------------------------------------------------------
        \39\ 44 U.S.C. Sec. 3506(a)(2)(A).
    ---------------------------------------------------------------------------
        In addition, the Clinger-Cohen Act specifies numerous
    responsibilities for ClOs. These include developing an accounting,
    financial, and asset management system that is reliable, consistent,
    and timely; developing and maintaining information systems; and
    assessing and reporting on progress made in developing information
    technology systems. The President's legislative language, however, does
    not specify any responsibilities for the ClO. In fact, the bill would
    assign responsibility for information technology systems to an Under
    Secretary for Management at the new Department, a responsibility
    assigned to the CI0 under the Clinger-Cohen Act.

        H. Limits on Access to Information by Inspector General
        Section 710 of the President's proposal would subject the inspector
    General (IG) of the new Department to the Secretary's control and would
    authorize the Secretarv to prevent the IG from doing work in areas
    involving certain information. These areas are quite broad and extend
    to information concerning any ``matters the disclosure of which would,
    in the Secretary's judgment, constitute a serious threat to national
    security.'' Under the President's proposal, the Secretary could
    prohibit the IG from doing work ``if the Secret determines that such
    prohibition is necessary. . . to preserve the national security or to
    prevent a significant impairment to the interests of the United
    States.''
        IGs at certain other agencies (such as the Defense Department and
    the Justice Department) have similar limitations on access. But in
    those cases, the IGs are directed to report to Congress if the relevant
    Secretary impedes their access 10 necessary information. In the case of
    the IG for the new Department, this important check on Secretarial
    interference has been eliminated. Instead, the proposal would give the
    responsibility of reporting interference with an IG investigation to
    the Secretary, who would have an obvious conflict of interest in full
    reporting.

        VI. EXEMPTION FROM CONGRESSIONAL OVERSIGHT
        In addition to creating exemptions to many of the nation's good
    government laws, the President's proposal would substantially undercut
    Congress' ability to conduct oversight of the new Department. Through
    several broad and sweeping provisions in the President's proposal, the
    Secretary of the new Department would have new powers to rewrite
    enacted legislation and override budgetary decisions made by Congress.
        The President's proposal would give the Secretary of the new
    Department the equivalent of a lump-sum appropriation of more than 530
    billion, in transferring the various existing agencies to the new
    Department. Several provisions of the President's proposal allow the
    Secretary to transfer agency balances to the new Department. Section
    803(e) of the President's proposal allows the new Secretary to allocate
    those funds as the Secretary sees fit, and it expressly overrides the
    provision of permanent Jaw that requires funds transferred to be used
    only for the purposes for which they were originally appropriated.
    Taken together, these provisions allow the new Secretary to rewrite
    appropriations relating to both homeland security and all other
    functions conducted by the new Department.
        Section 733(b) creates for the new Secretary a permanent blanket
    grant of authority to transfer between appropriations accounts up to 5%
    of the appropriations made each year for agencies within the new
    Department, so long as the Appropriations Committees are given 15 days
    notice. This provision could allow the Secretary to transfer $2 billion
    or more per year rather than addressing potential funding
    misallocations through the annual congressional appropriations process.
        In addition, section 733(a) allows the Secretary to ``establish,
    consolidate, alter, or discontinue'' any organizational unit in the new
    Department, including those established by statute, upon 90 days notice
    to Congress. Although the Coast Guard and the Secret Service are exempt
    from this provision, all other agencies transferred to the new
    Department could be abolished entirely with no input from Congress.

        VII. POTENTIAL FOR SERIOUS DISRUPTION IN THE WAR ON TERROR
        The Administration asserts that the ``current components of our
    homeland security structure will continue to function as normal and
    there will be no gaps in protection as planning for the new Department
    moves forward.'' \40\ Unfortunately, this is a difficult goal to
    achieve, and the proposal submitted to Congress contains no
    implementation plan that shows how disruptions will be avoided.
    ---------------------------------------------------------------------------
        \40\ White House Briefing Document, Supra note 1, at 4.
    ---------------------------------------------------------------------------
        In fact, the history of corporate and government reorganizations is
    not encouraging. As a management professor from Columbia University
    recently remarked. ``[t]o think that a structural solution can bring
    about a major improvement in performance is a major mistake.'' \41\ In
    the corporate world, more mergers fail than succeed.\42\ According to
    one expert, ``[p]rivate-sector data show that productivity usually
    drops by 50 percent in the first four to eight months following the
    initial announcement of a merger, largely because employees are
    preoccupied with their now uncertain future.'' \43\
    ---------------------------------------------------------------------------
        \41\ The Experiment Begins, National Journal (June 1 5. 2002).
        \42\ See e.g., Breaking Up is Hard, Merging is Harder, New York
    Times Week in Review (June 23,2002) (``Indeed, business history is
    littered with failed attempts to unite far-flung enterprises that would
    prosper through sheer scale''); and Stressed Out: Can Workplace Stress
    Get Worse?, Wall Street Journal (Jan. 16, 2001) (``75% of those deals,
    by several experts' estimates, will fail to achieve expected
    results'').
        \43\ Max Stier, Homeland Security: Mega Merger. Washington Post
    (June 25. 2002).
    ---------------------------------------------------------------------------
        The model most often cited by the Administration is the creation of
    the Department of Defense in 1947. But that reorganization was not
    undertaken until after World War II was over. Moreover, the newly
    created Defense Department was riven with strife for decades after its
    creation. As recently as 1983, when President Reagan ordered the
    invasion of Grenada, the Army and the Marines had to split the island
    in half because they could not figure out how to cooperate.\44\ The
    original 1947 reorganization required four different amendments, the
    last being the Goldwater-Nichols Act of 1986, before the problems
    created by the 1 947 reorganization were finally addressed.
    ---------------------------------------------------------------------------
        \44\ Repeating the Past, National Journal (June 15, 2002).
    ---------------------------------------------------------------------------
        GAO has closely tracked the history of government reorganizations.
    According to David Walker, the Comptroller General of GAO:
            Often it has taken years for the consolidated functions in new
            departments to effectively build on their combined strengths,
            and it is not uncommon for these structures to remain as
            management challenges for decades . . . [R]eorganizations of
            government agencies frequently encounter start up problems and
            unanticipated consequences that result from the consolidations,
            are unlikely to fully overcome obstacles and challenges, and
            may require additional modifications in the future to
            effectively achieve our collective goals for defending the
            country against terrorism.\45\
    ---------------------------------------------------------------------------
        \45\ GAO-02-886T, supra note 3, at 5.
    ---------------------------------------------------------------------------
        Given this history, the burden should be on the Administration to
    show how this bureaucratic reorganization can be accomplished
    successfully. But virtually no detail has been provided to Congress
    that addresses these serious implementation issues.

        VIII. LACK OF NATIONAL STRATEGY
        Most experts recommend three concrete steps for developing an
    approach to homeland security: First, evaluate the threats posed to the
    country: second, develop a plan for dealing with those threats; and
    third, implement that plan through whatever reorganization and
    realignment of resources is necessary. It appears, however, that the
    Administration has taken exactly the opposite approach: White House
    officials proposed the reorganization first; they will come out with a
    strategy second; and they may eventually do a comprehensive assessment
    of the threats facing the country.
        Experts have consistently criticized the United States for failing
    to have a comprehensive national strategy for fighting terrorism. GAO
    has made this finding repeatedly.\46\ The U.S. Commission on National
    Security, the bipartisan group headed by former Senators Warren Rudman
    and Gary Hart, found that ``no overarching strategic framework guides
    U.S. national security policymaking or resource allocations.'' \47\
    Likewise, the independent panel headed by Governor James Gilmore
    concluded that ``the United States has no coherent functional national
    strategy for combating terrorism.'' \48\
    ---------------------------------------------------------------------------
        \46\ See U.S. General Accounting Office. Combating Terrorism:
    Selected challenges and Related Recommendations (September 2001) (GAO-
    01-822); U.S. General Accounting Office, Combating Terrorism: Need for
    Comprehensive Threat and Risk Assessments of chemical and Biological
    Attacks (September 1999) (GAO/NSLAD-99-163); and U.S. General
    Accounting Office Combating Terrorism. Threat and Risk Assessments Can
    Help Prioritize and Target Program Investments (April 1998) (GAO/NSIAD-
    98-74).
        \47\ The United States Commission for National Security/21st
    Century, Road Map for National Security: Imperative for Change (Mar.
    15, 2001).
        \48\ Advisory Panel to Assess Domestic Response Capabilities for
    Terrorism Involving Weapons of Mass Destruction. Toward a National
    Strategy for Combating Terrorism (Second Annual Report) (Dec. 15,
    2000).
    ---------------------------------------------------------------------------
        Nine months ago, in October 2001, the White House agreed with this
    assessment. In the executive order creating the White House Office of
    Homeland Security, President Bush recognized that developing a national
    strategy was essential in the fight against terrorism. The executive
    order establishing the Office provided that:
            The mission of the Office shall be to develop and implement the
            coordination of a comprehensive national strategy to secure the
            United States from terrorist threats or attacks.\49\
    ---------------------------------------------------------------------------
        \49\ Executive Order 13228)
    ---------------------------------------------------------------------------
        When you assumed your position, you also recognized that developing
    this strategy was your top assignment, calling it your ``main mission''
    \50\ and your ``very first mission.'' \51\ In a speech in April, you
    said, ``I take every word of that executive order seriously,'' and you
    promised that the strategy would be ``guided by an overarching
    philosophy: risk management: focusing our resources where they will do
    the most good, and achieve the maximum protection of lives and
    property.'' \52\
    ---------------------------------------------------------------------------
        \50\ Ridge Says Focus is on Expanding Homeland Security Resources,
    Speech at Homeland Security Conference, U.S. Department of State
    (Washington, DC) (on line at http://usinfo.state.gov).
        \51\ Tom Ridge Speaks to the Associated Press Annual Luncheon,
    Office of the White House Press Secretary (Apr. 29. 2002) (on line at
    http://www.whitehouse.gov/news/releases/2002/04/20020429-3.html).
        \52\ Id.
    ---------------------------------------------------------------------------
        Since that time, the national strategy has been promised
    repeatedly. In the budget justification for fiscal year 2003, the
    Administration made this statement:
            The United States has never had a national blueprint for
            securing itself from the threat of terrorism. This year with
            the publication of the National Strategy for Homeland Security,
            it will.\53\
    ---------------------------------------------------------------------------
        \53\ Fiscal Year 2003 Budget Justification. supra note 10, at 6.
    The Administration continued: ``The Budget for 2003 is a down payment
    on a larger set of homeland security initiatives that will be described
    in the national strategy and reflected in the 2004 and later budgets.''
    Id. at 7.
    ---------------------------------------------------------------------------
        Unfortunately, this strategy has not been developed.\54\ As a
    result, Congress still does not have a list of priorities set forth in
    a clear way and cannot gauge whether your reorganization proposal best
    serves the nation's security goals. Moreover, the new Department will
    have no clear strategy to implement after it is created. As John R.
    Brinkerhoff, civil defense director at FEMA under President Reagan, has
    stated: ``The Bush Administration is doing the wrong thing for the
    wrong reasons. What worries me the most is that we've put the cart
    before the horse: We're organizing, and then we're going to figure out
    what to do.'' \55\
    ---------------------------------------------------------------------------
        \54\ In testimony before the Government Reform Committee on June
    20, 2002, you stated that the principles of the national strategy have
    been evident ``ever since the President sent up his 2003 budget
    initiative.'' House Committee on Government Reform, ``Hearing on The
    Hearing of Homeland Security: An Overview of the President's Proposal
    (June 20, 2002) (stenographic record). This statement is misleading at
    best. The budget justification for fiscal year 2003 included absolutely
    no information about the newly proposed Department of Homeland
    Security, which the Administration now says is the cornerstone of the
    national strategy. Moreover, the Administration's budget justification
    for fiscal year 2003 makes clear that no national strategy existed when
    the budget justification was submitted to Congress. Fiscal Year 2003
    Budget Justification. supra note 10. at 6.
        \55\ Bush's Homeland Gambit, National Journal (June 15, 2002)

        IX. COST
        The Administration has stated that the creation of this new
    Department ``would not `grow' government.'' \56\ According to the
    Administration: ``The cost of the new elements (such as the threat
    analysis unit and the state, local, and private sector coordination
    functions), as well as the wide management and administration units,
    can be funded from savings achieved by eliminating redundancies
    inherent in the current structure.'' \57\
    ---------------------------------------------------------------------------
        \56\ White House Briefing Document, supra note 1, at 17.
        \57\ Id.
    ---------------------------------------------------------------------------
        This is not a credible statement. CBO has examined the costs of the
    reorganization proposal put forth by Senator Lieberman (S. 2452).
    According to CBO, the Lieberman bill ``would cost about $1.1 billion
    over the 2O03-2007 period.'' \58\ CBO writes A] new cabinet-level
    department would require additional resources to perform certain
    administrative functions, including new positions to staff the offices
    of the Inspector General, general counsel, budget, and Congressional
    affairs for the new department.'' \59\ In addition. CBO states that the
    new Department would require additional funding for ``centralized
    leadership, coordination, and support services,'' and that ``new
    departmental staff would be hired over the first two years following
    enactment of the legislation.'' \60\
    ---------------------------------------------------------------------------
        \58\ CBO Cost Estimate, supra note 5 (specifically excluding the
    costs of obtaining a new or leased building and centralizing staff and
    resources there).
        \59\ Id.
        \60\ Id.
    ---------------------------------------------------------------------------
        The Administration's proposal is significantly more ambitious and
    costly than Senator Lieberman's. It includes more agencies, such as the
    Transportation Security Administration with over 40,000 employees.
    Moreover, it requires the new Department to take on a host of new
    functions, including:
            A new office for ``Intelligence and Threat Analysis'' to ``fuse
            and analyze intelligence and other information pertaining to
            threats to the homeland from multiple sources,'' \61\ including
            a new ``system for conveying actionable intelligence and other
            information'' \62\ and a new system to ``consolidate the
            federal government's lines of communication with stale and
            local public safety agencies and with the private sector'';
            \63\
    ---------------------------------------------------------------------------
        \61\ White House Briefing Document, supra note 1, at 3.
        \62\ Id. At 14-15.
        \63\ Id. At 14.
    ---------------------------------------------------------------------------
         A new ``state-of-the-art visa system, one in which
    visitors are identified by biometric information''; \64\
    ---------------------------------------------------------------------------
        \64\ Id. At 10.
    ---------------------------------------------------------------------------
         A new ``automated entry-exit system that would verify
    compliance with entry conditions, student status such as work
    limitations and duration of stay, for all categories of visas''; \65\
    ---------------------------------------------------------------------------
        \65\ Id..
    ---------------------------------------------------------------------------
         New ``interoperable communications,'' including
    ``equipment and systems'' for the ``hundreds of offices from across the
    government and the country'' that make up the ``emergency response
    community'' (this would be a ``top priority'' of the new Department);
    \66\ and
    ---------------------------------------------------------------------------
        \66\ Id. At 12.
    ---------------------------------------------------------------------------
         A new ``national system for detecting the use of
    biological agents within the United States,'' including a new
    ``national public health data surveillance system,'' and a new ``sensor
    network to detect and report the release of bioterrorist pathogens in
    densely populated areas.'' \67\
    ---------------------------------------------------------------------------
        \67\ Id. at 13.
    ---------------------------------------------------------------------------
        In addition to these new functions, the President's proposal would
    establish an entirely new bureaucracy, complete with a management
    hierarchy and accompanying staff. According to the President's
    legislative language, the new Department would have up to 22 Deputy,
    Under, and Assistant Secretaries. This is more than the number of
    Deputv, Under, and Assistant Secretaries at the Department of Health
    and Human Services, which administers a budget about ten times the
    proposed budget of the new Department of Homeland Security.
        Like CBO, GAO has also concluded that the new Department will
    impose costs on the taxpayer. According to GAO, ``[n]umerous
    complicated issues will need to be resolved in the short term,
    including a harmonization of information technologv systems, human
    capital systems, the physical location of people and other assets, and
    many other factors.'' \68\ As a result, GAO concludes that the
    President's reorganization proposal ``will take additional resources to
    make it fully effective.'' \69\
    ---------------------------------------------------------------------------
        \68\ GAO-02-886T, supra note 3, at 2.
        \69\ Id.
    ---------------------------------------------------------------------------
        Mark Everson. Controller at the Office of Federal Financial
    Management within the White House Office of Management and Budget, was
    asked about these costs at a staff briefing on July 1, 2002. He said
    that the Administration had no estimate of the transition costs of
    creating the new Department and no estimate of the level of savings to
    be achieved by combining agencies. The only thing he said he knew was
    that these unknown costs would equal these unknown savings.
        Obviously. Congress needs more concrete information about budget
    costs before it can legislate intelligently.

        X. PROCESS
        When the President made his nationally televised address on June 6,
    2002. announcing his proposal for a new Department of Homeland
    Security, it came as a surprise not only to Congress and the American
    people, but also to the agencies. departments, and offices affected by
    the proposal. The plan was put together with so much secrecy that
    ``[n]o Cabinet secretary was directly consulted about a plan that would
    strip 170,000 employees and $37 billion in funding from existing
    departments.'' \70\ In fact, there was so little communication between
    the White House and the agencies that at least one major agency had to
    call the minority staff of the Committee on Government Reform to learn
    whether it was affected by the reorganization plan.
    ---------------------------------------------------------------------------
        \70\ Bush Plan's Underground Architects; In Silence and Stealth,
    Group Drafted Huge Security Overhaul, Washington Post (June 9, 2002).
    ---------------------------------------------------------------------------
        This closed process utilized by the Administration is ill-suited to
    ensuring that all potential problems are identified and addressed
    beforehand. Moreover, the risk of making policy mistakes is compounded
    by the rushed process being used in Congress to consider the
    legislation. Ii is not clear how in this process the time and
    opportunity will be found to make sure the legislation is done
    correctly.

        XI. CONCLUSION
        The issues raised in this letter exemplify the serious questions
    that should be resolved before Congress completes work on this
    legislation. For this reason, we urge you to respond in detail and in
    writing to the concerns raised in this letter by July 15, before the
    House select committee starts its consideration of this bill.
        Sincerely,
                                       Henry A. Waxman,
                                       Ranking Minority Member,
                                 Committee on Government Reform

                                          David R. Obey
                                       Ranking Minority Member,
                                    Committee on Appropriations

                                   APPENDIX A

             Transferred Functions Not Related to Homeland Security

        Animal Plant Health Inspection Service

        Animal Welfare Act: APHIS enforces the Animal Welfare Act, the act
    that regulates the exhibition of animals in zoos and circuses and the
    Transportation of animals on commercial airlines.
        Bioiechnology Regulatory Policy: APHIS regulates the movement,
    importation, and field testing of geneticallv engineered plants and
    microorganisms.
        Canadian Geese: APHIS works with state wildlife agencies and local
    governments to address problems with non-migratory, resident Canadian
    geese.
        Disease and Pest Detection and Eradication: APHIS is responsible
    for the detection and eradication of pests and diseases that affect
    crops and livestock For example, on September 20, 2001, APHIS
    implemented the accelerated National Scrapie Eradication Program. A few
    of the other pests and diseases APHIS monitors for and eradicates
    include: the boll weevil; the fruit fly; rabies; the Asian Longhorned
    Beetle; the cirrus canker program; and the plum pox virus.
        Horse Protection Act: APHIS enforces the Horse Protection Act, the
    act which prohibits horses subjected to a process called soring from
    participating in exhibitions, sales, shows, or auctions.
        Missing Pets: APHIS maintains the missing pets network at
    www.missingpet.net
        National Poultry Improvement Plan: This is an industry/state/
    federal program that establishes standards for evaluating poultry
    breeding stock and hatchery products to ensure they are free from
    hatchery-disseminated and egg-transmitted diseases.
        Noxious weeds: APHIS cooperates with federal, state, and private
    organizations to detect and respond to infestations of invasive plants,
    such as branched broomrape and small broomrape.
        Screwworm: APHIS is working to ensure that screwworm is not
    reintroduced into the United States. This eradication program is close
    to its goal of establishing a permanent sterile screwworm barrier in
    the eastern third of Panama.
        Trade Issue Resolution and Management: APHIS monitors emerging
    foreign pest and disease threats at their origin before they have an
    opportunity to reach U.S. ports. APHIS also participates in trade
    agreements.
        Veterinary Biologics: AIPHIS regulates veterinary biologics
    including vaccines and diagnostic kits.

        Coast Guard
        International Ice Patrol: The Coast Guard has a fleet of ships
    designed to break ice in cold regions to ensure that boats are able to
    navigate the waterways.
        Marine Safety: The Coast Guard enforces regulations to ensure that
    boats and other marine equipment meet safety standards.
        Maritime Drug Interdiction: The Coast Guard interdicts drugs
    illegally brought into this country on the waterways.
        Maritime Law Enforcement: The Coast Guard enforces the laws of the
    waterways.
        Maritime Mobility Missions: The Coast Guard provides aids to
    navigation and bridge administration to ensure that vessels are able to
    navigate our waterways.
        Oil Spill Cleanup: The Coast Guard helps to prevent oil spills in
    the nation's waters and assists in their cleanup when they occur.
        Protection of Natural Resources: The Coast Guard protects our
    domestic fishery resources and marine environment.
        Search and Rescue: The Coast Guard, as one of its primary missions,
    rescues troubled vessels and people on the nation's waterways.

        Customs
        Border Drug Interdiction: The Customs Service fights against drug
    smuggling at the United States border.
        Copyright Protection: The Customs Service helps to enforce the
    Copyright Acts.
        Enforcement of Health and Safety Laws: The Customs Service checks
    imports to ensure that they comply with health and safety laws.
        Fostering of Trade: The Customs Service works with the trade
    community and identifies and confronts trade issues facing the country.
        Child Pornography Prevention: The Customs Service enforces laws
    protecting against child pornography.
        Fair Trade Protection: The Customs Service enforces a variety of
    fair trade laws such as the Lanham Trade-Mark Act and the Trade Act of
    1974.
        Protection of Species at Risk: The Customs Service enforces laws
    protecting threatened species such as the Bald Eagle Protection Act and
    the African Elephant Conservation Act as well as the Endangered Species
    Act of 1973.
        Revenue Collection: The Customs Service provides the nation with
    its second largest source of revenue.
        Stolen Antiquities and Art: The Art Recovery Team works to recover
    stolen pieces of art and antiquities.
        Tariff Enforcement: The Customs Service ensures that U.S. tariff
    laws are enforced.
        Department of Energy
        Energy Emergency Support: The DOE Office of Energy Assurance
    assesses the potential effects of natural disasters such as
    earthquakes, hurricanes, tornados, and floods on energy infrastructure
    and provides energy emergency support in the case of such disasters.
        Human Subjects Research Database: The DOE Environmental
    Measurements Laboratory (EML) maintains the Human Subjects Research
    Database, which contains descriptions of all projects involving human
    subjects that are funded by the DOE, performed by DOE staff, or
    conducted at DOE facilities. EML also provides direct assistance to the
    manager of the DOE Protecting Human Subjects Program, such as assisting
    with production of educational and guidance materials.
        A Quality Assessment Program for Contractor Labs: EML also runs a
    quality assessment program for DOE contractor laboratories that measure
    radiation. The program tests the quality of 149 private Laboratories'
    environmental radiological measurements.

        Mr. Waxman. One major problem is that the President's
    proposal would transfer to the new department a vast array of
    responsibilities that have nothing to do with homeland
    security, such as administering the national flood insurance
    program, cleaning up oil spills at sea, and eradicating pests
    like the boll weevil. Giving the new department dozens of
    unrelated responsibilities will bloat the size of the
    bureaucracy and dilute the new department's counterterrorism
    mission.
        The President's proposal also lacks an effective mechanism
    to coordinate the activities of the many Federal agencies with
    major homeland security functions. According to the
    administration, there are 153 different agencies, departments,
    and offices now involved with homeland security. After the
    creation of the new department, this number actually will
    increase. There will be a 160 agencies, departments or offices
    with security roles.
        Another serious problem with the bill is its cost. The
    administration has asserted that the creation of this new
    department would not grow government. They have stated that any
    costs that may be incurred will be paid for by eliminating
    redundancies inherent in the current structure.
        Since the administration provided no information on cost,
    Chairman Burton and I asked the nonpartisan Congressional
    Budget Office to provide their analysis. They concluded that
    implementing the President's reorganization proposal will cost
    the American taxpayers an astounding sum, $3 billion. If this
    money were used at the front lines of fighting terrorism
    instead of paying for a new bureaucracy, think how much better
    off we might be.
        Our job in the Committee on Government Reform was to make
    the flawed proposal from the administration better, and I
    believe we made some significant progress. The President's
    original proposal included broad exemptions from our Nation's
    most basic good government laws. The legislation allowed the
    new Secretary to waive all provisions of our civil service
    laws, including those that prohibit patronage, protect whistle-
    blowers, provide for collective bargaining rights and ensure
    health and retirement benefits. A similar approach was taken
    with procurement and the management of real property.
        Also, basic government in the sunshine laws, such as the
    Freedom of Information Act and the Federal Advisory Committee
    Act, were limited in their application to the new department.
    Moreover, the Chief Financial Officer Act, the Clinger-Cohen
    Act dealing with chief information officers, and the Inspector
    General Act did not fully apply.
        The Committee on Government Reform reported a bill that
    limits many of these exemptions. The civil service protections
    for Federal worker were restored while allowing for pay
    flexibility with in the agency. Under our bill, Federal
    employees who are transferred to the new agency will not have
    their rate of basic pay reduced. The committee bill also allows
    the Secretary to lift the salary cap on personal services
    contracts, but only for an urgent homeland security need; and
    those contracts still cannot exceed a year.
        Finally, the savings clause ensures that theTransportation
    Security agency rules cannot be expanded beyond TSA. Federal
    employees would be further protected by a provision in the
    committee print ensuring that the employees who were in
    collective bargaining units prior to being transferred to the
    new department would retain their bargaining rights.
        Finally included in the committee's legislation is the
    right to sue against any person, organization, or employer who
    retaliates against a whistle-blower. The bill we reported
    removed the original provision that would have exempted the new
    department from the Federal Advisory Committee Act. We were
    also able to fix other provisions to ensure that the Chief
    Financial Officers Act and the Clinger-Cohen Act apply to the
    new department. Although I would have preferred stronger
    language, the IG language on reporting was also strengthened.
        Also, the new department will have to manage its real
    property in accordance with the bipartisan property bill
    adopted by the committee earlier this year. Moreover, the new
    department would have a privacy officer, an office of civil
    rights and a citizenship and immigration service ombudsman.
        Our committee print also takes a very different approach to
    procurement than the administration's proposal. Although I
    still question the need to deviate from current procurement
    law, the committee print is an improvement from the
    administration's proposal because it includes safeguards
    against fraud and abuse.
        There were a few provisions in our committee print that may
    be considered a step backward for good government. For example,
    I would have liked the committee to eliminate, not expand, the
    FIOA loophole in the bill. In addition, I was disappointed that
    indemnification provisions were included in our committee's
    mark. This language could subject the Federal Government to
    unlimited liabilities incurred from its contractors. In
    addition, it is inappropriate for the Federal Government to
    indemnify contractors if they fail to exercise sufficient
    diligence and would impose an undue burden on the taxpayer.
        The procurement provisions also expanded the use of credit
    cards for the purchase of items up to $5,000. This very morning
    in our committee we heard testimony, how these cards are being
    used at strip clubs and to buy clothing from Victoria's Secret
    at taxpayers' expense. As Representative Schakowksy and I wrote
    Secretary Rumsfeld, we should be curbing this abuse, not
    expanding it; and I ask that this letter also be made part of
    the record.
        Chairman Armey. Without objection.
        [The information follows:]
                              House of Representatives,
                                 Committee on Government Reform
                                         Washington, DC, July 17, 2002.
    Hon. Donald Rumsfeld
    Secretary of Defense, The Pentagon, Washington, D.C.

        Dear Secretary Rumsfeld: Revelations about corporate misdeeds and
    accounting irregularities at companies such as Enron and WorldCom are
    causing enormous public concern. Increasingly, this concern is
    spreading to how the federal government manages the taxpayers' money.
    We in government have an obligation to ensure that the government's
    accounts are honest and the taxpayers' money is not squandered.
        For this reason. we are writing you to bring to your attention
    serious financial mismanagement within the Department of Defense.
    Today, testimony and a report are being released by the General
    Accounting Office that find widespread problems in the use of travel
    and purchase cards at the Defense Department. A copy of the testimony
    and report are enclosed.
        Travel cards are special credit cards given to employees by the
    Defense Department that are intended to be used to pay for travel on
    official business. But GAO investigators found that these cards are
    regularly being used for nonofficial business. According to the
    testimony of Gregory Kutz, the Director of Financial Management and
    Assurance for Defense at GAO, 15% to 45% of the charges on the travel
    cards that GAO reviewed were for personal--not government--use.
        For example, GAO investigators found that the travel cards were
    frequently used by Army personnel to obtain cash at strip clubs. GAO
    found that Army personnel would present the cards at a strip club and
    ask for cash. The strip club would then commonly charge a 10 percent
    fee for the cash and record it as a ``restaurant'' transaction. GAO
    also found that these travel cards were being used to pay for
    everything from dating and escort services to casino and internet
    gambling to cruises.
        GAO's investigation of purchase cards is similarly disturbing.
    These purchase cards are designed to provide a convenient method to
    purchase supplies that are not available through the General Services
    Administration (GSA) or would take too long to purchase through GSA.
    Although use of the cards is strictly limited to purchases for official
    business, GAO's report finds that these cards are regularly being used
    to purchase personal goods.
        According to the GAO report, the personal goods bought with
    taxpayer dollars on these purchase cards include jewelry, cosmetics,
    and computer equipment. The purchases reviewed by GAO included:
         An estimated $30,000 spent on items such as rings, purses,
    and clothing, including purchases from Victoria's Secret;
         Over $10,000 spent on a trip to Las Vegas, personal
    clothing, and paying personal bills;
         An estimated $100,000 for a variety of items including a
    computer game station, digital camera, and a surround sound system; and
         $630 for escort services.

        According to GAO, this abuse can be traced to the poor financial
    management practiced by the Department of Defense. Proper use of these
    cards requires that someone independently verifies that the goods were
    received by the government and that the purchase was for a government
    use. GAO found rampant failures to provide these safeguards. In fact,
    GAO found that ``none of the installations. . . audited had a
    comprehensive or effective program of oversight and monitoring.'' \1\
    ---------------------------------------------------------------------------
        \1\ U.S. General Accounting Office. Purchase Cards: Control
    Weaknesses Leave Army Vulnerable to Fraud Waste, and Abuse. 17 (June
    2002).
    ---------------------------------------------------------------------------
        These new GAO findings are unfortunately not isolated examples of
    financial mismanagement at your Department. Last year, GAO found that
    Navy personnel were similarly using government purchase cards to
    acquire personal items.\2\ And the Inspector General found that in
    fiscal year 2000 alone, ``$1.2 trillion in department-level accounting
    entries . . . were unsupported because of documentation problems or
    improper because the entries were illogical or did not follow generally
    accepted accounting principles.'' \3\
    ---------------------------------------------------------------------------
        \2\ U.S. General Accounting Office, Purchase Cards: Control
    Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse (July
    30.2001).
        \3\ Office of the Inspector General, Department of Defense,
    Independent Auditor's Report on the Department of Defense Fiscal Year
    2001 Agency-Wide Financial Statements (Feb. 26, 2002) (D-2002-055).
    ---------------------------------------------------------------------------
        Earlier this year, the Department convened a task force to examine
    the issue of travel and purchase cards and, just two weeks ago, the
    task force issued recommendations on how to address this problem. While
    we commend your efforts in convening the task force, its
    recommendations are clearly inadequate. For example, the
    recommendations do not address how the use of these cards at strip
    clubs can be avoided. Furthermore, the task force report does not lay
    out a specific plan for implementing management changes.
        We urge you to take immediate and decisive action to address the
    problems of financial mismanagement at your Department. The Defense
    Department should institute sound and effective oversight of these
    cards, as recommended by GAO.
        We also urge you to speak out against efforts by Republican leaders
    in Congress to expand the use of these cards without proper oversight.
    Just last week, Rep. Tom Davis, the chair of the Subcommittee on
    Technology Procurement Policy, and Rep. Dan Burton, the chair of the
    Government Reform Committee, inserted language in the homeland security
    bill that raised the threshold for transactions using purchase cards
    from $2,500 to $5,000. Due to the efforts of Rep. Jim Turner, the
    ranking member of the Subcommittee on Technology and Procurement
    Policy, the proposed increase in the threshold was reduced from $15,000
    to $5,000. But even this increase is too much without proper financial
    management.
        At the same time as the federal budget is deteriorating rapidly,
    our nation is fighting a new and expensive war on terrorism. We can not
    afford to allow financial mismanagement to continue: The American
    people need to be sure that every dollar is well spent. The Department
    of Defense spent over $6.1 billion with purchase cards in fiscal year
    2001. With the increase in the threshold for the cards and the
    increases in appropriations for the Department, that number is sure to
    rise. As it does, it is your responsibility to ensure that this money
    is not wasted.
        We respectfully request that you inform us of your plans to rectify
    this financial mismanagement no later than September 4. 2002.

            Sincerely.
                                     Jan D. Schakowsky,
                                        Ranking Minority Member
                                       Henry A. Waxman,
                                        Ranking Minority Member

        Mr. Waxman. With regard to the structure of the department,
    I would have liked the Government Reform Committee to limit the
    size of the department. For example, an amendment to strike the
    Secret Service from the department failed on a vote of 16 to
    17, but not all members were in attendance. An amendment to
    strike the Coast Guard from the department also failed on a
    vote of 16 to 17.
        Now, there were some close votes in our committee, but I
    must say that our committee worked in a bipartisan basis; and
    the decision to keep the civil service rules, for example, were
    the unanimous decision on a bipartisan basis of our committee.
    The Morella amendment was the only part of that that engendered
    some controversy and was decided by a close vote.
        I was pleased that the committee did not transfer the
    Bureau of Consular Affairs of the State Department to the
    Department of Homeland Security. In addition, I was pleased
    that the entire Animal and Plant Health Inspection Service
    would not be moved to the department under the Government
    Reform bill, only certain aspects of the service.
        Members of the Select Committee, I know you have a lot on
    your plate to consider, and I look forward to working with you
    as a homeland security bill moves through the legislative
    process. Many committees reviewed this bill. Our committee has
    the primary jurisdiction over government organization and
    reorganization. I think that as the Select Committee acts, you
    ought to respect the decisions of the committees that reviewed
    the bill and allow our work product to be reflected in what you
    recommend to the full House.
        Mr. Burton and I don't agree on every decision we make. He
    lost one close vote; I lost a couple of close votes. In those
    cases, I know he wants you to reverse the decision he didn't
    approve of; and I want you to reverse the decision where we
    lost. But on those things where we were together, I think we
    ought to recognize those are issues we ought to put aside; and
    fight over those matters that were controversial in the
    committees and not put everything up as if you never had any
    committees of the Congress with expertise review of these
    matters.

     PREPARED STATEMENT OF HON. HENRY A. WAXMAN, RANKING MINORITY MEMBER,
                         COMMITTEE ON GOVERNMENT REFORM

        Members of the Select Committee. thank you for inviting me to
    testify today. It is clear, we need homeland security legislation.
    Federal departments are not working together as they should to protect
    our nation.
        Unfortunately, the bill proposed by the President has serious
    flaws. In fact, I think it may well cause more problems than it solves.
        Last week, I joined with Rep. David Obey, the Ranking Member of the
    Appropriations Committee, in sending a letter to Governor Ridge
    outlining a number of serious concerns with the bill. I ask that that
    letter become part of the record.
        One major problem is that the President's proposal would transfer
    to the new Department a vast array of responsibilities that have
    nothing to do with homeland security, such as administering The
    National Flood Insurance Program. cleaning up oil spills at sea, and
    eradicating pests like the boll weevil. Giving the new Department
    dozens of unrelated responsibilities will bloat the size of the
    bureaucracy and dilute the new Department's counterterrorism mission.
        The President's proposal also lacks an effective mechanism to
    coordinate the activities of the many federal agencies with major
    homeland security functions. According to the Administration, there are
    153 different agencies. departments, and offices now involved with
    homeland security. After the creation of the new Department, this
    number actually will increase there will be 160 agencies. departments.
    or offices with security roles.
        Another serious problem with the bill is its cost. The
    Administration has asserted that the creation of this new Department
    ``would not `grow' government.'' They have stated that any costs that
    may be incurred will be paid for by ``eliminating redundancies inherent
    in the current structure.''
        Since the Administration provided no information on cost. Chairman
    Burton and I asked the nonpartisan Congressional Budget Office to
    provide an analysis. They concluded that implementing the Presidents
    reorganization proposal will cost the American taxpayers an astounding
    sum: $3 billion.
        If this money were used at the front lines of fighting terrorism--
    instead of paving for a new bureaucracy--think how much better off we
    might be.
        Our job on the Committee of Government Reform was to make the
    flawed proposal from the Administration better. I believe we made some
    significant progress.
        The President's original proposal included broad exemptions from
    our nation most basic ``good government'' laws. The legislation allowed
    the new Secretary to waive all provisions of our civil service laws,
    including those that prohibit patronage protect whistleblowers. provide
    for collective bargaining rights, and ensure health and retirement
    benefits.
        A similar approach was taken with procurement and the management of
    real property. Also, basic government in sunshine laws, such as the
    Freedom of Information Act and the Federal Advisor Committee Act, were
    limited in their application to the new Department. Moreover, the Chief
    Financial Officer Act, the Clinger-Cohen Act dealing with Chief
    Information Officers, and the Inspector General did not apply fully.
        The Committee on Government Reform reported a bill that eliminates
    many of these exemptions. The civil service protections for federal
    workers were restored while allowing for pay flexibility within the
    agency. Under our bill, federal employees who are transferred to the
    new agency will not have their rate of basic pay reduced. The Committee
    bill also allows the Secretary to lift the salary cap on ``personal
    services'' contracts, but only for a urgent homeland security needs and
    those contracts still cannot exceed a year. Finally, the savings clause
    ensures that the Transportation Security Agency (TSA) rules cannot be
    expanded beyond TSA.
        Federal employees would be further protected by a provision in the
    Committee print ensuring that employees who were in collective
    bargaining units prior to being transferred to the new Department would
    retain their bargaining rights. Finally, included in the Committee's
    legislation is the right to sue against an person organization or
    employer who retaliates against a whistleblower.
        The bill we reported removed the original provision that would have
    exempted the new Department from the Federal Advisory Committee Act. We
    were also able to fix other provisions to ensure that the Chief
    Financial Officers Act and the Clinger-Cohen Act apply to the new
    Department. Although I would have preferred stronger language, the IG
    language on reporting was also strengthened.
        Also, the new Department will have to manage its real property in
    accordance with the bipartisan properly bill adopted by the Committee
    earlier this year. Moreover, the new Department would have a Privacy
    Officer, an Office of Civil Rights, and a Citizenship and Immigration
    Service Ombudsman.
        Our Committee print also takes a very different approach to
    procurement than the Administration's proposal. Although I still
    question the need to deviate from current procurement law. the
    Committee print is an improvement from the Administration's proposal
    because it includes safeguards against fraud and abuse.
        There were a few provisions in our Committee print that may be
    considered a step backwards for ``good government.'' For example, I
    would have liked the Committee to eliminate--not expand--the FOIA
    loophole in the bill.
        In addition. I was disappointed that indemnification provisions
    were included in our Committee's mark This language could subject the
    federal go to unlimited liabilities incurred from its contractors. In
    addition, it is inappropriate for the federal government to indemnify
    contractors if they fail to exercise sufficient diligence and would
    impose an undue burden on the taxpayer.
        The procurement provisions also expanded the use of credit cards
    for purchases of items up to $5,000. This very morning in our
    Committee, we heard testimony how these cards are being used at strip
    clubs and to buy clothing from Victoria's Secret at taxpayer expense.
    As Rep. Schakowsky and I wrote Secretary Rumsfeld, we should be curbing
    this abuse, not expanding it. I ask that this letter also be made part
    of the record.
        With regard to the structure of the Department, I would have liked
    the Government Reform Committee to limit the size of the Department.
    For example, an amendment to strike the Secret Service from the
    Department failed on a vote of 16-17. but not all members were in
    attendance. An amendment to strike the Coast Guard from the Department
    also failed on a vote of 16-17.
        I was pleased that the Committee did not transfer the Bureau of
    Consular Affairs of the State Department to the Department of Homeland
    Security. In addition, I was pleased that the entire Animal Pant Health
    Inspection Service would not be moved to the Department under the
    Government Reform bill, only certain aspects of the Service.
        Members of the Select Committee. I know you have a lot on your
    plate to consider, and I look forward to working with you as a homeland
    security bill moves through the legislative process.

        Chairman Armey. Thank you for your testimony. We will now
    proceed under the 5-minute rule, somewhat racing the clock on
    the expectation of votes on the floor pending quickly.
        I now recognize the gentlelady from California, Ms. Pelosi.
        Ms. Pelosi. I defer to Mr. Menendez of New Jersey.
        Mr. Menendez. Thank you.
        Thank you both for your testimony. One of the focuses I
    would like to pursue with you which has been, and I think will
    be, one of the major contentious issues, possibly, in the
    markup that will take place here on Friday and as we proceed to
    the floor is what I said, that homeland security should not
    mean public employee insecurity; and in that context I want to
    jump off, Mr. Waxman, from the comment you--and Chairman Burton
    is shaking his head, yes--that in fact putting aside the
    Morella amendment for a moment, which some suggest expands
    certain protections, that those fundamental protections that we
    have described as good government in the first instance and
    which we have pursued over a long period of time to ensure the
    quality and the freedom from patronage and partisan influence
    which have inured to a civil service that is probably amongst
    the most exceptional in the world is protected under the
    committee's mark. There has been much between the Cabinet
    Secretaries that have come here to testify, and comments by
    members of the committee made, of the need for flexibility.
        Do you see any merit in those arguments that would rise to
    the point that what the committee did should be undone, that
    the protections for civil servants should be undone? I mean, I
    am concerned that certain sections of title V speak to issues
    and give powers--for example, section 7103 allows the President
    to issue an executive order taking away title V labor
    management rights, including the right to be in a union for
    agencies or subdivisions for national security reasons. The
    President used his authority last January to take away
    collective bargaining rights for approximately 500 Justice
    Department workers, most of whom were clerical employees that
    have been unionized for decades. I look at other possibilities.
        Could you speak to that because that clearly is something
    your committee spent a lot of time on, came to a bipartisan
    conclusion on, and is going to be one of the major subject
    matters of debate.
        Mr. Waxman. Mr. Menendez, Mr. Burton is allowing me to
    answer this first.
        Our committee has jurisdiction over so many of those issues
    that we have developed an expertise over the years, and for
    that reason, by unanimous vote of our committee under the
    manager's amendment offered by Mr. Burton and supported by all
    the members of our committee, we decided that what the
    President originally proposed was not sound policy. We didn't
    think it was necessary to throw out all the civil service
    protections that protect employees, and also protect the
    government, because otherwise you could have patronage, you
    could have employees that wouldn't have health benefits,
    employees that wouldn't have the same kind of standing as other
    Federal employees. We didn't think that was a good idea, so we
    all agreed to put in the bill the existing law regarding civil
    service protections.
        So the Morella amendment was the only issue where we had a
    division, and our side prevailed by a narrow vote. It would not
    have expanded anything at all. It simply would have allowed
    those employees who had collective bargaining rights to
    continue those collective bargaining rights if they were
    transferred over to the new department. And the majority
    supported the Morella--.
        Mr. Menendez. Let us me just pursue that one more step
    because my time is midway gone here.
        We have had Cabinet Secretary after Cabinet Secretary say
    we are not undoing any of those things, we are not undoing
    union rights, we are preserving whistle-blower protections. We
    had OPM here saying, well, we are preserving all those things.
    But as I read your statement on what the committee did, that
    certainly was not the mark--the President's submission did not
    provide for those protections.
        Mr. Waxman. I don't want to be critical of the President's
    original provision. The Administration had a lot to do in
    developing the plan. But in that regard, if the Cabnet
    secretaries thought they were trying to accomplish what you
    just said they said, they were inaccurate. And what we did,
    unanimously, is make sure all these those protections were
    still written in the law and couldn't be waived.
        Mr. Burton. If I may follow up, I think Mr. Waxman is
    correct. We clarified that. We put in language that we thought
    was easily understood, and we believe that the protections are
    there for all the employees that were transferred, and that is
    as it should be.
        I would like to comment briefly, though, since we are
    talking about the Morella amendment, because I think this is
    very important, the Morella amendment which passed by one vote
    weakens the President's authority to prohibit collective
    bargaining for Federal employees due to national security
    reasons and that is the main reason why I thought the Morella
    amendment should not pass.
        There are current threats to homeland security that are too
    serious, and we should not be weakening the President's hand.
    He should maintain the authority to limit collective bargaining
    for national security reasons. That is an authority that has
    been in effect since the Carter administration, and both
    Democrat and Republican Presidents have never abused that.
    Since 1979 Presidents Carter, Reagan, Bush, Bill Clinton and
    George W. Bush used this authority sparingly, only 11 times in
    23 years. It has never been misused.
        In response to the 9-11 attacks, President Bush excluded
    from collective bargaining five departments, the Department of
    Justice offices vital to national security--the U.S. Attorney's
    Office, the Criminal Division, Interpol, the National Drug
    Intelligence Center and the Office of Intelligence Policy
    Review; and especially since September 11 no steps--and I feel
    strongly about this--no steps should be taken to limit this
    Presidential authority. I think it would be a terrible mistake,
    especially since we are in a war, and this amendment really
    reduces the President's authority further in this new
    department more than in any other department of government.
        So I know this will be a contentious issue, but I hope you
    will look very closely at the Morella amendment.
        Chairman Armey. Thank you. As you noticed, the bells are
    ringing--I guess for me and my gal; I don't know. I think we
    have time for at least one more question prior to our having to
    recess, and we will do it as far as we can, but the Chair will
    ask the witnesses if you would return at end of our short
    recess. Because your committee's jurisdiction is so large and
    your work has been so important, this committee is going to
    want to review it thoroughly.
        With that observation, let me call upon the gentlewoman
    from Ohio.
        Mr. Portman. I thank the chairman. I was not expected--.
        Chairman Armey. Excuse me. I said the gentlewoman from
    Ohio.
        Mr. Portman. I am sorry. That makes more sense, Mr.
    Chairman.
        Ms. Pryce. I don't know if I am up or not, but I will go.
        Gentlemen, thank you very much. Your committee has had the
    toughest part of all of this because you touch it all; and we
    are very, very grateful for your hard work, for deferring to
    the others to kind of wait until they got up and passed, so we
    had a little bit of a semblance of order with all this. Truly,
    it is some of the most important work that any of us will ever
    do; and so we really appreciate your participation last week
    and this week and all the way through.
        Chairman Burton, there was a lot of discussion, and your
    ears might have been burning a day or two ago as we discussed
    the Morella amendment and what transpired at the committee; and
    there was a lot of reference to the Burton amendment as perhaps
    a compromise to that issue, and I wasn't certain if that was
    something you had offered in committee or it was just an idea
    that had been floated. But can you give this group any sense of
    what the Burton amendment was, how you feel about it now, and
    if you see it as a true place to compromise.
        Mr. Burton. Obviously, I believe it was the right thing to
    do. It was in the manager's mark. We had a substitute amendment
    that we worked with instead of the original bill that was sent
    up to our committee.
        But what it did, which I think is better than the approach
    taken by the Morella amendment, is, the Secretary of Homeland
    Security, jointly with the Director of Office of Personnel
    Management, would be authorized to adjust compensation levels
    to remedy any pay disparities that exist between employees of
    the department who perform similar jobs; and that means it
    probably would raise them up to the level that the highest one
    had, and I don't think there is anything wrong with that.
    However, no employee can be compensated above the Cabinet
    level, and we think that is important, too, for management
    considerations.
        To develop a disciplinary system based on existing law that
    enables the Secretary to expeditiously suspend or remove
    employees in the interest of national or homeland security. The
    system shall include a process for employees to appeal a
    suspension or removal decision, but it allows him to get rid of
    them right away in case there is a security problem; to develop
    and submit to Congress for approval a proposal for a
    demonstration project for a human resources management system
    that makes it easier to recruit and maintain talented
    individuals, and that would ensure that the veterans
    preferences whistleblower protection and collective bargaining
    rights were retained, and authorized a performance appraisal
    system for managers or supervisors--and that would give him 5
    years to get that perfected--and finally, to exercise the human
    resource management authorities under this section in
    accordance with the merit principles contained in title V of
    the U.S. Code.
        The Morella amendment, as I said before, goes just too far,
    and at this particular time I cannot for the life of me see why
    you would go that far when it does not go that far in any other
    agency.
        Ms. Pryce. Clearly, this is probably the most contentious
    issue that the House will deal with, at least from the
    experience of this committee, and if there is a middle ground
    and if this could possibly be it, it is great that you provided
    us a place to go.
        And, Mr. Waxman, I don't know if you care to comment.
        Mr. Burton. I believe this is a middle ground, a fair
    ground and I hope the committee will look with favor on that.
        Ms. Pryce. Thank you.
        Mr. Waxman. If you would permit me to comment, Mr. Burton--
    I told you what we all agreed to; it was his manager's
    amendment. It was worked out on a bipartisan basis, and it was
    adopted unanimously. And this manager's amendment said that we
    would ensure that veterans' preferences, whistle-blower
    protection and collective bargaining rights were retained. That
    was all agreed to.
        The Morella amendment dealt with a narrow situation, those
    people who were transferred from another department into the
    Department of Homeland Security and who had collective
    bargaining rights. It regarded whether or not they would retain
    collective bargaining rights; it was pretty limited in scope.
        Now, a majority of the committee,-although the chairman
    didn't support it, did go along with Mrs. Morella. It was
    bipartisan.
        So that area was controversial, but ensuring civil service
    protections was not controversal. I hear people talking about
    civil service laws all being thrown out. That was in the
    original proposal. I will give the administration the benefit
    of the doubt that maybe it misdrafted the civil section. What
    we did was protect veterans' preferences, whistle-blower,
    collective bargaining rights, and almost all of the civil
    service laws; we kept those intact. It was only that narrow
    area where there was controversy.
        Ms. Pryce. Thank you, gentlemen.
        Chairman Armey. The Chair will recognize the gentlelady
    from California, Ms. Pelosi, and following the conclusion of
    response to her, we will recess for such time as 5 minutes
    following the close of the last vote in the series.
        Ms. Pelosi. Thank you, Mr. Chairman. And I thank the
    distinguished chairman and the ranking member for their fine
    testimony and hard work on this issue.
        As a former member of Government Reform--it was called Gov
    Ops in those days, in the olden days, and in the olden days--we
    might have fashioned an old-fashioned department that looks
    like the one being proposed. I know from the perspective of
    your committee, which has the vast array, the total array, of
    government operations as your brief and as one who sits on
    Appropriations, another place where we see the total view, that
    I have a tremendous respect for the perspective that you bring.
        I have said many times here that I had hoped to see us do
    something very special going forward with Homeland Security. We
    want to do what the President calls upon us to do, to do what
    is best to protect the American people.
        In his strategy, he talked--in his strategy, he talks about
    using our resources judiciously as we reduce risk for the
    American people. We all share that goal, and we intend to do
    that.
        I would have hoped, and I would like your view from your
    perspective, that we could have ended up with a very strong--
    and I hope it could be still be included in our bill--very
    strong Office of Homeland Security in the White House. An
    office which really does coordinate the activities of many more
    agencies, even those that are not--including these, but many
    more beyond these agencies included in this Homeland Security
    Department. And to have well as a lean Department of Homeland
    Security that would address, coordinate technologically, use
    the benefits of technology in a lean operation where the
    Secretary would not be bogged down with administrative and
    management responsibilities, but could, instead, have the value
    added of this department, the freedom from all of that, and the
    ability to coordinate rather than manage and organize a
    department.
        Could you express some views on that proposal?
        Mr. Burton. I understand the approach that many of my
    Democrat colleagues have advocated--.
        Ms. Pelosi. If I just may interject, in my conversations
    with Republicans, it is not a Republican view to have a huge
    bureaucracy.
        Mr. Burton. I understand. I think the predominant view on
    the other side, the Democrat side, was that view, but there are
    Republicans who agree with you.
        My personal view is, the President is on track. There has
    to be coordination that can only be handled by a department
    head and secretaries working for him to make sure that all
    those functions work together very rapidly to defend the
    homeland, and when you have these in different agencies I think
    it becomes more cumbersome, and it is very difficult for those
    immediate decisions to be made that will protect us.
        For that reason, I think the President was justified in
    suggesting a new Homeland Cabinet position and agency. I know
    we might differ on what ought to be included in that--.
        Ms. Pelosi. That is our only difference. We all agree there
    should be a department.
        Mr. Burton. That is right. But I think the approach he
    suggested, and advocated and our committee voted for, is the
    right approach.
        Mr. Waxman. I support the idea of a coordinating body,
    Cabinet-level position on Homeland Security. It is sort of
    ironic that the Republicans would want to push a bill that
    takes the bureaucracy, moves it around, bloats it up and spends
    billions of dollars.
        It is not going to make us any more secure if it's wasted,
    and I fear, in moving these agencies into one department they
    won't quite know what to do. It will take a long time before
    they figure out how they fit in, and during that time, I think
    our country could be in danger.
        Let me give you this example to keep in mind. AOL and Time
    Warner merged. People thought this was brilliant. Well, this
    merger into this Homeland Security agency is far greater than
    that simple merger, and they haven't quite figured out how AOL
    and Time Magazine and Warner Studios and all the other things
    that go into that huge enterprise and that huge corporation
    should work together. So they are struggling.
        But I just worry about what happens in this country if you
    set up this agency with all the bureaucratic pieces being moved
    around without, coordination. Yes, give the Secretary of
    Homeland Security power to insist that certain things be done;
    but to transfer everything over to one department from others
    just seems to me quite radical, quite bureaucratic, very
    expensive, and may in the long run be very self-defeating.
        Mr. Burton. I know we have to vote and I will just take a
    moment.
        I understand Mr. Waxman's position. There is no question in
    my mind there are going to be some problems in transferring
    these agencies into Homeland Security, but during that process,
    I think the President will be very close to the situation and
    make sure it works smoothly. That is number one.
        Number two, we are looking at the long term. This terrorist
    threat is not going to go away tomorrow. It may be with us
    through our generation, our kids and long into the future. So I
    think we need a Homeland Security just like we need a
    Department of Defense that really deals with the problem of
    securing this Nation.
        Ms. Pelosi. I appreciate and respect both of your opinions.
    I want to say one thing and then I am going to be gaveled down.
        The Brookings Institution has said that the 170,000 is more
    like 200,000-plus when you factor in everything that goes into
    the department that is not accounted for yet. There are 85,000
    jurisdictions in the United States. Only 125 of them have more
    people than this department will have.
        Salt Lake City, Utah--I am talking about the cities
    themselves--Salt Lake City, Utah; Providence, Rhode Island;
    Portland, Maine; Reno, Nevada. The list goes on and on of
    cities that have less people than the Department of Homeland
    Security will have. So I think we can all put our best thoughts
    together as we go forward, how to manage that.
        Mr. Waxman. It took over a decade before the Department of
    Defense was fully coordinated. We need this department to be on
    guard for the American people immediately, not in the long term
    of 10 years from now.
        Ms. Pelosi. Thank you both.
        Chairman Armey. The Chair would appreciate if the two
    gentlemen would return. There will be much questioning on the
    subjects of your jurisdiction. Without objection, the committee
    stands adjourned until 5 minutes following the close of the
    last vote in this series of votes on the floor of the House.
        [Recess.]
        Chairman Armey. The committee will come to order. Let the
    Chair open by thanking Congressmen Burton and Waxman for your
    willingness to come back for a second round. I am sure our
    committee members will be drifting up but as it stands, we have
    the gentlewoman from Connecticut, Ms. DeLauro, and myself here.
    So Ms. DeLauro, the Chair recognizes you for your questioning
    under the 5-minute rule.
        Ms. DeLauro. Thank you very much, Mr. Chairman. Let me
    thank my colleagues for your testimony and thank you for your
    years of service to the institution and the knowledge that you
    bring to this effort. It really is--I have characterized the
    hearings to some of our other colleagues, and I have said that
    sometimes we just don't get to listen to and talk with our
    colleagues the way that we should to understand the depth of
    knowledge that they have on these issues.
        Let me just ask Mr. Waxman, if I might, and I asked Mr.
    Obey about this as well earlier today. There is one section of
    your letter, of the Waxman-Obey letter which I also had put
    into the record. I might add if I could just say, Mr. Chairman,
    that it was on the McLaughlin show that John McLaughlin said
    that this was one of the best pieces of analysis that he had
    ever seen of this effort. So I just mention that in passing.
        One section of the letter outlines a number of concerns
    which have to do with the good government provisions. Talk to
    me a little bit about how the Government Reform Committee's
    recommendation improve on these provisions. Well, let me just
    leave it at that.
        Mr. Waxman. Well, the Burton substitute, which was
    supported unanimously, did a number of important things that
    are basically good government kinds of provisions. It said that
    employees' rights would be protected. Whistleblowers would be
    protected. The right to collective bargaining would be
    protected. Those things were agreed to by everyone. The Morella
    amendment, as I mentioned earlier, and I will go into more
    detail if the committee chooses, dealt with a very narrow area.
        Now, there were other provisions in the Government Reform
    bill that I want to flag that I did not support. The Freedom of
    Information Act provisions I thought did not meet good
    government standards. The President's bill was very broad and
    exempted all information voluntarily provided to the Department
    about infrastructure vulnerabilities. from the Freedom of
    Information Act.
        Now, we adopted a Tom Davis amendment that added over 10
    additional departments to be exempted from the Freedom of
    Information Act--and the amendment defined ``critical
    infrastructure'' very broad. Lots of information about chemical
    plants, electric utilities, water systems could be exempted.
    Freedom of Information Act is working well, and I don't believe
    it should have been changed.
        The indemnity provisions we adopted give the taxpayer
    potentially unlimited liability. I think that is a mistake,
    because we ought to indemnify people only if they exercise due
    care. If they have been negligent, close to bordering on gross
    negligence, I don't think we ought to indemnify them.
        But let me just underscore again, the Burton substitute
    restored basic civil service laws. It wasn't a compromise. It
    was something that everybody thought made sense. It was a good
    government provision, and an important part of the work of our
    committee.
        Ms. DeLauro. I just might add here that with regard to
    FOIA, there was a statement made by Ronald Dick, Director of
    the FBI's National Infrastructure Protection Center, that, and
    I quote, we believe that there are sufficient provisions in the
    FOIA now to protect information that is provided to us, and a
    question with regard to that that I had had is if it works for
    the FBI, the CIA, if it works for the Defense Department, then
    why do we need a broader exemption for the new department?
        Mr. Waxman, you appear to concur with that.
        Mr. Waxman. I absolutely do.
        Ms. DeLauro. Mr. Burton, do you concur with that statement
    by the FBI Director?
        Mr. Burton. Well, I think the thing that concerned us and
    Mr. Davis and the White House is that you have new technologies
    coming online and a lot of businesses have limits of liability
    that say stop at 10 million or 20 million or 200 million,
    whatever it happens to be, and they are very concerned--no.
        Ms. DeLauro. That is a different issue.
        Mr. Burton. Pardon me. I was thinking about two things at
    once. I think that Mr. Davis and myself and the President and
    others felt like that a lot of information would deal with
    national security would be filtering through the homeland
    agency, and other agencies as well that involved new
    technologies, and if the people who are producing this new
    technology or who were trying to protect things like nuclear
    power plants felt like that there was going to be some leaks,
    they wouldn't let that technology go to the agency that we are
    talking about, Homeland Security, and for that very reason,
    they felt like we ought to have more exceptions to the Freedom
    of Information Act.
        I have always been very strongly in favor of freedom of
    information. In fact, I have taken on this administration as
    well as the previous administration when they tried to block us
    from getting vital information. However, we are in a war right
    now, and I think there should be some exceptions and that is
    why I think this particular clause is important.
        Ms. DeLauro. I would just commend to you, and I know my
    time is up, that the comments of the FBI, the Infrastructure
    Protection Center and Director talking about that, he felt that
    there were a number of protections within the law now and that
    there were the exemptions that were necessary to take care of
    this, and I just would mention that to take a look at in light
    of--.
        Mr. Burton. Well, I would presume, and I don't know this
    for sure, that in the drafting of the original bill that came
    from the White House and in the discussions we have had, the
    heads of our CIA and FBI and DIA and other intelligence
    agencies were involved in the process, and I find it difficult
    to understand why the FBI Director would take a position
    different than the President on this. So I will have to talk to
    him about that.
        Ms. DeLauro. Okay. Thank you very much. Thank you, Mr.
    Chairman.
        Chairman Armey. The Chair now recognizes the gentleman from
    Texas, Mr. Delay.
        Mr. DeLay. I appreciate both of you coming to testify. Your
    testimony is probably the most important testimony that we will
    hear today amongst all of the committees. Obviously your
    jurisdiction is far reaching and your expertise as a committee
    are vitally important to what we do here in trying to bring it
    all together.
        Having said that, my first knee-jerk reaction about this
    proposal when I first heard about it was oh, no, another
    department, another secretary, bigger government, but I have
    come to realize that many are looking at this as just a
    reorganization, and therefore that is why I think it is
    important and it is an opportunity to provide reorganization.
        Having said that, there have been suggestions that during
    these hearings from everything to, oh, just have an office
    over--just make the present Office of Homeland Security a
    confirmable office and move on to expanded bureaucracy to
    some--to a model sort of after the Drug Czar with no authority,
    no manpower, no direction and expect it to do great things, and
    so we are going to have to rely on you. Could either one of you
    give me a bigger picture understanding of where you think we
    ought to be heading in the bigger picture as far as what this
    department may look like under your vision, if you could? And
    please keep it short, because I have got a real important
    second question.
        Mr. Burton. I will go quick. Henry and I have a little
    different opinion on this, and he can speak for himself. I
    believe that there will be some problems in the transition, and
    I believe there may be some times when we will have to be very
    careful, because terrorists might take advantage of the
    transformation and transfer of authority. However, in the long
    run, I think it is absolutely essential that you have one
    person in charge of homeland security; i.e., Department of
    Defense for the United States of America, who can make sure
    that he can coordinate all of these different agencies that are
    spread all over the place right now, and I don't think he or
    she can do that if they have to go to the Department of
    Transportation for one thing or the intelligence department or
    CIA for another one, and for that reason I think it is
    extremely important that we put as many of these agencies or
    parts of these agencies that are going to be dealing with
    homeland security under one roof with one leader, and I think
    the President has got his thumb right on the pulse. I think his
    advisers were right on line, and I think that is why the
    majority of our committee voted to give him that authority.
        Mr. Waxman. If I could give you my view of it, I think your
    initial judgment was probably correct. Think about it, this is
    the homeland security department, but we are not putting the
    FBI and the CIA into this new agency, but we are putting the
    Animal Plant Health Information Services. We are putting the
    Coast Guard, where they do marine safety, maritime law
    enforcement, oil spill cleanups. We are taking Customs, where
    they ore doing border drug interdictions and copyright
    protection and putting that into the new department. And for
    the Department of Energy, we take human subjects research
    database, quality assessment program for contractor labs. These
    are a lot of things that have nothing really to do with
    homeland security. So either put everything in this Department
    or figure out some way for the head of this new department to
    be able to coordinate with these other groups such as with the
    FBI and CIA in the most efficient manner, without so much
    disruption that you end up creating another huge bureaucracy
    falling all over itself, spending a lot of money and waiting
    for all the kinks to be worked out.
        So I am troubled by it. I think what the President is
    trying to do is the right thing, but I don't think the
    administration has thought it through. In fact, from my
    understanding from the news reports, it was put together very
    quickly. It was put together even before the strategy which we
    recieved yesterday, was drafted. I think once the
    Administration, I have seen this over the years--announces it
    wants to do something, it goes forward without rethinking
    whether the idea makes a lot of sense.
        So I would give a strong coordinating function and
    authority over the FBI and the CIA and other agencies of
    government that relate to homeland security, but not move all
    these things over to this new department that we have.
        Mr. DeLay. I am running out of time. I want to give you an
    opportunity, because there is a disagreement between the
    Judiciary Committee and you on INS. Could you make--briefly
    make your case for your position on the INS versus the
    Judiciary's case?
        Mr. Burton. Well, I will go first, I guess. I would just
    like to follow up on one of the things that Henry said on the
    last issue real quickly. I know you are out of time but I know
    you want us to get this question. And that is he didn't mention
    all of the functions of those agencies. Many of the functions
    that he did not mention fit very well into homeland security.
    Some will not, but they will do those functions anyhow. But
    what we are talking about right now is declaring war on the
    enemy and protecting America, and the best way to do that is to
    have these agencies consolidated under Homeland Security.
        Now, regarding the INS, it is one of the major building
    blocks of the department. If we remove it or if we remove just,
    say, half of it, we are going to be weakening the President's
    plan very seriously, and that is why the committee voted to
    keep it in this new department. Like FEMA and a number of other
    agencies included in the new department, the INS performs a
    variety of functions beyond homeland security. And I just
    mentioned that. It facilitates legal immigration and enforces
    immigration laws. Its security and processing functions are
    closely related and should therefore both be included in the
    new department. The INS also works closely with other agencies
    like Customs Service that has a presence at our borders and
    will become part of the new department. These two agencies have
    overlapping functions in both enforcement and processing.
    Carving out a portion of the INS would jeopardize the Secretary
    of Homeland Security's ability to develop a cohesive Border
    Patrol strategy. I think on its face the INS has to be one of
    the first lines of defense against terrorists getting into the
    country and keeping them out. So I think it is logical to have
    that under that Homeland Security Department.
        Mr. Waxman. Mr. Delay, just as our committee has expertise
    because of our jurisdiction on civil service and procurement
    laws and all of that, the Judiciary Committee has had a long
    history with the Immigration and Naturalization Service. They
    have just reorganized the INS after a lot of problems with it,
    and their judgment that they have recommended is to separate
    the service part from the enforcement part, and the enforcement
    part they would move over to the Homeland Security Department.
    The service part they would leave alone. I think that makes
    sense. I would defer to their judgment, but it does seem to me
    to make sense, because the enforcement issues are the ones that
    relate to homeland security.
        Mr. Burton. I just might follow up by saying when you
    bifurcate or split up an agency like that, I think it takes a
    lot of time and effort, and I think what we are trying to do is
    expedite this as quickly as possible so the functions that are
    very germane to homeland security are there as quickly as
    possible.
        Mr. DeLay. Thank you, Mr. Chairman.
        Chairman Armey. Thank you. The gentleman from Texas.
        The Chair would like to announce that absent another
    minority member or Democrat member joining the committee, it
    would be my attention to recognize the gentleman from Ohio and
    then I would ask the members on your side to get your heads
    together and see which of you might seek recognition to
    represent your side, and then we will conclude with the
    chairman. So with that intention noted, let me recognize the
    gentleman from Ohio.
        Mr. Portman. Thank you, Mr. Chairman, and appreciate the
    testimony from both of my colleagues today, both of whom I
    served with at one time on the committee. I am one of the alums
    up here on the panel, and I worked with you on various
    projects. You do have the largest single jurisdiction and you
    have given us a lot of good things for us to work with in
    coming up with a mark that we can take to the floor.
        I just want to quickly ask about the final vote in
    committee. Mr. Chairman, what was the final vote in the
    committee, because we have heard different discussion about how
    the committee reacted to different proposals?
        Mr. Burton. The Morella amendment passed by one vote. It
    was very controversial. What were the other ones?
        Mr. Portman. How about final passage on the--.
        Mr. Burton. Final passage on the bill was 30 to 1.
        Mr. Portman. So it was 30 votes in favor of the
    restructuring, making the new agency--.
        Mr. Burton. Right.
        Mr. Portman. Consolidating all these various departments
    and agencies?
        Mr. Burton. Right.
        Mr. Portman. I have listened to my friend Mr. Waxman talk
    about the bloated bureaucracy, and I must say somehow it hasn't
    been properly explained to you or you haven't understood at
    least what the President was trying to do, because there is no
    sense this would be a larger bureaucracy. Indeed the whole
    notion here is to consolidate and I think Mr. Burton said it
    well earlier, which is right now we have so many different
    offices and departments. You have said over 150, that the right
    hand doesn't know what the left hand is doing, and often there
    are so many masters, there is no master and therefore no one in
    charge. And therefore it is a matter of accountability, and the
    notion would not be to leave those bureaucracies as they are
    but rather to make them work better together and to consolidate
    them. The bureaucracies are going to be there. If we don't do
    anything, if we simply put an office in the White House, like
    the Drug Czar's office, it doesn't do anything to reduce the
    bloated bureaucracy.
        So that is the concept. There will be of course challenges
    as we do this, as we have seen with every organization, but it
    is certainly not the intention to bloat the bureaucracy.
    Rather, it is to streamline it and that is the whole point.
        Mr. Waxman. Mr. Portman, I would hope you take a look at
    the letter that Mr.--.
        Mr. Portman. I have seen your letter.
        Mr. Waxman. And I hope you would also look at what the
    Congressional Budget Office estimated.
        Mr. Portman. And I have and that has been misrepresented a
    number of times.
        Mr. Waxman. This is estimated to create 21 Assistant
    Secretary positions. It is incredibly large. I voted for final
    passage, as did many other Members.
        Mr. Portman. I realize that.
        Mr. Waxman. I did vote for it, although I did not think it
    was a good bill as it stood. I voted for it and I think others
    did as well, to send it on to continue to work on the
    legislation. If this were the final bill before us in the
    House, I am not sure that I could still vote for it, or
    certainly if it came out of conference I expected I would vote
    against it.
        Mr. Portman. Hopefully we can address some of your
    concerns, and one of the concerns that you have raised
    repeatedly is this notion there will be other nonsecurity
    functions in the department. The answer to that is clearly that
    we think some of these entities work quite well together now.
        The Coast Guard for instance. You mentioned oil spill a few
    times. The oil spill function of the Coast Guard is related in
    an integral way to what they do to protect our borders. So we
    want to keep that, it works well. It is a good agency.
        The Customs Service, which is under the jurisdiction of
    Ways and Means, where I serve, same thing. You mentioned the
    Customs Service. You don't want to pull those agencies--.
        Mr. Waxman. No. But I don't know if you have served on the
    Transportation and Infrastructure Committee. They have a large
    expertise on this, and Chairman Young doesn't agree.
        Mr. Portman. I understand they have some jurisdiction
    issues with moving it over at all, but that is not what you are
    saying. You are saying maybe the border functions should go but
    not the other functions. He would object to that, because he
    would say, no, if you are going to move it, you need to do it
    in full.
        I will continue to talk to him on the record in a little
    while.
        Mr. Chairman.
        Mr. Burton. Let me just say that if you move--let us say
    there is a person or an agency that does two functions. One is
    a homeland security function as we perceive it. The other is
    maybe not a homeland security function. If you split that up,
    what you are talking about is splitting the agency, and you may
    be talking about more employees, because you are going to have
    to leave some here and some there, and people who have the
    expertise in both areas, you are going to have to have two
    instead of one, and so I think the consolidation process we are
    talking about, even though you are bringing in some functions
    that are not germane necessarily to homeland security but some
    that are, I think is going to make sure that we minimize the
    amount of new employment that is going to be necessary. Whereas
    if you split up agencies, I think you run the risk of saying we
    have got to have people that do this function as well as this
    function instead of one person or one agency.
        Mr. Portman. In some agencies--and Customs is a good
    example for me because it is in our jurisdiction--but people
    have multitasks. Coast Guard obviously is another great example
    of that.
        I would say, too, with regard to the alternative, which is
    to put something in the White House, I have lived through the
    Drug Czar, and I know you have lived through CEQ and I know how
    you view that, and maybe you can speak to that, but with no
    budget authority, no people or ability to move these agencies
    and departments, it is very difficult to do what we are trying
    to do here, which is to change a mindset, to make the primary
    function homeland security, and I would just suggest that if
    there is going to be an office in the White House, that does
    not have budget authority, it really is not going to have the
    strength to be able to perform, even if it is statutory, even
    if it has a confirmed director within the White House as is the
    case with CEQ or the Council of Economic Advisers or the Office
    of Drug Control Policy. They just don't have the ability to do
    what we need to do to get done here.
        Chairman Armey. I am afraid I might have to call time on
    the gentleman from Ohio and we come to a conclusion and--.
        Ms. DeLauro. We are going to have it both ways, Mr.
    Chairman. I will ask a brief question and then yield to Mr.
    Menendez.
        Chairman Armey. The gentlelady is recognized.
        Ms. DeLauro. Thank you very much. Following up on the cost
    issue, have you seen any evidence to support the
    administration's contention that the cost of the new
    department, including its administration and new entities that
    it creates, can be funded from savings achieved by eliminating
    redundancies in the current structure?
        Mr. Waxman. I can only respond that we asked the
    Congressional Budget Office to evaluate that idea, that
    premise, and they came back with an estimated $3 billion
    expenditure, just for this department. That to me is an
    incredible amount of money and could be used far more
    effectively for our national security, internal security in
    other ways than moving all of the bureaucracy around and moving
    all these pieces and ending up with 21 Assistant Secretaries.
        Mr. Burton. My view is that there will be initial
    additional costs. Long term, there will probably be some
    savings, but I am a realist. I think there will probably be
    additional expenses, but what we are talking about here, and I
    hope nobody loses sight of this fact, we are talking about in
    effect a Department of Defense for America. We have maybe
    thousands of terrorists, maybe more than that, in the United
    States who want to do us ill, and we have to do whatever is
    necessary, not only to protect the infrastructure but every
    American citizen as much as possible. And we must realize that
    it may very well cost more money than we anticipate, but what
    is the alternative? To do less, you run the risk of a real
    tragedy like we saw on September 11th. And so I don't know what
    the additional costs might be or if there will be ultimately an
    additional cost. All I am saying is that we have to do what we
    have to do to protect this country.
        Ms. DeLauro. I will just say, and I am going to yield to my
    colleague, but it would be good at the outset to lay out the
    fact that it is going to cost more money instead of trying to
    indicate that it probably won't cost more money.
        With that I yield to my colleague from New Jersey.
        Mr. Menendez. I thank the gentlelady for yielding. Let me
    go to the INS issue for a moment. The Hispanic Caucus today
    puts out a statement of principles on this saying they would
    really like to see it stay in the Justice Department, but if it
    is going to be transferred, that they would like to see an
    Under Secretary for all of those immigration functions within
    the Department of Homeland Security, because we don't want to
    get to the point that we treat immigration as terrorism.
        Is that something that you would be supportive of?
        Mr. Burton. Yes. I think it is very important that those
    who are coming here to seek freedom and justice and the
    American way of life not be hampered from getting to the United
    States, and I think we ought to do whatever is necessary in the
    Department of Immigration to make sure that those people do
    have the ability to come to America if they follow the rules
    and regulations to get here.
        But we also believe that it is very important that along
    with the visa provisions we were talking about earlier, that
    there be very close scrutiny of people coming into the country
    to make sure that we don't have terrorists slipping through the
    cracks.
        So I agree with you that we ought to make sure that we
    still have immigration according to our immigration laws, but
    at the same time there is going to be a dual purpose there, and
    that is probably why we made need an additional secretary to
    deal with that.
        Mr. Menendez. Mr. Waxman, let me ask you a question. To the
    extent that agencies propose to be transferred to this new
    department end up being transferred to this department, which
    agencies have multiple missions beyond security? Do you believe
    that there should be language here for a mechanism of some sort
    to try to guarantee the other managers of those departments
    that they are held in their work, in their--.
        Mr. Waxman. Well, I think that is part of the tricky
    difficulties we have with this legislation, because, for
    example, the FEMA agency deals with natural disasters and has a
    traditional function. We are going to continue to need that
    agency to deal with those kinds of problems. So I would hate to
    see that agency disrupted, similarly I would hate disruptions
    at the Coast Guard and the INS and other agencies as well. That
    is why we have to be mindful that we are not creating redundant
    bureaucracies. If we are going to leave them where they are now
    with some functions and move other functions, we have to figure
    out how to do that in a careful enough way. Otherwise it seems
    to me we are going to have a real mess on our hands.
        Mr. Menendez. But my concern is while we presume and assume
    that they will continue those functions unless their budgets
    are somehow preserved, unless their statements as to those
    missions are being preserved in the context of a security focus
    that has been the advocacy for those, there are no guarantees
    that those missions are preserved in a way in which they can
    succeed at, and that is of grave concern to us.
        Mr. Burton. If I might comment on that, Mr. Menendez. Our
    bill expanded the mission statement of this new department to
    highlight the importance of nonterrorist functions and the need
    for the department to respond to such things as national
    disasters, in addition to terrorist attacks. FEMA is a central
    agency for carrying out that mission. Therefore, it is critical
    that they be included. And also we are going to have a number
    of Assistant Secretaries. Many people differ on how many there
    should be, but I suggest that at least one or two of those
    Secretaries should be designated to deal with nonterrorist
    functions to make sure that those are not overlooked or short-
    changed. It is extremely important that if we transfer an
    agency in there that can deal with terrorism, will deal with
    terrorism but has other functions, that those are not
    neglected.
        Mr. Menendez. I thank you, Mr. Chairman.
        Chairman Armey. So much of what has come from your
    committee, I recognize another good looking suggestion. We will
    look into that.
        Just to update the committee, we now have two members that
    have joined the committee who have not had the opportunity to
    question this panel. The Chair's intention is to recognize the
    gentleman from Oklahoma on my right, the gentleman from Texas
    on my left, and then conclude our work with this panel with
    myself. The gentleman from Oklahoma.
        Mr. Watts. Mr. Chairman, I will try and be brief. Yesterday
    we heard testimony from the Director of Office of Personnel
    Management and she was talking about making the bureaucracy
    work for us, and we have heard the--Ms. Pelosi talked about the
    same thing, having a lean, streamlined department in the
    Homeland Security Department, and I know that one of the ways
    we can do that is by way of technology and different management
    features, and so forth. And I was pleased to see that you all
    included in your markup the Federal Information Security
    Management Act, FISMA, and formerly H.R. 4629, which encourages
    and supports carrying out innovative proposals to enhance
    homeland security.
        Can either you, Chairman Burton or Mr. Waxman, one or the
    other or both, I would just like for you to kind of share how
    you think each of these will help in securing America's
    homeland.
        Mr. Burton. Well, first of all, we differed a little bit
    with the administration on this. We expanded the language that
    they had in the original bill. We did that because we wanted to
    make sure that we kept the brightest and the best in these
    positions and that there wasn't a lot of problems with such
    things as pay disparities and the like.
        Let me just go through the kind of language we had further
    in there to deal with this, and I hope that answers your
    question. The Secretary of Homeland Security, along with the
    head of OPM, will be authorized to adjust compensation levels
    to remedy any pay disparities that exist between employees who
    come into the department from various areas who are going to
    perform similar jobs. Obviously if you bring somebody in from
    one department that is going to do a job and somebody from
    another department that is going to do a job and there is a pay
    disparity, you have got to make sure you work that out. And I
    presume that they would probably raise the pay so that it was
    comparable.
        To develop a disciplinary--however, no employee can be
    compensated above the Cabinet level, and there was some that
    wanted to take it to the degree that it would go up to the
    President's salary and above Cabinet level salaries. We thought
    that was going to be difficult for management purposes.
        To develop a disciplinary system based on existing law that
    enables the Secretary to suspend or expeditiously suspend or
    remove an employee in case of national or homeland security:
    Now, there is a process that we are talking about that would be
    followed which would guarantee their rights, review of what
    happened, but they can get them out of that position very
    quickly if it was a security risk, to develop and submit to
    Congress for approval a proposal for a demonstration project
    for a human resources management system that makes it easier to
    recruit and retain talented individuals. And that would ensure
    that veterans' preferences, whistleblower protection and
    collective bargaining rights would be retained and authorized
    performance appraisal system for managers or supervisors, and
    finally to exercise the human resource management authorities
    under this section in accordance with the merit principles
    contained in title 5, of the U.S. Code.
        I don't know--does that answer your question?
        Mr. Watts. Well, I think all of those things are good. The
    two issues that I addressed or spoke to were the technical
    innovations in using private sector innovations and technology
    to manage and to enhance defense of America's homeland. I think
    what you just shared with us I think does overlap into the
    question that I asked.
        Mr. Burton. I am sorry. I must have been thinking and
    missed part of your question. There are provisions in the bill
    which provide for mechanisms to make sure we get the best
    technology, the best minds from the outside to make sure that
    we have the ability and the technology to defend against any
    kind of terrorist threat or terrorist attack. One of the
    problems we had in getting the technology, for instance, is
    some of those companies--and you weren't here when we talked
    about this previously. Some of those companies have a limit of
    liability in their insurance, which would--they are afraid that
    if they were sued, if there was a national tragedy, it would go
    above their limit of liability. And so we provided a hold
    harmless provision in there so that the Director of Homeland
    Security and OPM agreed that we need to provide this protection
    for that company above their limit of liability. They get the
    most insurance they could, but above that limit of liability so
    we could get that technology, and we would go ahead and do it.
        Mr. Waxman. Before I address your point on FISMA, I want to
    make a comment on FOIA. I have a concern that we are going to
    keep a lot of this information from the public, when it is
    really not a matter of homeland or national security. So I have
    some misgivings, and I think we ought to continue to look at
    these new exemptions from FOIA.
        There was an issue I will bring to your attention that came
    up in the committee. In our bill based on an amendment by Mr.
    Davis, we allow the lowering of standards for computer security
    in order to make sure that more than one company could compete.
    That didn't make sense to me. We ought to keep the best
    standard and tell all the companies they should come up to that
    standard. I had a sense that we were doing this because some
    companies didn't have a good enough system to compete, and they
    wanted the standard lower so they could also come in and see if
    they could get government contracts. I didn't think that was
    the right course for us to take, and you might look at that
    provision again as well. My staff would certainly be available
    to help you examine that and rethink whether we want to lower
    standards for computer security simply to make some companies
    more commercially viable rather than make our security standard
    what we wanted out of the whole exercise.
        Mr. Burton. If I might follow up real quickly--.
        Chairman Armey. If I may ask you to do so.
        Mr. Burton. I missed part of your question, and you asked
    about three questions in one. I understand the committee
    adopted an amendment that would improve information security in
    the Federal Government. Currently information in the possession
    of Federal agencies is vulnerable because of a lack of
    coordinated uniform management. Resolving this problem is an
    important aspect of homeland security because of our reliance
    on information technology and the advancement of electronic
    government, and that Mr. Davis provided we put in the bill.
        Chairman Armey. Thank you.
        Mr. Waxman. And I just want to add most of that we agreed
    to. I raise just one point where we had a disagreement.
        Mr. Watts. But I think that is beneficial for this effort,
    and I was delighted to see you insert that.
        Chairman Armey. Thank you again, and the Chair recognizes
    the gentleman from Texas, Mr. Frost.
        Mr. Frost. I just would like to nail something down so
    there is no possibility of misunderstanding, and let me preface
    by saying I am not asking you about the Morella amendment. Just
    disregard that for a moment. I am asking you about section 730
    in the bill in H.R. 5005, as introduced, and section 730, as
    reported by your committee. Section 730 as reported--.
        Mr. Burton. Okay. You want us to start off with what was in
    the bill submitted to us by the White House?
        Mr. Frost. Yes. Starting with that, and then I am asking
    you about section 730 as reported by your committee.
        Mr. Burton. Okay. Well, as reported by our committee--.
        Mr. Frost. Let me ask the question, if I may. My question
    is are you asking this committee to substitute the language
    for--in section 730 as reported by your committee for the
    language as appears in the bill as filed, H.R. 5005?
        Mr. Burton. You know, that is a tough question to answer,
    because I am a very strong supporter of the President and all
    the work they put in this bill, but I believe, being realistic,
    the language that the committee came up with is superior, will
    work better and will solve the problems that are inherent in
    this kind of a transfer.
        Mr. Frost. So you are asking that we use your language?
        Mr. Burton. I believe that would be preferable. Do you
    agree with that, Henry?
        Mr. Waxman. I do.
        Mr. Frost. Mr. Burton, in the event that this committee
    does not use your language for some reason, uses the language
    as introduced rather than your language, will you want the
    opportunity on the floor when this is considered to offer your
    language as an amendment?
        Mr. Burton. Well, I would have to discuss with the
    leadership, people on this committee the reasons why they
    preferred the other language to our language and make a
    determination at that point. You know, I am not omnipotent,
    although sometimes I might think I am, and there may be reasons
    that I missed for the language that was sent to us in the first
    place being used rather than ours. However, at the present
    time, I believe what we put in the bill is the right approach,
    and unless convinced otherwise, I would support that.
        Mr. Frost. And Mr. Waxman, would you want the opportunity
    to offer that as an amendment on the floor if this committee
    chose not to put it in the bill?
        Mr. Waxman. I certainly think the Members should have the
    opportunity to vote on the provisions that were unanimously
    adopted by the Government Reform Committee as it relates to
    government employees.
        Mr. Frost. I agree with you, and I hope that this committee
    will see the wisdom on a bipartisan basis in using the language
    that was reported unanimously out of your committee, and if
    this committee does not on a bipartisan basis choose to use the
    language reported out of your committee unanimously, then as a
    member of the Rules Committee, I will certainly seek to have
    that made in order as a floor amendment so that it can be
    offered--considered on the floor of the House.
        Mr. Burton. One real quick follow-up, and that is you said
    putting the Connie Morella--.
        Mr. Frost. I am not asking about that.
        Mr. Burton. That is a very important amendment, a very
    important issue, and I sincerely hope the committee will take a
    hard look at that. I think that should be reversed.
        Mr. Frost. But I wasn't asking on that question.
        Mr. Waxman. But I also think that Mrs. Morella or some
    other Member ought to be able to offer her provision which was
    adopted by our committee, because I think it was a worthwhile
    provision, and it is important to have it debated and Members
    should be informed and make a decision about it.
        Mr. Frost. I understand. I didn't want to confuse the two
    issues, though, Mr. Waxman, because I wanted to make it clear
    that as base text, it was the position of your committee, and
    the chairman has just reiterated that, that the base text
    adopted by your committee is superior to the base text in the
    bill as filed with us.
        Mr. Waxman. Well, the text adopted by our committee
    includes the Morella amendment.
        Mr. Frost. I understand. I am just asking about section
    730, though.
        Mr. Waxman. The Morella amendment was a closer vote, the
    other parts of it were unanimous, but it was nevertheless the
    recommendations of our committee.
        Mr. Frost. Well, that I understand, but I was asking about
    section 730 only. Although there are people--Mr. Waxman, there
    are people who agree with you and people on our side who agree
    with you on that, but there really are two separate questions,
    and it is my concern that this committee, our Select Committee,
    may ignore the very good work done by your committee in
    redrafting section 730, and I think that would be a mistake and
    I think it would be a step backwards in the effort to achieve
    bipartisanship.
        I have no further questions.
        Mr. Waxman. I agree with you.
        Chairman Armey. Gentlemen, let me thank you for being here.
    The chairman of this committee does have some questions he
    could direct to our panel, but the Chair remains confident that
    in that event he would still remain more satisfied with his own
    conclusions than the conclusions of the witnesses. So we will
    spare you the difficulty of responding to my questions.
        Mr. Burton. May I make one final request, and that is if
    you or any member of the committee requires any information
    from our staff or ourselves as far as why we did certain
    things, we will be very happy to provide those for the
    committee, and I would like to end up by saying these people
    behind me and I am sure behind Henry worked their tails off.
    They worked over the weekend. They worked hours and hours on
    end and they are the unsung heros on this bill, and I just
    really appreciate all the hard work they did.
        Chairman Armey. Let me just say, and that is good of you to
    mention that, we have already--our staffs from this committee
    have already had the privilege of working with your committee.
    We do feel very well-informed about the background thinking,
    the chapter and verse discussions you had. I myself sat up
    until 1:30 in the morning and watched your markup. I found it
    scintillating. I don't imagine what I was thinking in my life
    that I would have preferred to watch till 1:30 in the morning.
    But it has been a very important exercise, what you have done
    in your committee.
        We will take you up on that offer, and we do so much
    appreciate the time you have been willing to share with this
    committee, and thank you so much for your hard work.
        The Chair recognizes that we are now being joined by the
    chairman and the distinguished ranking member of the
    International Relations Committee, and the Chair would like to
    invite Chairman Hyde and Ranking Member Lantos to the dais.
        Gentlemen, as you approach, let me just explain that it is
    our procedure here to by unanimous consent put your formal
    statement in the record and then ask you if you could to
    summarize your statement to us under the 5-minute rule, each in
    your turn, and then following that, we will proceed to try to
    stay on a fairly rigorous schedule by exercising our own
    questions under the 5-minute rule.
        So with that, let me just say thank you for being here. We
    welcome you. We appreciate your hard work, and Chairman Hyde,
    we will begin with you.

     STATEMENT OF THE HONORABLE HENRY J. HYDE, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Hyde. Thank you very much, Mr. Chairman and ladies and
    gentlemen of this very important and consequential committee.
    We will be brief.
        Mr. Lantos and I have worked together on this problem, and
    we are in total accord, as we are on many issues before our
    committee. The subject of the issuance of visas is a
    controversial one. There are about 12 million applications for
    visas every year. The ministerial administration of those 12
    million applications for visas is a considerable task.
        Some people wanted to take the whole function of issuing
    visas and transplant it to the Homeland Security Agency or
    Department, doing away with the State Department's function in
    this process. We felt that was doing no favor to homeland
    security, that much of this work, the overwhelming bulk of this
    work is not connected to homeland security. We felt continuing
    to use State Department personnel in the consular offices to do
    the routine work would work, and we would put the Secretary of
    Homeland Security in charge of policy, of training, of
    discipline, of regulatory activity and have the power and
    authority to send people out to these consular offices anywhere
    in the world should the need arise.
        This is the best of both worlds. It utilizes what are
    already in place in the State Department, consular personnel
    and at the same time hands over the authority to regulate, to
    oversee, to train these personnel and to make policy to the
    Secretary of Homeland Security, and so that amendment was
    comfortably passed in International Relations. I am happy to
    say that it passed in the Judiciary Committee comfortably, and
    I am advised it also passed in Government Operations.
        So that is what I am presenting to you today, plus one more
    issue. I was somewhat startled to learn that in Washington,
    D.C. there are 41 police agencies; that is, agencies who have
    the right to arrest people and to carry weapons, 41 of them. I
    have the list here, and neither the left hand knows what the
    right hand is doing times 41, and so it seemed to me
    appropriate that in this important subject of homeland
    security, we advise the Secretary of Homeland Security of this
    plethora, this proliferation of police agencies and suggest
    some regulatory language to have them communicate with each
    other.
        It seems to me that having this firepower and not talking
    to each other is wasteful and counterproductive. So we don't
    provide how that should happen, but we suggest and require the
    Secretary of Homeland Security to look at that and to make
    regulations that will stimulate interfacing communication
    between these police agencies. And I am now pleased to yield to
    my colleague, Tom Lantos.
        [The statement of Mr. Hyde follows:]

         PREPARED STATEMENT OF HON. HENRY HYDE, CHAIRMAN, COMMITTEE ON
                            INTERNATIONAL RELATIONS

        First, Mr. Chairman, I would like to thank you for
    permitting me to explain the compromise provision on visa
    processing in our Embassies and consulates abroad, which was
    worked out last week among a bipartisan coalition of members
    representing the three House committees with jurisdiction over
    this vital issue.
        The President's proposed legislation creating the
    Department of Homeland Security included important changes in
    the way in which the U.S. government processes the 10 to 12
    million visa applications that stream each year into more than
    200 U.S. embassies worldwide. The vast majority of these visa
    applications are from people who are visiting relatives,
    touring the country, or doing business in the United States.
        The President's plan transfered ultimate authority over
    visa issuance and refusal to the Secretary of Homeland
    Security, while continuing to rely on U.S. foreign service
    officers to perform the day-to-day work of reviewing
    applications and conducting interviews.
        Some expressed concern that the President's plan did not go
    far enough to ensure that security would come first in the visa
    adjudication process. In our examination of H.R. 5005 as
    introduced, we determined that these concerns arose primarily
    from ambiguity or uncertainty in the language of the
    legislation. We were able to draft an amendment to clarify and
    fortify this language, and our amendment was adopted (with
    minor variations) by three separate Committees during their
    markups last week.
        The amendment which my colleagues--Tom Lantos, Ileana Ros-
    Lehtinen, and Howard Berman--and I proposed, included several
    important new provisions:
        First, our amendment makes clear that ultimate authority
    rests with the Department of Homeland Security. No visa will be
    issued over the objections of the new Department.
        Second, our amendment makes clear that the new Department
    has authority to place homeland security officers in our
    embassies not only to review individual visa applications, but
    also to oversee consular activities, train and advise consular
    officers on homeland security issues, and conduct
    investigations relevant to these issues.
        Finally, our amendment includes a very important provision
    clarifying that a decision denying a visa is not subject to
    judicial or administrative review.
        Other members proposed more radical changes to the
    President's plan. While eliminating any role for the State
    Department in the visa process might be satisfying to those who
    seek to punish the Department for past failures, over the long
    run this approach could weaken, not strengthen, our efforts to
    protect the American homeland. In my judgment, we would not be
    doing Homeland Security any favors by requiring it to assemble
    a new overseas bureaucracy to adjudicate 10 to 12 million
    applications a year, the overwhelming majority of which present
    no homeland security issues. Our compromise proposal will allow
    Homeland Security officers to spend more time--as long as it
    takes--on identifying and dealing with those applications that
    do present risks to the security of the United States.
        The Hyde-Lantos-Berman-Ros-Lehtinen compromise is endorsed
    by the Bush Administration and by the three Committees of
    jurisdiction. It will preserve the essence of the
    Administration's proposal--the sensible division of labor under
    which homeland security officers will be allowed to concentrate
    on homeland security functions--while helping to ensure that
    security concerns will be central to key decisions made abroad.
        We would like to thank the Select Committee for its time,
    and we hope our recommendations will be helpful in its drafting
    of the final proposal.

        Chairman Armey. Thank you, Chairman Hyde. Tom Lantos, it is
    my pleasure, my friend, to have you here.

      STATEMENT OF THE HONORABLE TOM LANTOS, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Lantos. Thank you very much, Mr. Chairman, Ranking
    Member Pelosi, ladies and gentlemen. Let me first say that one
    of the great joys of my 22 years of service in Congress has
    been to work with Henry Hyde on the International Relations
    Committee. I think I can say without any possibility of
    contradiction that under Henry's leadership, this has been by
    far the most bipartisan committee of the House of
    Representatives and probably of either Chamber and that, as
    Henry stated, we in the International Relations Committee, Mr.
    Chairman, adopted the Hyde-Lantos proposal unanimously which
    enjoys the full support of the administration.
        I do not serve on the Judiciary Committee, but the
    Judiciary Committee adopted essentially the same proposal. I do
    serve on Government Reform, and in Government Reform again
    overwhelmingly, with Republican and Democratic votes, we
    accepted this proposal.
        So I can only echo Henry's statement, but I would like to
    take a minute, because I know how precious your time is, to
    spend a little time on the culture of the Foreign Service as it
    relates to this issue, because I think this is a very important
    item. When you are 24 years old and take the Foreign Service
    examination, at the end of your personal rainbow, Mr. Chairman,
    there is not the item of issuing visas to Turkish housewives.
    That is not what you are aiming at. You are aiming at becoming
    an ambassador 25 years from now and to participate if not in
    the formulation, at least in the implementation of U.S. foreign
    policy.
        And what we have today is really a 2, 3, 4-year bootcamp
    for bright young people who do their kitchen police duty in the
    State Department issuing visas, and they can hardly wait to get
    a good grade on that so they can move on to other things.
        Now, the notion of hiring a whole new bureaucracy of people
    whose lifetime occupation will be the issuing of visas is an
    absurdity. The State Department has been issuing visas for over
    200 years, and we clearly, following September 11th, need to
    readjust our priorities and our focus. So the Hyde-Lantos
    amendment to the administration's proposal recognizes the
    primacy of the Homeland Security Secretary in all aspects of
    this process, but handling the issuing of the visas via the
    State Department. The Homeland Security Secretary will have the
    opportunity of assigning as many of his people as necessary who
    will have full authority over the issuance of every single visa
    that is issued, but it would be absurd to have this whole new
    department take over a function which on the whole is very well
    performed. I am fully cognizant of the horrendous failures that
    have occurred in recent years, the security lapses, and that is
    why the placement of homeland security people trained for that
    job in whatever embassy or consular office the Secretary of
    Homeland Security determines will be done.
        There is only one exception in our scheme to the primacy of
    homeland security, and I think we as members of Congress will
    appreciate it. If the State Department official rejects a visa
    application, then Homeland Security cannot overrule him. If the
    State Department wants to issue a visa, then Homeland Security
    has full authority to review it, and this I think in more ways
    than one protects us as Members of Congress, because
    constituents come to us and say an individual was rejected for
    a visa, can you use some pressure to get that visa done? If the
    State Department says no, that is the end of the rope.
        I personally believe that our proposal, which has the
    approval of three committees and the administration, should be
    probably the easiest provision for your distinguished committee
    to approve.
        Thank you, Mr. Chairman.
        [The statement of Mr. Lantos follows:]

        PREPARED STATEMENT OF HON. TOM LANTOS, RANKING MINORITY MEMBER,
                      COMMITTEE ON INTERNATIONAL RELATIONS

        Mr. Chairman, I would like to thank you, Ranking Democratic
    Member Pelosi and other members of the Committee for receiving
    our testimony here today on this critical endeavor,
    establishing a Department of Homeland Security. I have an
    extensive written statement, and I ask unanimous consent that
    it be made part of the record.
        Mr. Chairman, nothing this House will do this session is
    more important than to move forward successfully this
    gargantuan undertaking, and I believe we must do it in the most
    expeditious and bipartisan manner possible. It was in this
    spirit, Mr. Chairman, that Chairman Hyde and I worked together
    on a bipartisan basis with other members of the Committee to
    craft a sensible proposal relating to the division of labor
    between the Secretary of State and the Secretary of Homeland
    Security with respect to the visa function. I am very pleased
    that the White House has announced its support for this
    proposal, and that last week it was adopted by all three House
    committees that considered it. Moreover, I understand that
    Governor Ridge confirmed the Administration's support for the
    Hyde-Lantos Amendment in testimony before your Committee
    earlier this week.
        Under our proposal, which builds on the President's
    proposal in H.R. 5005, the Secretary of Homeland Security would
    have all authorities relating to issuing regulations, enforcing
    and administering the laws on processing visas at United States
    diplomatic and consular posts abroad. The Secretary would also
    have the authority to confer this authority on other officials
    and employees of the U.S. Government. Absent such delegation,
    however, these authorities would be exercised through the
    Secretary of State and his highly trained cadre of consular
    officers. The Secretary of Homeland Security can overturn
    decisions of consular officers to grant a visa, alter visa
    procedures now in place, and can develop programs of training
    for consular officers.
        In addition, in the spirit of a bipartisan compromise with
    those who would like to move the entire visa function to the
    new Department, the Hyde-Lantos amendment explicitly authorized
    the assignment of Homeland Security employees in U.S.
    diplomatic and consular posts abroad. Consular officers would
    continue to have the primary responsibility for reviewing visa
    applications. Rather than assume all visa processing functions,
    Homeland security employees would concentrate on identifying
    and reviewing cases that present homeland security issues.
    Homeland Security officers will provide expert advice and
    training for consular officers, investigate threats and ensure
    that these officers have access to all the homeland security
    information necessary to perform their function.
        I want to stress again the bipartisan nature of this
    amendment and its wide-ranging support. It was unanimously
    adopted by voice vote in the International Relations Committee.
    Chairman Hyde and Congressman Berman sponsored it in the
    Judiciary Committee, where it prevailed on a combination of
    Republican and Democratic votes. And Congresswoman Ros-Lehtinen
    and I sponsored the amendment in the Government Reform
    Committee, where it prevailed by an overwhelming voice vote.
    Late in the Government Reform Committee markup, Congressman
    Weldon, who had opposed the Ros-Lehtinen-Lantos Amendment,
    slipped in a further amendment that was inconsistent with some
    key provisions of the Ros-Lehtinen-Lantos Amendment. I
    understand that the Administration opposes this amendment.
    Thus, while I agree with the intent of the provision, that
    there be more interviews and careful scrutiny of visa
    applicants from Saudi Arabia, I think the Select Committee
    either make substantive revisions to the amendment or consider
    not including it in its mark.
        Mr. Chairman and Ranking Member Pelosi, I want to take a
    brief moment to tell you why I feel so strongly about this
    amendment. The Department of State has some of our Government's
    finest civil servants, trained in over 60 languages with
    decades of experience in dealing with foreign cultures. Their
    continuation in the Foreign Service is predicated on carrying
    out their responsibilities successfully if they don't, they
    will not get promoted and will be forced out of government
    service altogether.
        I believe that the current system can be improved,
    particularly through additional resources for the State
    Department to allow more detailed interviews of visa
    applicants. But I do not agree with those who suggest that the
    answer is moving the entire visa function to the Homeland
    Security Department. I do not believe that standing up a whole
    new bureaucracy, with little experience in foreign languages,
    cultures, or conditions, and with little opportunity for
    advancement to higher level posts, will draw the kind of
    quality people needed to advance our national security.
        Even more important, the proposal transferring the entire
    visa function to Homeland Security would risk overwhelming
    Homeland Security personnel with non-homeland security
    functions and thereby make it difficult or impossible for them
    to perform their central mission. With all the new agencies
    that the Secretary of Homeland Security will have to integrate,
    the last thing this Department should be focused on is creating
    a whole new system for adjudicating over 11 million visas, at a
    huge and unknown cost.
        In addition, the Hyde-Lantos-Ros-Lehtinen-Berman proposal
    also included an authority for the Secretary of State to refuse
    visas if to do so was in the foreign policy or security
    interests of the United States. This was somewhat of a
    narrowing of the Administration's proposal, but was consistent
    with the Administration's goal of retaining the Secretary of
    State's authority to deny visas on foreign policy grounds and
    has been endorsed by the Administration. In addition, the
    amendment makes clear that there are certain authorities that
    are vested by law in the Secretary of State that should not be
    affected by this proposal. These authorities include
    determinations regarding the issuance of diplomatic visas,
    exclusion and deportation on foreign policy grounds, and
    implementing Presidential proclamations regarding the
    admissibility of classes of aliens. Other authorities included
    authorities that are specifically related to narrow foreign
    policy concerns, such as the exclusion of certain Haitian human
    rights abusers and persons who were beneficiaries of U.S.
    property expropriated by the Cuban Government. While the
    Committee listed some of the most important provisions in this
    regard, the list included in the Hyde-Lantos-Ros-Lehtinen-
    Berman amendment is not meant to be exhaustive, and we expect
    that the Secretary of State and the Secretary of Homeland
    Security will reach an understanding through an interagency
    agreement on the exact division of responsibilities between
    them.
        Finally, Mr. Chairman, the amendment provides that nothing
    in the amendment shall be construed as creating a private right
    of action. We did not intend to extinguish any existing cause
    of action, but wanted to ensure that the reorganization of
    functions embodied by the amendment did not affect the doctrine
    of consular non-reviewability or create a new cause of action
    not otherwise contemplated by law.
        Mr. Chairman, Ranking Democratic Member Pelosi, other
    members of the Committee, I respectfully request that in your
    markup of H.R. 5005, you adopt the Hyde-Lantos-Ros-Lehtinen-
    Berman proposal, which is supported by the Administration and
    was adopted by all three relevant committees. If you do so, I
    believe the House of Representatives should consider this issue
    closed, with no need to address it as the legislation moves to
    the House floor. However, to the extent this issue is
    considered by the full House, I further request that it is done
    so in a way that will allow an up or down vote on this
    particular issue, as opposed to it being buried in the middle
    of some large-scale immigration reorganization amendment.
        Thank you, and I stand ready to answer any of your
    questions.

        Mr. Hyde. If I could just say one thing. The perception
    among some of our more conservative Republicans is the State
    Department is a little squishy, and we ought to straighten them
    out by turning over this vital function to the Homeland
    Security. I am suggesting that the Homeland Security will be in
    the driver's seat. It will direct, supervise, oversee,
    discipline.
        Mr. Lantos. Overrule.
        Mr. Hyde. Overrule. It will be a robust supervisor, and so
    we have still the ability to utilize people that are in place
    and superimpose on it a robust directorship that should meet
    the worst fears of people who are concerned that the State
    Department still exists.
        Chairman Armey. Thank you. Thank you gentlemen, both, for
    your opening statement. The Chair now recognizes the gentleman
    from Texas, Tom DeLay, for his 5 minutes.
        Mr. DeLay. I thank you, Mr. Chairman, for being here and
    Ranking Member Lantos. It is great to have your testimony.
    Quite frankly, you have done such a thorough job in your
    committee that I have no questions. It is amazing how you have
    done this in a bipartisan way but also gotten approval of the
    administration and anybody and everybody else that may deal
    with this issue. So I just congratulate you on the job that you
    have done.
        Mr. Lantos. It helps to be a team of septuagenarians, Mr.
    Delay.
        Chairman Armey. I agree with you. I concur fully on the
    white hair. And the Chair recognizes the gentlelady from
    California, Ms. Pelosi.
        Ms. Pelosi. And I am not going into the white hair bit at
    all. I want to join you, Mr. Chairman, and our distinguished
    whip from Texas in commending the gentlemen, the distinguished
    witnesses, for their fine work. I too want to acknowledge,
    though, their great leadership on promoting democratic values,
    which is a pillar of our foreign policy. They have both been
    champions for promoting human rights. Mr. Lantos has chaired
    the Human Rights Caucus, and over the years Mr. Hyde in his
    various capacities in Judiciary and in the International
    Relations Committee. They bring to the table a value that is
    central to what we are talking about here, protecting freedom
    now in our own country, and doing so in a way that values the
    work of the people who have been issuing these visas but
    recognizing the concern about protecting the American people.
    Here the other day the Secretary of State, General Powell
    testified that he supported the product of the International
    Relations Committee.
        So your work is done. You worked in a bipartisan way and a
    thoughtful way with balance. That was recognized by the
    administration. So for your part, you have made our work
    easier, and I commend you for that. Thank you for your valuable
    service today and for all time. Thanks, Mr. Chairman. I yield
    back the balance of my time.
        Chairman Armey. Thank you. Thank the gentlelady. The
    gentleman from Oklahoma.
        Mr. Watts. I have no questions.
        Chairman Armey. Gentleman from Texas.
        Mr. Frost. I would just like to add to the other comments
    and thank you for what you have done. Oh, that the other
    committees had been able to reach agreement with the
    administration as effectively as you have.
        Thank you.
        Chairman Armey. The gentlelady from Ohio.
        Ms. Pryce. Thank you, Mr. Chairman. We can tell it is late
    in the afternoon. The questions are getting fewer and fewer and
    far between. So I will just add my congratulations to the
    gentleman and hope that the spirit of bipartisan cooperation
    that you found in your committee's work will transfer all the
    way through this process. It is very important that it does,
    and so thank you for getting us started.
        Mr. Lantos. Thank you.
        Chairman Armey. The gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman. As someone who sits
    on the committee, I witness firsthand the great work of both
    the chairman and the ranking Democrat, and I am very pleased
    with both their work, their leadership and their effort. I just
    want to take the opportunity, however, to say that I hope--you
    know, it still sends somewhat of a shiver down my spine when I
    think that the Secretary of Homeland Security can overturn
    decisions of consular offices to issue a visa, can alter visa
    procedures now in place, can develop, in essence--and I know
    that is what we did, but I am concerned that there are those
    who will look at immigration as terrorism, and as it is, a
    consular officer right now has virtually unfettered discretion
    to make a determination as to whether or not they issue a visa.
        Mr. Menendez. Add to that this power of this new Homeland
    Security Secretary to go ahead and send in--deny someone based
    on what criteria; we are going to have to be looking at that in
    the future. I certainly hope that we will continue our
    oversight of how this unfolds as the committee--as the new
    Department is created, because I think there are many United
    States citizens who seek to be reunified with their family who
    will be facing--their family member will be facing a consular
    officer somewhere in the world. And there is enormous impact
    upon the economy of this country in terms of tourism,
    legitimate tourism of people from across the world that come
    here that would have a significant consequence to our national
    economy and to communities across this country for which
    tourism is a big part. And probably one of the greatest aspects
    of our democracy is how we permit students to come here from
    across the world and learn what is so unique about America and
    hopefully plant those seeds back where they go.
        So I certainly commend the work of the two gentlemen and
    the committee which I am privileged to serve on, but I hope we
    will continue to be vigilant as this unfolds to make sure that
    we are stopping those that wish harm to this country, but not
    stopping those which would both enrich us and for which
    provides part of our foreign policy and foreign objectives
    abroad. Thank you, Mr. Chairman.
        Chairman Armey. The gentlewoman from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman. And I want
    to say thank you to Chairman Hyde and Ranking Member Lantos for
    their testimony and for their good work.
        I would associate myself with the remarks of my colleague,
    Mr. Menendez. As the daughter of an immigrant family, I think
    that we are always nervous about whether or not we are going to
    treat immigration with other than the good spirit in which it
    has provided great strength and energy to this great Nation.
        And I would just say that we are relying on your knowledge,
    your sensitivity, and your good judgment, as you have
    demonstrated in the work that you put forth here today. So I
    commend you for what you are doing, and I think we all need to
    be vigilant to safeguard that very, very, very special quality
    of this Nation in its immigrants, you know, past, present, and
    in its future. Thank you.
        Mr. Lantos. Mr. Chairman, if I may just make a one-sentence
    comment, I fully concur with the statements of my colleagues,
    Mr. Menendez and Ms. DeLauro. Although my ancestors came on the
    Mayflower, I try to be sensitive to these concerns to the very
    best of my ability.
        Chairman Armey. Thank you. The Chair now recognizes
    himself, which is no small matter at my age.
        Let me begin, Mr. Hyde. Mr. Lantos says about the Weldon
    amendment--and by the way, let me just say that this chairman
    observed with great interest the manner in which you won your
    point indeed in three committees: one where you chaired, two
    where you served, two where you serve. But there is a
    difference, I believe, that is drawn between the language of
    your own committee, IR, and the language of Government Reform.
    And that difference is the Weldon language. And I have Mr.
    Lantos' statement which, Mr. Hyde, I will just read. And he
    says: I think the select committee either makes substantive
    revisions to the amendment or consider not including it in his
    mark the Weldon amendment.
        Mr. Hyde do you concur with that?
        Mr. Hyde. Frankly, I am not familiar with the Weldon
    amendment. I understand Mr. Weldon did not, in my opinion, did
    not understand our amendment and was critical of it. But I did
    have a talk with him but I am not sure what his amendment did.
        Chairman Armey. Maybe I can--since Mr. Lantos is on both
    committees. Mr. Lantos, is it possible that this Chair's
    writing his own mark, looking at these two iterations, is it
    possible that my staff might prevail upon your staff for advice
    on, one, the question should it be dropped all together; or,
    two, are there revisions that will make this a good service to
    the American people?
        Mr. Lantos. Mr. Chairman, as I understand the Weldon
    amendment, it relates to Saudi Arabia, and properly so.
        Chairman Armey. Yes.
        Mr. Lantos. It was my view that since the Department of
    Homeland Security has total authority over the issuance of
    visas, it merely delegates the ministerial functions to the
    Department of State. Should the Secretary of Homeland Security
    choose to enunciate a policy according to which all visas in
    Saudi Arabia must be reviewed by homeland security officials,
    this would be possible under the original Hyde-Lantos proposal.
        My understanding is further, Mr. Chairman, that the
    administration may want to offer additional refinements, I
    believe.
        Chairman Armey. If I may, I do not mean to cut you off, but
    I think you made the point that indeed under your language,
    that designation with respect to Saudi Arabia is perfectly
    within the power.
        Mr. Lantos. It is perfectly within the power of the
    Homeland Security Department.
        Chairman Armey. I do not mean to cut you off, but I have a
    couple of other points I want to cover. A few days ago we had
    the privilege of seeing the Secretary of State here in the
    committee, and he displayed for us, actually held up for us,
    got a picture in The New York Times, the new visa, and talked
    about some of the reforms that they have put in place in State.
    And I gather, Mr. Hyde, from your comments that you see this as
    substantive reform, recognizing some of the problems in State
    that have troubled us and something that we in this committee
    should acknowledge and appreciate on the part of the Secretary
    of State. Is that a correct observation?
        Mr. Hyde. Absolutely; yes, sir.
        Chairman Armey. Thank you. Now, Mr. Lantos, I have admired
    you for a great many reasons.
        Mr. Lantos. Your judgment has always been flawed, Mr.
    Chairman.
        Ms. Pelosi. Or flawless.
        Chairman Armey. But I seem to recall, I thought I recalled
    correctly, that you were one of the few naturalized citizens to
    be elected to the United States House of Representatives. Is
    that not the case?
        Mr. Lantos. That is correct, sir.
        Chairman Armey. Are there others? I am thinking perhaps
    Aliena Ros-Lehtinen, Mr. Diaz-Balart. But I feel like this
    gives you an interesting perspective on a subject that I am
    fascinated by. America probably today may stand alone as the
    only Nation in the world that does not differentiate between
    its own citizens and other persons within its borders with
    respect to the rights protected for these persons. It is, I
    think, a fairly unique American experience, one that in fact
    some nations describe as naive on our part, but I cherish it as
    a rather special thing.
        Is the threat that we face now that prompts us to create
    this division so great that this Nation should forsake its
    time-honored tradition of protecting the rights of persons
    without regard to citizenship?
        Mr. Lantos. I believe, Mr. Chairman, the historic tradition
    is well worth preserving. I believe we are able to take care of
    our security concerns by other means, not through restricting
    rights.
        Chairman Armey. Mr. Hyde.
        Mr. Hyde. If I could revert back to the Weldon amendment,
    my staff has handed me a note that says the Weldon amendment
    says no visa may be issued to a Saudi Arabian without an
    interview by a Homeland Security officer. So it would undo the
    compromise Mr. Lantos and I have put together, because our
    language would allow the Secretary to require such interviews
    but not force them on every applicant.
        Chairman Armey. I appreciate that. And that was what I
    grasped. But because you are such an international statesman
    and such a jurist, I would appreciate your comment on my other
    question. Do we face such a serious threat from international
    terrorism that we should forsake what I think has been the
    special American tradition of making no differentiations in the
    rights of persons based upon whether they are or are not
    citizens of the United States?
        Mr. Hyde. I would say we should make no differentiation.
        Chairman Armey. In the rights persons as protected in this
    country on the basis of whether they are or are not citizens?
        Mr. Hyde. I think the Constitution applies to everybody in
    America, whether you are a citizen or not.
        Chairman Armey. Thank you. Thank you both.
        Do you seek recognition? Very quickly, we will recognize
    the gentleman from Oklahoma.
        Mr. Watts. I just want to say, Mr. Lantos mentioned at the
    outset how bipartisan this committee was. And having gotten to
    know Henry Hyde and Tom Lantos over the last 8 years, I would
    have been highly surprised if it would have been anything other
    than bipartisanship and total cooperation. And I just want to
    say to the both of you, you honor us by being before our
    committee this afternoon. And I cannot imagine any two other
    people in all of Congress that work together that have been
    anymore gracious than you gentlemen have been, and I think a
    real example for all of us.
        And I want to say to you what my papa told me once when I
    reminded him of how white his hair was getting. He said,
    ``White and gray hair, when you see that,'' he said, ``that
    means wisdom. And so it would have been fascinating for me to
    be in one of your meetings, your deliberations from time to
    time, and listen to all the wisdom that that white hair has
    given you both. So I thank you both for how gracious both of
    you have been.
        Mr. Hyde. Mr. Watts, I hate to inform you of this, and Mr.
    Armey, but both of you are retiring and it takes unanimous
    consent to do that, and I object.
        Chairman Armey. Thank you so much. I do see our next panel
    is here. Thank you.
        I should mention as we are changing panels to the very
    important Intelligence panel, it is with a flurry of activities
    going on around us; we have prevailed upon so many committees
    to testify before this committee. It is the intention of this
    chairman to stay with the process until we complete our
    hearings. I know some may have to come and go, and some may
    even switch sides on us for a moment. But I should say we do
    intend to proceed.
        We want to recognize the chairman and ranking member of the
    Intelligence Committee, Mr. Goss. It is our purpose here to, by
    unanimous consent, put your prepared statement in the record,
    except under the 5-minute rule, the points you would like to
    make before the committee. Ms. Pelosi knows the routine quite
    well. And we will, after your statements, proceed under the 5-
    minute rule, and we appreciate you being with us today.
        So we will recognize Mr. Goss to proceed.

    STATEMENT OF THE HONORABLE PORTER J. GOSS, CHAIRMAN, PERMANANT
                    SELECT COMMITTEE ON INTELLIGENCE

        Mr. Goss. Thank you, Mr. Chairman. I appreciate the
    opportunity to come before you and share the work product of
    the House Permanent Select Committee on Intelligence on this
    matter. The establishment of the Department of Homeland
    Security is recognition that the Federal Government understands
    the types of threats that terrorism brings to our homeland and
    that these threats call for a different expanded approach to
    protecting our national security that was what we needed during
    World War II and ensuing years.
        Mr. Chairman, our Ranking Member Mrs. Pelosi and I have
    submitted to the committee a recommended amendment to title II
    of H.R. 5005 that covers the area of information analysis and
    infrastructure protection. I am pleased to report that the
    Intelligence Committee passed this amendment out by a vote of
    17 to 1 after a lot of hard work and discussion.
        The committee also held two hearings on H.R. 5005 with the
    Director of Central Intelligence, Mr. George Tenet; the
    Director of the FBI, Robert Mueller; and Governor Ridge. Since
    HPSCI's markup of 5005 last Thursday, committee staff have
    discussed our recommendations in some detail with relevant
    White House staff and others in the administration. We found
    the administration to be generally supportive of our analysis
    and information sharing proposals, but there are some areas
    that they want to have further discussion and we will try and
    make the benefit of those discussions available to you on a
    timely basis.
        Moreover, there is a unique quality to the analytical
    portion of the new Department in that this is the only point
    where all the disparate pieces of information come together. By
    that I mean that this is where presumably foreign intelligence,
    Federal law enforcement, and State and local information all
    come together to be analyzed collectively in order to best
    understand threats specifically to our homeland and to properly
    evaluate the weakness in our defenses.
        The HPSCI recommendations for the select committee provides
    for the establishment of an all-source collaborative
    Intelligence Analysis Center that will fuse intelligence and
    information from the Intelligence Community as well as from
    Federal, State, and local law enforcement agencies and the
    private sector with respect to threats of terrorist acts
    against the United States. This is something that we do not
    have right now.
        An equally important duty of the DHS Intelligence Analysis
    Center will be to integrate intelligence and other information
    to produce and disseminate strategic and tactical vulnerability
    assessments with respect to terrorist threats. Committee
    members were concerned that DHS not simply be a department of
    counterterrorism. Protecting the Nation's infrastructure will
    require a much broader focus.
        For example, vulnerability assessments developed by DHS
    will not address the insider threat to steal secrets or other
    information on national resources or infrastructure, for
    example, nor as the administration's bill specifically
    addressed, the cyberthreat, terrorist-related or otherwise.
    Additionally, terrorists' involvement in proliferation of
    weapons of mass destruction, the financing of terrorist
    operations themselves, the relationship between narco-
    trafficking and terrorism, all are missing in the
    administration's bill and we feel should be dealt with.
        The committee's proposal to establish an all-source
    intelligence fusion center within DHS seeks to fill these
    national threat and vulnerability analysis gaps. The Center
    would be charged with developing a comprehensive national plan
    to provide for the security of key national resources and
    critical infrastructures. The Intelligence Analysis Center
    would review and recommend improvements in law, policy, and
    procedure for sharing intelligence and other information within
    the Federal Government and between Federal, State, and local
    governments, an area that needs a lot of work.
        The Intelligence Analysis Center is designed to not only
    support the new Department's intelligence requirements. As
    important, the Center will establish requirements for the
    collection and coordination of information and intelligence
    relating to threats of terrorism against the United States.
        The committee believes the proposed Intelligence Analysis
    Center should be made an element of the Intelligence Community
    and be a funded program within the national foreign
    intelligence program in accordance with the National Security
    Act of 47. Making the center an NFIP element like this will
    ensure that the Secretary of DHS has full and timely access,
    which is critical, to all the relevant intelligence pertaining
    to terrorist threats against the United States, as well to
    ensure proper coordination between DHS and the Federal
    intelligence and the law enforcement agencies of our country.
        And rather than transferring Intelligence Community
    agencies to DHS, the committee has recommended that some
    intelligence analysts from the civilian and Defense Department
    components of the Intelligence Community be detailed on a
    reimbursable basis to the Intelligence Analysis Center for up
    to 2 years. The specific number of detailees will be determined
    through cooperative agreements between the DHS Secretary and
    the Director of CIA, the Secretary of Defense, Attorney
    General, Secretary of State, and other related agencies.
        During the testimony before HPSCI on 5005, Governor Ridge,
    Director Tenet, and Director Mueller each offered their
    personal commitments that the new Department would have access
    to intelligence pertaining to terrorist threats against the
    United States. And although their stated willingness to share
    intelligence is appreciated, and I believe they will because of
    the chemistry that exists between those people, the committee
    felt so strongly about the issue of the DHS's access to
    intelligence that it included mandatory language to ensure the
    immediate provision to the DHS Secretary of all intelligence or
    other information that is collected by any U.S. Government
    agency relating to terrorism and infrastructure vulnerability.
        The HPSCI language creates a mechanism whereby the
    President can resolve any disputes between DHS and the
    Intelligence Community concerning timely access to
    intelligence. These are very important gaps to fill.
        And finally in closing, the Intelligence Committee's
    proposal envisions an Intelligence Analysis Center that is
    actual in terms of personnel and infrastructure; appropriately
    flexible in terms of its authorities and its capacity to
    address rapidly changing threats to the United States and the
    nature of terrorism; is unique to our government in that it
    incorporates the best analytical practices and capabilities
    that are found both in government and the private sector to
    defend our country and our people. That is using all of our
    assets and talents and skills to the best we can bring them
    together and I think is a timely and important suggestion.
        Thank you, Mr. Chairman.
        Mr. DeLay. [Presiding.] Thank you, Mr. Chairman.
        [The statement of Mr. Goss follows:]

     PREPARED STATEMENT OF HON. PORTER J. GOSS, CHAIRMAN, HOUSE PERMANANT
                        SELECT COMMITTEE ON INTELLIGENCE

        Mr. Chairman, thank you for this opportunity to address this
    distinguished committee on an area of great importance to our national
    security. The establishment of the Department of Homeland Security is
    recognition that the Federal Government understands the types of
    threats that terrorism brings to our homeland, and that these threats
    call for a different, expanded approach to protecting our national
    security than what was needed during and since World War II. It is
    indeed unfortunate and ironic that it took a World War II type event,
    once again, to make the country understand that the world contains
    individuals who would attack our way of life--our values, our
    livelihood and our principles--in ways that are anathema to civilized
    society.
        In fact, Mr. Chairman, I believe that the world hasn't changed that
    much since September 11th. What has changed is the audience. And it is
    this same audience, the American people, which appears to be supportive
    of making such a significant change to our government's structure. But
    with that support, is the requirement to make sure that we do this
    right; that national security is enhanced at the end of the day and
    that we are positioned to reduce the risks to our security--to our way
    of life--as best as possible. It is with that charge that I am honored
    to appear before you Today to discuss those portions of the bill that
    relate to the jurisdictional responsibilities of the House Permanent
    Select Committee on Intelligence.
        Mr. Chairman, our Ranking member, Ms. Pelosi, and I have submitted
    to the Committee a recommended amendment to Title II of H.R. 5005, that
    covers the area of Information Analysis and Infrastructure Protection.
    I am pleased to report that the Intelligence Committee passed this
    amendment by a vote of 17 to 1, with the one dissenting vote being cast
    in relationship to the overall process of Congress' proceedings on the
    establishment of this new department rather than on any substantive
    differences with the Intelligence Committee's product. This amendment
    is the result of a significant amount of work by our very experienced
    and professional staff and our members who have been very significantly
    involved in these issues through our normal oversight process and as
    they participate in the bicameral inquiry into September 11th. The
    Committee also held two hearings on H.R. 5005, with the Director of
    Central Intelligence, George Tenet, the Director of the FBI, Robert
    Mueller, and with Governor Ridge. Since HPSCI's mark-up of HR. 5005
    last Thursday, Committee staff have discussed our recommendations in
    some detail with relevant White House staff and have found the
    Administration to be generally supportive of our intelligence analysis
    and information sharing proposals for the new Department. There are one
    or two areas where we will have further discussions, and it is possible
    that we may offer additional thoughts in the very near future.
        Before I summarize the Amendment, let me first give you an idea of
    why the Committee took such actions. Mr. Chairman, if you look at the
    overall structure of the new department, you will notice that the vast
    majority of the organization has to do with planning, implementation,
    protection and response to terrorist threats and actions. The
    successful integration and operation of this portion of the department
    is very important to strengthening our borders, our infrastructure, and
    our security. This is a critical step in ensuring that federal, state,
    and local entities are coordinated and effective. What we also know,
    however, is that combating terrorism relies very much on information
    and intelligence. We have seen this time and again both in combating
    the threats posed during the Millennium and during our operations in
    Afghanistan, the Philippines, and other areas where we are fighting
    this war. This makes the analysis and proper handling of information
    and intelligence related to the threats critical to the success of any
    other actions we may take. I would submit that if the analytical
    portion of the department doesn't work, the rest of the department's
    operations and functions are somewhat academic. Moreover, there is
    unique quality to the analytical portion of the new department in that
    this is the only point where all the disparate pieces of information
    come together. By that I mean that this is where, presumably, foreign
    intelligence, federal law enforcement, and state and local information
    will all come together to be analyzed collectively in order to best
    understand threats, specifically to our homeland, and to properly
    evaluate the weaknesses in our defenses.
        This, again, makes having the right analytical approach critical.
    Such resources must be a priority from the beginning and must be robust
    and dynamic, and this where I will begin my summary of the HPSCI
    actions. The Administration's proposed legislation lacks a provision
    for establishing a robust analytic cadre to do terrorism threat
    analysis. Without an all-source analytic capability to validate and
    make sense of threat information, the Secretary will have to rely only
    on Intelligence Community analysis that may be fractious,
    contradictory, parochial and incomplete, and will have to make critical
    analytical judgments in a vacuum.
        Information sharing is also an issue of concern for the
    Intelligence Committee. The Administration's proposal leaves unclear
    the circumstances under which ``raw'' intelligence will be made
    available to the Department. Given that the Secretary doesn't know what
    he doesn't know, decisions on what DHS needs to know will be entirely
    left to the various agency heads at CIA and FBI, with the risk that key
    information will not always be shared, or not shared promptly or with
    enough detail. And under the Administration's current information
    analysis construct, it is unclear whether intelligence and law
    enforcement sources and methods will be adequately protected and
    whether certain information can be shared with the department.
        It is also not clear how or whether DHS will task the Intelligence
    Community with collection requirements, and how conflicting
    requirements will be adjudicated or otherwise prioritized. Given that
    DHS will be the first US Government entity to do vulnerability
    assessments of infrastructure, there will necessarily be both analytic
    and collection gaps from the outset. And during a 9-11 type of national
    crisis, DHS will presumably play a key role, but, as currently
    envisioned, without the benefit of a mechanism to input knowledge and
    requirements into the intelligence and law enforcement communities'
    systems.
        The HPSCI recommendations to the Select Committee provide for the
    establishment of an all-source, collaborative Intelligence Analysis
    Center that will fuse intelligence and information from the
    Intelligence Community as well as federal, state, and local law
    enforcement agencies and the private sector with respect to threats of
    terrorist acts against the United States.
        An equally important duty of the DHS Intelligence Analysis Center
    will be to integrate intelligence and other information to produce and
    disseminate strategic and tactical vulnerability assessments with
    respect to terrorist threats. Committee Members were concerned that DHS
    not simply be a Department of Counterterrorism--protecting the nation's
    infrastructure will require a much broader focus. For example,
    vulnerability assessments developed by DHS will not address the insider
    threat to steal secrets or other sensitive information on national
    resources or infrastructure. Nor has the Administration's bill
    specifically addressed the cyber-threat, terrorist-related or
    otherwise. Terrorist involvement in the proliferation of weapons of
    mass destruction, the financing of terrorist operations, and the
    relationship between narcotics trafficking and terrorism are also
    missing in the Administration's bill. The Committee's proposal to
    establish an all-source intelligence fusion center within the DHS seeks
    to fill these national threat and vulnerability analysis gaps.
        The Intelligence Analysis Center would be charged with developing a
    comprehensive national plan to provide for the security of key national
    resources and critical infrastructures. The Intelligence Analysis
    Center would review and recommend improvements in law, policy, and
    procedure for sharing intelligence and other information within the
    federal government and between the federal, state, and local
    governments. The Intelligence Analysis Center is designed to not only
    support the new Department's intelligence requirements. As important,
    the Intelligence Analysis Center will establish requirements for the
    collection and coordination of information and intelligence relating to
    threats of terrorism against the United States.
        The Committee strongly believes that the proposed Intelligence
    Analysis Center should be made an element of the Intelligence Community
    and be a funded program within the National Foreign Intelligence
    Program in accordance with the National Security Act of 1947. Making
    the Intelligence Analysis Center an NFIP element will ensure that the
    Secretary of DHS has full and timely access to all relevant
    intelligence pertaining to terrorist threats against the United States,
    well as to ensure proper coordination between DHS and federal
    intelligence and law enforcement agencies. Rather than transferring
    Intelligence Community agencies to DHS, the Committee has recommended
    that some intelligence analysts from the civilian and Defense
    Department components of the IC be detailed, on a reimbursable basis,
    to the Intelligence Analysis Center for up to two years. The specific
    number of detailees will be determined through cooperative agreements
    between the DHS Secretary and the Director of Central Intelligence, the
    Secretary of Defense, the Attorney General, and the Secretary of State.
        During testimony before HPSCI on H.R. 5005, Governor Ridge, DCI
    Tenet and Director Mueller each offered their personal commitments that
    the new Department would have access to intelligence pertaining to
    terrorist threats against the United States. Although their stated
    willingness to share intelligence is appreciated, the Committee felt so
    strongly about the issue of DHS's access to intelligence that it
    included mandatory language to ensure the immediate provision to the
    DHS Secretary of all intelligence or other information that is
    collected by any U.S. Government agency relating to terrorism and
    infrastructure vulnerabilities. The HPSCI language creates a mechanism
    whereby the President can resolve any disputes between DHS andthe
    intelligence and law enforcement communities concerning timely access
    to intelligence.
        The Intelligence Committee's proposal envisions an Intelligence
    Analysis Center that is agile in terms of personnel and infrastructure,
    appropriately flexible in terms of its authorities and its capacity to
    address rapidly changing threats to the United States, and unique to
    our government in that it incorporates the best analytical practices
    and capabilities found in both the government and the private sector to
    defend our country and our people. Our proposal integrates the
    traditional mission of intelligence analysis with new sources of
    information and sophisticated information tools. As important, our
    proposal views information and intelligence sharing as a two-way
    street--with data moving up from localities and the private sector to
    states and then torelevant federal authorities as well as national data
    flowing down to states, localities and, when necessary, to the American
    public.
        In closing, I think that we all agree that developing effective
    information analysis and dissemination functions within DHS is a very
    complex and nuanced requirement. It is critical that timely
    intelligence informs our homeland security strategy and its
    implementation. But establishing this new department, and the
    analytical center within it, will not completely solve our problem or
    reduce the risks. The missing component is the implementation of
    Intelligence Community reforms as well. I want to assure the Select
    Committee that the Intelligence Committee is equally focused on this
    urgent need to reform the civilian and defense elements of the
    Intelligence Community and we are in active discussions with the White
    House on such issues.
        I appreciate the Select Committee's interest in the HPSCI's
    recommendations and I look forward to responding to any questions that
    panel members may have.

        Mr. DeLay. Ms. Pelosi.

       STATEMENT OF THE HONORABLE NANCY PELOSI, RANKING MINORITY
           MEMBER, PERMANANT SELECT COMMITTEE ON INTELLIGENCE

        Ms. Pelosi. Thank you very much, Mr. Chairman. I am very
    pleased to join my distinguished chairman in our presentation
    to the select committee to develop legislation for a Homeland
    Security Department. I wanted to say at the outset that our
    committee always works in a bipartisan way. Particularly I want
    to commend Mr. Goss for the bipartisan leadership. He is always
    open to our suggestions.
        We worked hard for our presentation to you today because
    there were so many different suggestions and proposals and
    because, frankly, we are walking on sacred ground now. This
    hearing takes place in the context of a joint inquiry that we
    are having in our Committee on Intelligence with the Senate. We
    will have some hearings tomorrow, we had some yesterday, and
    that are concurrent with these hearings.
        We have a common purpose in having the product of our work
    give some comfort to the families who were affected on
    September 11th: to reduce risk to the American people and to
    protect our civil liberties as we protect the American people.
        We began our deliberations in our joint inquiry with a
    moment of silence in recognition of the suffering of those
    families but also the gravity of the responsibility that we
    have there. We also in the select committee have a tremendous
    responsibility.
        Our chairman has presented some of the provisions of our
    amendment which we believe improves the legislation
    significantly. We should have a good suggestion. We have worked
    on these issues for many years. I would only like to add a
    couple of points, more than a couple, but some points as we go
    along.
        As you know, our committee focused on title II of the bill,
    which is the relevant section, and we set forth the
    responsibility for the Under Secretary for Information Analysis
    and Infrastructure Protection, the functions transferred to
    this Department in this area, and the Secretary's access to
    information, the note on which the Chairman ended his remarks,
    especially intelligence information. The title also describes
    the protection to be afforded information, including protection
    from unauthorized disclosure and an exception from the Freedom
    of Information Act for information infrastructure information
    provided on a voluntary basis by the private sector.
        I have some disagreement on that provision, but more on
    that later.
        After wide-ranging discussion of several options, the
    committee voted 17 to 1 to recommend a substitute for title II.
    The substitute contains many of the provisions proposed by the
    President, but also establishes a distinct entity within the
    Department of Homeland Security to produce all-source
    collaborative intelligence analysis and threat assessments. The
    committee recommends that the entity be called the Intelligence
    Analysis Center, that it be an element of the Intelligence
    Community, and that for budget purposes it be included in the
    National Foreign Intelligence Program.
        Importantly, the Center is intended to provide intelligence
    support for all of the mission areas of the Department, whether
    these are the prevention of terrorism, protection of
    infrastructure, or the functions of the various entities
    transferred to the Department. Thus the committee
    recommendation calls for the intelligence elements of the Coast
    Guard, the Customs Service, the Immigration and Naturalization
    Service, the Federal Protective Service, and the El Paso
    Intelligence Center of the Drug Enforcement Administration to
    be transferred to the Intelligence Analysis Center, as well as
    the infrastructure protection entities specified in section 202
    in the President's bill.
        I would note that a member of our committee had concern
    over whether there will be sufficient analytic strength within
    the Department of Homeland Security as originally proposed. We
    recognized that this Department is to have a responsibility to
    a new kind of strategic analysis that will build on but be
    different from the analysis going on elsewhere in the Federal
    Government. Our recommendation provides a viable framework for
    the creation of a new analysis entity.
        Questions remain, however, beyond the scope of the
    Intelligence Committee's review, over whether there will be
    sufficient resources provided to the Department to make this
    Center viable and meld its various analytic entities together,
    to provide training for the analysts, and to make its computer
    systems and databases compatible. The Intelligence Committee
    did not accept the proposition that a new domestic intelligence
    service along the lines of the British or Canadian model should
    be created. Far-reaching proposals outside the U.S. tradition
    should be subjected to considerable study, and the committee
    and the Senate Select Committee on Intelligence embarked on an
    investigation of September 11th.
        I believe Congress should await the findings of the joint
    inquiry and we shouldn't try to include significant
    organizational changes, for example, FBI and CIA for the
    Intelligence Community, in legislation establishing the
    Department of Homeland Security.
        Finally, I have my reservations which I expressed at the
    Intelligence Committee meeting about the provisions in the
    committee's recommendation that would exempt from the Freedom
    of Information Act information provided voluntarily by non-
    Federal entities or individuals related directly to the duties
    of the Under Secretary for Information Analysis and
    Infrastructure Protection. I fear this provision may be too
    broad in its scope and beyond what is necessary to satisfy the
    concerns of the private sector with respect to proprietary
    information about infrastructure vulnerabilities.
        I believe the select committee should ensure that whatever
    is done in this area is narrowly targeted and precisely
    constructed. I say this with complete respect for the concerns
    that we have about private sector information that is given to
    us for our national security purposes, but I think we should
    define it carefully.
        As I always say, I love the freedom of a tightly-knit idea.
    I think we can achieve our national security goals, we can
    respect the legitimate concerns of the private sector and, of
    course, continue the FOIA protection to the American people
    that is important to us.
        With that, Mr. Chairman, I again hope that the committee
    will accept the recommendation of our committee. We worked very
    hard on it. We had nearly unanimous support, certainly
    overwhelming bipartisan support for the proposal, and it was
    not without competition of many ideas to be presented here
    today.
        Thank you for your attention, Mr. Chairman, and members of
    the committee.
        Chairman Armey. Thank you both.
        [The statement of Ms. Pelosi follows:]

       PREPARED STATEMENT OF HON. NANCY PELOSI, RANKING MINORITY MEMBER,
                   PERMANANT SELECT COMMITTEE ON INTELLIGENCE

        Mr. Chairman, members of the Select Committee, I appear before you
    today as the Ranking Democrat on the Permanent Select Committee on
    Intelligence to describe the Committee's recommendations to the Select
    Committee with respect to the Homeland Security Act of 2002.
        Our committee focused on Title II of the bill. Title II sets forth
    the responsibilities of the Under Secretary for Information Analysis
    and Infrastructure Protection; the functions transferred to the
    Department in this area; and the Secretary's access to information,
    especially intelligence information. The title also describes the
    protection to be afforded information, including protection from
    unauthorized disclosure and an exception from the Freedom of
    Information Act for infrastructure information provided on a voluntary
    basis by the private sector.
        After a wide-ranging discussion of several options, the Committee
    decided by a vote of 17 to 1 to recommend a substitute for Title II.
    This substitute contains many of the provisions proposed by the
    President, but also establishes a distinct entity within the Department
    of Homeland Security to produce all-source collaborative intelligence
    analysis and threat assessments. The Committee recommends that the
    entity be called the Intelligence Analysis Center, that it be an
    element of the intelligence community and that for budget purposes it
    be included in the National Foreign Intelligence Program.
        Importantly, the Center is intended to provide intelligence support
    for all of the mission areas of the Department, whether these are the
    prevention of terrorism, protection of infrastructure or the functions
    of the various entities transferred to the Department. Thus, the
    Committee recommendation calls for the intelligence elements of the
    Coast Guard, the Customs Service, the Immigration and Naturalization
    Service, the Federal Protective Service and the El Paso Intelligence
    Center of the Drug Enforcement Administration to be transferred to the
    Intelligence Analysis Center, as well as the infrastructure-protection
    entities specified in section 202 of the President's proposal.
        I should note that members of our Committee had considerable
    concern over whether there would be sufficient analytic strength within
    the Department of Homeland Security as originally proposed. We
    recognized that this Department is to have a responsibility to do a new
    kind of strategic analysis that will build on, but be different from,
    the analysis going on elsewhere in the federal government. Our
    recommendation provides a viable framework for the creation of a new
    intelligence analysis entity. Questions remain, however, beyond the
    scope of the Intelligence Committee's review over whether there will be
    sufficient resources provided to the Department to make this Center
    viable and meld its various analytic entities together, to provide
    training for its analysts, and to make its computer systems and
    databases compatible.
        The Intelligence Committee did not accept the proposition that a
    new domestic intelligence service along the lines of the British or
    Canadian model should be created. Far-reaching proposals outside the
    U.S. tradition should be subject to considerable study. The Committee
    and the Senate Select Committee on Intelligence are embarked on an
    investigation of the intelligence community before and after September
    11 that may result in recommendations for change in the community's
    organizational structure. I believe the Congress should await the
    findings of the joint inquiry and not try to include significant
    organizational change for the intelligence community in legislation
    establishing the Department of Homeland Security.
        Finally, I have my reservations, which I expressed at the
    Intelligence Committee meeting, about the provision in the Committee's
    recommendations that would exempt from the Freedom of Information Act
    information provided voluntarily by non-Federal entities or individuals
    related directly to the duties of the Under Secretary for Information
    Analysis and Infrastructure Protection. I fear this provision may be
    too broad in its scope and beyond what is necessary to satisfy the
    concerns of the private sector with respect to proprietary information
    about infrastructure vulnerabilities, I believe the Select Committee
    should ensure that whatever is done in this area is narrowly targeted
    and precisely constructed.

        Chairman Armey. The Chair recognizes the gentleman from
    Texas, Mr. Delay.
        Mr. DeLay. I did read both your statements and I must say
    you did an excellent job in making an excellent presentation
    covering many issues that, frankly, are giving a lot of Members
    on both sides of the aisle, liberal to Republican--I mean
    liberal to conservative--very high concerns about this
    particular office and the Intelligence Analysis Center.
        Could you explain to me--I just I worry, because we seem to
    be breaking down that high wall that we have built to make sure
    that the CIA was not involved in our private lives, and now you
    are proposing that we take detailees from other existing
    agencies, including the CIA and FBI and NSA--and I would assume
    even maybe DIA? Is that also suggested?
        Mr. Goss. Yes, sure.
        Mr. DeLay. Is there a possibility that the Center would
    perform--could you make us feel better that there are enough
    protections in your proposal that individuals's privacy rights
    and civil liberties cannot be violated?
        Mr. Goss. I think I can try and give you some satisfaction
    on that. We are talking about an Analysis Center, and the
    Center itself is going to be a place where information comes in
    from outside, and where requests for information are going to
    emanate to the outside. What you are looking for is the
    safeguards on how that information is collected outside.
        Presently in our form of government, we have excellent
    safeguards over our foreign intelligence collection system.
    Basically that is why we call it the National Foreign
    Intelligence Program. We do not spy on Americans.
        There is a secondary part which we are wrestling with, and
    there is a great debate--which is not part of our
    presentation--we are talking about analysis, not what the
    analysts analyze, but the analysis capability, and that is the
    debate about how do we go ahead in our country and safeguard
    that democracy and freedom that we all care very much about,
    which is our hallmark; and how do we nevertheless get
    information that might be relevant through law enforcement
    personnel who are working in this country to prevent something
    of a terrorist nature from happening before it happens?
        That is a very tricky and difficult question and probably
    more appropriately addressed to the Judiciary people than it is
    to the Intelligence people.
        The Intelligence people are going to operate by the law.Now
    you are suggesting that perhaps that by having Intelligence
    Community analysts at work in homeland security, that we would
    somehow be breaking down freedoms. Let me assure you that we
    have Intelligence Community analysts working now in a number of
    agencies that deal with a number of problems, domestic and
    foreign in the United States. That is not uncommon. It is a
    question of the operation against an American citizen or
    American spying on an American. That safeguard is still there.
    But if you are the object of a law enforcement search, or you
    have broken a law and have attracted the attention of law
    enforcement authorities, those are the areas where your
    question goes, and I think that we do not try and address that
    in our bill.
        Ms. Pelosi. If I may, Mr. DeLay, your question is music to
    my ears, because I think this is the challenge that we have. We
    all take an oath, every single one of us in public office, to
    protect and defend the Constitution. Again, as we protect and
    defend the American people, we have to protect and defend the
    Constitution. So we have a higher calling than other countries
    might have. Some had suggested an MI-5, which is a British
    model, which collects on the British people. We rejected even
    the beginnings of something like that in our deliberation.
    There are some who advocate for that, no one that I know of in
    the administration. So we have bipartisan interest in not
    collecting on the American people. And most us involved in this
    would fight to the death on that issue.
        I have said over and over, because there are shortcomings
    in other aspects of our intelligence gathering analysis and
    dissemination, we should not say the answer is to spy more on
    the American people. The answer is to improve our collection
    abroad, to improve our analysis across the board, and to
    improve our dissemination so people know what it is that we
    have.
        So I look forward to working with you to make sure that
    we--the Attorney General has rejected that, others in the
    administration, I don't know if I am at liberty to say because
    it was in our hearings upstairs but who have rejected that, and
    it is not a part of our proposal here today.
        Mr. DeLay. I appreciate your answers. Thank you.
        Chairman Armey. The Chair recognizes the gentleman from
    Texas, Mr. Frost.
        Mr. Frost. Well, you both have talked about this some, but
    I wish you could elaborate if you would, briefly, n the factors
    that the committee took into account in not bringing more of
    the Central Intelligence Agency and Federal Bureau of
    Investigation into the Department of Homeland Security. I
    assume you did look at this carefully, and if you could
    indicate the reasons why you did not recommend more of a
    consolidation of these functions.
        Ms. Pelosi. We will take turns going first, I guess. First
    of all, we were addressing the homeland security legislation
    and the section that applied to intelligence. I think the
    administration, rightly so, did not go down a path in the
    homeland security bill that talked about incorporating CIA,
    FBI, broadly in the bill.
        We are, as I mentioned, we are in the middle of our joint
    inquiry. Before September 11th even, we were in the process of
    restructuring of the Intelligence Community. And in our bill
    last year, we said this will be the last bill that looks like
    this because with the restructuring next year, our bill will
    look different. Little did we know that September 11th, God
    forbid, would intervene.
        The point is that when we come out of the joint inquiry,
    lessons learned there, there is a Scowcroft Report to the
    President on Restructuring that addresses some issues about the
    Intelligence Community. At that time, we will be better
    equipped to make some determinations.
        I do not, just speaking myself, I do not see any situation
    under which we will be including the CIA and the FBI under the
    Homeland Security Department. But we certainly will be
    restructuring the Intelligence Community, improving selection
    analysis and dissemination of information.
        Mr. Goss. I certainly associate with those remarks, and I
    come to the same conclusion. I cannot foresee a time when we
    would be putting a whole agency into the Department of Homeland
    Security. There are actually some, I guess 14, depending on how
    you count agencies that have an intelligence component, some
    are 100 percent, some are a lot less than that, to make up our
    foreign Intelligence Community.
        The CIA has a great deal more responsibility and function
    than just terrorism. Terrorism is obviously top of the list.
    That is where the war is now, that is what we are focused on
    now. It is highest priority. But there is a whole bunch of
    other stuff that is critically important to us, too; just
    defending our communications at the government level, those
    kinds of things, those kinds of chores that are routinely taken
    up by people that are a lot harder than you would think.
        So when you take a look at the total work that needs to be
    done and the way the Foreign Intelligence Service works for us,
    it seems very appropriate that it stay outside of this Homeland
    Security piece, to give the reassurance that we are not spying
    on Americans in part, but also to take advantage of the full
    range of capabilities that the foreign intelligence collection
    and analytical capability that we have can be brought to bear
    on the homeland security, and still do all the rest that it is
    assigned to do, which is a very large amount of work on a
    global basis, as you know.
        With regard to the FBI, I think I have just received 12
    pages of reforms that are going on in the FBI. I haven't even
    had a chance to digest them superficially, but I believe it is
    fair to say as our chief Federal law enforcement agency in the
    country, it also has a very full menu that goes beyond
    prevention of terrorism. And I think it is appropriate that we
    not subsume all of the other activities to terrorism, but we
    provide that terrorism has the priority. It is the first among
    equals of the law enforcement challenges right now. I think
    that was the reasoning. And we will be looking at the
    architecture of the Intelligence Community once we get through
    with the immediate task at hand.
        Ms. Pelosi. If I may add to that, Mr. Frost. Force
    protection--one of the primary responsibilities of the
    Intelligence Community writ large, not just the CIA but
    Intelligence, is force protection of our young men and women in
    uniform around the country. So there is such--the scope of the
    responsibilities is so broad and go well beyond homeland
    security, as central as that is to us in this hearing today.
        Mr. Frost. Mr. Goss, if I could, there has been a lot of
    discussion in the press that the FBI is very good at catching
    people after the fact but that it has not been always very good
    at prevention. And I would hope that your recommendations, both
    as a part of this and then your later recommendations, will
    address that.
        Mr. Goss. Indeed, Mr. Frost, they do. And we are well aware
    of that, and it is not a criticism of the FBI. That was their
    mission. Their mission has changed and it has been reinforced.
    The understanding of that mission change is very clear to them.
    And I think they are doing their best to adapt to it. And I am
    satisfied that they are trying.
        Mr. Frost. Thank you. Thank you.
        Chairman Armey. The gentleman from Oklahoma.
        Mr. Watts. Thank you, Mr. Chairman. In this new
    Intelligence Analysis Center, Congressman DeLay mentioned civil
    liberties, which I think we all are concerned about. And I
    think not only do we have to be concerned about that, but we
    have to be concerned about duplication as well. And in this new
    Agency, given that the Center would take detailees from other
    agencies like CIA, FBI, NSA, is there any possibility that the
    Center would perform functions that duplicate some of the
    activities of the existing agencies?
        Mr. Goss. I think that the idea is to bring into focus the
    terrorist target and terrorist threat and the vulnerability and
    bring them all together and fuse them all together in one
    place. We have counterterrorist centers, as you know, in other
    agencies--without going too far into details in a public
    hearing.
        And, yes, I think there is a possibility that information
    will come in and get analyzed in one area and then say oh, my
    gosh, this would be of interest to the Homeland Security
    people, let's channel that right down to them now. So I think
    you will see more than one pair of hands handling some of this.
    But I think that is of necessity, because I don't think anybody
    is suggesting that Homeland Security should be running
    intelligence operations overseas.
        So inevitably as information comes in, goes through the
    analytical process, I would believe that it would get a value
    added from the Intelligence Community. But as a customer, it
    would be receiving a good piece of information that would be of
    particular interest to it; because people will know that if you
    have got something that involves terrorism or counterterrorism
    or the terrorist threat or the vulnerability of our
    infrastructure here, the customer that is interested, in
    addition to the President of the United States, are these folks
    in the Department of Homeland Security.
        Our Intelligence Community is actually pretty good at
    understanding who their customers are and getting information
    timely, whether it is the Defense Department or State
    Department or whomever.
        Ms. Pelosi. I would only add that some of us, post-
    September 11th, wanted to assess the performance of every
    agency that had any responsibility for preventing a act. And
    some of these agencies are well beyond what you would say--the
    CIA, the FBI and that. You have INS, FAA, and the rest of that.
    And the Office of Homeland Security and the White House, of
    course, will be the ultimate place which will see all. But some
    of this information that you are talking about and the analysis
    that would go on at the Department of Homeland Security that is
    different from at the FBI and the CIA, is that the Secretary
    would be seeing it within a larger context of the other
    agencies under his purview. And, of course, the director at the
    White House, if that is the title, advisor to the President,
    whatever the title is, would be seeing it even in a broader
    context, which I think would be valuable to the American--
    protecting the American people.
        Mr. Watts. I yield back the balance of my time.
        Chairman Armey. The gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman. And thank you both
    for your work and your testimony.
        I just want to focus on one element of this which I think
    is so crucial, and that is information sharing. And in that
    regard, you know, I think there is a difference--which is part
    of what I have tried to bring out over the various witnesses we
    have--between providing for information sharing and having
    mechanisms that guarantee information sharing.
        And I would just ask, Mr. Goss, I read your statement as
    well as what you verbalized, and you expressed what the
    committee was concerned about in terms of the President's
    proposal, leaving unclear what raw intelligence would be made
    to the new Department. And I think the line that I like here
    the most is, ``Given that the Secretary does not know what he
    does not know,`` you know, it is very telling.
        Could you and Ms. Pelosi address, do you think that what
    the Intelligence Committee has done provides--goes beyond
    providing for information sharing and gives us some mechanisms
    or guarantees of information sharing and at what levels?
        Mr. Goss. Well, we certainly tried to take what we felt was
    an uncovered part in the President's proposal and reinforce it
    with a mandate that information will be shared; because without
    getting into other work that we are doing too much, we have
    found that information sharing--no secret to anybody--has not
    been our brightest success story as we have gone along.
        And breaking down what in the lingo they call the
    ``stovepipes,'' so that one agency really wants to get a piece
    of information and polish it and guard it jealously and take it
    up to the top and say, see what we at this agency have
    contributed, which quite often you get a better product for
    timely if you are coordinating horizontally at lower levels--
    that is what we have tried to do.
        So the answer to your question I hope is that we have
    mandated sharing, but we hope in that mandate we have
    encouraged the opportunity for, at the working level, people to
    use the common sense to know that this is not about promoting
    our agency and sticking our logo on a piece of paper that says
    this is our product and you cannot have it until we get our
    logo on it; that people will be protective in sharing
    information.
        Part of our problem, honestly--you have hit on a very
    important point--is that there has not been a lot of reward for
    that kind of initiative among the working people. It is high
    risk. You get caught doing something like that, and you risk
    the ire of your bosses. We have had some cases where we saw
    some what you will call commonsense initiatives taken by some
    people saying, I know a guy at another desk in another agency
    who ought to know this right now, and they have gotten
    themselves in some difficulty.
        We have to change that culture that everything has to go
    all the way up before it can go out. And I hope that we have
    tried to get some forward progress on that. But I cannot tell
    you that any amendment that we do or anybody else, any words
    that you write on a paper, is going to make that happen. That
    is a cultural change that is going to take leadership to make
    that happen. That is my view, anyway. But I think we are
    pushing the right way. Do you agree?
        Ms. Pelosi. I agree with what the chairman has said. I
    also--stop me--I think that it is okay to talk about what the
    current law is?
        Mr. Goss. Sure.
        Ms. Pelosi. The current situation is now--and perhaps one
    of these times we should sit down in a closed session to talk
    about some of this as well--but right now the President of the
    United States retains the power to give, for example, the
    Secretary of Homeland Security, when that person is sworn into
    office and is confirmed, raw data. Raw data.
        The committee will be receiving reports, the committee--I
    mean the Department will be receiving reports. The committee
    will be doing its own analysis. And so the question is, can the
    committee task back out to say I need more information about
    this, I want you to pursue this further? Or I want the raw data
    that supports what this report, this finished report says?
        Right now, it is the President who makes the determination.
    The President is obviously a busy person. I think that what we
    suggested strengthens the hand of the Secretary of the
    department who has the responsibility, who is accountable, to
    get access to more raw data, as is his due, rather than having
    to make a strong case on why he or she should have it.
        Mr. Menendez. In this regard, while we have often talked
    about the FBI and the CIA, I assume we are also talking about
    Defense Intelligence, NSA, the whole litany of different
    elements of the Federal Government that have intelligence
    procuring abilities? This would be part of your information
    sharing?
        Mr. Goss. Very much so. We have tried to create enough
    flexibility so that anything that is relevant to what the DHS
    mission is, is available to them.
        Mr. Menendez. And very, very briefly, Mr. Chairman, are
    there any penalties, is there--you talked about incentivizing
    and changing the culture so that people share. Are there
    consequences if you do not share?
        Mr. Goss. Yes. The World Trade Towers.
        Mr. Menendez. I understand that. In the legislation, are
    there consequences so that people understand, hey, if I do not
    share this, there is some form--.
        Mr. Goss. Not in our legislation. We have not gone that
    far.
        Mr. Menendez. Do you consider that something of value?
        Mr. Goss. I think you need to provide an incentive, you
    know, whether you should provide a stick. Nobody wants to
    suggest, in my view, that we are creating a penalty for trying
    to do an honest job. But I think that there are ways to,
    already on the books, that if you are malfeasant or misfeasant
    in your job that there is a penalty for that.
        So I suggest what we do is set the guidelines for the
    positive and let the normal guidelines or the normal standards
    that we have for malfeasance or misfeasance pertain. But we did
    not focus on that, to my knowledge.
        Chairman Armey. The gentlewoman from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman. And thank
    you both very much again. Your years of experience at this
    important function are really demonstrated here today.
        Let me just pick up a quick follow-on question to my
    colleague from New Jersey. Can the Secretary of DHS request
    that there be a particular kind of intelligence gathered? Or
    can it work in the opposite way? In other words, they are not
    collecting the raw data, they have access to raw data, as I
    understand it. But can they request FBI, CIA, to move in
    directions to gather intelligence in particular areas that may
    seem relevant to looking at national security issues?
        Mr. Goss. The answer is, under our proposals they can do
    that. There are obviously management controls involved in that.
    But the answer is, yes, we specifically do provide that the DHS
    can task the Intelligence Community.
        Now, tasking the Intelligence Community again, without
    getting too far into this, the Intelligence Community is asked
    to provide a lot more than it can possibly do. There are lots
    of customers that are always asking it to do things. So DHS
    would become a customer. But DHS would become a specialized
    unique customer in the area of terrorism and terrorist threats.
    So my answer is yes, they would have tasking capability to the
    community, but that would be weighed against the other tasking
    requirements that the community has to deal with.
        For example, if we happen to be in a war at the time, a
    shooting war, or there happened to be a need for a national
    technical means for certain other higher priorities that the
    administration felt--then it might be that their task wouldn't
    be handled immediately or would be put on a shelf or would be
    watered down or something else. But they have the right to get
    into the tasking competition. And if there is a problem there
    is a referee provided for.
        Ms. DeLauro. They are a unique customer. But if we are
    talking about the uniqueness of the issue and a Department of
    Homeland Security, probably the single biggest issue that
    potentially has prompted a Department of Homeland Security is
    the issue of intelligence and intelligence gathering, sharing
    what we know when we know it, when can you respond? I am not
    clear about what the lines are in terms of if you were in a
    shooting war, is there the potential for there to be a
    terrorist attack accompany that kind of thing?
        So I don't know ,among equals, how do these lines of
    management, these management controls work? What is the thought
    process of all of that? Help me; this is very new.
        Mr. Goss. What I am trying to tell you is that the DHS will
    have the unique requirement under this proposal to task the
    community to get more information about something of interest
    to them that they think is critically important. They will have
    that capacity.
        Ms. DeLauro. Not out of frivolous interest, but this is
    about whether or not--.
        Mr. Goss. No, let us say that John Doe comes into their
    sights. They get a report that says, ``John Doe was seen in an
    airport in country X. We would like to know more about John
    Doe. Was he carrying a bag? What can you tell us about John
    Doe? Go back to the agency that provided the report or the
    information and say, can you tell us more?'' .
        Now in order to get that information, you have to go into
    the operational side of things. And the people who run those
    operations are besieged with requests from lots of people. I
    would say normally if it is the subject of terrorism, you are
    going to get pretty good response.
        Ms. DeLauro. That would be a priority, I would think.
        Mr. Goss. I would think so. But just because it is coming
    from DHS, everything else does not stop because that is not
    necessarily true.
        Ms. Pelosi. The chairman gave you a straightforward answer,
    the reality. But I think that reality will be changed, just as
    Mr. Menendez questioned what is the penalty for not sharing
    information. I think the accountability factors will weigh in
    very high in responding to the Secretary of Homeland Security
    at his tasking request or at the sharing of information level.
    Because the stakes are high, the expectation is too. And there
    is a whole different attitude now in all of this. But the
    chairman was giving you the honest answer.
        Mr. Goss. The reason we wanted to put the Under Secretary
    for Intelligence Analysis in the National Foreign Intelligence
    Program is so that they have a seat at the table. They are a
    member of the club. And that way they will be able to
    coordinate more efficiently with more transparency, and they
    will be able to get quicker and better answers. As far as I am
    concerned, I think it is the right way to do it.
        Ms. DeLauro. Thank you very much.
        Chairman Armey. This chairman has the extraordinary
    privilege of being able to discuss these matters in more
    private settings with both the chairman and the ranking member,
    and I find my discussions with you on these matters always
    enlightening, and look forward to perhaps a few more very
    important ones before I do my drafting work throughout the
    night.
        So I will not trouble you with questions now in this more
    public setting. But I do want to take a moment to thank you
    both for your service on this very important Intelligence
    Committee.
        And, Ms. Pelosi, while I want to thank you generously, I am
    sure you would concur with me that this body, indeed this
    Nation, should pay Porter Goss a special tribute of
    appreciation.
        Ms. Pelosi. This is true.
        Mr. Goss. Thank you, Mr. Chairman.
        Chairman Armey. Nobody in this body can be said to have
    been willing, and to have demonstrated his willingness by
    action, to make a larger sacrifice for his Nation than Porter
    Goss when he decided to stay on the job. And, Porter, my
    compliments and my appreciation.
        Mr. Goss. Thank you very much, Mr. Chairman. I appreciate
    that.
        Ms. Pelosi. Mr. Chairman, as I said at the beginning of my
    remarks, I commended him for the bipartisan manner in which he
    conducted--we are point and counterpoint, as you can imagine,
    on the intelligence issues. And while we may not always agree,
    we frequently do. But we always work together to hammer out a
    solution that is in the best interest of our country and is a
    service to the Congress. And he has been a tremendous leader. I
    associate myself with the remarks you made.
        I do also say it is a tribute to him and his leadership on
    the committee that we were able to present to you a model of
    what we think this Department should look like. We have an
    agile proposal that is easily absorbed by the new Department,
    something that can be on line immediately in the important work
    of intelligence as far as protecting the American people are
    concerned.
        So I hope that beyond the substance of our proposal, you
    will see it as a model for how the Department should look in
    its various aspects. With that, I thank the committee. And I
    also as a member of the committee thank the distinguished
    chairman.
        Mr. Goss. You caught me and made me speechless, Mr.
    Chairman, which is uncommon for me. But it is a pleasure
    working with Mrs. Pelosi. She is an extremely valuable ranking
    member, to put it mildly, and we have a marvelous working
    relationship. It is great to understand national security tops
    everything else when we get down to business, and Mrs. Pelosi
    handles it extremely, extremely well and always brings a good
    contribution, to put it mildly, to the table from a perspective
    I usually hadn't thought of, which is very helpful.
        And, Mr. Chairman, I want to tell you that the work you are
    doing in your committee here is extremely important to this
    Nation, and I wish you well. And we stand by, ready to help you
    in any way we can. And I return the compliments that you have
    been a great leader as well, and we will miss you.
        Chairman Armey. The practice of this committee is that I as
    chairman get in the final word. In this instance the final word
    should come from my grandfather: You are, sir, a gentleman, a
    scholar, and a poor judge of good whiskey.
        We thank you.
        The Chair now recognizes the chairman and ranking member of
    the Science Committee. And we would invite you to come to the
    dais. While you are approaching, let me just say that it is a
    practice of this Committee to put your formal statement in the
    record and to invite you each in your turn, under the 5-minute
    rule, to make your statement before the Committee after which
    the committee will conduct its questioning again under the 5-
    minute rule. With that understanding, Chairman Boehlert, it is
    a pleasure to see you here and we would welcome you to open
    with your statement.

        STATEMENT OF THE HONORABLE SHERWOOD BOEHLERT, CHAIRMAN,
                          COMMITTEE ON SCIENCE

        Mr. Boehlert. Thank you, Mr. Chairman, and members of the
    committee. It is a pleasure to appear here today. I think all
    of us in the Congress are impressed with the way the Select
    Committee is going about its very important business, and in
    particular, Mr. Chairman, I wish to thank you and your staff
    for being so open and cooperative with ours.
        Writing this bill has been a true collaborative effort, as
    it should be. That collaboration was part of the Science
    Committee's deliberations as well. The Science Committee's
    amendment to H.R. 5005 reflects work on both sides of the aisle
    and it was approved by a voice vote. I am pleased we were able
    to develop such a broadly supportive approach in a very short
    time. The Committee on Science amendment has three main
    components: strengthening research and development; improving
    cyber security; and helping firefighting. Let me discuss each
    briefly in turn.
        The Committee on Science felt, as did several other
    committees, that H.R. 5005 did not pay adequate attention to
    research and development. The bill did not spell out the R&D
    responsibilities or activities of the new department, did not
    give them a central focus and did not designate a senior
    official who would be accountable for, or for that matter, have
    the background to run the department's research and development
    program. We thought that that was a recipe for failure, and we
    can't afford failures in this area.
        As I have said before, like the Cold War, the war on
    terrorism will be won as much in the laboratory as on the
    battlefield. So following the recommendations of the National
    Academy of Sciences, among others, we created an Under
    Secretary for Science and Technology and gave that person clear
    responsibilities for R&D across the department. You know,
    Governor Ridge endorsed that approach when he appeared before
    you on Monday. Let me be clear, the bottom line for us is that
    there must be an Under Secretary for Science and Technology
    with clear research and development responsibilities, but we do
    not necessarily believe that this has to be an additional under
    secretary as was proposed in our bill.
        If the Select Committee wanted to meld our approach with
    that of some other committees, and it is a daunting task I
    know, and rename and reorient the under secretary created in
    title III of H.R. 5005, that would fully accomplish our goals,
    assuming the appropriate language was used.
        I don't have time now, nor do you, to outline all of the
    aspects of our R&D provisions that we consider important, but
    let me name a few: We believe the Congress should have a clear
    sense of how any transferred national labs will operate before
    those labs are actually transferred; we are skeptical of the
    need for other transactions authority; we think there needs to
    be an office that can act as a single point of entry for
    scientists and entrepreneurs with ideas to contribute to
    improve homeland security; and we support the creation of a
    homeland security institute.
        We also have changed the organic statute for two agencies
    under our jurisdiction: the White House Office of Science and
    Technology Policy, and the National Institute of Standards and
    Technology, to add homeland security as one of their principal
    duties. Both already contribute to homeland security, and I
    think that these are noncontroversial but necessary changes.
        Moving to cyber security, we also focused on gaps in H.R.
    5005 that drew the attention of several committees. The basic
    problem is that while cyber security is one of our Nation's
    greatest vulnerabilities, the bill never deals with it
    explicitly, so we added a new section, 205, to make the title
    II under secretary's cyber security duties explicit, and those
    include improving the security of Federal computers and working
    with private, state and local officials to improve the security
    of their systems.
        We also created a volunteer corps to respond if and when
    security fails. For Federal computers, we drew on the approach
    in current law and in Ms. Morella's H.R. 1259, which the House
    has already passed. Under this approach the National Institute
    of Standards and Technology, or NIST, a Federal laboratory that
    is trusted by industry as an honest broker, will develop
    standards for Federal computers, which the new department will
    then promulgate and oversee. This is a sensible division of
    labor endorsed strongly by the high tech community. With that
    division of labor in mind, the Committee on Science rejected
    the proposal in H.R. 5005 to move NIST's computer security
    division to the new department.
        We believe the move would be counterproductive in two ways.
    First, the move would sever the very useful links between the
    computer security division and the rest of NIST researchers on
    whose work the division depends. Second, the move would
    undermine the division's relationship with the private sector,
    which trusts NIST as a neutral scientific agency with no direct
    regulatory authority or national security responsibilities.
        I know that a group of House members, like Mr. Goodlatte
    and high tech industry specialists are in the process of
    sending letters to the Committee, if you haven't already
    received them, backing the Committee on Science position on
    this matter.
        Finally, let me say a brief word about the fire provisions.
    Our Committee believes that the U.S. Fire Administration, a
    unit of FEMA, needs to remain a distinct entity and have its
    programs maintain their separate identity to ensure that
    firefighters, truly the first of first responders, do not get
    lost in the shuffle within the new department.
        Mr. Chairman, I believe the Committee on Science has taken
    a thoughtful, balanced, targeted, bipartisan approach to build
    on and strengthen the very useful foundation that has been
    built by the administration, and I will be happy to answer any
    questions you might have. Thank you, Mr. Chairman.
        Chairman Armey. Thank you, Mr. Chairman.
        [The statement of Mr. Boehlert follows:]

     PREPARED STATEMENT OF HON. SHERWOOD BOEHLERT, CHAIRMAN, COMMITTEE ON
                                    SCIENCE

        Mr. Chairman and Members of the Committee:
        Thank you for the opportunity to appear today. I think all of us in
    Congress are impressed with the way the Select Committee is going about
    its business, and, in particular, I want to thank your staff for being
    so open and cooperative with ours. Writing this bill has been a true,
    collaborative effort--as it should be.
        That collaboration was a part of the Science Committee
    deliberations, as well. The Science Committee's amendment to H.R. 5005
    reflects work on both sides of the aisle, and it was approved by voice
    vote. I'm pleased that we were able to develop such a broadly supported
    approach in a very short time.
        The Science Committee amendment has three main components--
    strengthening research and development (R&D); improving cybersecurity;
    and helping firefighting. Let me discuss each in turn.
        The Science Committee felt, as did several other Committees, that
    H.R. 5005 did not pay adequate attention to R&D. The bill did not spell
    out the R&D responsibilities or activities of the new Department, did
    not give them a central focus, and did not designate a senior official
    who would be accountable for--or for that matter, have the background
    to run--the Department's R&D programs. We thought that was a recipe for
    failure, and we can't afford failure in this area. As I've said before,
    like the Cold War, the war on terrorism will be won as much in the
    laboratory as on the battlefield.
        So, following the recommendations of the National Academy of
    Sciences, among others, we created an Under Secretary for Science and
    Technology and gave that person clear responsibilities for R&D across
    the Department. As you know, Governor Ridge endorsed that approach when
    he appeared before you on Monday.
        Now, let me be clear, the bottom line for us is that there must be
    an Under Secretary for Science and Technology with clear R&D
    responsibilities, but we do not believe this has to be an additional
    Under Secretary as we have proposed. If the Select Committee wanted to
    meld our approach with that of some other Committees, and rename and
    reorient the Under Secretary created in Title III of H.R. 5005, that
    would fully accomplish our goals--assuming the appropriate language was
    used.
        I don't have time now to outline all the aspects of our R&D
    provisions that we consider important, but let me list just a few--we
    believe the Congress should have a clearer sense of how any transferred
    national labs will operate before those labs are actually transferred;
    we are skeptical of the need for ``Other Transactions Authority;'' we
    think there needs to be an officethat can act as a single point of
    entry for scientists and entrepreneurs with ideas to contribute to
    improve homeland security; and we support the creation of a Homeland
    Security Institute.
        We also have changed the organic statutes for two agencies under
    our jurisdiction, the White House Office of Science and Technology
    Policy, and the National Institute of Standards and Technology, to add
    homeland security as one of their explicit duties. Both already
    contribute to homeland security, and I think these are non-
    controversial changes.
        Moving to cybersecurity, we also focused on gaps in H.R. 5005 that
    drew the attention of several committees. The basic problem is that
    while cybersecurity is one of our nation's greatest vulnerabilities,
    H.R. 5005 never deals with it explicitly. So we added a new section 205
    to make the Title II under secretary's cyber duties explicit, and those
    include improving the security of federal computers and working with
    private, state and local officials to improve the security of their
    systems. We also create a volunteer corps to respond if and when
    security fails.
        For federal computers, we drew on the approach in current law and
    in Mrs. Morella's H.R. 1259, which the House has already passed. Under
    this approach, the National Institute of Standards and Technology, or
    NIST, a federal laboratory that is trusted by industry as an honest
    broker, will develop standards for federal computers, which the new
    Department will then promulgate and oversee. This is a sensible
    division of labor, endorsed by the high tech community.
        With that division of labor in mind, the Science Committee rejected
    the proposal in H.R. 5005 to move NIST's Computer Security Division to
    the new Department. We believe the move would be counter-productive in
    two ways. First, the move would sever the very useful links between the
    Computer Security Division and the rest of NIST's researchers, on whose
    work the Division depends. Second, the move would undermine the
    Division's relationships with the private sector, which trusts NIST as
    a neutral, scientific agency with no direct regulatory authority or
    national security responsibilities.
        I know that both a group of House Members led by Mr. Goodlatte and
    high tech industry are in the process of sending letters to the
    Committee--if they haven't arrived already--backing the Science
    Committee position on this matter.
        Finally, let me say a brief word about our fire provisions. Our
    Committee believes that the U.S. Fire Administration, a unit of FEMA,
    needs to remain a distinct entity and have its programs maintain their
    separate identity, to ensure that firefighters--truly the first of
    first responders--donot get lost in the shuffle within the new
    Department.
        Mr. Chairman, I believe the Science Committee has taken a
    thoughtful, balanced, targeted, bipartisan approach to build on and
    strengthen the very useful foundation that has been built by the
    Administration. I would be happy to answer any questions. Thank you.

        Chairman Armey. Mr. Hall, there is a great country western
    song in Texas that goes around Texas that says it is a Texas
    loving night, and your presence makes this that for me and I
    want to welcome you tonight

      STATEMENT OF THE HONORABLE RALPH M. HALL, RANKING MINORITY
                      MEMBER, COMMITTEE ON SCIENCE

        Mr. Hall. Mr. Chairman, members of the board, I thank you.
    I will remember you as a chairman. I respect you as a chairman
    finally, and you have come a long way since that day over at
    Homestead Hotel in Hot Springs when I introduced you as a new
    member. I think I said you were so naive you didn't know that
    you couldn't close some military bases.
        Chairman Armey. I recall that word of encouragement from
    you at the time.
        Mr. Hall. And as the new chairman you are going to need a
    new portrait, and a lot of us from Texas would like to be here
    to hang it when it takes place.
        Seriously, Mr. Chairman, and members of the Select
    Committee, I am honored to testify before you today. Chairman
    Boehlert ran a very good bipartisan and constructive process in
    our committee. Recommendations that we present to you today
    comprise a consensus product that I think greatly enhances the
    bill and I am pleased to be present at the creation of the
    Department of Homeland Security. I think the President deserves
    a lot of credit for stepping up and accepting the idea that a
    new department is called for at this time, and I am
    particularly pleased that the Science Committee can present to
    you an amendment that places a clear focus in the new
    Department on Science and Technology.
        The single most important recommendation, I think, and I
    think the chairman agrees with me, was the creation of an Under
    Secretary for Science and Technology, a recommendation that was
    supported by both sides of the aisle and unanimously was
    approved in our markup just last week. I would also note that
    the President's counterterrorism strategy published just
    yesterday cites Science and Technology as one of the homeland
    securit's strategic four foundations. And Science and
    Technology are, of course, too important to be left to chance
    in the new department. They need to be planned, coordinated and
    directed under a strong Under Secretary.
        Lynn Woolsey and Mike Honda successfully offered--I want to
    highlight some of these changes for the Select Committee. I
    think Chairman Boehlert has covered them very adequately, so I
    will touch base on them a little bit. I quickly want to
    highlight Lynn Woolsey and Mike Honda, who successfully offered
    an amendment to create a Homeland Security Institute. The
    institute would be a nonprofit organization, assisting the
    Secretary much in the same way that the Rand Corporation and
    the MITRE Corporation assist the Secretary of Defense in
    analyzing proposals, establishing test beds, assessing defense
    vulnerabilities and strengths and so forth.
        Also, one that the Chairman did not mention, an amendment
    that Representative Joe Barton offered, an amendment that would
    establish university-based centers to help meet the science and
    technology needs of the new Department of Homeland Security.
    The Chairman and I have probably a different approach to that
    and take different positions on that, and it was a hotly
    contested amendment, but I think America's leading research
    universities represent a great resource to enhance our Nation's
    homeland security. It creates four university regional centers,
    and I encourage the select panel to retain this provision as it
    works its way through the legislation.
        Another, Brian Baird feels it is important to include
    funding for research on how people cope with terrorist attacks
    and provide tools to help repair the psychological impact to
    our citizens as part of any international homeland defense
    strategy. Congressman Baird is a clinical psychologist. I think
    he gave good testimony and advice to the committee, and I think
    it is essential that we help him as we want to help our
    survivors to reduce the potentially paralyzing symptoms of
    terror trauma and provide mental health professionals the tools
    to provide effective treatment. We think that was a very good
    amendment.
        Zoe Lofgren and Vern Ehlers led the charge in blocking the
    transfer of NIST Computer Division to the new department. A lot
    of high tech organizations have warned that this transfer could
    actually hurt national security by choking off productive
    interactions between the government and the private sector on
    computer security issues.
        Eddie Bernice Johnson and Steve Israel successfully offered
    an amendment to create an advisory committee to review and make
    recommendations on general policy issues for the Under
    Secretary for Science and Technology, and Lynn Rivers and David
    Wu offered an amendment strengthening the channels through
    which creative American inventors who otherwise might not have
    access, could propose their ideas and technologies to
    appropriate government officials.
        Mr. Chairman, these are just some of the reason we need to
    move this bill as quickly as possible, and I thank you for your
    time and effort on this, and I will be pleased to answer any
    questions.
        Chairman Armey. Thank you. Thank you gentlemen.
        [The statement of Mr. Hall follows:]

      PREPARED STATEMENT OF HON. RALPH M. HALL, RANKING MINORITY MEMBER,
                              COMMITTEE ON SCIENCE

        Mr. Chairman and members of the Select Committee, I am honored to
    testify before you today with my Chairman and friend, Sherry Boehlert.
    Chairman Boehlert ran a very bipartisian and constructive process and
    the recommendations we present to you today comprise a consensus
    product that I think greatly enhances the bill.
        I am pleased to be present at the creation of the Department of
    Homeland Security. The President deserves a lot of credit for stepping
    up and accepting the idea that a new department is called for at this
    time.
        I am particularly pleased that the Science Committee can present to
    you an amendment that places a clear focus in the new Department on
    science and technology--two of our most important tools in fighting
    terrorism. The single most important recommendation that we made was
    the creation of an Under Secretary for Science and Technology, a
    recommendation that was supported bi-partisanly and unanimously in our
    markup last week. I would also note that the President's counter-
    terrorism strategy, published just yesterday, cites science and
    technology as one of the homeland security strategy's ``four
    foundations--unique American strengths that cut across all of the
    mission areas, across all levels of government, and across all sectors
    of society''. Science and technology are too important to be left to
    chance in the new Department--they need to be planned, coordinated, and
    directed under a strong Under Secretariat.
        Our Committee made over a dozen constructive changes to the
    President's proposal in our markup last week. I will quickly highlight
    four of these changes for the Select Committee:
         Lynn Woolsey and Mike Honda successfully offered an
    amendment to create a Homeland Security Institute. The Institute would
    be a non-profit organization assisting the Secretary in much the same
    way that the RAND Corporation and the MITRE Corporation assist the
    Secretary of Defense in analyzing proposals, establishing test-beds,
    assessing defense vulnerabilities and strengths, and so forth. The
    creation of this Institute was the major recommendation of last month's
    National Research Council report on terrorism R&D.
         Zoe Lofgren and Vern Ehlers led the charge in blocking the
    transfer of NIST's Computer Security Division to the new Department.
    This Division develops information security standards, testing, and
    evaluation tools for use in federal agencies and in the private sector.
    Many high-tech organizations have warned that this transfer could
    actually hurt national security by choking off productive interactions
    between the government and the private sector on computer security
    issues. Reps. Goodlatte and Boucher (and a number of other Members)
    have sent the Select Committee letters on the importance of this
    matter.
         Eddie Bernice Johnson and Steve Israel successfully
    offered an amendment to create an advisory committee to review and make
    recommendations on general policy issues for the Under Secretary for
    Science and Technology. Most importantly, the Committee will include
    representatives of the users of the Department's research activities--
    emergency responders--and of citizen groups.
         Lynn Rivers and David Wu successfully offered an amendment
    strengthening the channels through which creative American inventors
    can propose their ideas and technologies to appropriate government
    officials.
        Mr. Chairman, we need to move this bill as quickly as possible.
    Homeland security is too important a task to let politics, turf,
    jurisdictional concerns, or struggles over credit get in our way.
        Thank you for your time and efforts on this matter. I would be
    pleased to answer any of your questions.

        Chairman Armey. Ms. Pelosi, the chairman is tempted to
    continue with his Texas theme by recognizing Mr. Frost from
    Texas.
        Mr. Frost. I appreciate that because actually I have a
    Texas question.
        Ralph, I didn't have the privilege of serving in the Texas
    legislature. Of course, you did with great distinction, and in
    the Texas legislature there is a practice called Bracket law,
    in which you write a law that applies to only one entity or to
    one city. It is a city no larger than a million 115 people, no
    smaller than--you understand what I am talking about. And it
    appears that the Barton law is a classic example of Bracket
    law. It only applies to one school in the state of Texas.
        Mr. Hall. That is the University of Texas at Arlington, I
    think.
        Mr. Frost. No, it does not apply to the University of
    Texas. It only applies to Texas A&M where Mr. Barton went to
    school.
        Mr. Hall. I was joking with you.
        Mr. Frost. But it applies to Texas A&M only. Here is my
    question. As you know, Texas has many world class research
    universities; yet the amendment adopted by your Committee
    authored by my colleague from Texas, Joe Barton, would, for all
    practical purposes, exclude all of those universities, except
    for one, from eligibility to compete for those centers
    designated. Can you comment on the Barton amendment and the 17
    criteria it sets forth to establish eligibility requirements?
    Is there a need to, in this legislation, exclude many
    universities from this competition including the University of
    Texas which is excluded from this competition?
        Mr. Hall. Yes. I would be glad to. Initially the bill was
    drawn and many thought it alluded only to Texas A&M University,
    perhaps because Barton was the author of it, and his having
    been a graduate of there. We discussed that and Congressman
    Barton agreed that it should be regional and that all
    universities should have a shot at it. He even offered to take
    those 17 criteria away, and I think this committee could do
    that if they wanted to. We want to pick the finest
    universities, the greatest universities.
        I mentioned Stanford, Johns Hopkins. I mentioned a lot of
    others in our debate there. I think it could be any of those. I
    think they are great universities. I think we ought to avail
    ourselves of them.
        Mr. Frost. I have the Barton amendment in front of me, and
    I would like to read you several of these 17 criteria. Number
    6, strong affiliations with animal and plant diagnostic
    laboratories; number 7, demonstrated expertise in food safety;
    number 8, affiliation with Department of Agriculture
    laboratories or training centers. That appears to be bracket
    law applying only to Texas A&M. I have family that went to
    Texas A&M. It is a fine institution. But I think that the other
    institutions in our State should have the opportunity to
    compete and I think if this Committee were to include the
    Barton amendment I would hope that we would eliminate the 17
    criteria which seemed to tailor this for only one institution
    in our home State.
        Mr. Hall. I think Tarleton State University lacked that
    provision. I think there are probably ten other institutions
    that would have lacked it. But I think Congressman Barton is
    willing to set-aside those 17.
        Mr. Frost. Where I went to school at University of
    Missouri, if the University of Missouri were applying for this,
    it would probably be eligible because Missouri does not have an
    A&M school. The Agriculture Department is right there on the
    main campus in Columbia, but I would say that the majority of
    the States in this country do have a separate A&M school. They
    may not call it A&M, but it is an agriculturally-based school,
    so that they would have the opportunity to compete, but in our
    State, this would exclude an awful lot of our institutions, and
    I hope we would not adopt it in its current form.
        Mr. Hall. I understand that, and as I said, I think they
    are willing to forego the criteria they set there; however,
    there are other institutions in our State that I think
    certainly would be under consideration, including the ones you
    represent. I would be very pleased if it were Texas A&M or the
    University of Texas or my alma mater, SMU. I think they all
    ought to be considered and set the criteria aside. I am willing
    to do that.
        Mr. Frost. I agree with that. They ought to all be
    considered. And I hope if we adopt this amendment, we will do
    it in a way so that they can all compete, even including the
    University, where our distinguished chairman taught prior to
    being in Congress, the University of North Texas. They should
    be able to compete.
        Mr. Boehlert. Mr. Frost, may I respond that too? As you
    probably know, if you check the record for the Committee, I did
    not favor that particular amendment. I did so with sound
    reasoning, I think, on my part, and I thank you for the very
    perceptive question.
        We avoided specificity in terms of designating specific
    types of research, and Dr. Baird's contribution was very
    significant but when you start outlining the number of research
    areas that should be considered, the list is endless. We want
    to leave it up to the experts in the new Department of Homeland
    Security. And secondly, in terms of the number of centers,
    while the initial proposal by Mr. Barton zeroed in on one
    center, he expanded that to include four. I am not sure if they
    were within a radius of so many miles of Texas A&M. That is
    another question for another day, but the fact of the matter is
    we think the bill very adequately directs research to
    universities and we would let the experts determine where those
    centers should be and what disciplines they should focus on.
        Chairman Armey. The Chair just observes that the Chair
    withhold judgment, until he determines whether or not a winning
    football team is one of the criteria. The gentleman from Texas
    and the gentleman from New York, the Chair will be looking at
    that provision.
        Mr. Boehlert. Knowing the Chair's fondness for music
    comparisons, I would point out that the committee on both sides
    of the aisle worked very well together, and some people would
    say it constitutes amazing grace.
        Chairman Armey. Thank you.
        Mr. Hall. Mr. Chairman, our chairman, Mr. Boehlert, was on
    top of the table with us. He was opposed to the centers and
    took that position and it was a 17-to-15 vote. It was a close
    vote, and I think the very fact that he allowed some amendments
    and that some of the amendments that were sent up from the
    Democratic side of the aisle passed evidences the fairness he
    exhibits as a chairman and I appreciate that as we all do.
        Chairman Armey. I appreciate both of you and recognize the
    gentleman from Ohio, Mr. Portman.
        Mr. Portman. Mr. Chairman I will be brief, first of all, to
    thank our colleagues for being here and giving us the wisdom on
    this. The Science and Technology piece of this is extremely
    important, and one thing we have learned over the last few
    weeks as we have looked at this, is there is probably nothing
    more important than being sure this works, both in terms of the
    private sector and the government sector.
        I noticed you changed some of the language of the bill to
    strengthen the Science and Technology provisions. Particularly
    you changed the director, who would have been giving assistance
    to all the other under and assistant secretaries to an under
    secretary role. Maybe you, Chairman Boehlert and Mr. Hall,
    could address that issue, and why you think that is important
    structurally.
        Mr. Boehlert. I think it's very important. It gives
    responsibilities with a research and development focus, it
    gives it accountability, it gives it intellectual heft. It
    makes it possible to attract the best and the brightest from
    wherever we can attract that individual to fill that important
    slot. And I would like to report that while this was not in the
    initial presentation from the administration, we worked very
    closely with Dr. Marberger, the President's science advisor. We
    worked very closely with Governor Ridge, and I am pleased to
    report that Governor Ridge, on Monday in the statement before
    this committee, embraced the concept of creating an under
    secretary for research and development. That puts the emphasis
    where we need to.
        I am absolutely convinced, Mr. Portman, that this war on
    terrorism is going to be won more in the laboratory than on any
    battlefield. That is a very, very important aspect of modern
    warfare and modern defense mechanisms, so we want the best
    researchers in the Nation working on this very important
    subject. We want to have one person in charge working with the
    other under secretaries and Cabinet-level officers to put focus
    to this very important mission.
        Mr. Portman. Thank you. Mr. Hall.
        Mr. Hall. It is supported by both of us, it's supported by
    Governor Ridge, and I think that science is at the top of the
    list and without an under secretary--if that is what your
    question was, there wouldn't be anyone there with the primary
    mission to coordinate the science and technology functions
    necessary to guarantee our security. I know that there are some
    who have some problem with another group here in D.C. They want
    them out in the field and there is something to be said for
    that. But I think if you take the recommendation of another
    committee to eliminate an under secretary, you are back to
    four. I think this is the heart of our recommendation that if
    the Department is not focused on discovering, and not really
    focused on developing the tools necessary to defend the
    homeland, and all the other missions of the secretary are going
    to be greatly compromised. Science has to be at the top of the
    list.
        Mr. Boehlert. Let me ask, Mr. Chairman, if it's permissible
    to submit for the record a letter from the National Academies--
    National Academy of Sciences, National Academy of Engineering,
    and The Institute of Medicine strongly endorsing this proposal.
        Chairman Armey. The record is open. Without objection, it
    will be accepted. Thank you.
                           National Academy of Sciences
                                         The National Academies
                                 Washington, D.C. 20418, July 12, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C. 20515
    Hon. Nancy Pelosi
    Ranking Member
        Dear Chairman Armey and Chairman Pelosi:
        We are writing endorse strongly the recommendation for an
    Undersecretary for Science and Technology in the new Department
    of Homeland Security. This recommendation was made in the
    recent National Academies report Making the Nation Safer: The
    Role of Science and Technology in Countering Terrorism, which
    is enclosed.
        As your committee and the administration move forward in
    planning for the new department, we believe that you have an
    important opportunity to create a structure and a culture to
    harness America's strength in science and technology for
    counterterrorism. In particular, an Undersecretary for Science
    and Technology would provide a focal point for guiding key
    research and technology development programs within the new
    department and, very importantly, for building collaborative
    partnerships with the major science, engineering, and medical
    science departments and agencies (such as the National Science
    Foundation, the National Institutes of Health, the Department
    of Energy, the Department of Defense, the Department of Health
    and Human Services, and the National Aeronautics and Space
    Administration) that will remain outside the department. This
    undersecretary would work closely with the Office of Science
    and Technology Policy on coordinating multiagency projects and
    their linkages to related programs throughout the government.
    This person would have responsibility not only for developing
    homeland security-related technology, but also for all
    technical elements of the agencies that are located within the
    department.
        Thank you for your consideration Of this input from the
    National Academies and of our report.
        Please let us know if we can be of further assistance to
    you.
            Sincerely,
                                         Bruce Alberts,
                        President, National Academy of Sciences
                                           Wm. A. Wulf,
                     President, National Academy of Engineering
                                    Harvey V. Fineberg,
                               President, Institute of Medicine

        Mr. Portman. I appreciate the work that you all put in, and
    I know going forward, your oversight will be extremely
    important to make sure we can meet the promise of more
    technology, more science. As Mr. Boehlert says, this will be as
    important to this battle as anything that happens on the
    battlefield itself. Thank you very much.
        Chairman Armey. The Chair recognizes the gentleman from New
    Jersey.
        Mr. Menendez. Thank you, Mr. Chairman. And I want to thank
    both of you for your work and your testimony here. I want to
    get a sense --I asked this most of the Chairs that come before
    us where there have been changes made to the President's
    proposal. Were there different elements of your changes--were
    they bipartisan in terms of the votes--.
        Mr. Boehlert. Without any question, bipartisan, every
    member's fingerprints are all over this product. We are proud
    of it.
        Mr. Menendez. Very good. And I know that one of those
    important amendments that Mr. Hall referred to, and I certainly
    am very concerned about, and I hope that the committee will
    adopt it as its own--as a matter of fact, I hope the Committee
    will adopt a lot of what you did in the committee in our mark
    here, but certainly the NIST issue, I think we choke off
    potentially the advances we can make with the private sector
    and we hurt ourselves in the context of some of what we can
    capture, and I am glad to see that the committee acted as it
    did, and I hope we will preserve it here as well.
        Mr. Boehlert. Thank you very much. We came to the same
    conclusion after the same thoughtful deliberation, and I would
    like to submit for the record some more statements from our
    colleagues and the co-chairs of the high tech caucus, Mr.
    Boucher and Mr. Goodlatte, and also letters from the whole
    bunch of groups, the Business Software Alliance, American
    Association for the Advancement of Science, all addressing this
    very important issue. I think the computer security division of
    NIST performs exceptionally well. It's a small staff, less than
    50 people. A modest budget, five to $10 million, doing an
    extremely important work and it has credibility in the world
    outside of Washington. It is trusted, it is respected, and we
    don't want to lose that trust and respect.
        Mr. Menendez. I agree and I thank you for the work. Yield
    back.
        Chairman Armey. Without objection, we will receive those
    these letters as well. The gentlelady from Connecticut.
                              House of Representatives,
                                    House Committee on Science,
                                          Washington, DC, July 9, 2002.
    Hon. Sherwood Boehlert
    Chairman, House Committee on Science, Rayburn House Office Building,
            Washington, D.C. 20515
        Dear Chairman Boehlert: As members who are concerned about
    technology Issues, we are writing regarding the Administration's
    proposal to move the Computer Security Division (CSD) of the National
    Institute of Standards and Technology (NIST) from the Department of
    Commerce to theproposed new Department of Homeland Security.
        While we support the Administration's efforts to make our country
    more secure in the face of terrorist threats, we are concerned that
    this provision, found in Section 202 of the President's proposal, would
    unravel years of collaboration between the CSD and the private sector
    to enhance the level of confidence in computer security practices. We
    are concerned that this reduced collaboration would be
    counterproductive to the Administration's goals by reducing confidence
    in American-made IT systems thereby making our critical Infrastructure
    more vulnerable to terrorist attack.
        The credibility and success of NIST's CSD depends on effective
    independence from and appropriate collaboration with law enforcement
    and national security agencies in the U.S. and abroad. We believe that
    this independence could not be maintained in the new Department of
    Homeland Security. In the past, it has proven to be a challenge for the
    CSD to strike this balance. We have been frustrated by past indications
    of inappropriate influence of law enforcement and national security in
    the development of standards for ``sensitive, unclassified''
    information, which delayed the development of computer security
    standards. Too often, the CSD deferred to military and intelligence
    agency needs to the exclusion of other vital national interests.
        In one example, the CSD'S lack of responsiveness to the IT
    community led to a proposed encryption standard that was overbroad and
    unduly burdensome to American companies and completely unworkable.
    There is a strong national interest in ensuring that strong encryption
    software is available to protect our critical infrastructure from
    attack. The widespread use of encryption promotes our national security
    and prevents crime by ensuring the security, confidentiality and
    authenticity of electronic networks, information and users. We were
    pleased to finally see the announcement late last year of the new much
    Improved Advanced Encryption Standard--the result of 4 long years of
    public-private partnership with the CSD, the private sector, and
    national security agencies.
        We have serious concerns that transferring the CSD from the
    Commerce Department would upset the balance that we have attempted to
    achieve in protecting our sensitive information and critical
    infrastructure in a way that doesn't disadvantage American industry or
    limit the availability of strong encryption. Based on the demonstrated
    ability of NIST to work effectively with the private sector, while
    ensuring effective collaboration with other governmental agencies, we
    urge that the new Department focus on continued interagency
    coordination with NIST's CSD rather than taking the inevitably
    counterproductive step of moving this vital office into the Department
    of Homeland Security.
            Sincerely,
                                         Bob Goodlatte,
                                      Co-Chair, Internet Caucus
                                          Rick Boucher,
                                      Co-Chair, Internet Caucus
    [GRAPHIC] [TIFF OMITTED] T3173.009

              ENVIRONMENT, TECHNOLOGY, AND STANDARDS SUBCOMMITTEE

                              House of Representatives,
            Environment, Technology, and Standards Subcommittee
                                         Washington, DC, July 16, 2002.
    Hon. Richard K. Armey
    Chairman, Select Committee on Homeland Security, The Capitol,
            Washington, D.C. 20515
    Hon. Nancy Pelosi
    Ranking Member
        Dear Chairman Armey and Chairman Pelosi: We are writing to ask that
    give careful consideration to the amendments offered by the Committee
    on Science, particularly the provision that strikes Section 202,
    paragraph (4) from H.R. 5005. Under this paragraph, the Computer
    Security Division of the National Institute of Standards and Technology
    (NIST) would be transferred to the Department of Homeland Security. We
    strongly oppose the proposed transfer of the Computer Security Division
    and request that you retain the Science Committee's position during the
    Select Committee's deliberations.
        As Members of the Environment, Technology, and Standards
    Subcommittee, which has jurisdiction over NIST, we gave careful
    scrutiny to the provision in H.R. 5005 that would transfer the Computer
    Security Division to the Department of Homeland Security. Based on
    information gathered from meetings with the Administration and from the
    two hearings on homeland security held by the Committee on Science, we
    concluded that the Computer Security Division could more effectively
    support the development and adoption of stronger information security
    standards, and thereby the mission of homeland security, if it remained
    in NIST.
        We do not reach this conclusion as a matter of protecting the
    Committee's jurisdiction, as we have carefully reviewed other proposed
    transfers and have not objected to them. Our interest lies in improving
    information security, avoiding duplication of effort, and preserving
    functions that have worked very well within the Federal Government.
    While the President's proposal does have many important aspects
    protecting homeland security, the proposal to move this division would
    undermine a successful partnership in improving information security
    standards that the Federal government has developed with the private
    sector.
        One reason that Computer Security Division has been successful in
    developing information security standards that are widely accepted in
    the information technology community is because of NIST's close
    connection to its industrial customers. This relationship works two
    ways: technical experts from the private sector are involved at every
    step of NIST's standards development process, and the trust developed
    between NIST and the private sector facilitates adoption of the NIST
    standards.
        Most of the nation's critical information infrastructure is
    privately owned and operated, and that which is government owned and
    operated relies on commercial off-the-shelf hardware and software. In
    short, in order to establish strong information security standards,
    government must work closely with the private sector. The information
    technology industry has been unanimous in their deep reservations about
    the proposed transfer of the Computer Security Division to the
    Department of Homeland Security. They do not believe that the
    relationship of trust and cooperation that they enjoy with NIST will
    survive the transfer of the division into the new Department. We share
    their reservations.
        We also oppose this transfer because it will harm work done by both
    the Computer Security Division and NIST as a whole. This Division is
    deeply integrated within the Information Technology Lab at NIST.
    Cleaving it from the lab and moving it to the new Department would
    leave a gaping hole within the IT lab. Clearly, NIST would have to
    recreate this division if it were to carry out its mission, because
    computer security is integrated in NIST's information technology
    mission as a whole. It makes no sense to transfer this activity to the
    new Department, only to have NIST scramble for funding in order to
    recreate an integral part of the Information Technology lab. If
    adopted, Congress would be left funding both the Computer Security
    Division at the new Department, as well as its replacement at NIST.
        In addition, when developing information security standards and
    carrying out computer security research, the Computer Security Division
    draws upon the technical expertise of many other NIST laboratories. For
    example, research on advanced encryption standards benefited from Nobel
    prize-winning research conducted by scientists in the Physics
    Laboratory at NIST. NIST's worldwide reputation for scientific
    excellence has an enormously positive impact on the work of the
    individual scientists who work there. If we sever or substantially
    alter this relationship, we may be ultimately undermining our goal of
    improving computer security within the Federal Government.
        We ask that you leave the Computer Security Division at NIST. We
    believe the interests of homeland security, particularly those aspects
    that relate to information security, will be best served by leaving the
    division at NIST.
        We wish you all the best in your important endeavor.
            Sincerely,
                                       Vernon J. Ehlers
                                           James Barcia
                                           Gil Gutnecht
                                            Lynn Rivers

                                  ------------

            American Association for the Advancement of Science
                                                           July 8, 2002
    Hon. Nancy Pelosi
    Ranking Member, Select Committee on Homeland Security, The Capitol,
            Washington, D.C. 20515
        Dear Ranking Member Pelosi: The American Association for the
    Advancement of Science (AAAS) has been following the current debate
    over the establishment of a new Department of Homeland Security with
    great interest. We are particularly concerned about the role and
    structure of counterterrorism research and development (R&D) in the new
    department.
        As Congress begins the process of defining and shaping this
    department, we hope that careful consideration will be given to this
    issue. We agree strongly with House Science Committee Chairman Sherwood
    Boehlert that a ``clear focus on-and locus for--research'' will allow a
    new Department of Homeland Security to coordinate the many diverse
    scientific and technological areas essential to its functions. This
    focus would be sharpened by providing for the appointment of a single
    official--for example, an under secretary - with responsibility for
    coordination of R&D across the entire department and with other
    relevant agencies.
        This idea is underlined by the recent National Academies report
    which observed that the complexity and interdisciplinary nature of the
    science and technology involved in fighting terrorism requires more
    than just parallel investments in various areas of R&D. It calls for a
    well--orchestrated and coordinated endeavor among the 26 agencies that
    currently contribute to ournation's R&D enterprise.
        AAAS is the world's largest general scientific society, with over
    130,000 individual members and 272 affiliated societies, representing
    10 million individuals in all fields of science and engineering.
    Founded in 1848, AAAS is also the publisher of the journal Science, and
    has long been a leader in promoting science to meet our national goals.
        These comments are respectfully submitted as a means for enhancing
    the dialogue between the executive and legislative branches on this
    vital issue. AAAS supports a balanced approach to protecting our
    national security and promoting scientific and technological
    advancement and stands ready to assist you in the future.
            Sincerely,
                                        Alan I. Leshner

                                  ------------

                                     Business Software Allaince
                                                          July 16, 2002
    Hon. Richard K. Armey
    Chairman, Select Committee on Homeland Security, The Capitol,
            Washington, D.C. 20515
        Dear Chairman Armey: The Business Software Alliance \1\ (BSA)
    appreciates the opportunity to share with the Select Committee on
    Homeland Security our recommendations with regard to the committee-
    passed cyber security provisions of H.R. 5005 that we believe should be
    included in a final, consolidated Select Committee mark.
    ---------------------------------------------------------------------------
        \1\ BSA members include Adobe, Apple, Autodesk, Bentley Systems,
    Borland, CNC Software/Mastercam, Dell, Entrust, Hewlett-Packard, IBM,
    Intel, Intuit, Macromedia, Microsoft, Network Associates, Novell,
    Sybase, Symantec and Unigraphics Solutions (an EDS company).
    ---------------------------------------------------------------------------
        We commend the House of Representatives for the excellent work
    undertaken by numerous committees in recent days to ensure that the
    Department of Homeland Security is well equipped to protect and advance
    our nation's cyber security. In examining the recommendations of these
    committees as reported in their versions of H.R. 5005, several
    provisions stand out as critical to America's ability to ensure the
    cyber security of its citizenry, and we ask that you include these
    provisions in the consolidated legislation that the House will
    consider.

    These provisions are as follows:
    1. Federal Government Computer Security

            H.R. 5005 should include the Federal Information Security
            Management Act, as amended

             The Committee on Government Reform adopted provisions
            to require binding minimum Federal information security
            standards and guidelines for government departments and
            agencies. These provisions (based on H.R. 3844, the Federal
            Information Security Management Act, introduced by Rep. Tom
            Davis) will substantially strengthen what are currently
            unacceptably low levels of computer security within the Federal
            Government. Importantly, the bill adopted by the Committee on
            Government Reform states that these security standards and
            guidelines must be technology neutral and performance-based,
            and that they must not mandate the use of any specific hardware
            or software security solutions. Such flexibility is critical to
            the ability ofFederal agencies to respond to fast-changing
            computer security threats.

            HR 5005 should create a team of public and private sector
            experts to provide technical expertise on agency security.

             The Committee on Energy and Commerce mark calls for
            the creation of a Federal Information System Security Team to
            assist Federal agencies in hardening their systems against
            cyber attack. Team members would include both public and
            private sector technical experts, including auditors, computer
            scientists, and computer forensics analysts, who would analyze
            Federal security systems and report their findings to the
            Secretary and Inspector General of each Department. Strong
            public-private partnerships of this nature are critical in the
            field of cyber security, where the private sector owns and
            operates over 90 percent of the critical infrastructure
            networks in question.

    2. Structure of the Department of Homeland Security

            H.R. 5005 should create a specific cyber security program
            within the Department of Homeland Security.

             The Committee on Energy and Commerce included
            provisions to create a Cyber Security Program within the
            Department of Homeland Security's Office of Information
            Assessment and Critical Infrastructure. In so doing, the
            Committee seeks to ensure that cyber security functions receive
            sustained attention and concerted resources within the context
            of the Department's overall critical infrastructure protection
            mission. Strengthening cyber security requires analytical and
            technological capabilities that are related to, but also
            distinct from, traditional intelligence gathering and physical
            security functions, and we believe that these are best handled
            through a dedicated office or program within DHS. Further, we
            believe that the Department's ClO and Under Secretary for
            Management should advance existing efforts in key Department
            agencies to fund, implement and maintain the enhanced
            information security necessary for sensitive data and
            communications to be securely stored, transmitted, and
            disseminated within the Department.

            H.R. 5005 should create the position of Undersecretary for
            Science and Technology.

             The Committee on Science mark creates the function of
            Undersecretary of Science and Technology within the Department
            of Homeland Security. Given the Department's wide
            responsibilities in this area, and the importance of sustained,
            focused R&D to our nation's ability to develop leading security
            technologies, the creation of this function is highly merited.
            We believe that this function should be tasked with explicitly
            establishing priorities for directing, funding and conducting
            R&D to improve cyber security, and that all such research
            should also be done in conjunction with private sector business
            partners (examining existing models of such partnerships) in
            order to maximize its effectiveness.

            H.R. 5005 should maintain NIST's Computer Security Division
            within NIST.

             The Committee on Science included a provision to
            maintain NIST's Computer Security Division (CSD) within NIST,
            instead of moving its functions to the Department of Homeland
            Security, as has been proposed. We strongly support the
            Committee's decision in this regard. While we wholeheartedly
            endorse the Administration's efforts to create the greatest
            possible cohesion among security-related offices within the
            Federal Government, we believe that the CSD--a standards-
            setting entity--is integral to NIST's overall standards-setting
            mission and that its work in this area can best be achieved in
            the context of the Institutes itself. Further, we are concerned
            that moving CSD to the Department of Homeland Security--an
            agency that will focus primarily on law enforcement-related
            issues--could result in CSD failing to adequately recognize the
            technological and cost feasibility issues associated with cyber
            security topics under the Department's jurisdiction. Moreover,
            since the Administration has repeatedly stated that it does not
            desire or envision imposing cyber security technological
            mandates on the private sector, we do not see the need to
            incorporate NIST's CSD within the Department.

    3. Information Sharing

            HR. 5005 should encourage increased information sharing about
            cyber security threats--The Committee on Government Reform has
            included provisions that would greatly facilitate the voluntary
            sharing of information with the government and within industry.
            This provision protects against the disclosure of such
            information through the FOIA process and ensures that the
            information cannot be used against those providing the
            information in a civil suit. The measure was adopted on a
            bipartisan basis by the Committee and we urge its inclusion in
            H.R, 5005.

                                       *

            We believe that the provisions outlined above will form the
            basis of a strong and effective cyber security strategy by the
            Department of Homeland Security and the Federal Government
            overall. We urge the inclusion of these provisions in the
            consolidated legislation that will be considered by the full
            House of Representatives, and we thank you for your
            consideration of our views in this area.

            Sincerely,
                                      Robert Holleyman,
                                              President and CEO

                                  ------------

                    Public and Scientific Affairs Board
                              American Society for Microbiology
                                         Washington, DC, July 19, 2002.
    Hon. Ralph Hall
    Ranking Minority Member, Committee on Science, The Capitol Washington,
            D.C. 20515
        Dear Ranking Member Hall: The American Society for Microbiology
    (ASM) is writing concerning issues related to the proposed Department
    of Homeland Security (DHS) and the policy implications for the civilian
    biodefense and infectious disease research programs. The ASM has
    reviewed the Administration's Bill to establish a Department of
    Homeland Security and S.2452 to establish a Department of Homeland
    Security and a National Office for Combating Terrorism, introduced by
    Senator Lieberman.
        The ASM is the largest life science society with over 40,000
    members and its principal goal is the promotion of scientific knowledge
    of microbiology for the benefit of human welfare. The ASM has worked
    with the Administration, the Congress and federal agencies on measures
    to protect against biological weapons and bioterrorism. Most recently,
    ASM provided expert advice on provisions to expand the Biological
    Weapons Statute in the USA Patriot Act and on Title II of the Public
    Health Security and Bioterrorism Preparedness and Response Act of 2002,
    which expands controls on certain dangerous biological agents and
    toxins. ASM members are involved in research and public health
    initiatives aimed at eradicating the scourge of infectious diseases,
    which daily end the lives of thousands of Americans and tens of
    thousands around the world. Infectious diseases remain the major cause
    of death in the world for those under the age of 45 and particularly
    for children. They are the third leading cause of death in the United
    States.
        The terrorist events of September 11 and the anthrax biocrime
    reveal the need and complexity of homeland defense. The ASM, therefore,
    supports efforts to establish a Department of Homeland Security that
    can provide oversight, coordination and leadership for biodefense
    activities. Given that science and technology will play vital role in
    the biodefense of the nation, the ASM supports the establishment of an
    Office of Science and Technology as proposed in S 2452. This office
    will provide the necessary linkage between the Secretary of Homeland
    Security and all the numerous mission agencies charged with science and
    technology development.
        It is critical that the proposed DHS build upon existing science
    and technology programs that hold promise in the defense against
    bioterrorism and in the effort against deadly infectious diseases. The
    ASM would like to submit the following comments to assist Congress as
    it deliberates how best to achieve this goal.
        Biodefense research is part of the continuum of biomedical research
    aimed at protecting the nation and the world against infectious
    diseases. The capability to develop countermeasures and interventions
    is directly related to information generated by biomedical research on
    pathogenic microbes and the host response to these microbes. Therefore,
    it is critical that federal research efforts related to civilian human
    health-related biological, biomedical, and infectious diseases should
    be prioritized and conducted by, and at the direction of the Department
    of Health and Human Services (HHS). It is important to distinguish
    between oversight functions such as policy and planning guidance and
    coordination, which would well be served by an Office of Science and
    Tecimology within a Department of Homeland Security, and the
    responsibility and authority for the direction, control and conduct of
    scientific research. ASM recommends that HHS, a public health and
    biomedical research agency of unparalleled success, should continue to
    be responsible for the conduct and direction of scientific research.
        The Administration's Bill recognizes the necessity that HHS conduct
    the research and development programs related to infectious diseases.
    Section 303(a)(1) of the Bill provides that the Secretary shall carry
    out responsibilities related to civilian human health-related
    biological, biomedical, and infectious diseases through HHS and the
    Public Health Service ``under agreements with the Secretary of Health
    and Human Services, and may transfer funds to him in connection with
    such agreements.'' Section 30 1(2) of the Administration's Bill,
    however, gives DHS primary authority and responsibility for the conduct
    of national scientific research including ``directing, funding, and
    conducting research and development'' related to biological threats.
    Additionally, at Section 303(a)(2), the Bill provides that DHS, in
    consultation with HHS, ``shall have authority to establish the research
    and development program, including the setting of priorities''.
        The ASM understands the role envisioned for DHS is to integrate
    threat analysis and vulnerability assessments and identify priorities
    for preventive and protective steps to be taken by other federal
    agencies to protect the American public. The HHS, however, is best
    qualified to establish biomedical research and development programs and
    identify scientific opportunities and the research approaches for
    ensuring that biodefense needs are met in the best way possible. The
    NIAID is best able to bring together all aspects of biomedical research
    and the full capability of science to ensure breakthroughs and advances
    of high quality for biodefense. The proposed restructuring of program
    authorities in the Administration's bill will create unpredictability
    for research programs, will divert monies from research and will not be
    the best approach to achieving the goal of civilian biodefense, which
    requires the involvement of the best scientific minds and the support
    of excellent science based on merit review.
        We have already seen the ability of HHS to respond to bioterrorism.
    In the months since September 11, 2001, the National Institute of
    Allergy and Infectious Diseases (NIAID) within the National Institutes
    of Health (NIH) has rapidly accelerated work to protect the nation
    against the threat of bioterrorism. This acceleration has occurred
    across the spectrum of scientific activities from basic research in
    microbial biology to the development of vaccines and therapeutics to
    research related to diagnostic systems. It is critical that this work
    continue to develop rapidly and efficiently without delay, disruption
    or loss of momentum.
        ASM agrees that DHS should have an important role in developing the
    nation's defenses against, and responses to biological threats. The DHS
    can and should coordinate, review, and evaluate scientific and
    teclmical programs related to human, animal, and plant life. However, a
    scientific health agency, HHS, rather than the nonscientific, nonpublic
    health DHS should have the principal authority for developing and
    prioritizing scientific and health related programs.
        Essentially, therefore, the ASM suggests reversing the
    responsibilities identified in Section 303(a)(2) of the
    Administration's Bill. HHS, in consultation and coordination with DHS,
    should retain responsibility for accelerated research and development
    programs, including prioritizing such projects.
        The ASM is also concerned that we not create a separate public
    health system for biodefense. Therefore, the ASM would leave primary
    responsibility for planning for public health emergencies arising from
    biological causes with the Centers for Disease Control and Prevention.
    At the earliest possible moment after the outbreak of a contagion, it
    is critical to determine the nature of the organism and to distinguish
    between a bioterrorism attack and a natural event. Then, public
    authorities must respond rapidly and appropriately to the health threat
    that either one would present.
        The ASM believes CDC should be charged with these tasks. Section
    505(a)(2) of the Administration's Bill requires DHS to carry out these
    functions under agreement with HHS. Again, the ASM believes the
    important and appropriate role for DHS is to coordinate planning and
    development of programs and to lend technical assistance to the
    responsible agency. It is entirely appropriate for HHS to coordinate
    and consult with DHS. As with the direction and control of research,
    however, the primary duty and authority should remain with the
    scientific agency with the existing knowledge, experience, and
    expertise to fulfill the critical mission.
        Because agriculture, the food supply, and the environment along
    with humans are potential targets of bioterrorism, it is important to
    integrate and coordinate programs related to human, animal, and plant
    agents. Section 302(a) of the Administration Bill transfers to DHS the
    select agent registration and enforcement programs of HHS. However, it
    does not transfer the select agent registration and enforcement
    programs of the Department of Agriculture to the DHS. Subtitle C of the
    Public Health Security and Bioterrorism Preparedness Act of 2002
    mandated coordination of activities of HHS and the Secretary of
    Agriculture regarding ``overlap agents''--that is, agents that appear
    on the separate lists prepared by HHS and Agriculture. Without doubt,
    such coordination must occur. Bioterrorism research extends and applies
    infectious disease and select agent research. The ASM believes that
    integration of the select agent registration program inevitably will
    assist in the creation of an efficient registration process thereby
    expediting registration.
        The proper administration of the select agent program is key to the
    development of the nation's biodefense capability and response and must
    balance the concerns for public safety with the need to not unduly
    encumber legitimate scientific research and laboratory diagnostic
    testing. The ASM continues to believe that HHS has the scientific and
    institutional knowledge and expertise related to dangerous biological
    agents, biosafety, and biosecurity in microbiological and biomedical
    laboratories and that it is best qualified to achieve the goal of
    protecting the public health and safety without interfering with
    research, and clinical and diagnostic laboratory medicine. Transferring
    this program to DHS, a nonregulatory, nonscientific department, raises
    many questions with regard to the administration of this program which
    must be carefully considered by Congress, which recently enacted new
    legislation and additional requirements for select agents. The ASM,
    therefore, requests that a review be done by an interagency group with
    the involvement of scientific societies to assess the advisability of
    removing the select agent program from HHS authority.
        Some additional specific measures in the Administration Bill
    require further consideration and comment by the ASM. The ASM continues
    to study the Administration Bill to evaluate the best approach to
    achieving expedited research that advances the defense against
    bioterrorism but does not dilute the continuing, critical battle
    against naturally occurring infectious diseases. The ASM suggests
    expeditious review of the appropriateness of each transfer of a
    facility or responsibility related to biological organisms from an
    existing agency.
        For example, as noted above, the defense against bioterrorism must
    be fully integrated into the nations public health system that is led
    by the Centers for Disease Control and Prevention. Currently, CDC would
    use the national pharmaceutical stockpile in response to infectious
    diseaseoutbreaks--both natural and intentional. Sections 501(3)(B) and
    502(6) would transfer the Strategic National Stockpile to DHS. Such
    transfer should be reviewed carefully during further consideration of
    the Bill. HHS should be responsible for developing the materials in the
    stockpile. Therefore, it seems appropriate for HHS to continue
    management of the stockpile. The ASM, however, understands the
    coordination and oversight function envisioned for DHS, and the final
    resolution of the management of the stockpile ultimately must depend
    upon the resolution of the scope and role of DHS responsibilities and
    activities.
        Similarly, transfer provisions relating to programs and activities
    of the Department of Energy's microbial genome research appear to be
    proposed although ASM cannot readily discern from the Bill the portions
    of the genome program that would be transferred under Section 302(2)(A)
    of the Bill.
        In closing, we reaffirm ASM's commitment to work with the
    Administration and Congress to achieve the most efficient and effective
    system in the world for research, control, and response to the threat
    posed by biological agents.

            Sincerely,
                                Abigail Salyers, Ph.D.,
                                                 President, ASM

                                Ronald M. Atlas, Ph.D.,
                                           President Elect, ASM

                                    Gail Cassell, Ph.D.
                     Chair, Public and Scientific Affairs Board

                            Kenneth Berns, M.D., Ph. D.
             Co-Chair, Task Force on Biological Weapons Control

                                  ------------

                 Computer & Communications Industry Association
                                                           July 8, 2002
    Hon. Sherwood Boehlert
    Chairman, House Committee on Science, Rayburn House Office Building,
            Washington, D.C. 20515
        Dear Chariman Boehlert: Congress and the Administration have
    reacted swiftly and decisively to the challenge of terror in the past
    year. As befits Americans in times of crisis, we have joined together
    to fight a commonenemy. Thanks to our collective efforts, those who
    would destroy our society are in disarray, and our nation--for now, at
    least--is secure.
        Yet, for all the good we have accomplished since September 11,
    fundamental liberties will be at risk if we are too zealous in our
    pursuit of wrongdoers. We must avoid departmental incentives that
    compromise core agency missions or, worse traditional democratic
    values. We believe the proposed transfer of the Computer Security
    Division from the National Institute of Standards and Technology (NIST)
    to the proposed Department of Homeland Security is one such action, and
    one we strongly urge you to oppose. Such a transfer would transform
    NIST from a civilian agency known for assisting the private sector into
    one in which law-enforcement and national security concerns are
    dominant.
        NIST has distinguished itself through its expertise in cryptography
    the creation of codes crucial to safeguarding business, government and
    personal assets from unauthorized access. NIST technicians have
    performed yeoman's work in establishing government security procedures,
    in developing cryptographic toolkits for the public and private sectors
    and, most recently, in sponsoring development of the Advanced
    Encryption Standard. The AES competition, which drew on the efforts of
    cryptographers around the world, is already the unchallenged benchmark
    for civilian code-making excellence. Likewise, NIST's Common Criteria
    computer-security initiative has won enthusiastic cooperation from the
    private sector. All of this has taken place under the auspices of the
    Computer Security Act of 1987, which assures that NEST will work with
    business and civilian agencies alone to achieve its goals.
        Not everyone agrees with the Computer Security Act, however, The
    National Security Agency and the FBI, for instance compromised NEST's
    traditional role during the 1990s. Despite clear requirements that NEST
    serve only civilian interests, NIST succumbed to pressure from these
    agencies and began promoting a series of flawed ``security''
    initiatives. One such initiative, known as the Clipper Chip, would have
    given national security and law enforcement guaranteed access--a back
    door--to the encoded, confidential communications of US citizens as
    needed.
        The Clipper Chip proposal was both controversial arid
    technologically flawed. lied it been implemented, the nation's
    infrastructure would have been irreparably harmed, and our networks
    rendered highly vulnerable to attack.
        Subsequent iterations of the plan known as ``key recovery''; and
    ``message recovery'' only raised more questions. Those questions, in
    turn, led to lengthy and critical reports from the National Academies
    of Science (http://book.nap.edu/books/03090544753/html/1.html) as well
    as a panel the world's most prominent cryptographers (http://cdt.org/
    crypto/riks98/).
        Both groups concluded that key recovery weakened overall security.
    But those assertions only doubled the resolve of law enforcement. At
    one point, the FBI pushed hard to outlaw all cryptography that did not
    have such security-weakening back doors already built in.
        Controversy swirled for nearly a decade over this and similar
    initiatives. The fight pitted business and civil-liberties groups
    across the political spectrum against the NSA and FBI. The topic soon
    became so politically sensitive that one White House Clipper Chip
    proponent declared it the--``Bosnia of technology policy.'' The last
    administration ultimately abandoned its encryption-control policy more
    than two years ago.
        Clearly, law enforcement and national-security sectors have a
    checkered past with regard to NIST and computer security, Their
    interference in NIST's mission has repeatedly compromised the private
    sector's confidence in the Institute and seems certain to do so in the
    future if repeated. We believe the last thing our nation needs now is a
    reprise of debates that were long ago settled.
        As always, we remain eager to work with you and the Committee to
    help address any concerns you may have about computer security and the
    Department of Homeland Security.
                                               Ed Black
                                             President and CEO,
                 Computer & Communications Industry Association

                                  ------------

           Information Technology Association of America (ITAA)
                                                          July 1, 2002.
    Hon. Sherwood Boehlert
    Chairman, House Committee on Science, Rayburn House Office Building,
            Washington, D.C. 20515
        Dear Chariman Boehlert: On behalf of the 500 members of the
    Information Technology Association of America (ITAA), I would like to
    commend you for your ongoing efforts to protect our nation's critical
    infrastructure. Your work to bring more resources to bear to improve
    government information security is vitally important. The creation of
    the Department of Homeland Security can foster additional progress in
    this area, but it needs to be structured in the right way to accomplish
    that goal.
        As the Committee reviews the Homeland Security Act of 2002 and
    considers possible changes to the bill, ITAA strongly encourages you
    and other Members of Congress to work with the Bush Administration to
    highlight information security in the new Department.
        Towards this end, ITAA recommends creating a separate Bureau of
    Cyber Security headed by an Assistant Secretary for Cyber Security.
    Under the current proposal, the components that would be merged into
    DHS from other departments and agencies that focus on cyber security
    (e.g. NIPC, NCS, CIAO, and Cybercorps) would be included with those
    that focus on physical security. This melding would be a mistake. The
    challenges in the cyber world are sufficiently different from those in
    the physical world to merit a separate, focused entity headed by a
    Senate-confirmed public official.
        ITAA also supports specific new authorization/appropriations for
    funds that facilitate the sharing of data across the new Department's
    myriad of organizational units. If new funds are not made available,
    then funding for the IT needed to share information will not be
    forthcoming as each organizational unit will strive to hold onto its
    existing appropriations for other priorities.
        ITAA endorses four additional changes to the Homeland Security Act
    of 2002:
         Substitute existing language in Title II of the Act in
    Section 204 with current language from the ``Critical Infrastructure
    Information Act,'' that U.S. Representatives Tom Davis and Jim Moran
    and U.S. Senator Bob Bennett and others have been working on to
    eliminate legal barriers to information sharing between government and
    industry.
         Add the Federal Information and Security Management Act
    (FISMA) or H.R. 3844 to the Act. FISMA strengthens, renews, and extends
    the Government Information Security Reform Act (GISRA), and requires
    all Federal agencies to implement a risk-based management approach to
    developing and implementing information security measures for all
    information and information systems.
         Increase emphasis on Research and Development issues in
    the new Department structure. We believe that the Department's research
    and development functions relating to information security should be
    the responsibility of the new Assistant Secretary in the cyber security
    bureau.
         While the Department of Homeland Security may well wish to
    develop its own capabilities similar to those of the Computer Security
    Division of the National Institute of Standards and Technology (NIST),
    we recommend leaving the Computer Security Division in NIST, where it
    is integrated with other functions of NIST's computer research
    operations.
        We appreciate your considering our recommendations.
            Sincerely yours,
                                      Harris N. Miller,
                                                      President

                                  ------------

           Information Technology Association of America (ITAA)
                                                           July 9, 2003
    Hon. Sherwood Boehlert
    Chairman, House Committee on Science, Rayburn House Office Building,
            Washington, D.C. 20515

               RE: Comments Regarding ``Amendments to H.R. 5005''

        Dear Chariman Boehlert: On behalf of the 500 members of the
    Information Technology Association of America (ITAA), I would like to
    commend you for your ongoing efforts to protect our nation's critical
    infrastructure. Let me express our appreciation for the opportunity to
    comment on a circulation by Science Committee staff of ``Amendments to
    ER. 5005 Offered by Mr. Boehlert.'' Our comments in this letter are
    limited to the provisions identified as ``Sec. 205. Information
    Security,'' although we may have some additional comments about ``Sec.
    206 NETGUARD'' later this week.
        As you know from earlier correspondence, while the Department of
    Homeland Security may well wish to develop its own capabilities similar
    to those of the Computer Security Division of the National Institute of
    Standards and Technology (NIST), we strongly recommend leaving the
    Computer Security Division in NIST, where it is integrated with other
    functions of NIST's computer research operations. Our comments on Sec.
    205 proceed from this assumption.
        As a general matter, we fully support the role NIST plays in
    developing security and authentication guidelines for the Federal
    Sector, its role in developing quality assessment measures, and its
    consultative role with other Federal agencies in the field of computer
    security. Many of our members, however, have serious concerns with
    proposals for NIST to engage in conformance testing of commercial
    products and certification of private sector labs to test commercially
    available security products for their use in the Federal sector. First,
    widely available commercial security standards already exist without
    the necessity of reinventing a Federal wheel. Second, the applicability
    of these provisions to virtually ALL products with security features
    would mean a vast effort to create testing protocols and lab
    certifications for minor features and a substantial cost for testing
    with correspondingly little return in terms of the benefit to the
    government. These provisions simply put represent overkill that will
    not have the intended effect of benefiting the efficient and effective
    deployment of security solutions in Federal agencies. They will only
    add unnecessarily to the cost of government procurement of needed
    security solutions.
        Our members continue to study these amendments arid other
    provisions of this important legislation and I look forward to
    continuing our dialogue in the coming days and weeks. Again, we deeply
    appreciate your commitment to leadership in the field of information
    security and stand ready to assist in whatever way we can with the
    creation of an effective, efficient and successful Department of
    Homeland Security.
            Very truly yours,
                                     Joseph Tasker, Jr.
     General Counsel & Senior Vice President Government Affairs

                                  ------------

                  Software and Information Industry Association
                                                          June 27, 2002
    Hon. Sherwood Boehlert
    Chairman, House Committee on Science, Rayburn House Office Building,
            Washington, D.C. 20515

    RE: Transfer of NIST's Computer Security Division to the new Department
                              of Homeland Security

        Dear Chariman Boehlert: On behalf of the Software & Information
    Industry Association (SIIA), the principal trade association of the
    software code and electronic content industry, I am writing regarding
    the Administration's proposal to move the Computer Security Division
    (CSD) of the National Institute of Standards and Technology (NIST) out
    of the Department of Commerce and merge it into the proposed new
    Department of Homeland Security. SIIA 800 member high-tech companies
    develop and market software and electronic content for consumers,
    business, education, entertainment and the Internet.
        While our Association has supported and continues to support the
    Administration's efforts to make our country more secure in the face of
    terrorist threats, the particular provision found in Section 202 would,
    in our view, be counterproductive to the Administration's goals and
    undermine the long-standing work of NIST, its Information Technology
    Laboratory and the CSD in working with industry in a non-regulatory
    environment to assure greater confidence in IT systems in both the
    public and private sectors. In short, moving the Computer Security
    Division into the new Department will, in all likelihood, reduce the
    ability of NIST to continue its important role and provide technical
    expertise to promote more confidence in IT security.
        NIST's CSD has played an meaningful role in working with the
    private sector (both for-profit and not-for-profit) in a non-law
    enforcement, non-regulatory setting with direct benefits for enhancing
    the level of confidence in computer security practices that have
    benefited both government and commercial IT systems. Hundreds of
    companies have utilized CSD's world-class testing modules and voluntary
    standards and protocols, and we were pleased to see the announcement
    late last year of the new Advanced Encryption Standard (AES)--the
    result of 4 long years of public-private partnership.
        The inclusion of NIST's CSD in the Administration's proposal comes
    as some surprise, as it was not included in the White Paper, ``The
    Department of Homeland Security'', released earlier this month. As
    Section 202 requires the transfer of functions, personnel, assets, and
    liabilities of the following entities [including]... ``(4) the Computer
    Security Division of the National Institute of Standards and
    Technology, including the functions of the Secretary of Commerce
    relating thereto,'' we are concerned that no analysis has been provided
    of how the transfer of the CSD our of NIST fits into and supports the
    operational role that is inherent to the new Department. The work of
    this one unit of NIST's Information Technology Laboratory (ITL) depends
    on and is integral to NIST's on-going collaboration with the private
    sector based on science, research and innovation in promoting U.S. IT
    in global markets.
        The credibility and success of NIST's CSD has depended on effective
    independence from and appropriate collaboration with law enforcement
    and national security agencies in the U.S. and abroad. This
    effectiveness has not come without substantial effort over the last 10
    years. In the 1980's and early 1990's, there were indications of
    inappropriate influence of law enforcement and national security in the
    development of standards for ``sensitive, unclassified'' information,
    and this delayed the development of computer security standards.\1\ In
    fact, in creating NIST's responsibilities for developing federal
    computer systems security standards and guidelines for sensitive but
    unclassified information, the Congress recognized that absent specific
    directions, these activities could favor military and intelligence
    agency needs to the exclusion of other vital national interests.\2\
    This independence could not be maintained in the new Department of
    Homeland Security.
    ---------------------------------------------------------------------------
        \1\ Whitfield Diffie and Susan Landau, Cryptography's Role in
    Protecting the Information Society, National Research Council Press,
    1996, P. 139.
        \2\ See Conference Report, ``Computer Security Act of 1987'' P.L.
    100-235 at p. 26.)
    ---------------------------------------------------------------------------
        With its $10.2 million budget--just 0.027 percent of the proposed
    Department's $37.45 billion in expenditures--the CSD would simply be
    emasculated by the larger agencies and missions that will become part
    of the new Department of Homeland Security. In this context, the CSD
    would simply become a secondary concern--which is not the situation in
    its current status at the Department of Commerce.
        As the Administration indicated in its blueprint released earlier
    this month, ``Homeland security will continue to require interagency
    coordination.'' \3\ We completely agree with this conclusion. Based on
    the demonstrated ability of NIST to work effectively with the private
    sector, while ensuring effective collaboration with other governmental
    agencies, we urge that the new Department focus on continued
    interagency coordination with NIST's CSD rather than taking the
    inevitably counterproductive step of folding this small, but vital,
    office into a new government agency.
    ---------------------------------------------------------------------------
        \3\ White House Office of Homeland Security, ``The Department of
    Homeland Security'', June 2002, p. 8. Found at http://
    www.whitehouse.gov/deptofhomeland/book.pdf.
    ---------------------------------------------------------------------------
        We appreciate the opportunity to convey our views on this proposal.
    Please do not hesitate to contact me if I can provide additional
    information or answer any questions.

        Sincerely,
                                             Ken Wasch,
                                                      President

        Ms. DeLauro. Thank you, Mr. Chairman, and thank both of you
    for your testimony and for your great work. I have two
    questions. The first question is, and help me with this, are we
    talking about transferring all the labs, Energy, Commerce, Ag,
    Defense, to a new entity?
        Mr. Boehlert. There is not going to be a transferring of
    all labs. There is going to be a transferring of some portion
    of Lawrence Livermore and some portion of the DOE labs, but we
    specify in our proposal that there be a 60-day advance
    notification of any plan to transfer and outline in specific
    terms of who is going to do what under what circumstances, what
    is going to happen to the infrastructure, what is going to
    happen to the employees. In other words, we are not opposed to
    the transfer of laboratory responsibilities to the new
    Department of Homeland Security, but we want a well thought-out
    plan.
        The administration plan is a little bit sketchy on that. I
    am confident that it will be well thought-out once it is
    presented, but we think we should have some advance
    notification of that so we could have an opportunity
    collectively--.
        Ms. DeLauro. But there are different procurement system in
    various places and to meld all of that is seemingly--.
        Mr. Boehlert. It is a challenge and a half, but so is this
    very daunting assignment.
        Ms. DeLauro. Let me just ask, because I think the way you
    proceeded is the right way to proceed, with strong emphasis on
    science and technology--. This is really again, like we have
    talked about, the NIH and the CDC and those pieces of our
    health infrastructure, the whole effort in science and
    technology, this is truly part of our existing infrastructure
    and we shouldn't dissipate the ability that we currently have
    or give it less of an opportunity to play the role that it
    should play. Now, you have recommended that there be an under
    secretary to handle this area. Also the National Research
    Council, I was reading their materials, has said there ought to
    be an under secretary.
        Let me just ask you whether or not in the final product
    here if a decision would be not to have a new under secretary
    to handle this information? What do you think is the result for
    Science and Technology for the future and where would that
    leave both of you in term of this overall proposal on the
    Department of homeland security?
        Mr. Boehlert. My view is it would send exactly the wrong
    signal to the Congress and the American people. The American
    public is very sophisticated. They know the great advances that
    have been made possible by the proper Federal investment and in
    many instances a partnership with the private sector and the
    university-based research centers. The great wave of the past
    10 years, a decade of unprecedented growth in our economy was
    largely made possible by our investments in research and
    development.
        So if we downplay rather than focus proper attention on
    research and development, I think a lot of people will question
    the seriousness of our intent. Bottom line, we want to
    demonstrate to the American people that above everything else,
    homeland security is number one, and the greatest weapon we
    have in our arsenal to advance our cause is research and
    development properly directed.
        Ms. DeLauro. Mr. Hall.
        Mr. Hall. I think that was well said. That was the opinion
    of almost everyone. I think that was a voice vote--.
        Mr. Boehlert. We didn't have any opposition to that because
    we thought it through and, once again, our committee, and I can
    only speak for our committee, but we spent a lot of time in
    preliminary work and discussions before we got to the actual
    sessions.
        So Mr. Hall and every single Democrat on the committee felt
    they had every opportunity to present their point of view, and
    the Chair was not arbitrary. I lost a couple of amendments, the
    Barton amendment referred to by Mr. Frost, by a very narrow
    vote. The Chair has a lot of advantages in a hearing like this,
    and I don't think we are dealing with all equals. The Chair is
    the first among equals. I accepted that loss. I didn't agree
    with it, and I am appealing to the wisdom of this committee to
    reexamine that and not be so specific in its direction to this
    new department that we say this is a specific type of research
    you have to fund, this is a specific center, and here is the
    location of that center. I think we are making a big mistake if
    we interpose our views on this new department. I think we have
    got to be very supportive and give them the resources they need
    and the flexibility to do the job.
        Ms. DeLauro. I will ask a question that Mr. Frost would
    usually ask in these hearings, that if the final product does
    not have a new under secretary, would you be offering an
    amendment on the floor--.
        Mr. Boehlert. We will have to know the rules of engagement
    as we get to the floor, but let me tell you the final product
    doesn't have to represent what I agree with 100 percent or what
    Mr. Hall agrees with 100 percent. The final product has to give
    some assurance to the American people that we are serious in
    this effort, we are putting our best minds to the task and we
    have come up with something that we are probably identifying
    with every single member of this Congress. And the final
    product will not have 100 percent of what any one of us want.
    But it will demonstrate to the American people the seriousness
    of our purpose.
        Ms. DeLauro. Thank you very much to both of you and for
    your great work.
        Chairman Armey. Thank you. The Chair now recognizes the
    gentlelady from California, Ms. Pelosi.
        Ms. Pelosi. Thank you, Mr. Chairman. I want to join you in
    thanking our distinguished witnesses for their excellent
    testimony and great work in approving the product that is this
    bill, and I hope our chairman will be receptive in his mark to
    your suggestions. I want to ask one question on the subject of
    NIST--the committee's removal of the proposed transfer of the
    computer science division of NIST has been discussed. Is it
    correct to understand that your manager's amendment containing
    this provision passed unanimously?
        Mr. Boehlert. That is correct.
        Ms. Pelosi. So it was unanimous opinion of the Science
    Committee that this be removed?
        Mr. Boehlert. It is.
        Ms. Pelosi. I appreciate that. As you know, Congresswoman
    Lofgren has been our advocate--.
        Mr. Boehlert. She provided leadership on this area and I
    provided followership because she had a good idea and it
    deserves support.
        Ms. Pelosi. I think your comment just now is indicative of
    the testimony of both you and Mr. Hall. You have been very
    generous in acknowledging the work of the members of your
    committee. No wonder you have been so successful in putting
    this together. Thank you, Mr. Hall.
        Chairman Armey. Gentlemen, let me say, first of all, that
    one of the actions taken by your committee I would like to
    applaud is the treatment of NIST. I think it is exactly the
    correct understanding, and I am pleased to see that it was
    unanimous understanding in your committee. I find that very
    encouraging. I have found in all my academic areas that
    international students, international scholars have always been
    a great asset to all of our universities. There is clearly now,
    in America today, an incentive to be, should I say, more
    rigorous in scrutinizing people. I can't resist pointing out
    Einstein came to this country as a refugee from foreign
    despotism. So many of our great scholars have come to this
    Nation seeking freedom.
        Have you addressed this question of how do we manage to
    maintain the security of our great research institutions, while
    at the same time, retain the access to the world intellect that
    this Nation has so thoroughly well enjoyed throughout all of
    its existence? Have you addressed that at all in your bill? Is
    there some provision I should look at or is there something you
    might want to see me include in our mark?
        Mr. Boehlert. Quite frankly we have met with Dr. Marburger,
    the President's White House science advisor and director of The
    Office of Science and Technology Policy, because he is chairing
    an effort on the part of the administration to address this
    very subject. Let me just say that I think this Nation has been
    greatly enriched by those who have come here from abroad, but
    under the current circumstances, we are oftentimes challenged;
    so that is an assignment outside the jurisdiction of our
    committee. We have got to be very rigorous in examining very
    carefully those who seek to come to the United States, but we
    would be making the biggest mistake ever if we denied the
    intellectual capital that so many of these people bring to the
    research and development enterprise. We have noted in our
    report that we think as much of the research as possible should
    be unclassified, but we are very sensitive, and as a member of
    the House Permanent Select Committee on Intelligence, I am very
    mindful of national security needs and those should not be
    ignored.
        But the fact of the matter is I think we have got the right
    approach to this.
        Chairman Armey. Thank you.
        Mr. Hall. I think, Mr. Chairman, that the Woolsey amendment
    in creation of the Homeland Security Institute that gives some
    flexibility to us on matters of importance that perhaps no one
    with the Homeland Security could quite fathom themselves. It
    creates a flexible organization that can tap experts as they
    are needed to give advice on that very subject. That is one of
    many that they can give and it relieves the department from
    having full-time people, expensive people, people that really
    would be more needed in some other thrust and specialized
    fields that might be needed for only a short time, and the
    Woolsey amendment gives us that benefit. It is kind of a think
    tank to advise the under secretary in specific matters, such as
    the one you inquired about.
        Chairman Armey. Thank you. I will make it a point to look
    at that tonight. I want to thank both of you. We will, for the
    next 30 days or so, perhaps be in touch with you for matters of
    the official record, but in the meantime, thank you for your
    good work in your committee. Thank you for your testimony.
        Mr. Boehlert. Thank you, Mr. Chairman. I want to thank this
    Committee for taking on this important assignment. It is very
    demanding and time consuming, but it is very necessary.
        Chairman Armey. The Chair recognizes both the chairman and
    the ranking member of the Transportation Committee, and the
    Chair would invite you both to come to the dais. You don't want
    to. I might mention as you make your way to the table that it
    is the practice of this committee to put your formal statements
    in the record and to invite you each to in your turn give your
    opening statement and then we would proceed by asking
    questions. The Chair cannot help but recognize that Chairman
    Young is always the contrarian, has rearranged the seating
    order. And the Chair recognizes Chairman Young.

     STATEMENT OF THE HONORABLE DON YOUNG, CHAIRMAN, COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE

        Mr. Young of Alaska. Thank you, Mr. Chairman and Madam
    Chairman. I can tell you, I am to the right and my good ranking
    member is to the left, but we are in this together and I want
    everybody to understand that on the committee. On July 11, as
    directed by leadership we passed out of the committee by
    unanimous vote our recommendations to this committee. We did
    recommend that we transfer TSA, and I believe the government
    buildings to the new homeland security. We did not recommend,
    however, we transfer the Coast Guard and FEMA. We sent you a
    lengthy report. I hope you had time and will have time, your
    staff has time, to read it, for the reasons stated, we did not
    believe that is a wise thing to do and we very frankly think
    that you have great responsibility. We also have a
    responsibility.
        I have spoken to you personally, Mr. Armey about the time
    schedule, what we want to get done, can we do it and should we
    do it right. I think we should do it right and can we do it in
    that short period of time? That is yet to be seen. I am
    concerned in my own way, about especially the Coast Guard and
    FEMA as I mentioned, and what will happen to them if they are
    transferred over to a new department. What will be their
    direction? So consequently, what we recommended to you because
    these two agencies are actually the only two agencies to
    interface with constituencies, yours and mine, 365 days of the
    year, 24 hours a day.
        More so than the Army, the Navy, the Air Force or Marine
    Corps or the FBI, the CIA or anything else, these two agencies
    are there on demand, on call every hour of the day. Be it an
    earthquake, a flood, forest fire, some other catastrophe, even
    a terrorist attack. That is FEMA. It is the Coast Guard, it is
    search and rescue, a lost sailor, fisherman, boater, child,
    wife, husband and uncle, grandma and grandpa. They are on
    demand there immediately.
        Maybe it is interceding with foreign fleets that invade our
    waters and take our fish and destroy our environment. They are
    there immediately. Maybe it is navigational aids that make our
    ships avoid the catastrophe that happened in my State in an oil
    spill. They are there immediately putting those navigational
    aids in. Maybe they are there to not only prevent the oil spill
    but to clean it up. They have the responsibility to do that
    today.
        Maybe it is the smuggling of drugs that enter the coast of
    California, Florida, Texas, Alaska or any other State that has
    oceans on it's shores, or maybe it just might be interdiction
    of those refugees that are coming in illegally, but they are
    there all the time. They are there all the time and they have
    done that job outstandingly without the money that we should
    have been giving them.
        And I will give the President credit. This is the first
    year that the Coast Guard has been funded adequately, even
    before 9-11, and we saw the response in the New York Harbor. As
    I told the President, and you were there Mr. Armey, and I will
    tell the public, I believe that the responsibility of the Coast
    Guard should be maintained as a unit. That if they continue
    those missions which we have drafted in this legislation as we
    proposed to you, and in the report, we still give the President
    the flexibility financially. You have a chart in front of you,
    I think you have it, but for the major missions we, in fact,
    keep the funding at that level. Yet 50 percent of the money he
    can redirect, do what he wants to do, because 22 percent of
    that 50 percent is already in port security. So what I am
    asking this committee as you structure your bill is, to
    consider the words I have given you about FEMA and about the
    Coast Guard and about the immediate interfacing.
        I understand why the President has been asked to do this
    and what you have been charged to do, and that is to try to
    make this run more efficiently. And I hope that will be the
    result. If I can sound a little bit of a warning, Mr. Oberstar
    and I passed TSA with great intentions, and we had some
    estimates and thoughts, and every time you turn around, it gets
    bigger and bigger and less efficient and less efficient, and
    that concerns me a great deal. We don't want that to happen in
    Homeland Security.
        But if we do create this agency, if we do have a
    department, a cabinet member, a secretary, if we do, and I
    think it is correct if we do have to, and I don't recommend it
    in my legislation, to transfer either one of the agencies of
    Coast Guard or FEMA, that their mission is left intact and is
    not diminished in any way, shape or form.
        That is what I am asking this committee to do. If you don't
    do it, then we have some long discussions ahead of us, because
    I believe I am absolutely on target for what I have just said,
    not because of me, but because the action that has taken place
    in my State by both of these agencies and what they do and how
    they do it, the professionalism, the results they give us. All
    I ask you to do as you listen carefully as you meditate and
    draw this bill together, heed some of the words I have just
    given you. Thank you very much.
        [The statement of Mr. Young follows:]

         PREPARED STATEMENT OF HON. DON YOUNG, CHAIRMAN, COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE

        On July 11, 2002, the Committee on Transportation and
    Infrastructure met to consider H.R. 5005, the Homeland Security Act.
    The Committee by voice vote adopted a bipartisan amendment that
    recommends the transfer of the Transportation Security Administration
    (TSA) and the Federal Protective Service to the Homeland Security
    Department. Both of these transfers were requested by the President and
    we have honored that request.
        However, the Committee recommended against transferring the Coast
    Guard and the Federal Emergency Management Agency (FEAM). The Committee
    has sent to you a lengthy report to accompany their legislative
    recommendation which details the very good reasons for our
    recommendation.
        There is no doubt that after the events of September 11th, the
    President must be given the resources to protect this country from all
    attacks, whether terrorist or otherwise. However, my committee has
    expressed its collective view that the bill as introduced simply goes
    too far and covers too many agencies.
        There is a tremendous concern that the bill as introduced will
    create a great deal of bureaucratic chaos and inaction. There is also
    some concern that the bill gives the Secretary of Homeland Security
    unprecedented power with few checks and balances.
        I want to make it clear that we do not object to the creation of a
    Department of Homeland Security however, the bill as introduced raises
    many concerns which this Congress has a responsibility to address.
        The Transportation Committee agrees that it is appropriate to
    transfer the TSA and the Federal Protective Services to the Department
    of Homeland Security because both of those agencies have as their
    primary mission securing against acts of terrorism or violence. They
    are both security agencies. However, both the Coast Guard and FEMA
    provide a broad array of services to average citizens and have had
    limited responsibility in the area of security. While maritime security
    is an extremely important function of the Coast Guard which should
    never be minimized, they have other functions which are also vital to
    the wellbeing of the American people.
        The Coast Guard also provides for search and rescue of boaters,
    they keep our waterways open to navigation through their ice breaking
    efforts and they maintain critical aids to navigation. They protect our
    environment and fisheries resources, they keep passengers safe on
    commercial vessels of all types, and interdict both drugs and illegal
    immigrants.
        We've given the Coast Guard a great deal of work to do and they
    have always carried out their duties with distinction.
        The same can be said of FEMA which responds to both natural and man
    made disasters. FEAM has many other responsibilities as well. They are
    important not only in responding to disasters but in preventing and
    preparing for disasters of all types. They play a key role in training
    fire fighters. They prepare flood plain maps and operate the flood
    insurance program.
        If the Secretary of Homeland Security wants to commit his entire
    effort to preventing terrorist attacks, under the bill as introduced,
    he can reduce the resources of the Coast Guard and FEMA for these other
    missions and direct those resources entirely to security.
        I have grave concerns about giving the secretary that kind of
    power. If the Select Committee overrules our 75 member committee, I
    would strongly recommend that at a minimum, the missions of the Coast
    Guard and FEMA be mandated to insure they are funded and carried out
    consistent with the will of Congress.
        Our Committee also made recommendations with regard to the manner
    in which the new department will acquire land and office space. We
    believe that the GSA is the proper agency to act on behalf of the
    department to acquire and manage any space needed for offices. It will
    be a massive job to develop the headquarters space and office space for
    all the many agencies affected by this bill.
        The Agencies identified by the Administration to be consolidated in
    the new department occupy roughly 4.9 million square feet of GSA
    assigned space in either leased or owned buildings. If the new
    Department of Homeland Security were consolidated in the Washington, DC
    area, it would require a building almost the size of The Pentagon,
    which is at least 5 million square feet of space.
        GSA has the experience and expertise to serve the new department's
    real estate needs. We have included provisions in the bill to expedite
    the acquisition of a new headquarters for the DHS.
        Our committee worked on a bipartisan basis to develop our
    recommendations. We believe they are the best recommendations we can
    make within such a short time period.
        I would urge you to give great deference to the committee that has
    the longest history of dealing with these issues and understands the
    impacts of transferring these agencies.
        When this bill is signed into law by the president, I hope that we
    can all be sure that the Department of Homeland Security can indeed
    keep our country secure from terrorist attacks, while preserving all
    the important missions that these many agencies carry out each day.
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        Chairman Armey. Mr. Oberstar.

    STATEMENT OF THE HONORABLE JAMES L. OBERSTAR, A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF MINNESOTA

        Mr. Oberstar. Thank you, Mr. Chairman. Chairman Young has
    stated the case on the Coast Guard with great feeling and
    passion, and I hope persuasiveness, certainly persuasive to me
    and to the 73 other members of our Committee on Transportation
    and Infrastructure. We come to you with more than a half
    century of experience in transportation between the two of us,
    and for myself, I would say I have served this body both as a
    member and previously as a staff member for my predecessor John
    Blatnik, who chaired the subcommittee that created the
    Department of Transportation. I participated in that staff work
    from January 24, 1966, until its enactment, its signature into
    law, by President Johnson on October 15 of that same year. We
    spent ten months working in very close cooperation with the
    White House, the White House staff, weekly meetings and
    sometimes daily meetings, with total cooperation between the
    executive branch and the legislative branch, which has not been
    the case with this proposal for Homeland Security.
        As Chairman Young suggested, look carefully at our
    committee report on the agencies under the responsibility of
    our committee or the jurisdiction of our committee. We have
    authority over 56 percent of the personnel and nearly an equal
    amount of the budget that will be the basis of this new
    Homeland Security Department. Coast Guard, Federal Emergency
    Management Administration, FEMA, the Transportation Security
    Administration, and the Federal Protective Service. This is a
    huge undertaking that you are charged with and that the
    President has set forth--22 agencies, 169,000 staffing, and
    some $38 billion in funding. But our objective, as we proceeded
    to undertake our role in this, was not to look at shifting
    boxes, but to look at achieving the mission, and as the
    chairman said, we want to get that mission right. We want to
    get those issues of transportation security right.
        And I want to address the matter of the Transportation
    Security Administration. That was the major concern of this
    entire country, of the President and of this Congress
    immediately after the attack on September 11. First was to make
    New York whole and address the other needs of security in this
    country with an immediate appropriation. The next was to
    strengthen aviation security and security in other modes of
    transportation might be vulnerable. I was the author in 1990 of
    the first Aviation Security Act in the aftermath of Pan Am 103.
    It was at the request of then President Bush that I crafted the
    legislation to establish a commission, the President's
    Commission on Aviation Security and Terrorism, and I served on
    that Commission along with John Paul Hammerschmidt from the
    House, and Senators D'Amato and Lautenberg in the other body
    and three public members.
        We spent ten months inquiring into the tragedy of Pan Am
    103, and we set forth recommendations that were crafted into
    legislation, signed into the law by the President, but
    regrettably not fully implemented. Airlines resisted, airports
    resisted, other forces resisted the full implementation of
    those provisions. Now we have a law that goes even further
    than, the Aviation Security Act of 1990, with tough deadlines,
    strong provisions, and I don't want to see any of those
    undermined.
        Never again do I want to stand at an abyss as we did in
    Lockerbee and look into a hole that was 14 feet deep, 150 feet
    long, a trench filled with water where an apartment building
    had stood and where the fuselage of Pan Am 103 exploded and
    incinerated people. We vowed that never again will this happen.
    But it did happen because we weren't vigilant enough because
    the patience of the public wore thin; because the forces who
    lobbied against criminal background checks for airport security
    screeners prevailed rather than the provisions of law. I don't
    want to see that happen with the Transportation Security
    Administration that we have crafted and that the Congress
    passed by an overwhelming vote once again.
        We have said in this legislation that the Transportation
    Security Administration may well indeed be transferred to the
    new department of homeland security provided certain steps are
    taken first, that the key positions are filled. The Secretary,
    the Secretary for Homeland Security, the Under Secretary for
    Border and Transportation Security, the Assistant Secretaries
    for Transportation Security are filled, that the Secretary of
    Transportation has certified that explosive detection systems
    are deployed at all U.S. Airports as we provided for in this
    law and that these systems are, in fact, operating to screen
    all checked luggage, that the Secretary of Transportation has
    certified that there are a sufficient number of Federal
    screeners, security managers, security personnel, and law
    enforcement officers deployed at all airports where screening
    is required under the law.
        If you don't do that, if, in fact, this agency is
    transferred to the new Department and is then subject to the
    endless bureaucratic wrangling and tangling that will happen,
    and believe me it will happen, I know, I've seen it, then we
    will have undermined the very cornerstone of aviation security
    and of transportation security.
        So leave it as it is. Secretary Mineta said we will meet
    all those deadlines. He said we are going to meet all those
    deadlines. What we are offering you in this bill that we have
    reported from Committee is an insurance policy against the
    failure of the transfers and of the deadlines to be met. And
    those deadlines were not afterthoughts. They were not slipped
    into the bill undercover of darkness. They were openly debated
    in committee, on the floor, in conference. The American public
    said we want this done, we want it done yesterday. People
    weren't boarding airplanes because the fares were too high.
    They weren't boarding airplanes because their anxiety level was
    too high and they wanted these tougher measures of security.
        We have provided it. This Department of Transportation
    under Secretary Mineta and Deputy Secretary Jackson and Under
    Secretary Magaw couldn't work hard, couldn't be working faster
    to achieve those goals. Norm Mineta is putting 17 hours a day
    and Michael Jackson is putting in 18-hour days, 7 days a week,
    but those deadlines have to be met and if you do anything to
    disrupt it and something happens, that would be terrible.
        We have, for example, asked now the administration for
    information. We couldn't get it. We got no responses to our
    requests from both sides of the aisle together for basic
    factual information, are explosive detection systems being
    purchased with facilities and equipment funding, from airport
    and airways trust fund, or from what other fund? Is the civil
    penalty authority of DOT going to be transferred to the new
    department, or will it remain with the existing Department of
    Transportation?
        Will Homeland Security agencies that are now in leased or
    government-owned space going to be transferred in those same
    conditions or will they be government-owned space? What will be
    the condition? We couldn't get answers to those simple factual
    questions. So we moved ahead with legislation.
        There is also wrangling over deadlines and I have heard
    that there may be a measure to stretch out the deadline for
    compliance with the security provisions of the Transportation
    Security Act. I urge you not to put any such extraneous
    language in this Homeland Security Department. Stick with the
    law. There is flexibility in the law to meet those deadlines,
    but don't try to undermine the law.
        Chairman Armey. Thank you.
        [The statement of Mr. Oberstar follows:]

    PREPARED STATEMENT OF HON. JAMES L. OBERSTAR, RANKING MINORITY MEMBER,
                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

        Mr. Chairman, Congresswoman Pelosi, and Members of the
    Committee, thank you for the opportunity to testify before the
    Select Committee on the bipartisan homeland security
    recommendations of the Transportation and Infrastructure
    Committee. Our Committee has worked on transportation security
    and safety issues for decades and, between us, Chairman Young
    and I come to you with more than a half-century of experience
    in transportation issues. As you develop your recommendations,
    I urge you to consider our Committee's expertise in determining
    how the Coast Guard, the Federal Emergency Management Agency,
    the Transportation Security Administration (TSA), and the
    Federal Protective Service best fit within a plan for homeland
    security and how they can best contribute to the welfare of
    this Nation.
        As we consider this issue, we all must appreciate the
    magnitude of what we are considering--a proposal that, as Norm
    Ornstein points out, is arguably the largest governmental
    reorganization in history. The President's proposal envisions
    consolidating parts of 22 different agencies--including more
    than 100 governmental entities with more than 169,000 employees
    that are employed in 4.8 million square feet of space all
    across this Nation--with many different missions, cultures, and
    histories. As we create a Department of Homeland Security, we
    cannot focus on shifting boxes; we must focus on achieving the
    mission--to prevent terrorist attacks, reduce vulnerabilities,
    and, in the tragic event of an attack, to minimize damage and
    begin the process of recovery. Moreover, we must ensure that we
    get it right!
        Today, I would like to focus on our Committee's bipartisan
    recommendation to getting transportation security right. Like
    the Administration's bill, the Committee-reported bill
    authorizes the transfer of the TSA to the Department of
    Homeland Security but, unlike the Administration's bill, the
    Committee makes clear that the transfer will not jeopardize
    TSA's security mandate. Under the Committee-reported bill, no
    transfer will occur until:
         key positions are filled, including the Secretary
    of Homeland Security, as well as the Under Secretary for Border
    and Transportation Security, and the Assistant Secretary for
    Transportation Security;
         the Secretary of Transportation certifies that
    explosive detection systems are deployed at all U.S. airports
    required under the Aviation and Transportation Security Act and
    that these systems are screening all checked baggage; and
         the Secretary of Transportation has certified that
    a sufficient number of federal screeners, security managers,
    security personnel and law enforcement officers have been
    deployed at all airports where screening is required under the
    Aviation and Transportation Security Act.
        Achieving these security mandates prior to transferring TSA
    is essential because, again, the purpose of this legislation is
    to prevent terrorist attacks, not move agencies. TSA must not
    be distracted by the uncertainties of an organization change
    while it is fully occupied with the demanding tasks of hiring
    tens of thousands of employees, and purchasing and installing
    several thousand pieces of explosive detection equipment.
    Moreover, at yesterday's Select Committee hearing, Secretary of
    Transportation Norm Mineta made crystal clear that the
    Administration will meet all statutorily mandated deadlines
    included in the Aviation Security Act. Given the
    Administration's commitment, the President will be able to
    transfer TSA on January 1, 2003, as his proposal provides. Our
    provision is a simple insurance policy.
        I would also like to comment on the aviation security
    deadlines imposed by Congress last November in the Aviation
    Security Act, which the House adopted by a vote of 410-9.
    During our Committee consideration of the Homeland Security
    bill, Congressman Mica offered and withdrew an amendment to
    extend the December 31, 2002 deadline for airports to deploy
    explosive detection systems and ensure that these airports are
    screening all checked baggage. There have been press reports
    that there will be efforts to include an extension in the bill
    you are considering. I, and many of my colleagues, would
    strongly oppose an extension at this time. Yesterday, in
    testimony before you, the Administration made very clear that
    it will meet the deadline. It would be wholly inappropriate for
    Congress to weaken this requirement when the Administration has
    made clear that the mandate is within reach. Moreover, the idea
    that the ``Homeland Security'' bill would include a provision
    that would enable a terrorist to more easily get a bomb on a
    plane is directly contrary to everything we are trying to do
    here today.
        Finally, I would like to express my sincere hope that
    Congress will develop a bipartisan homeland security proposal,
    working hand-in-hand with the Administration. To date, I have
    been deeply disappointed in the appalling lack of cooperation
    from the Administration on this legislation. The White House
    has muzzled the agencies and insisted that all contact with
    Congress be cleared through it. As a result, our Committee did
    not receive responses to bipartisan requests for basic, factual
    information--such as whether explosive detection systems are
    purchased with Facilities and Equipment funding from the
    Airport and Airways Trust Fund; whether the DOT's civil penalty
    authority transferred to the new department; or whether the
    proposed Department of Homeland Security agencies are currently
    located in leased or government-owned space--until after the
    Committee reported the bill. I am hopeful that as we move
    forward the Administration will stop stonewalling and expecting
    a rubber stamp, and begin to work with us to try to create the
    Department that best achieves our common goal.
        Mr. Chairman, I am also hopeful that the House Republican
    Leadership will bring this bill to the Floor under an open
    rule. These issues of homeland security, and protecting our
    constituents, are too important to each and every Member of
    this Body to limit an opportunity for a free and open debate of
    these issues. Let the ``House of the People'' work its will.

        Chairman Armey. The Chair will advise you I am being
    advised that we may expect votes on the floor within the next
    15 minutes. So with that in mind, and out of respect for this
    panel's patience getting to the dais, let us try to proceed
    with dispatch, and the Chair recognizes the gentleman from
    Ohio.
        Mr. Portman. I thank the Chair and I want to thank my
    colleagues for their testimony, but more important, for the
    work they put into this, not just over the last couple of weeks
    but over the last several years. And you are right, you have
    got about 56 percent of the people and about 56 percent of the
    budget of the proposed transfer, and obviously your continued
    oversight is going to be critical if this is ever going to
    work, the issue provided for the Transportation Security
    Administration.
        I have a couple of questions. One is with regard to the
    Coast Guard, and Chairman Young, I know you feel very strongly
    about this agency and have worked closely with them over the
    years. My question is if--and you may not want to answer
    hypotheticals--but if the Coast Guard were to have its so-
    called homeland security functions transferred over to this new
    Homeland Security Department, and the other functions were to
    be left behind, would that be preferable to you as opposed to
    keeping the Coast Guard intact and moving it over to the
    Department of Homeland Security?
        Mr. Young of Alaska. No. In my testimony, Mr. Portman, I
    believe I said that the Coast Guard has to remain intact, and I
    will stress. It is my preference it stays where it is at, but
    if it has to be moved, it has to be moved intact. I would also
    like to suggest, and I say this as a constructive suggestion,
    (It is not in my testimony). I was deeply concerned about the
    flow chart the President sent to us. No way will I support the
    Coast Guard reporting to the Under Secretary of Border Patrol.
    I don't know where that came from. If anything, they cannot be
    diminished. They have right now the right and the duty to
    report to the Secretary straight on, the commandant does, and
    at the least that has to occur. And I would also suggest that
    as I have said, and I will say again, what we have done in this
    legislation is to write the mission, and that is really what,
    and my ranking member I hope will agree with me, has to be a
    crucial part of your legislation.
        Again, if you will look at this chart I gave you, the
    funding aspect of it is just for the operating part, not for
    capital improvement. We retain search and rescue, which is 12
    percent of the budget and Marine safety which is 5 percent. We
    retain drug interdiction, which is huge. We retain living
    marine resources and make migrant interception and marine
    environmental protection. Search and rescue as I mentioned. But
    we also leave ports, waterways and coastal security, which is
    part of their job and we leave defense readiness which is part
    of their job. So if we move something, it has to be moved
    intact. I am a realist. I have said before I think it is wrong,
    but if you decide to do so, at least recognize what I am
    asking--mission definition written by myself and other people
    that know the Coast Guard and then making sure that the
    missions they are historically involved in are fully funded and
    they can still interface with their constituency and my
    constituency.
        Mr. Portman. I appreciate that. You indicated earlier that
    you take some comfort in the fact that this President has
    increased funding for the Coast Guard. For the first time in a
    long time, the Coast Guard is getting the kind of resources it
    needs. I am sure you would like to see them get even more, but
    there is a substantial increase in funding, and I think
    everything we are hearing from the White House is that they
    understand the importance of this role.
        Mr. Menendez and others have talked a lot about the
    maintenance of existing nonhomeland security functions, and I
    think having that mission laid out is extremely important to
    being sure that in this legislation we aren't giving short
    shrift to any of the existing functions, whether it is cleaning
    up oil spills or search and rescue efforts.
        So I appreciate the time you have put into this and the
    help you have given us to be able to get to a point where this
    can work well together with other border and port authorities.
        Mr. Oberstar on TSA, I know you have spent an enormous
    amount of time on this, you have laid out your strong view that
    we ought to be sure these deadlines are met first before we
    move so we don't have any disruption in what is already a very
    difficult process. Some have argued that maybe we should, in
    this legislation, alter some of these deadlines. They have
    said, for instance, that the technology coming on board to be
    able to screen baggage that would be in the belly of a plane is
    going to improve in the next couple of years: and many
    airports, in any case, even if we had better technology, can't
    meet the deadlines.
        You testified this afternoon that you believe that is
    inaccurate, that we need to keep their feet to the fire, keep
    these deadlines in place. Can you expand on that a little bit
    in response, specifically to the suggestion that perhaps if we
    did postpone some of these deadlines, new technology will
    become available, smaller and more accurate machines, for
    instance, can be installed--.
        Chairman Armey. May I encourage Mr.Oberstar to do so
    succinctly because we have others who would like to get the
    questions in before we must vote.
        Mr. Oberstar. I would like to, first of all, support
    Chairman Young's statement about the position of Under
    Secretary for the Coast Guard, that is this critically
    important to the operation and communication. Secondly, on
    deadlines, there is authority in existing law for alternative
    means to be used if explosive detection systems cannot be
    deployed in time to meet the December 31, 2002, deadline or in
    the event that explosive trace detection systems cannot be
    certified to meet the standard of detecting all types of
    explosives.
        Furthermore, as to the question of extending deadlines to
    wait for new technology, let me just give you my experience as
    Chair of the Aviation Subcommittee, when we were proposing that
    the FAA by rule adopt the TCAS, the collision avoidance systems
    for aircraft aloft, the FAA resisted, the airlines resisted,
    wait for TCAS II, wait for TCAS III, it is a better system.
    TCAS II will give you only vertical authority, TCAS III will
    give you information to move laterally in response to an
    aircraft entering your five hundred foot space.
        Mr. Oberstar. They waited and they delayed and, you know,
    three mid-air collisions resulted, killing hundreds of people.
    This Congress enacted legislation requiring the establishment
    of a rule to adopt TCAS II, with authority to move on and adopt
    better technology as it comes along. But let us not let the
    perfect be the enemy of the good.
        Mr. Portman. Thank you.
        Chairman Armey. Thank you, gentlemen.
        The gentlelady from California. We have just about adopted
    you to our home State in Texas.
        Ms. Pelosi. Well, three grandchildren I have in Texas.
    Thank the chairman.
        I thank the distinguished witnesses for their wonderful
    testimony, their great leadership for our country and their
    wonderful proposal to this committee which I know in your mark
    you will take under great consideration. I am now speaking for
    him, right?
        Anyway, here is what I would like to say, because I know
    the hour is late and you have been patient in waiting and you
    have made such a comprehensive presentation. I did want to just
    call to the attention of the committee a document that Mr.
    Oberstar related to me in our joint inquiry, and that is the
    report on the Aviation Commission in relationship to the
    Aviation Act of 1989, and I think if the members read that they
    would see how prescient it was. It really laid out the steps
    that we should take to protect our aviation system and our
    airports specifically in relationship to terrorism.
        Of course, I have been lobbying for strengthening the
    Office of Homeland Security in the White House to making it
    statutory instead of just existing under executive order; and I
    would hope that that adviser to the President would have the
    FAA strongly under his or her--in the jurisdiction that that
    person coordinates in the interest of fighting terrorism.
        I will share my copy, but if you have more, Mr. Oberstar, I
    think it would be very instructive as we go into the markup to
    see some of the documentation that you provide. It was useful
    to me in the joint inquiry. I thank you for it.
        Mr. Young, I thank you for your always convincing and
    spoken-with-conviction testimony, and thank you both.
        I have no questions. Thank you, Mr. Chairman.
        Mr. Oberstar. I will be happy to provide that section of
    the report for all of the members. It relates to a
    recommendation the Commission made that there be established
    within the intelligence community of the United States a single
    unit whose role would be to gather information from all U.S.
    and foreign intelligence sources and to be prospective, to
    enter into the mind of the terrorist, to think ahead rather
    than simply react to the last terrorist action. It was strong
    recommendation by all of the members of the President's
    commission that such a unit be established within the
    intelligence community of the United States to be anticipatory
    rather than reactive. That was never done.
        Ms. Pelosi. If I may, Mr. Chairman, just to continue on
    that, and we didn't go into that in our comments here, but you
    have hit the nail on the head. Plans and intentions, we can do
    all of the mitigation and protecting all the rest that we want,
    and that is very important to reduce risk, but until we can get
    into the minds of and understand the plans and intentions, we
    cannot give any guarantees to the American people. Thank you
    for making that point.
        Chairman Armey. Thank you.
        The gentleman from New Jersey.
        Mr. Menendez. Thank you, Mr. Chairman.
        As a member of the Transportation Committee, it has been
    privilege to work with both of these gentlemen and,
    notwithstanding Mr. Young's wild Alaskan wilderness reputation,
    it has really been a pleasure. The committee has continued to
    act in its tradition with what I consider our treasure trove of
    transportation information, Mr. Oberstar, in a bipartisan way,
    and I want to salute them.
        Just as I have asked every other Chair and ranking
    Democrat, the votes that were taken in the committee were
    bipartisan on what you reported out?
        Mr. Oberstar. A voice vote.
        Mr. Young. Voice vote. No discussion. No dissent. It was
    well done.
        Mr. Menendez. In reference to the Coast Guard, the
    Commandant appeared and said that about 80-some-odd percent of
    the Coast Guard's missions were nonsecurity related. Secretary
    Mineta came here and said it was about 60 percent. In either
    case, it is well over 50 percent of their missions are
    nonsecurity related.
        Chairman Young, how do you see--if this committee does put
    the Coast Guard as an entity into Homeland Security, how do you
    see the nonsecurity missions that you so eloquently spoke about
    being preserved?
        Mr. Young. I would like to have, with your cooperation, the
    chairman, the committee-- a role in writing the mission and
    have it in the law so there is no question about what the
    mission is. I mention in the chart, again, they are involved in
    a great deal of security already. I believe it is about--you
    know, I would say nonhome security is closer to 85 percent, but
    we even cut the slack in the sense, because the White House
    requested it, that we took care of those nonsecurity missions
    and tried to make them whole.
        I would like to suggest that what this committee should do
    also--and it doesn't deter from the home security aspect of it.
    In fact, it probably will add to it. It gives them some
    flexibility, but it will not take away from those things that
    are so crucial to our commerce and to our people. And I know
    people have told me this--we will do. In all due respect, my
    friends, I would prefer it in the law so there is no question
    that what they will be able to do in the past, they will be
    able to do in the future, and they will be funded for it.
        Mr. Oberstar. And that latter point is absolutely critical.
    Over the last 20 years, the Congress has designated 19 new
    missions for the U.S. Coast Guard to carry out but has never
    provided adequate funding for those new missions. So the Coast
    Guard has continued from the time I was elected to Congress in
    1974 with 39,000 personnel, and there are only a thousand or
    two above that today.
        They have added--we have added all these missions, kept
    them at the same level. Their budget has not increased. In
    fact, the Coast Guard interdicts drugs whose street value is
    greater than the budget of the Coast Guard.
        So if you are going to ignore the recommendation of our
    committee, then be sure in transferring that you increase the
    personnel to handle whatever the homeland security role is
    envisioned to be for the Coast Guard and recommend an increased
    budget to handle that additional role as well. If they are
    going to board merchant vessels 24 hours before they arrive at
    the U.S. port because they are vessels of concern, that they
    need additional people to do that, because the Coast Guard
    shifted about a third of it people from search and rescue where
    they save 3,000 lives a year to boarding vessels and monitoring
    vessels of concern.
        Mr. Menendez. I think, Mr. Oberstar, you and the chairman
    give us some insights into the concerns of the committee. This
    is not about turf that some would like to suggest that it is.
    This is about some very serious missions that already have
    suffered because of the nature of the obligations the Coast
    Guard has now more significantly undertaken.
        Secretary Mineta sat here before us. I asked him a yes-or-
    no question. Has the Coast Guard been doing a bad job of
    securing the United States in the territorial war? He said, no.
    I said has he been doing a good job? He said, yes.
        So it is been doing the job, but it is clearly diminished
    in terms of its capacity, considering all of the functions. I
    think that is what the committee's significant concern is
    about.
        Lastly, before my time runs out, Mr. Oberstar, TSA, as I
    understand the committee's amendment, it basically says we are
    not stopping the transfer of TSA. We are trying to ensure that
    TSA, as an infant agency, will succeed by making sure that the
    senior leadership of this new homeland department exists in
    place, that in fact screeners are deployed and, lastly, that
    the detection devices are employed.
        I asked Secretary Mineta, well, why would the
    administration not accept that, because it--and he said they
    are going to meet all the deadlines, period, was his point.
    Without reservation. If that is true, can you see any reason
    why this committee should not accept the amendment of the
    Transportation Committee as it relates to the transfer of TSA?
        Mr. Oberstar. You have understood the legislation of our
    committee brilliantly.
        Chairman Armey. The chairman must call the gentleman from
    New Jersey and--.
        Mr. Young. If I could make one comment, Mr. Menendez.
        Chairman Armey. One short comment.
        Mr. Young. One of the other things I mentioned in my
    statement, I still suggest under the President's chart to make
    sure that those missions can be accomplished, that the
    Commandant reports directly to the new Secretary if it is to be
    transferred and not to the Under Secretary of Border Patrol.
        Chairman Armey. Thank you.
        The gentlelady from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman.
        Let me say thank you to my colleagues for your vast
    knowledge in this area and your thoughtful process in going
    through this. Mr. Oberstar, your historical perspective is
    always awesome; and, Mr. Young, I have had the opportunity just
    recently, as you know, to visit the wildlands of Alaska and
    your state is truly beautiful.
        Let me ask a question with regard to FEMA. You have
    recommended keeping FEMA as a separate agency but it would
    coordinate with DHS in the event of a terrorist attack. How do
    you think that moving FEMA into the Department of Homeland
    Security would affect our ability to respond to hurricanes, and
    other natural disasters, and how do you envision the FEMA-DHS
    coordination being carried out?
        Mr. Young. Well, it is our opinion FEMA is very parallel to
    the Coast Guard. They have a lot of characteristics as far as
    their mission, and if the mission is properly spelled out in
    law, I don't think there will be that much difficulty and I do
    think they will cooperate. FEMA has responded immensely well in
    the last 8 months to floods and actually the World Trade
    Towers, et cetera.
        I just worry again about them being absorbed into a new
    agency and being swallowed in and redirected into supposedly
    what is the mission of the homeland security and not what we
    originally intended them to do. I do think they can coordinate.
    I do think they will cooperate, and I still think they could be
    able to respond immediately to the disasters that occur every
    day. If they are not able to do that and they are redirected
    over here to watch out for bole weevils coming out of some
    other country close by that has been imported by a terrorist,
    then I think we have got some problems.
        Mr. Oberstar. If I might supplement the chairman's splendid
    response, FEMA started out as the Civil Defense Agency and then
    moved into--as the Cold War wound down, assuming a broader
    responsibility as our Nation's premiere disaster assistance and
    response agency. To move it into this new Department of
    Homeland Security without a clearly defined homeland security
    role is, in my judgment, a mistake.
        We have not seen a delineation of what is homeland security
    compared to response to floods, hurricane, blizzards,
    earthquakes, tornados. You know, when your home is under water
    up to the eaves, are you going to wonder, where is FEMA? Are
    they on some mission looking for terrorists, or are they going
    to be on a mission looking for your lost children and rescuing
    you from the rooftop of your home?
        Ms. DeLauro. Let me ask two very quick questions. With
    regard to TSA, if they did meet all of their deadlines, are you
    confident that moving TSA to the new Department will enhance
    our homeland security?
        Last question is, if your recommendations are not included
    in the bill that is reported out, would you expect to have the
    opportunity to amend this legislation on the floor?
        Mr. Young. I am hoping that this committee does what I
    think is correct and listen to every chairman and draw a bill
    that we can all possibly support. I have told people publicly
    and privately that if what we suggest is not in the bill, then
    we expect to be able to offer amendments to make that part of--
    and I would suggest respectfully my leadership knows this, that
    I do not take this task lightly, nor do you. We are going to
    try to do what I think is right for homeland security but also
    make sure that we are able to be involved all of the way
    through the construction of this legislation, especially in the
    definitions and writing of the mission.
        Mr. Chairman, before I finish, I would like to suggest one
    other thing. In my written testimony, please remember about the
    purchasing of property and setting up property for this agency.
    Under our recommendation, GSA, we believe, is the proper agency
    to do so, but it is transferred over to Homeland Security. But
    right now you don't have a place to put this agency. There is a
    recommendation Mr. Oberstar has. I believe it is St. Elizabeth
    property there. But don't let this get bogged down, and if this
    becomes a reality--it was a part of the testimony I didn't--.
        Mr. Oberstar. I concur with the chairman. We ought to be
    able to offer an amendment. The amendment should be made in
    order under the rule if you do not concur in our committee's
    recommendations to offer an amendment on the floor to propose
    and let the House work its will on our proposal.
        Secondly, you do have to have a place for these agencies.
    You can't have them under a tent on the mall somewhere, and
    one-third of the cost of establishing a new department is the
    land cost. The government already owns the St. Elizabeth's land
    which already has the appropriate setbacks, 131 acres, and you
    can easily establish the new facility right there.
        Ms. DeLauro. If it meets the deadline for TSA.
        Mr. Oberstar. And it is already in Federal ownership, in
    GSA's ownership.
        Ms. DeLauro. The last part of my question was, if TSA meets
    all of its deadlines, should--in your view, will moving that
    agency to the new Department enhance our security?
        Mr. Oberstar. Well, I don't know if it is going to enhance
    security. Let us hope it won't--.
        Ms. DeLauro. Suppose if the corporations can plead the
    fifth--.
        Chairman Armey. Let me recognize myself, and let me just
    advise the committee we will soon complete our work with this
    panel, and the committee will recess until 5 minutes following
    the close of the last vote in a series of votes. It is the hope
    and the intention of the chairman that we would complete our
    work with all of our witnesses invited for this day before we
    conclude tonight. So we will come back and hope to drive to a
    conclusion.
        Now, having made that point, let us, gentlemen, see if
    there are a few things we have, I believe, universal agreement
    on.
        Irrespective of whether the Coast Guard stays where it is
    or is moved, we all agree that Coast Guard should not be broken
    up. There is no question in anybody's mind. All of the
    functions carried out by the Coast Guard are carried out by
    personnel and materiel specifically trained and designed for
    the versatility that is required for it to fulfill all its
    missions, oftentimes by just moving smoothly and seamlessly
    from one assignment to another as the need arises, and we all
    agree on that.
        I think we have fairly clear agreement that we should
    respect the enormous opportunity, especially where real
    property is concerned, to use the services, the expertise of
    the GSA. I think there is universal agreement.
        The other points that I would make would be points that
    relate to a debate between us regarding our differences, and I
    am confident there will be ample time to have that debate, a
    better opportunity for that debate. So why don't I just defer
    now and look forward to that greater opportunity to debate
    these fine points where we can all display our rhetorical and
    debate skills at a time when indeed it makes the difference.
        Mr. Young. I thank the chairman, Madam Chairman.
        Chairman Armey. The committee stands adjourned until 5
    minutes following the close of the last vote in a series of
    votes on the floor. Without objection.
        [Recess.]
        Chairman Armey. The committee will come to order.
        The chairman sees the distinguished chairman of Ways and
    Means, and I have been advised that the ranking member, Mr.
    Rangel, will be unable to be here today. So, Mr. Chairman,
    without objection, Mr. Rangel's statement will be included in
    the record.
        Chairman Armey. We will open with your statement. We will
    put your formal statement in the record, and whatever comments
    you would like to make before the committee, and then we will
    follow that with questioning under the 5-minute rule.

    STATEMENT OF THE HONORABLE WILLIAM THOMAS, CHAIRMAN, COMMITTEE
                           ON WAYS AND MEANS

        Mr. Thomas. I thank you very much, Mr. Chairman.
        It is true the change in the homeland security provision
    that is in the jurisdiction of the Ways and Means Committee
    passed the committee 34 to 3; and given the lateness of the
    hour and the other commitments, Mr. Rangel indicated to me that
    he was perfectly satisfied with me representing the committee
    on this question.
        One of the things that the Ways and Means Committee
    attempted to do in looking at those provisions of homeland
    security under our jurisdiction is to take note of the fact
    that only the Ways and Means Committee has the initiating
    capability on the question of revenue; and to underscore how
    long the Ways and Means has been dealing with Customs, we had
    before us presented by the Library of Congress the fifth bill
    ever passed by the first Congress. That was to create the
    Customs Bureau. The fifth bill creating the Customs Bureau
    implemented the first bill ever passed by the United States
    Congress, the Tariff Bill of 1789. Since that time, the line of
    control and jurisdiction has been in the Treasury Department to
    the Committee on Ways and Means.
        Oftentimes people are not aware of the level of activity
    and the relationship between the Ways and Means Committee and
    Customs. In the 107th Congress, for example, up to this time
    more than 578 bills dealing with Customs have been introduced.
        We understand the importance of creating a seamless
    presentation at the border, one of the fundamental goals of the
    homeland security approach. We understand the difficulty with
    the myriad jobs associated with the border.
        My previous committee assignment when I first came to
    Congress was on the Agriculture Committee. As a member from
    California, I spent a great deal of time working with the
    Animal Plant Health Inspection Service, It is a monumental
    task.
        The Ways and Means Committee does not want to be an
    obstacle in making sure that to the best of our ability we can
    create a seamless organization. We do, however, feel very
    strongly about not moving the entire Customs structure--because
    we are willing to move the entire Customs structure, and
    should, into Homeland Security--but for that portion which is
    about 25 percent of the current total number in Customs who
    deal directly with trade and revenue, a very specialized niche,
    if you will, we would very much like to see those, as our
    legislation indicates, still tied to the Treasury Department.
        That the Commissioner of Customs be Senate approved, but,
    understanding the difficulty in dealing with that, we did in
    the legislation say that Treasury could delegate to Homeland
    Security the coordination of that, about 25 percent of the
    staff, to create that larger seamless structure.
        So what we did was say, yes, the entire Customs Service can
    be transferred. We identified those only very narrowly dealing
    with trade and revenue, the jurisdictional scope of the Ways
    and Means Committee, to maintain that traditional tie through
    Treasury, but we did say that Treasury could delegate
    significant work-related or other aspects to Homeland Security.
        And that one final provision, since we are down the road in
    a long and difficult process of creating a computerized system
    that will maximize our commercial commerce capabilities, a
    computer system called ACE, in which the Customs merchandising
    and processing fee would be directed to paying for that system.
        I understand the difficulty in creating a system which
    blends all of the Homeland Security Departments in place, but
    this has been a project that is very near completion. It is a
    quality program. It has been paid for by private sector
    dollars, and we believe in a bipartisan way it would be a shame
    try to move in a different direction. So that was one area we
    wanted to see a completion of the funding process over; and in
    testimony not in front of the committee but in discussions with
    Governor Ridge on a bipartisan basis, they indicated that it
    was likely that the cornerstone of the new Department's
    architecture on computers would, in fact, be the ACE system.
        That is the sum and substance of the modifications we
    propose to make, maintain a historical and important
    relationship in the area of trade and revenue.
        Chairman Armey. I want to thank the chairman.
        [The statement of Mr. Thomas follows:]

    PREPARED STATEMENT OF HON. BILL THOMAS, CHAIRMAN, COMMITTEE ON WAYS AND
                                     MEANS

        Mr. Chairman, thank you for the opportunity to testify before you
    and the Select Committee today. Let me begin by recognizing the work of
    President Bush and the importance of this legislation to the safety of
    the American public.
        For more than 200 years, the U.S. Customs Service has been on the
    frontline supporting and defending our nation. The requirement to
    generate revenue for this country through Customs duties, which was the
    very first Act of Congress, was the primary reason Customs was
    established in the fifth Act of Congress as the first Federal agency of
    the new Republic. This function is still important today as
    demonstrated by the fact that Customs collects over $20 billion of
    revenue.
        Today, under the authority of the Department of the Treasury,
    Customs enforces well over 400 provisions of law for at least 40
    agencies. In addition to collecting revenue, Customs safeguards
    American agriculture, business, public health, and consumer safety and
    ensures that all imports and exports comply with U.S. laws and
    regulations. Unlike other agencies that are being transferred, the
    Customs Service has several unique characteristics:
            1. The Customs Service is a revenue-collecting agency with
            significant trade facilitation functions--the only revenue
            collector proposed by the Administration to be moved to the new
            Department.
            2. A significant portion of the Customs Service's budget is
            funded from user fees paid by importers that by domestic and
            international law must be used only for specific commercial
            operations.
            3. Substantial portions of the Customs Service's trade work are
            very technical. The work requires professionals with legal and
            regulatory skills that are unlike border security skills.
        For these reasons, the Ways and Means Committee, by a strong
    bipartisan vote of 34-3, recommends that the Select Committee on
    Homeland Security recognize the unique mission of the Customs Service
    and adopt its amendment to H,R, 5005. The Ways and Means Committee
    agrees with the fundamental basis of the President's proposal to
    transfer Customs assets and personnel in their entirety to the new
    Department and rejects the option of carving up the Customs Service
    into commercial and non-commercial elements. Instead the Committee
    seeks to identify and prevent further reorganization or reductions in a
    closely defined core group that performs trade facilitation and
    revenue-collection functions. The overarching goal of the Committee is
    to give the new Department the tools it needs to protect our borders
    while at the same time ensure that revenue continues to be collected
    and that goods keep moving across the border with little delay. The
    Ways and Means Committee is confident that the proposed changes do not
    interfere with the new Department's missions but will enhance its
    effectiveness, Our bipartisan amendment:
            1. Transfers the Customs Service in its entirety to the
            Department of Homeland Security Division for Border and
            Transportation Security.
            2. Identifies revenue-related offices and functions within
            Customs (about 25% of the agency) and prohibits reorganization
            or decrease in their funding or staff or reductions to Title V
            pay and benefits levels.
            3. Requires that adequate staffing of customs revenue services
            be maintained, and requires notice to Congress of actions that
            would reduce such service.
            4. Maintains the Commissioner of Customs as Senate-confirmed.
            5. Transfers all authority exercised by Customs to Homeland
            Security with the exception of revenue collecting authority,
            which would remain at the Treasury Department. Treasury may
            delegate this authority to Homeland Security.
            6. Specifies that a portion of the Customs Merchandise
            Processing Fee must go to build the new Customs computer, which
            Governor Ridge has told us will likely be the cornerstone of
            the new Department's architecture.

        Chairman Armey. At this time, the Chair recognizes the
    gentleman from Ohio.
        Mr. Portman. Thank you, Mr. Chairman.
        It is like deja view all over again since we have been
    through this already in a very thoughtful and I think
    appropriate process through the Ways and Means Committee where
    we brought the Customs Service in, brought Treasury in, and
    talked to people from the outside.
        I appreciate, Mr. Chairman, working with David Kavanaugh,
    who has been great, and your other staff to come up with what I
    think is a good way to combine these two needs. One is to
    assure that we have the most effective border security possible
    which must, in my view, include the Customs Service working
    seamlessly with these other agencies we have talked about
    earlier today, but, second, respecting and acknowledging the
    unique function of Customs to collect revenue and to ensure
    that we have efficient trade flow which is important to our
    economy.
        So I think the solution works, and I would really not have
    any questions for the chairman, except to commend him for
    working through this and spending the time necessary to come up
    with what I think is a good solution.
        Mr. Thomas. I thank the gentleman.
        Chairman Armey. The gentlelady from Connecticut.
        Ms. DeLauro. Thank you very much, Mr. Chairman.
        Thank you very much, Mr. Thomas and Mr. Chairman, for being
    here.
        My understanding is that what the committee has agreed to
    is to take Customs to the new Department. Treasury would retain
    a statutory authority over collecting revenue and Trade Act
    enforcement. Also my understanding--and correct me if I am
    wrong--currently, Customs is only able to screen than 2 to 3
    percent of the large cargo containers that enter the United
    States, and that leaves us vulnerable to the importation of a
    number of threats from abroad.
        Is it your view that moving Customs into the new Department
    will improve performance, and do you think that Customs has
    adequate resources to inspect products coming into the United
    States? And, if not, what further recommendations would you
    make to help Customs execute their mission?
        Mr. Thomas. There is always a question of do you have
    adequate resources to do the job. The problem is that over the
    years in defining these various jobs, because they have been in
    separate areas, there is a significant degree of duplication.
        If I told you there were Customs officers in airplanes
    flying over Peru for interdiction of drugs, you would say, wait
    a minute, that is not Customs. But in fact there are folk who
    do that, so I do think there is this synergy that is very
    positive by pulling together in this new agency all of these
    border activities.
        As we said, 75 percent of the employees aren't directly
    involved in the narrow area that we are most concerned about.
    Our hope is that, as we preserve the hours and wages, title V
    aspects of these particular individuals and we get the computer
    up and running, we can be far more productive in what we have
    been doing, but that it will always be a fight, frankly, to get
    adequate revenue to do a good job at our ports.
        It is one of those areas I am sure the gentlewoman from
    Connecticut is familiar with, in which as long as nothing
    happens they are invisible, and the only time they really get
    publicized is when there is a mistake.
        It is hard to keep attention on how important that trade
    aspect is. For example, on September 11th, very few people
    realized the volume of, quote, unquote, just-in-time automobile
    parts that come from Canada to the United States until they
    shut the bridge down. And our concern is that those trade and
    revenue functions are maintained harmoniously with the
    security, and that if you place security over those, security
    would trump trade every time.
        We always need more resources. We are continuing to fight,
    but one of the ways you can get more with the same amount or
    slightly more is to integrate, be more productive. That is what
    we are really advocating. Move it over there, but give them the
    modern computerized capability of not slogging through
    paperwork but by structuring it in a way that we can use modern
    computers to do more.
        Ms. DeLauro. Let me just quote, if I might, Mr. Chairman,
    Protecting the American Homeland. This was a recent study that
    was done by the Brookings Institution.
        They are concerned with the high-risk containers and the
    Customs inability to screen more than 2 to 3 percent of large
    cargo containers, and they took the threats seriously enough to
    warn--and this is a quote--``a doomsday scenario attack on the
    maritime industry using nuclear devices concealed in a shipping
    container could cause damage and destruction costing the
    economy as much as $1 trillion.''
        Let me just get your, impressions of that and your response
    to that effort.
        Mr. Thomas. One of the things we can do by integrating
    certain portions of Customs with Homeland Security is to focus
    on security. Now here I have just--sounds like I am
    contradicting myself, so let me finish the statement.
        By focusing on security, you would be able to get money
    that you wouldn't be able to get if you were focusing on trade
    only. But what we have, for example, new devices coming along
    which allow us on these large cargo containers, trucks and
    others to take an x-ray--not just an old-fashioned x-ray but a
    very detailed x-ray in which, for example, some of the models
    that I saw showed that behind the cargo, when you opened the
    back of the doors, it looked like cargo. Up front there was a
    stolen car. But not only from this quick scanning could you see
    there was a car. You could see what was in the trunk of the
    car, which was additional stolen items that had been loaded
    conveniently in the car.
        The capability of screening these rapidly for security
    reasons allows us also to facilitate much more effectively the
    trade aspect. So, in that area, we want full utilization. But,
    as I said, 578 bills in this Congress alone dealing with
    tariffs, trade and that narrow group who have the expertise to
    assess, in our opinion, really does need to have that continued
    tie to Treasury, notwithstanding the delegation at the border.
        So those of us who have been fighting to get some money for
    Customs and others actually like the idea that we are now using
    security, because people will lay a dollar on the table to
    create an x-ray machine for security purposes they would never
    do for trade. So I do think there is some positive synergy by
    putting these together. We are only asking that you do it in a
    thoughtful and understanding way for that small group of
    specialists who do hang onto the trade and revenue function.
        Ms. DeLauro. Thank you very much, Mr. Chairman.
        Chairman Armey. Thank you.
        The chairman is taking great pleasure in realizing, having
    had an earlier Texas moment for the committee, we should now
    have a California moment by recognizing Ms. Pelosi.
        Ms. Pelosi. Thank you very much, Mr. Chairman.
        Thank you, Mr. Chairman, for being here and for your
    testimony.
        When the Secretary of the Treasury was here and we were
    talking about the cost of establishing this Department, he
    thought it didn't have to cost too much. He said, for example,
    in terms of the Customs, there is no reason I could not still
    be Custom's landlord and just change the sign on the door, or
    words to that effect. Do you agree with that? Do you think that
    that is sufficient in terms of bringing Customs under the
    jurisdiction of the committee?
        Mr. Thomas. I do, and let me say that I do enjoy this
    California moment. Given the makeup of the Select Committee, we
    can only do it very seldom, as opposed to how many times you
    can share a Texas moment.
        Ms. Pelosi. Oh. I am surrounded with Mr. DeLay, Mr. Frost,
    and then we have Mr. Hall.
        Mr. Thomas. Because we are only talking about roughly
    currently one-quarter of the personnel who are involved in what
    we believe to be these critical areas, we have asked that the
    pay and the work conditions that we have outlined under title V
    be carried with these folk. There is no reason to jerk them
    around on the pay scale structure or anything else.
        It is the core function of Customs, but because so much has
    been expanded, it in part even is ignored under the current
    structure.
        Another thing is our desire to have the Customs
    Commissioner approved by the Senate. That gives them some
    ability when there is this inevitable decision between security
    and trade to have standing to be able to make the argument that
    there should be doubt.
        Since they are already doing it anyway and we are moving
    all of those other functions over to Homeland Security and they
    would be assigned under the Homeland Security, all they are
    doing is changing dotted lines on a flowchart; and whatever
    that cost is, basically, what it is that we would be doing,
    because we do retain that authority that has been there since
    the beginning of the Republic in 1789.
        So I agree completely with the Secretary. There shouldn't
    be any real costs involved. There may be some physical moving
    costs, but those go on all the time.
        Ms. Pelosi. Since you brought up the subject, I want to
    pursue your distinction between the 25 percent of the Customs
    workers and others.
        When the Secretary was here, he couldn't stay very long, so
    we had to submit some questions for the record. One of the ones
    that I did was to say that you all, the Ways and Means
    Committee, reported out a bill that protected the pay and
    benefits of a select group of Customs employees--revenue
    experts, attorneys, et cetera. These employees represent about
    25 percent--I assume it is the 25 percent you are talking
    about--of Customs workers. But the select Customs employees'
    benefits still do not enjoy assurances that their title V
    rights and protections--the right to bargain collectively,
    whistle-blower, anti-discrimination, pensions--will continue.
    Can you clarify on that, Mr. Chairman? Are they included
    under--.
        Mr. Thomas. What we tried to do on the Ways and Means
    Committee was stay within the committee's jurisdiction. We
    found that we are very pleased with our jurisdiction, and if
    everybody stays within their jurisdiction, we will stay
    pleased. If we try to go outside our jurisdiction, others then
    will try to go outside their jurisdiction. And although we were
    borderline in getting outside of our jurisdiction on the pay
    conditions that we outlined that are under title V, had we gone
    on and added collective bargaining and all of those other
    areas, not to say that we didn't kind of by implication say
    that maybe they should be left alone, but we clearly would have
    been outside our jurisdiction, and we could have been called
    down by other committees quite properly.
        So what we tried to do was to convey the idea that the 25
    percent that we think ties to trade and revenue should be
    retained, and not just the personnel but the working conditions
    and the environment that they find themselves in today should
    be retained as well. But had we--repeat myself. Had we moved to
    the title V point by point, we clearly would have exceeded our
    jurisdiction.
        One of the things that I think gave us a 34 to 3 vote in
    the committee was basically that we decided to be very prudent,
    very cautious and deal with solving our problem and not
    throwing ourselves around and saying this is as good as
    anything and it should be moved over wholesale. If all the
    committees did that, what you would have would be a
    compartmentalized new Department that would never provide the
    kinds of seamless structure we are looking for. But we felt
    strongly enough in this particular area.
        Ms. Pelosi. Well, I appreciate your doing that in your
    bill; and your testimony here today then is to infer from your
    remarks, that the conditions and climate in which they worked
    would have included title V benefits.
        Mr. Thomas. Well, we included those that we thought were
    appropriate, and obviously the committee is going to make that
    decision. It seems to me if we want to keep these people
    preserved as much as possible that we should leave them as they
    are as much as possible.
        Ms. Pelosi. Further, the remaining 75 percent of Customs
    employees do not have any assurances that their pay benefits,
    rights and protections that they currently enjoy will remain
    with them. Can you speak to that point?
        Mr. Thomas. Had we done that, what we would have been
    saying was, okay, you can move Customs from Treasury to
    Homeland, but you can't rearrange, restructure or do anything
    with them. And that really then I think defeats the purpose of
    what we are trying to do, because there are many of those
    Customs officials--I don't know if you were here when I
    responded, that there are people who do jobs you would never
    guess they are in Customs.
        Ms. Pelosi. I was.
        Mr. Thomas. Based on the core of what we do and for us to
    say that those people can't reasonably be integrated into a new
    structure I believe, one, it is not true because I think they
    can, given the jobs they are doing; and then, two, if we said
    you can't touch them in any way on any reorganization, we are
    defeating the purpose of what we are trying to do.
        So to strengthen the committee's ability--and we had this
    discussion in committee, and I think the 34 to 3 vote--you need
    to know that nothing has ever passed unanimously out of Ways
    and Means. So I keep emphasizing 34 to 3, and people say, gee,
    there were three dissents. That is very, very good for us.
        The point that I am making is, to maximize the chance to do
    what we think was most essential, we had to narrow the scope of
    the kind of dictatorial legislation that we would send to this
    committee.
        Now, if you ask me, do I think they are hard-working people
    who ought to retain their current privileges? Yes, I think they
    should. But as you create this new structure, other people are
    coming from other areas of the government who have a lot of
    those title V or all of the title V protections as well, and
    you are going to get a restructuring for those employees. It
    isn't that we want to dump all that out. We just didn't think
    in dictating that we would have made a stronger message about
    how important we believe it is to keep those core functions
    together.
        Ms. Pelosi. I appreciate that. My time has expired. I will
    just say that we are talking here not about their job
    responsibilities but their pay, benefits, rights and
    protections and--.
        Mr. Thomas. I agree with you that all of that should be
    looked at, but were we to make those statements about those
    people we didn't include as the core, I think we would have
    been making a statement that would have been less defensible
    than the one I am making to you now.
        Ms. Pelosi. Thank you very much, Mr. Chairman.
        Thank you, Mr. Chairman.
        Chairman Armey. I thank the gentlelady.
        The Chair recognizes--I guess the Chair recognizes himself.
    The gentlelady from Ohio was here a minute ago.
        Mr. Chairman, it is my understanding that you and the
    Secretary of Treasury, working in consultation with the White
    House, have come to a fairly complete agreement on this and
    that that agreement was pretty much endorsed by your committee,
    as you said, with a near unanimous vote.
        Mr. Thomas. There are some areas where the administration
    would prefer that we approach our solution differently. We
    continue to work with them.
        For example, they don't believe that the Customs
    Commissioner should retain Senate approval. If they simply
    become a line officer, notwithstanding the tie to Treasury,
    they don't have the ability to point out the ability--the
    reasonableness of treating trade equally with security in
    particular areas. We think that is important.
        In other areas, for example, we currently have a
    requirement where changes are made that we retain oversight. If
    you are going to have the ability, you need oversight.
        They want to shrink the 180 days to 30 days and only deal
    with permanent changes. If in fact you have nonpermanent and
    permanent, you know as well as I do that there will be no
    permanent changes. There will only be nonpermanent changes. And
    if they shrink the review period to 30 days, all we are doing
    is being told what changes are being made.
        If you are serious in trying to retain this 200-plus-year
    relationship, you need to have the oversight capability. We
    want to retain the 180 days on not permanent and permanent so
    we can carry out our oversight function.
        Those are the kinds of discussions that we continue to
    have. It seems to me those are on the margin, and they become,
    to a certain extent, stylistic. If the core structure is agreed
    to, i.e., trade and revenue retaining its relationship with
    Treasury, we feel quite strongly on a bipartisan basis.
        Just let me say one area that also would be complicated if
    you didn't do that, it has to do with committee jurisdiction.
    It wasn't the reason we did it, but it could cause real
    problems if you simply moved it over. It is hard enough with
    one committee having the revenue jurisdiction. If you create
    two or three committees that now believe they have a pot that
    they can legislate in for revenue purposes, that is something
    that will be very hard to put back in the bottle.
        Chairman Armey. I appreciate the gentleman's point there
    and the tradition, the constitutional requirements regarding
    revenues raised--and origin of such measures in the House is
    something that this House protects, and this committee will
    honor that need to protect that constitutional requirement.
        Mr. Thomas. In the House, it is the Ways and Means
    Committee that has had it for 200-plus years, and we would just
    kind of like you to continue the comment of continuing the--.
        Chairman Armey. The--.
        Ms. Pelosi. Will the gentleman yield?
        Chairman Armey. Oh, sure, be happy to.
        Ms. Pelosi. I am reminded of a question. Chairman Tauzin
    and Ranking Member Dingell spent a good deal of their time on a
    regulatory provision that they recommended that they had in
    their committee report to us, and basically I think of it as
    sort of like Amendment 10 of the Constitution in terms of any
    regulatory functions that are not specifically moved with their
    encompassing duties to the Homeland Security Department are
    retained by the original Department. Is that something--.
        Mr. Thomas. I don't feel as strongly about that as perhaps
    they did. Because in our careful analysis of how we would deal
    with what were the core functions of Customs, we feel fairly
    comfortable that in the bipartisan analysis, the way we have
    structured it, we are content with moving everything else. If
    we retain the structure that we have asked for--now if you
    alter that structure, we would have to go back and reexamine,
    but we are looking only at the narrow technical trade and
    revenue tie, keep it to Treasury.
        Treasury can delegate to Homeland Security where there
    seems to be a potential conflict--the Customs Commissioner
    approved by the Senate--and that that tie is through Treasury
    to the Ways and Means Committee.
        The other 75 percent can very easily be merged with clearly
    their rights and responsibilities as employees under the
    Federal Government into a much better, seamless structure and
    not cost that much more, if any at all, in the benefits gained
    by doing that.
        Ms. Pelosi. I am sure the chairman will be pleased to know
    that they only made this recommendation for those agencies
    under the jurisdiction of their committee but said we might
    suggest it for others, but they were only speaking to those
    under their jurisdiction.
        Mr. Thomas. I appreciate the gentlewoman, but that means
    there is, without fully understanding it, some commitment of a
    vestigial tie that you are not quite clear of, that when you
    try and do something it comes up and bites you, because
    somebody says, remember the reserve clause, and that is, if we
    didn't mention it specifically, it is prohibited. I think
    oftentimes in these kinds of line-item relationships, we
    shouldn't use the constitutional model. That is, if it isn't
    mentioned, it isn't covered. I prefer the other one, that if
    you don't mention it, it is covered the other way, because
    otherwise you have an endless list that you have to make sure
    you find. So to make a choice, I prefer the Ways and Means
    model.
        Ms. Pelosi. That was not their analogy. That was mine. So
    don't let me mischaracterize the thrust of that. I will take
    that admonition as my own and not theirs.
        Thank you, Mr. Chairman.
        Thank you, Mr. Chairman.
        Chairman Armey. Mr. Chairman, we want to thank you again.
    Thank your committee for your good work. Outstanding as usual
    for your committee.
        And this committee is happy to dismiss the witness.
        Mr. Thomas. Thank you very much, and all we ask is that, if
    you look at what we offered, we believe it was appropriate,
    reasonably circumscribed and that it in fact does enhance the
    overall ability of the new agency to function without
    diminishing the historical and important ties that we have in
    this area.
        Chairman Armey. Thank you. Very well put.
        Mr. Thomas. Thank you very much.
        Chairman Armey. The Chair recognizes the Comptroller, Mr.
    David Walker, Comptroller General.
        Mr. Walker, without any objection by the committee, we
    would put your written statement in the record. We would invite
    you, Mr. Walker, to give your statement to the committee; and
    then we would proceed to questions under the 5-minute rule.
        I might just say, Mr. Walker, every good team knows that it
    saves its best hitter for cleanup; and we are here to welcome
    you here tonight as our cleanup hitter.

    STATEMENT OF THE HONORABLE DAVID WALKER, COMPTROLLER GENERAL OF
              THE UNITED STATES, GENERAL ACCOUNTING OFFICE

        Mr. Walker. Mr. Chairman, Ranking Member Pelosi, Mr.
    Portman and other members of the committee, thank you for the
    opportunity. I realize that I am the cleanup hitter, and I am
    probably standing between you and dinner, so I am going to try
    to summarize this in about 5 minutes and then open it up for Q
    and A, if that is all right.
        It really is a pleasure to be here to talk about this
    incredibly important topic at this time in our country. We at
    GAO believe that in creating any new department, special
    attention needs to be given to the strategy, criteria and
    priorities that are critical to this Nation's efforts to defend
    and protect against terrorism.
        As you know, Mr. Chairman, the President's national
    homeland security strategy does provide for a proposed
    definition of homeland security, which should help the
    government to more effectively administer, fund and coordinate
    activities both inside and outside the new Department and to
    assure that all parties are focused on the same goals and
    objectives. We believe it is critically important that the
    Congress and the administration, reach agreement on an
    appropriate definition for homeland security, because that is
    fundamental to everything else that will have to be done in
    this area.
        Congress may want to provide also a statutory basis for the
    Office of Homeland Security in order to effectively coordinate
    activities beyond the scope of the proposed Department of
    Homeland Security and to assure that reasonable congressional
    oversight can be conducted.
        Often, as it has in prior years when the government has
    consolidated a number of areas, it has taken years to
    ultimately achieve the objective. As you know, Mr. Chairman,
    when the Defense Department was created in 1947, the Congress
    subsequently in 1949, 1953, 1958 and 1986 made a number of
    adjustments to that statute in order to make necessary
    improvements over time.
        At the same point in time, we all recognize when you are
    creating a department of this size, you try to get it as good
    as you can coming out but it won't be perfect. You may have to
    make adjustments down the road, but it is going to be a major
    undertaking and it may take years to effectively achieve. In
    fact, over 50 years after the Department of Defense was
    created, DOD has 8 of 24 high-risk areas on GAO's high-risk
    list.
        So we believe it is important for you to try to balance,
    which I know you are trying to do, the urge to do it quickly
    and the related sense of urgency with the need to do it right.
        In that regard, GAO has developed a framework that
    hopefully will help this committee and the Congress to be able
    to make the decisions about what should be in, what should be
    out, but, more importantly, whatever you decide to be part of
    this new Department of Homeland Security, how to effectively
    implement it. The key to success will be the leadership and
    effective implementation.
        On Page 7 of my statement we outline the major criteria and
    I am not going to cover them here, Mr. Chairman. The ultimate
    effectiveness of the new Department will be dependent upon
    successfully addressing a range of key implementation and
    transition issues. Clearly, the right leadership will be key,
    and it is not only leadership from a policy standpoint. It is
    operational and management leadership as well. The
    transformation and transition challenges associated with this
    new Department will be huge, and we cannot ignore, the key
    management challenges.
        My experience in the public and private sector, Mr.
    Chairman, has shown, that to effectuate a major merger,
    transition and transformation will take, on average, to make it
    work and to get it to stick, 5 to 10 years. Therefore, we
    believe it is critically important that Congress consider
    creating a Deputy for Management, a chief operating officer who
    would have the primary responsibility for focusing on those
    critical transition and transformation efforts that are
    important irrespective of who the President is, irrespective of
    who the Secretary is, and irrespective of who the other key
    policymakers are.
        I note that the Government Reform Committee has suggested
    the elevation of what the administration proposed as an Under
    Secretary of Management to the Deputy Secretary for Management.
    In other words, there would be two deputies. We would
    respectfully suggest that, in addition to that, the Congress
    would want to consider making that position a term appointment
    for 5 to 7 years because of this need for continuity and
    consistency; and, in addition, you may want to consider
    subjecting that individual to a performance contract to try to
    achieve specific results. This is a concept that has been used
    in other countries such as New Zealand with some success, and
    we think it may have particular application here.
        We also suggest Congress may want to make sure that the new
    department is subject to the basic management reforms, such as
    the Government Performance and Results Act, and the CFO Act. I
    know, Mr. Chairman, you championed a number of these acts; and
    I think it is important that the new department be subject to
    these as a baseline of accountability and transparency for the
    Congress and for the American people.
        The President's proposal does include a set of human
    capital and management flexibilities for the new Department.
    GAO does believe that it is reasonable for certain flexibility
    to be granted to the new Department in such areas as human
    capital, provided that they are accompanied by adequate
    transparency and accountability mechanisms to safeguard against
    abuse.
        In that regard, Congress in some cases may not decide to
    provide all of the flexibilities that the administration seeks.
    We believe that some are appropriate, but if Congress decides
    not for some reason to provide some of these flexibilities,
    Congress may want to consider a mechanism by which it would
    give expedited consideration to flexibilities that the
    administration may seek in the future if you don't provide them
    up front.
        The administration has suggested that it needs a special
    grant of budget flexibility for the Department of Homeland
    Security. GAO believes the Congress should be careful to
    distinguish between those flexibilities that will solely
    enhance the operations of DHS versus those that might
    simultaneously raise other concerns, including concerns about
    constitutional responsibilities and prerogatives of the
    legislative branch.
        The creation of this Department will clearly be the largest
    reorganization that has been undertaken in over 50 years. A
    comprehensive transition plan is critical. We need a plan of
    action to be able to guide this. That is critically important;
    and we need to be able to use that as a basis for Congress to
    engage in periodic oversight, because Congress will have a
    critically important role to play in order to help to assure
    the success and the successful implementation of this effort.
        Clearly, there will be some increased cost that we believe
    will be incurred as a result of this transition and
    transformation. As Secretary O'Neil has testified, over time I
    think it is clearly reasonable to expect that there will be
    economies, efficiencies and effectiveness enhancements that
    will and should be achieved through this merger, through this
    consolidation, through this transformation. But, realistically,
    that is going to take time; and there will be incremental costs
    and risks that will be incurred in order to make this a
    reality.
        In summary, Mr. Chairman, as I discussed, this is a major
    undertaking of critical importance to our country. The single
    most important element for successful reorganization is the
    sustained commitment of top leaders at the top and to make sure
    that we focus on the people strategy. People are the key to
    successful transformation. We need to have modern, effective,
    and credible human capital strategies, reasonable flexibilities
    with the appropriate safeguards. That will make the difference
    between success and failure, because, in the end, it is
    implementation that counts.
        Thank you, Mr. Chairman.
        Chairman Armey. Thank you, Mr. Comptroller general.
        [The statement of Mr. Walker follows:]

    PREPARED STATEMENT OF HON. DAVID A. WALKER, COMPTROLLER GENERAL OF THE
                    UNITED STATES, GENERAL ACCOUNTING OFFICE

        Mr. Chairman and Members of the Select Committee:
        Thank you for the opportunity to appear before this Select
    Committee today to discuss one of the most important issues of our
    time, the reorganization of government agencies and the reorientation
    of their missions to improve our nation's ability to better protect our
    homeland. It is important to recognize that this transition to a more
    effective homeland security approach is part of a larger transformation
    effort that our government must make to address emerging security,
    economic, demographic, scientific, technological, fiscal and other
    challenges of the 21st century and to meet the expectations of the
    American people for timely, quality and cost-effective public services.
        In the months since the horrible events of September 11th, the
    President and the Congress have responded with important and aggressive
    actions to protect the nation, including creating an Office of Homeland
    Security (OHS), passing new laws such as the USA Patriot Act and an
    initial emergency supplemental spending bill, establishing a new agency
    to improve transportation security, and working with unprecedented
    collaboration with federal, state, and local governments, private
    sector entities, non-governmental organizations, and other countries to
    prevent future terrorist acts and to bring to justice those individuals
    responsible for such terrible acts.
        More recently, the Congress and the President have sought to remedy
    long-standing issues and concerns in the government's homeland security
    functions by proposing greater consolidation and coordination of
    various agencies and activities. On June 6th, the President announced a
    proposal to establish a Department of Homeland Security (DHS) and on
    June 18th he transmitted draft legislation to the Congress for its
    consideration. Both the House and the Senate have worked diligently on
    these issues and this Select Committee is now deliberating on a variety
    of proposals and issues raised by House committees and subcommittees.
        In my testimony today, I will focus on two major issues that we
    believe the Congress should consider in its deliberations on creating a
    new cabinet department principally dedicated to homeland security: (1)
    the national strategy and criteria needed to guide any reorganization
    of homeland security activities and to help evaluate which agencies and
    missions should be included in or left out of the new DHS; and (2) key
    issues related to the successful implementation of, and transition to,
    a new department, including leadership, cost and phasing, and other
    management challenges. Our testimony is based largely on our previous
    and ongoing work on national preparedness issues\1\, as well as a
    review of the proposed legislation.
    ---------------------------------------------------------------------------
        \1\ See ``Related GAO Products'' at the end of this testimony.
    ---------------------------------------------------------------------------
        In response to global challenges the government faces in the coming
    years, we have a unique opportunity to create an extremely effective
    and performance-based organization that can strengthen the nation's
    ability to protect its borders and citizens against terrorism. There is
    likely to be considerable benefit over time from restructuring some of
    the homeland security functions, including reducing risk and improving
    the economy, efficiency, and effectiveness of these consolidated
    agencies and programs. Sorting out those programs and agencies that
    would most benefit from consolidation versus those in which dual
    missions must be balanced in order to achieve a more effective fit in
    DHS is a difficult but critical task. Moreover, the magnitude of the
    challenges that the new department faces will clearly require
    substantial time and effort, and will take institutional continuity and
    additional resources to make it fully effective. Numerous complicated
    issues will need to be resolved in the short term, including a
    harmonization of the communication systems, information technology
    systems, human capital systems, the physical location of people and
    other assets, and many other factors. Implementation of the new
    department will be an extremely complex task and will ultimately take
    years to achieve. Given the magnitude of the endeavor, not everything
    can be achieved at the same time and a deliberate phasing of some
    operations will be necessary. As a result, it will be important for the
    new department to focus on: articulating a clear overarching mission
    and core values; establishing a short list of initial critical
    priorities; assuring effective communication and information systems;
    and developing an overall implementation plan for the new national
    strategy and related reorganization. Further, effective performance and
    risk management systems must be established, and work must be completed
    on threat and vulnerability assessments.
            homeland security strategy, criteria and reorganization
        Congress, in its deliberations on creating a new department, should
    pay special attention to strategy, criteria and priorities for
    reorganization critical to the nation's efforts to protect the nation
    from terrorism.
    Homeland Security Strategy
        In recent testimony before the Congress, GAO urged that the
    proposal for establishing DHS should not be considered a substitute
    for, nor should it supplant, the timely issuance of a national homeland
    security strategy.\2\ Based on our prior work, GAO believes that the
    consolidation of some homeland security functions makes sense and will,
    if properly organized and implemented, over time lead to more
    efficient, effective, and coordinated programs; better intelligence
    sharing; and a more robust protection of our people, borders, and
    critical infrastructure. At the same time, the proposed cabinet
    department, even with its multiple missions, will still be just one of
    many players with important roles and responsibilities for ensuring
    homeland security. At the federal level, homeland security missions
    will require the involvement of the Central Intelligence Agency (CIA),
    Federal Bureau of Investigation (FBI), the U.S. Marshals Service, the
    Department of Defense (DOD), and a myriad of other agencies. In
    addition, state and local governments, including law enforcement and
    first responder personnel, and the private sector also have critical
    roles to play.
    ---------------------------------------------------------------------------
        \2\ U.S. General Accounting Office, Homeland Security: Proposal for
    Cabinet Agency Has Merit, But Implementation Will Be Pivotal to
    Success, GAO-02-886T (Washington, D.C.: June 25, 2002).
    ---------------------------------------------------------------------------
        If anything, the multiplicity of players only reinforces the
    recommendations that GAO has made in the past regarding the urgent need
    for a comprehensive threat, risk, and vulnerability assessment and a
    national homeland security strategy that can provide direction and
    utility at all levels of government and across all sectors of the
    country.\3\
    ---------------------------------------------------------------------------
        \3\ U.S. General Accounting Office, Combating Terrorism: Selected
    Challenges and Recommendations, GAO-01-822 (Washington, D.C.:
    Septemeber 20, 2001).
    ---------------------------------------------------------------------------
        We are pleased that the Administration has just released the
    national homeland security strategy and GAO stands ready to work with
    the Congress and the Administration to ensure that a sound and strong
    strategy can be effectively implemented to protect the country against
    terrorism. Although GAO has not had time to thoroughly analyze the
    strategy yet, we previously suggested that certain key elements be
    incorporated in the homeland security strategy.\4\ We have indicated
    that a national homeland security strategy should: 1) clearly define
    and establish the need for homeland security and its operational
    components, 2) clarify the appropriate roles and responsibilities of
    federal, state, and local entities and build a framework for
    partnerships for coordination, communication, and collaboration, and 3)
    create specific expectations for performance and accountability,
    including establishing goals and performance indicators. In addition,
    GAO has said the national strategy development and implementation
    should include 1) a regular update of a national-level threat and risk
    assessment effort, 2) formulate realistic budget and resource plans to
    eliminate gaps, avoid duplicate effort, avoid ``hitchhiker'' spending,
    and protect against federal funds being used to substitute for funding
    that would have occurred anyway, 3) coordinate the strategy for
    combating terrorism with efforts to prevent, detect, and respond to
    computer-based attacks, 4) coordinate agency implementation by
    reviewing agency and interagency programs to accomplish the national
    strategy, and 5) carefully choose the most appropriate policy tools of
    government to best implement the national strategy and achieve national
    goals.
    ---------------------------------------------------------------------------
        \4\ GAO-02-886T
    ---------------------------------------------------------------------------
        Based on our preliminary review, some of these elements have been
    addressed in the national strategy. In the past, the absence of a
    broad-based homeland security definition or the ad hoc creation of a
    definition by individual government departments suggest that a
    consistent and transparent definition be applied to help create a more
    integrated approach and unified purpose. The President's national
    homeland security strategy does provide for a proposed definition of
    homeland security, which should help the government to more effectively
    administer, fund and coordinate activities both inside and outside a
    new department and to ensure that all parties are focused on the same
    goals and objectives, results and outcomes. It is critically important
    that the Congress and the Administration agree on a definition since it
    serves as the foundation for a number of key organizational,
    operational and funding decisions. Finally, I would also note that, in
    the past, we have suggested that a central focal point such as OHS be
    established statutorily in order to coordinate and oversee homeland
    security policy within a national framework.\5\ Today, we re-emphasize
    the need for OHS to be established statutorily in order to effectively
    coordinate activities beyond the scope of the proposed DHS and to
    assure reasonable congressional oversight.
    ---------------------------------------------------------------------------
        \5\ U.S. General Accounting Office, Homeland Security:
    Responsibility and Accountability For Achieving National Goals, GAO-02-
    627T (Washington, D.C.: April 11, 2002).
    ---------------------------------------------------------------------------
    Need for Criteria and Reorganization
        Often it has taken years for the consolidated functions in new
    departments to effectively build on their combined strengths, and it is
    not uncommon for these structures to remain as management challenges
    for decades. It is instructive to note that the 1947 legislation
    creating DOD was further changed by the Congress in 1949, 1953, 1958,
    and 1986. Despite these and other changes made by DOD, GAO has
    consistently reported over the years that the department--more than 50
    years after the reorganization--continues to face a number of serious
    management challenges. In fact, DOD has 8 of 23 high-risk areas based
    on GAO's latest list.\6\ This note of caution is not intended to
    dissuade the Congress from seeking logical and important consolidations
    in government agencies and programs in order to improve homeland
    security missions. Rather, it is meant to suggest that reorganizations
    of government agencies frequently encounter start-up problems and
    unanticipated consequences that result from the consolidations are
    unlikely to fully overcome obstacles and challenges, and may require
    additional modifications in the future to effectively achieve our
    collective goals for defending the country against terrorism.\7\
    ---------------------------------------------------------------------------
        \6\ U.S. General Accounting Office, High-Risk Series: An Update,
    GAO-01-263 (Washington, D.C.: January 2001).
        \7\ U.S. General Accounting Office, Implementation: The Missing
    Link In Planning Reorganizations, GGD-81-57 (Washington, D.C.: March
    20, 1981).
    ---------------------------------------------------------------------------
        The Congress faces a challenging and complex job in its
    consideration of DHS. On the one hand, there exists a certain urgency
    to move rapidly in order to remedy known problems relating to
    intelligence and information sharing and leveraging like activities
    that have in the past and even today prevent the United States from
    exercising as strong a homeland defense as emerging and potential
    threats warrant. Simultaneously, that same urgency of purpose would
    suggest that the Congress be extremely careful and deliberate in how it
    creates a new department for defending the country against terrorism.
    The urge to ``do it quickly'' must be balanced by an equal need to ``do
    it right.'' This is necessary to ensure a consensus on identified
    problems and needs, and to be sure that the solutions our government
    legislates and implements can effectively remedy the problems we face
    in a timely manner. It is clear that fixing the wrong problems, or even
    worse, fixing the right problems poorly, could cause more harm than
    good in our efforts to defend our country against terrorism.
        GAO has previously suggested that reorganizations should emphasize
    an integrated approach; that reorganization plans should be designed to
    achieve specific, identifiable goals; and that careful attention to
    fundamental public sector management practices and principles, such as
    strong financial, technology, and human capital management, are
    critical to the successful implementation of government
    reorganizations.\8\ Similarly, GAO has also suggested that
    reorganizations may be warranted based on the significance of the
    problems requiring resolution, as well as the extent and level of
    coordination and interaction necessary with other entities in order to
    resolve problems or achieve overall objectives.\9\
    ---------------------------------------------------------------------------
        \8\ U.S. General Accounting Office, Government Reorganization:
    Issues and Principles, GAO/T-GGD/AIMD-95-166 (Washington, D.C.: May 17,
    1995).
        \9\ U.S. General Accounting Office, Environmental Protection:
    Observations on Elevating the Environmental Protection Agency to
    Cabinet Status, GAO-02-552T (Washington, D.C.: March 21, 2002).
    ---------------------------------------------------------------------------
        GAO, based on its own work as well as a review of other applicable
    studies of approaches to the organization and structure of entities,
    has concluded that the Congress should consider utilizing specific
    criteria as a guide to creating and implementing the new department.
    Specifically, GAO has developed a framework that will help the Congress
    and the Administration create and implement a strong and effective new
    cabinet department by establishing criteria to be considered for
    constructing the department itself, determining which agencies should
    be included and excluded, and leveraging numerous key management and
    policy elements that, after completion of the revised organizational
    structure, will be critical to the department's success. Figure 1
    depicts the proposed framework:

            [GRAPHIC] [TIFF OMITTED] T3173.008

        With respect to criteria that the Congress should consider for
    constructing the department itself, the following questions about the
    overall purpose and structure of the organization should be evaluated:
         Definition: Is there a clear and consistently applied
    definition of homeland security that will be used as a basis for
    organizing and managing the new department?
         Statutory Basis: Are the authorities of the new department
    clear and complete in how they articulate roles and responsibilities
    and do they sufficiently describe the department's relationship with
    other parties?
         Clear Mission: What will the primary missions of the new
    DHS be and how will it define success?
         Performance-based Organization: Does the new department
    have the structure (e.g., Chief Operating Officer (COO), etc.) and
    statutory authorities (e.g., human capital, sourcing) necessary to meet
    performance expectations, be held accountable for results, and leverage
    effective management approaches for achieving its mission on a national
    basis?
        Congress should also consider several very specific criteria in its
    evaluation of whether individual agencies or programs should be
    included or excluded from the proposed department. Those criteria
    include the following:
         Mission Relevancy: Is homeland security a major part of
    the agency or program mission? Is it the primary mission of the agency
    or program?
         Similar Goals and Objectives: Does the agency or program
    being considered for the new department share primary goals and
    objectives with the other agencies or programs being consolidated?
         Leverage Effectiveness: Does the agency or program being
    considered for the new department create synergy and help to leverage
    the effectiveness of other agencies and programs or the new department
    as a whole? In other words, is the whole greater than the sum of the
    parts?
         Gains Through Consolidation: Does the agency or program
    being considered for the new department improve the efficiency and
    effectiveness of homeland security missions through eliminating
    duplications and overlaps, closing gaps, and aligning or merging common
    roles and responsibilities?
         Integrated Information Sharing/Coordination: Does the
    agency or program being considered for the new department contribute to
    or leverage the ability of the new department to enhance the sharing of
    critical information or otherwise improve the coordination of missions
    and activities related to homeland security?
         Compatible Cultures: Can the organizational culture of the
    agency or program being considered for the new department effectively
    meld with the other entities that will be consolidated? Field
    structures and approaches to achieving missions vary considerably
    between agencies.
         Impact on Excluded Agencies: What is the impact on
    departments losing components to DHS? What is the impact on agencies
    with homeland security missions left out of DHS?
        In addition to the above criteria that the Congress should consider
    when evaluating what to include and exclude from the proposed DHS,
    there are certain critical success factors the new department should
    emphasize in its initial implementation phase. Over the years, GAO has
    made observations and recommendations about many of these success
    factors, based on effective management of people, technology,
    financial, and other issues, especially in its biannual Performance and
    Accountability Series on major government departments.\10\ These
    factors include the following:
    ---------------------------------------------------------------------------
        \10\ U.S. General Accounting Office, Major Management Challenges
    and Program Risks: A Governmentwide Perspective, GAO-01-241
    (Washington, D.C.: January 2001).
    ---------------------------------------------------------------------------
         Strategic Planning: Leading results-oriented organizations
    focus on the process of strategic planning that includes involvement of
    stakeholders, assessment of internal and external environments, and an
    alignment of activities, core processes and resources to support
    mission-related outcomes.
         Organizational Alignment: The organization of the new
    department should be aligned to be consistent with the goals and
    objectives established in the strategic plan.
         Communication: Effective communication strategies are key
    to any major consolidation or transformation effort.
         Building Partnerships: One of the key challenges of this
    new department will be the development and maintenance of homeland
    security partners at all levels of the government and the private
    sector, both in the United States and overseas.
         Performance Management: An effective performance
    management system fosters institutional, unit and individual
    accountability.
         Human Capital Strategy: The new department must ensure
    that its homeland security missions are not adversely impacted by the
    government's pending human capital crisis, and that it can recruit,
    retain, and reward a talented and motivated workforce, which has
    required core competencies, to achieve its mission and objectives. The
    people factor is a critical element in any major consolidation or
    transformation.
         Information Management and Technology: The new department
    should leverage state-of-the art enabling technology to enhance its
    ability to transform capabilities and capacities to share and act upon
    timely, quality information about terrorist threats.
         Knowledge Management: The new department must ensure it
    makes maximum use of the collective body of knowledge that will be
    brought together in the consolidation.
         Financial Management: The new department has a stewardship
    obligation to prevent fraud, waste and abuse; to use tax dollars
    appropriately; and to ensure financial accountability to the President,
    the Congress, and the American people.
         Acquisition Management: Anticipated as one of the largest
    federal departments, the proposed DHS will potentially have some of the
    most extensive acquisition government needs. Early attention to strong
    systems and controls for acquisition and related business processes
    will be critical both to ensuring success and maintaining integrity and
    accountability.
         Risk Management: The new department must be able to
    maintain and enhance current states of homeland security readiness
    while transitioning and transforming itself into a more effective and
    efficient structural unit. The proposed DHS will also need to
    immediately improve the government's overall ability to perform risk
    management activities that can help to prevent, defend against, and
    respond to terrorist acts.
         Change Management: Assembling a new organization out of
    separate pieces and reorienting all of its processes and assets to
    deliver the desired results while managing related risks will take an
    organized, systematic approach to change. The new department will
    require both an executive and operational capability to encourage and
    manage change.
    Homeland Security Reorganization and Missions
        The President's proposal for the new department indicates that DHS,
    in addition to its homeland security responsibilities, will also be
    responsible for carrying out all other functions of the agencies and
    programs that are transferred to it. In fact, quite a number of the
    agencies proposed to be transferred to DHS have multiple functions.
    Agencies or programs that balance multiple missions present the
    Congress with significant issues that must be evaluated in order to
    determine how best to achieve all of the goals and objectives for which
    the entity was created. While we have not found any missions that would
    appear to be in fundamental conflict with the department's primary
    mission of homeland security, as presented in the President's proposal,
    the Congress will need to consider whether many of the non-homeland
    security missions of those agencies transferred to DHS will receive
    adequate funding, attention, visibility, and support when subsumed into
    a department that will be under tremendous pressure to succeed in its
    primary mission. As important and vital as the homeland security
    mission is to our nation's future, the other non-homeland security
    missions transferred to DHS for the most part are not small or trivial
    responsibilities. Rather, they represent extremely important functions
    executed by the federal government that, absent sufficient attention,
    could have serious implications for their effective delivery and
    consequences for sectors of our economy, health and safety, research
    programs and other significant government functions. Some of these
    responsibilities include:
         maritime safety and drug interdiction by the Coast Guard,
         collection of commercial tariffs by the Customs Service,
         public health research by the Department of Health and
    Human Services,
         advanced energy and environmental research by the Lawrence
    Livermore and Environmental Measurements labs,
         responding to floods and other natural disasters by the
    Federal Emergency Management Agency (FEMA), and
         authority over processing visas by the State Department's
    consular officers.
        These examples reveal that many non-homeland security missions
    could be integrated into a cabinet department overwhelmingly dedicated
    to protecting the nation from terrorism. Congress may wish to consider
    whether the new department, as proposed, will dedicate sufficient
    management capacity and accountability to ensure the execution of non-
    homeland security missions, as well as consider potential alternatives
    to the current framework for handling these important functions. One
    alternative might be to create a special accountability track that
    ensures that non-homeland security functions are well supported and
    executed in DHS, including milestones for monitoring performance.
    Conversely, the Congress might separate out some of these functions. In
    doing so, the Congress will still need to hold agencies accountable for
    the homeland security missions that are not incorporated in the new
    department. In making these decisions, Congress should consider the
    criteria presented earlier in my testimony, especially those related to
    agency transitions, such as mission relevancy, similar goals and
    objectives, leveraging effectiveness, and creating gains through
    consolidation. There are clearly advantages and disadvantages to all of
    the decisions about placing agencies or programs with multiple missions
    in DHS and Congress must carefully weigh numerous important factors
    related to performance and accountability in crafting the legislation.
        For example, we have indicated in recent testimony that DHS could
    serve to improve biomedical research and development coordination
    because of the current fragmented state of disparate activities. Yet,
    we remain concerned that the proposed transfer of control and priority
    setting for research from the organizations where the research would be
    conducted could be disruptive to dual-purpose programs, which have
    important synergies for public health programs that need to be
    maintained.\11\ Similarly, we have testified that the President's
    proposal, in tasking the new department with developing national policy
    for and coordinating the federal government's research and development
    efforts for responding to chemical, biological, radiological, and
    nuclear weapons threats, also transfers some of the civilian research
    programs of the Department of Energy.\12\ Again, there may be
    implications for research synergy.
    ---------------------------------------------------------------------------
        \11\ U.S. General Accounting Office, Homeland Security: New
    Department Could Improve Biomedical R&D Coordination but May Disrupt
    Dual-Purpose Efforts, GAO-02-924T (Washington, D.C.: July 9, 2002).
        \12\ U.S. General Accounting Office, Homeland Security: Title III
    of the Homeland Security Act of 2002, GAO-02-927T (Washington, D.C.:
    July 9, 2002).
    ---------------------------------------------------------------------------
        Congress may also craft compromises that strengthen homeland
    security while reducing concerns of program disruption or unanticipated
    consequences. One such example is seen in recent deliberations about
    the appropriate location for visa processing. Congressional debate has
    focused on two of our criteria, mission relevancy and gains through
    consolidation. The visa function attempts to facilitate legitimate
    travel while at the same time denying entry to the United States of
    certain individuals, including potential terrorists. Some have argued
    that the mission of the visa function is primarily related to homeland
    security and that therefore the function should be located within the
    proposed department. Others have advocated that the Department of State
    (State) should retain the visa function because they believe that there
    would be no gains from consolidation. They point out that State has an
    established field structure and that it may be impractical to create a
    similar field structure in the proposed department. The compromise
    position of several committees has been to transfer responsibility for
    visa policy to the proposed department, while retaining the cadre of
    overseas visa officers within State.
        As part of these deliberations, the Congress should consider not
    only the mission and role that agencies fulfill today, but the mission
    and role that they should fulfill in the coming years. Thus, while it
    may be accurate that large portions of the missions engaged in by the
    Coast Guard or FEMA today do not relate primarily to homeland security,
    it is wholly appropriate for Congress to determine whether the future
    missions of such agencies should focus principally on homeland
    security. Such decisions, of course, would require the Congress to
    determine the best approach for carrying out a range of the
    government's missions and operations, in order to see that non-homeland
    security activities of these departments are still achieved. In fact,
    given the key trends identified in GAO's recent strategic plan for
    supporting the Congress and our long range fiscal challenges, it is
    appropriate to ask three key questions: (1) what should the federal
    government do in the 21st century? (2) how should the federal
    government do business in the 21st century? and (3) who should do the
    federal government's business in the 21st century? These questions are
    relevant for DHS and every other federal agency and activity.
        As the proposal to create DHS demonstrates, the terrorist events of
    last fall have provided an impetus for the government to look at the
    larger picture of how it provides homeland security and how it can best
    accomplish associated missions. Yet, even for those agencies that are
    not being integrated into DHS, there remains a very real need and
    possibly a unique opportunity to rethink approaches and priorities to
    enable them to better target their resources to address our most urgent
    needs. In some cases, the new emphasis on homeland security has
    prompted attention to long-standing problems that have suddenly become
    more pressing. For example, we've mentioned in previous testimony the
    overlapping and duplicative food safety programs in the federal
    government.\13\ While such overlap and duplication has been responsible
    for poor coordination and inefficient allocation of resources, these
    issues assume a new, and potentially more foreboding, meaning after
    September 11th given the threat from bio-terrorism. In another example,
    we have recommended combining the Department of Justice's Office For
    Domestic Preparedness with FEMA to improve coordination.\14\ A
    consolidated approach to many of these issues can facilitate a
    concerted and effective response to new threats and mission
    performance.
    ---------------------------------------------------------------------------
        \13\ U.S. General Accounting Office, Food Safety and Security:
    Fundamental Changes Needed to Ensure Safe Food, GAO-02-47T (Washington,
    D.C.: October 10, 2001).
        \14\ GAO-01-822.
    ---------------------------------------------------------------------------
        Similarly, we have conducted a number of reviews of State's visa
    function over the years and, based on our work, we believe that there
    are a number of areas in which the visa function can be strengthened.
    For example, the U.S. government needs to ensure that there are
    sufficient staff at overseas posts with the right training and
    experience to make good decisions about who should and who should not
    receive a visa. In addition, we are currently looking at ways that the
    visa function can be strengthened as a screen against potential
    terrorists and we expect to make recommendations later this fiscal
    year. These recommendations will apply regardless of decisions about
    the respective roles of the State Department and the proposed
    Department of Homeland Security regarding visa functions.
             homeland security implementation and transition issues
        The ultimate effectiveness of the new department will be dependent
    on successfully addressing implementation and transition issues.
    Picking the right leadership for these critical positions in the new
    department will be crucial to its success. If you don't have the right
    leadership team in key policy, operational and management positions,
    the department will be at risk. In addition providing the new
    department with some reasoned and reasonable, human capital, management
    and budget flexibilities combined with appropriate safeguards to
    protect the Congress' constitutional authorities and to prevent abuse
    can also help contribute to a successful transition. Both the Congress
    and the Executive Branch have critical roles to play in achieving
    desired outcomes for the American people.
    Key Success Factors, Leadership and Accountability
        Among the most important elements for effectively implementing the
    new cabinet department will be close adherence to the key success
    factors. Strategic planning, building partnerships, human capital
    strategies, financial management and other critical factors will make
    the difference between a department that can quickly rise to the
    challenge of its mission and one that might otherwise become mired in
    major problems and obstacles that hamper efforts to protect the nation
    from terrorism.
        The quality and continuity of the new department's leadership is
    critical to building and sustaining the long-term effectiveness of DHS
    and homeland security goals and objectives. The experiences of
    organizations that have undertaken transformational change efforts
    along the lines that will be necessary for the new department to be
    fully effective suggest that this process can take up to 5 to 10 years
    to provide meaningful and sustainable results. Given the scope and
    nature of challenges facing the new department, the critical question
    is how can we ensure that the essential transformation and management
    issues receive the sustained, top-level attention that they require.
    The nation can ill-afford to have the secretary or deputy secretary
    being side-tracked by administrative and operational details--the
    mission of the department requires their undivided attention.
        As a result, it is important for the Congress to give serious
    consideration to creating a deputy secretary for management/chief
    operating officer (COO) position within the department to provide the
    sustained management attention essential for addressing key
    infrastructure and stewardship issues while helping to facilitate the
    transition and transformation process. Recent legislative language
    adopted by the House Committee on Government Reform suggests elevating
    the undersecretary for management to a deputy secretary, equivalent to
    the deputy position provided for in the Administration's proposal. We
    believe that is an important first step to ensuring that transformation
    and management issues receive the top-level attention they require.
    Raising the organizational profile of transformation and management
    issues is important to ensure that the individual has the authority
    needed to successfully lead department-wide initiatives. We are not
    convinced that an under secretary for management, on par with the other
    under secretaries, would necessarily have sufficient authority.
        To provide further leadership and accountability for management,
    Congress may wish to consider several points:
         First, Congress should consider making the deputy
    secretary for management/COO a term appointment of up to 7 years,
    subject to Senate confirmation. A term appointment would provide
    continuity that spans the tenure of the political leadership and
    thereby help to ensure that long-term stewardship issues are addressed
    and change management initiatives are successfully completed.
         Second, to further clarify accountability, the COO should
    be subject to a clearly defined, results-oriented performance contract
    with appropriate incentive, reward and accountability mechanisms. The
    COO would be selected without regard to political affiliation based on
    (1) demonstrated leadership skills in managing large and complex
    organizations, and (2) experience achieving results in connection with
    ``good government'' responsibilities and initiatives. Requiring that
    both the performance contract and the subsequent performance evaluation
    be made available to the Congress would provide additional
    accountability and transparency.
        In addition to providing top-level leadership and accountability,
    the department will need to develop employee performance management
    systems that can serve as a key tool for aligning institutional, unit,
    and employee performance; achieving results; accelerating change;
    managing the organization on a day-to-day basis; and facilitating
    communication throughout the year so that discussions about individual
    and organizational performance are integrated and ongoing.\15\ A
    cascading set of results-oriented performance agreements is one
    mechanism in a performance management system that creates a ``line of
    sight'' showing how individual employees can contribute to overall
    organizational goals.\16\
    ---------------------------------------------------------------------------
        \15\ U.S. General Accounting Office, Human Capital: Key Principles
    From Nine Private Sector Organizations, GAO/GGD-00-28 (Washington,
    D.C.: Jan. 31, 2000).
        \16\ U.S. General Accounting Office, Managing for Results: Emerging
    Benefits From Selected Agencies' Use of Performance Agreements, GAO-01-
    115 (Washington, D.C.: Oct. 30, 2000).
    ---------------------------------------------------------------------------
        Further accountability can be achieved by ensuring that all
    relevant management laws are applied to the new department (e.g,
    Government Performance and Results Act (GPRA), Chief Financial Officers
    Act, Clinger-Cohen Act, etc.). These laws provide a foundation for the
    management structure of the new department and a basis for ensuring
    appropriate transparency and accountability.
    Request for Increased Human Capital and Management Flexibilities
        The President's proposal includes a set of human capital and
    management flexibilities for the new department. GAO believes that it
    is reasonable for certain flexibilities to be granted to the new
    department in such areas as human capital, provided that they are
    accompanied by adequate transparency and accountability safeguards
    designed to prevent abuse. Human capital and management flexibility
    will help the new department to reorganize, realign and transform
    itself to achieve its important missions. Appropriate safeguards can
    help to prevent abuse of federal employees and provide adequate
    monitoring mechanisms to gauge performance. For instance, the Congress
    may wish to provide the new department with ``early out'' and ``buy
    out'' authority in order to help quickly realign the component entities
    and provide for future flexibility. DHS might consider new scientific
    and technical personnel tracks to encourage recruitment, retention and
    rewarding of individuals with critical knowledge, or Congress may wish
    to provide the new department with some limited term appointment
    authority. These and other suggested flexibilities for DHS should be
    viewed in the context of how similar flexibilities have been exercised
    by other agencies with similar missions, such as the Transportation
    Security Administration (TSA), the DOD, the FBI, and the CIA. Congress
    should also note that, as GAO has indicated in the past, agencies are
    already accorded in law significant flexibilities, especially with
    respect to human capital issues, but for a variety of reasons they do
    not always take advantage of them.\17\ DHS should use these existing
    flexibilities and be given others in areas where Congress has done so
    with other agencies (e.g., TSA, Internal Revenue Service, DOD).
    ---------------------------------------------------------------------------
        \17\ U.S. General Accounting Office, Managing For Results: Using
    Strategic Human Capital Management to Drive Transformational Change,
    GAO-02-940T (Washington, D.C.: July 15, 2002).
    ---------------------------------------------------------------------------
        In requesting human capital flexibilities, questions have been
    raised about whether they would result in eroding merit principles,
    veterans' preferences, whistleblower protections, collective bargaining
    and other basic civil service provisions. Recent testimony to the
    Congress by Governor Ridge has clarified the Administration's
    commitment to these provisions.\18\ The final legislation should
    clearly reflect the applicability of these tenets to the new
    department.
    ---------------------------------------------------------------------------
        \18\ Statement of Governor Tom Ridge on the Department of Homeland
    Security to the House Select Committee on Homeland Security, July 15,
    2002.
    ---------------------------------------------------------------------------
        Other flexibilities, such as ones for acquisitions and contracting,
    are included in the President's proposal. Careful analysis is needed to
    determine the need for additional flexibilities. Congress may want to
    consider not expressly providing certain flexibilities in the initial
    legislation, but rather providing a mechanism for expedited
    consideration of flexibilities should the new department request them
    in the future. For example, the Congress might wish to agree on rules
    specifying procedures for consideration of proposed changes, time
    limits on debate, or requirements that any amendments to future
    legislation be strictly related to DHS. This would not be the blanket
    grant of authority envisioned in the original Freedom to Manage
    proposal, but it would permit both the executive branch and the
    Congress to feel confident that proposed changes would receive timely
    consideration.
    Request for Increased Budget Flexibility
        The Administration has suggested that it needs a special grant of
    budget flexibility for the Department of Homeland Security. GAO
    believes that Congress should be careful to distinguish between those
    flexibilities that will solely enhance the operations of DHS and those
    that might simultaneously raise other concerns, including concerns
    about the constitutional responsibilities and prerogatives of the
    legislative branch. For instance, the President's proposal permits the
    Secretary to allocate funds as he sees fit, without regard to the
    original purpose of the appropriations. Moreover, there must be a
    system to identify homeland security funds across the wide range of
    existing budget accounts and program activities. This is necessary not
    only for the budget resolution and appropriations process, but also for
    tracking budget execution and for accountability to Congress. The
    Congress, through its appropriations subcommittees, has proven quite
    adept at creating and granting the kind of flexibility it sees as
    appropriate to any given agency. Congress gives agencies flexibility
    over the timing of spending by varying the period of fund availability:
    agencies may receive one-year, multi-year and no-year [permanent]
    funds. Congress has granted agencies varying degrees of transfer or
    reprogramming authority. These flexibilities are generally provided as
    part of the appropriations process and consider the balance between
    accountability and flexibility to ensure that Congress is a partner in
    the spending of taxpayer funds.
        Over the longer term the creation of the new Department may also be
    an opportune time to review the account structure of the Department's
    component entities. Should the orientation of budget accounts be
    shifted toward the strategic goals defined in plans? Such a
    reorientation might facilitate the process of linking resource
    allocation to results consistent with GPRA. Efforts designed to
    rationalize the number of budget accounts within the new department can
    serve to provide flexibility while ensuring accountability.
    DHS Transition Issues
        The creation of the Department of Homeland Security will be one of
    the largest reorganizations ever undertaken and the difficulty of this
    task should not be underestimated. Under the President's proposal, 22
    existing agencies and programs and 170,000 people would be integrated
    into the new department in order to strengthen the country's defense
    against terrorism. With an estimated budget authority of the component
    parts of the new department of $37.45 billion, successfully
    transitioning the government in an endeavor of this scale will take
    considerable time and money.\19\ Careful and thorough planning will be
    critical to the successful creation of the new department. While
    national needs suggest a rapid reorganization of homeland security
    functions, the transition of agencies and programs into the new
    department is likely to take time to achieve. At the same time, the
    need for speed to get the new department up and running must be
    balanced with the need to maintain readiness for new and existing
    threats during the transition period. Moreover, the organizational
    transition of the various components will simply be the starting
    point--as implementation challenges beyond the first year should be
    expected in building a fully integrated department. As I stated
    earlier, it could take 5 to 10 years to fully implement this
    reorganization in an effective and sustainable manner.
    ---------------------------------------------------------------------------
        \19\ The President's proposal entitled The Department of Homeland
    Security, President George W. Bush, June 2002.
    ---------------------------------------------------------------------------
        A comprehensive transition plan needs to be developed. The
    transition plan should establish a time table for the orderly migration
    of each component agency or program to the new department, identify key
    objectives to be achieved during the first year following the transfer,
    and describe the strategy for achieving an orderly transition and
    sustaining mission performance. More detailed implementation plans also
    will be necessary to address business system, processes, and resource
    issues. The President has taken an important first step by establishing
    a transition office within the Office of Management and Budget.
        Congress has an important oversight role to play in helping to
    ensure the effective implementation of the new department. In addition
    to the transition plans, Congress should consider requiring DHS to
    submit regular progress reports on implementation from the department
    and should also conduct periodic oversight hearings to assess progress
    and performance. In this regard, GAO stands ready to assist the
    Congress in conducting its oversight role.
        Increased cost must also be considered with regard to the
    President's proposal. It is likely that over time consolidation of
    functions within DHS may reduce costs below what otherwise would have
    been the case if these functions continued to operate separately. This,
    however, is unlikely to happen quickly. Moreover, we should expect that
    any reorganization would incur start up costs as well as require some
    funding for redundant activities to maintain continuity of effort
    during the transition period. The Congressional Budget Office (CBO) has
    estimated that the costs of implementing the new department would be
    about $3 billion over the next five years with an annual estimate of
    $150 million in FY2003 and $225 million thereafter. However, there are
    other transition costs that CBO acknowledges are not included in their
    estimates beyond the cost to hire, house, and equip key personnel. The
    CBO estimate assumes continuation of the existing multi-pay and
    retirement systems--however unlikely-- and does not address the
    potential need to cross-train existing personnel. Although the purchase
    of new computer equipment, supplies and compatible information
    management systems are included, no estimates are provided for the cost
    to correct existing computer system deficiencies nor the resources to
    support some system redundancy for a period of time. Finally, CBO did
    not attempt to price the relocation of personnel to a central location.
        The Administration has argued that CBO's estimates are inflated. In
    fact, CBO estimates that 1 percent of the total annual spending will be
    for administrative costs, but that a proportionate share of the costs
    to currently administer these agencies will be transferred. Depending
    on the decision to co-locate personnel and the flexibilities ultimately
    provided to the Administration in legislation--in particular a broad
    grant of transfer authority and the ability to staff through non-
    reimbursable agreements with other agencies-- these estimates may well
    change. More important than a precise cost estimate of the transition,
    however, is the recognition that there will be short-term transition
    costs and that these costs need to be made transparent. To fully
    recognize the transition costs, in fact, Congress should consider
    appropriating for them separately.
        In summary, I have discussed the reorganization of homeland
    security functions and some critical factors for success. However, the
    single most important element of a successful reorganization is the
    sustained commitment of top leaders to modern, effective and credible
    human capital strategies and to setting clear goals and appropriate
    accountability mechanisms. Top leadership involvement and clear lines
    of accountability for making management improvements are critical to
    overcoming an organization's natural resistance to change, marshalling
    the resources needed to improve management, and building and
    maintaining organization-wide commitment to new ways of doing business.
    Organizational cultures will not be transformed, and new visions and
    ways of doing business will not take root without strong and sustained
    leadership. Strong and visionary leadership will be vital to creating a
    unified, focused organization, as opposed to a group of separate units
    under a single roof. Modern human capital strategies, including
    implementing a credible, effective and equitable performance management
    system that links institutional, unit, team and individual performance
    measurement and reward systems to the department's strategic plan, core
    values and desired outcomes will be critical to success.
        Mr. Chairman, this concludes my written testimony. I would be
    pleased to respond to any questions that you or members of the Select
    Committee may have at this time.
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        Chairman Armey. Let me just say, the quality of your
    presentation is an object lesson in the points you have just
    made.
        I want to compliment the GAO on the outstanding work that
    they have done. Now we have had the pleasure of working
    together on so many occasions, and I have always found the
    quality of the work good. I now see the reason why, and I want
    to thank you for that.
        Mr. Walker. Thank you, Mr. Chairman. We have outstanding
    people, and a lot of them are with me today. Thank you.
        Chairman Armey. But at this point I would like to recognize
    the gentlelady from Ohio.
        Ms. Pryce. Thank you very much, Mr. Chairman; and thank
    you, Mr. Walker. Your testimony is very enlightening and very
    helpful as well.
        The GAO has said in its reports all along that utilization
    of grants and tax incentives can help strengthen this whole
    homeland security endeavor by encouraging certain types of
    behavior and activities. That has already intrigued me, and I
    wonder if you can give us some examples of how that might work.
    What types of things were they referring to?
        Mr. Walker. Well, there are a number of areas where
    potentially they could have application. Obviously, to the
    extent you are dealing with homeland security, it is clearly
    not just a Federal responsibility. It is a national endeavor,
    and therefore you need to engage the cooperation of State and
    local government agencies. There would be opportunities and
    appropriate mechanisms to consider grants in that regard.
        Over 70 percent of the critical infrastructure in this
    Nation is owned by the private sector. Obviously, we are not
    going to typically give grants to the private sector, but you
    could provide certain types of incentives potentially for them
    to be able to take certain actions, in addition to possibly
    mandating that they have to take certain types of actions that
    are in the best interest of the public.
        So those would be a couple of examples that I would give.
        Ms. Pryce. Thank you very much. I will yield back.
        Chairman Armey. Thank you.
        Let me recognize the gentleman from New Jersey.
        Mr. Menendez. Well, thank you, Mr. Chairman; and thank you,
    Mr. Walker. I have been reading throughout the day your
    testimony. So I was not here for your oral presentation. I have
    been reading this. Let me ask you some questions.
        The comments you make on page 2 of your written submission
    are I think of great importance, where you said, toward the end
    of that page, it will be important for the new Department to
    focus on: articulating a clear overarching mission and core
    values; establishing a short list of initial critical
    priorities; assuring effective communication and information
    systems; developing an overall implementation plan for the new
    national strategy.
        In that regard, I had hoped that the President's strategy
    document would have been available earlier in this process.
    Because it would seem to me to be the process by which we
    dictate how do we respond to that strategy which is, in
    essence, what this committee is doing in part through the
    creation of this Department.
        Have you had an opportunity to look at that strategy
    document and reflect upon it as it relates to your observations
    here how the Department will have to focus? Do you think that
    it provides the right risk assessment and then response?
        Mr. Walker. We are still in the process of reviewing the
    strategy, as you might imagine, as it was just issued
    yesterday. I agree ideally it would have been nice to have that
    first and then the proposal afterwards.
        I will note and my testimony contains some information that
    we had made a number of recommendations to the White House on
    elements that should be considered as part of a strategy. We
    are in the process of looking to determine whether and to what
    extent they adopted those recommendations. Based upon our
    preliminary review, it appears as if they did adopt a number of
    them, but, again, we are in the early stages; and I will be
    happy when we are completed with that review to provide it to
    you and this committee.
        Mr. Menendez. Have you, during the course of the committees
    of jurisdictions' work, had your people review what they have
    done? Do you have any sense of that at all?
        Mr. Walker. Review--.
        Mr. Menendez. The committee reviews that made amendments to
    the President's proposal, have you had an opportunity to look
    at those?
        Mr. Walker. I am familiar with some of them, and we have
    reviewed some of them, yes.
        Mr. Menendez. Do you have any conclusions as it relates to
    any of those amendments made by those committees?
        Mr. Walker. As you might imagine, Mr. Menendez, I have no
    hesitation to be able to be specific and to make
    recommendations when you are dealing with operational issues,
    but many of these recommendations deal with inherently policy
    issues that I think only elected officials can--address.
        Mr. Menendez. Well, let me deal with one of the operational
    issues, then; and that is, how do you guarantee in a newly
    created department that has agencies transferred to it with
    multiple functions, some of which are not security related,
    that those other functions will be preserved and enhanced?
        Mr. Walker. I think there are several ways that the
    Congress historically has looked at that. One of the ways that
    the Congress has looked at it is to try to make sure that, in
    critically important areas, that you might have a presidential
    appointee with Senate confirmation responsible for the
    function, who you can call up to testify before the House and
    the Senate.
        In addition to that, from time to time there can be things
    done through the appropriations process whereby there is some
    kind of guidance that is given to make sure that at least a
    certain amount of funds are spent for certain types of
    activities.
        So there are ways the Congress historically has been able
    to do that.
        I also believe that it is can be done through making this
    new Department subject to the Government Performance and
    Results Act, through making sure that it has a strategic plan,
    that it has performance goals, that it is reporting annually on
    its results that these reports are is made available to the
    Congress and the American people. It is something that is
    important to make sure they are doing what they should be
    doing.
        I would strongly recommend that you consider using GAO to
    periodically review the implementation efforts and to assess
    whether or not this is having an adverse effect on any
    particular missions that the Congress is concerned about.
        So I think there are a lot of ways where you can--.
        Mr. Menendez. So you believe that we can have some
    mechanisms--do you believe that some mechanisms should be
    established in the legislation to try to ensure that those
    functions that are nonsecurity continue to be preserved?
        Mr. Walker. I think one of the ways to do that is to make
    sure that they are subject to the basic management provisions
    such as the Government Performance and Results Act. I think
    another way to do that is to make sure that GAO conducts a
    periodic review and reports back to the Congress with regard to
    this implementation plan and particular areas where Congress
    may have a concern to make sure that there is not an
    inappropriate diminution of emphasis or activities. I think
    those types of approaches might help--.
        Mr. Menendez. Lastly, in your--at the same time, on Page 3,
    you say, at the same time that this Department is created, even
    with its multiple missions, it will still be just one of many
    players with important roles. In that context, do you not
    believe it is important to have a White House structure that is
    still coordinating all of these functions? And if so, do you
    have any opinion on how the nature of that structure should
    take place?
        Mr. Walker. As you probably recall, the GAO recommended the
    establishment of the Office of Homeland Security and, in fact,
    consideration of a Department of Homeland Security before
    September 11th of last year; and the President acted on it very
    quickly in the case of the Office of Homeland Security.
    Clearly, you are going to need to have something there. There
    are over a hundred departments and agencies involved in, quote,
    unquote, homeland security. The President is proposing to
    consolidate about 22. That leaves a number which will require,
    coordination and planning.
        There is going to be a need and the President recognizes
    there is going to be a need for an overall coordinator. We
    think the Congress needs to consider whether or not that
    overall coordinator is provided on a statutory basis in order
    to make sure that you have the ability to conduct reasonable
    oversight in areas that aren't going to be included within the
    Department of Homeland Security.
        Mr. Menendez. Thank you, Mr. Chairman.
        Chairman Armey. The Chair would like to advise the
    committee and our witness that I anticipate being called to the
    floor for final votes of the evening within the next 5 minutes.
    So, that being the case, we would have approximately 15 to 20
    minutes to complete our work, if we were to complete and not
    have to return. So I would just advise you and hope that we can
    meet that deadline so we could all go to dinner after these
    votes.
        In that regard, I believe, Mr. Portman, the Chair
    recognizes you.
        Mr. Portman. I think Nancy and I can do this in 20 minutes.
        I did wish we had that much time, because this is a very
    important part of the overall project here, and that is making
    sure that we have the performance measurements in place and the
    21st century kind of approach to government ought to include
    that. You have been great in working with us on the Internal
    Revenue Service and on other management challenges that we have
    had, Mr. Walker, and your team at GAO; and we appreciate that.
        You are going to be needed in terms of follow-up. No matter
    what happens out of this process in Congress, there will need
    to be oversight by Congress; and your reports and, frankly, the
    pressure that GAO applies by going through the analysis helps
    to keep it on track.
        I do have a couple of questions for you. One is on page 10
    of your written statement. You talk about the people factor
    being so critical, and you restated that in your oral testimony
    too, being sure that it can recruit, retrain and reward a
    talented and motivated work force which has the core
    confidences required to achieve the mission. I think that is
    our biggest single challenge, and this is why I believe
    strongly in some flexibility.
        Can you talk a little more about what you mean by
    flexibility? Are you talking about pay banding so that you
    could have some sort of performance pay or are you talking
    about specific performance bonuses that are tied to a
    performance measurement of some kind? We obviously need to
    provide again in this new modern agency some kind of
    flexibility to be able to attract and reattract and retain the
    best people.
        Mr. Walker. Several ideas, Mr. Portman. First, I know the
    Congress has already provided certain flexibility to various
    departments and agencies in the past, whether it be the
    Internal Revenue Service, whether it be the new Transportation
    Security Administration or whether it be the GAO, and so this
    is not something that the Congress has not done before. Areas
    that you may want to consider would be areas such as the
    ability to hire a certain number of people for term
    appointments without having to go through the competitive
    process, again term appointments, a limited number, having a
    specialist and scientific career track, having broad banding
    authority, not only for classification but pay. Having
    realignment authority, having the ability to offer voluntary
    early outs and voluntary buyouts side in order to be able to
    realign the work force rather than to downsize the work force.
    Moving towards a structure whereby individuals are getting
    compensated more based upon their skills, knowledge and
    performance rather than the passage of time and rate of
    inflation.
        These would be a few examples that I would give.
        Mr. Portman. I think it is very important and we have
    talked a lot with Kay James, the Office of Personal Management
    Director who was here yesterday, about some of these issues and
    the administration proposed initially some very general
    language, basically asking us to allow them to put together a
    personnel policy which would provide for some of that
    flexibility, and I think we have gotten to the point where
    probably that language is too general and we need to specify
    further and if you could work with us in the next 24 hours to
    help with that it would be helpful because I think some members
    on both sides of the aisle are interested in being sure that
    this is again a 21st century approach to personnel management,
    but that we retain some of the basic civil service protections.
    I think, I know we can do both. I know we must if we are going
    to achieve the results we all want.
        Why is it not subject to GPRA anyway? You mentioned it
    should be subject to Government Performance Results Act. I
    assume that GPRA would cover--.
        Mr. Walker. I think it needs to be express. It wasn't
    express in the President's proposal. I am not aware he was
    trying to circumvent that. It just wasn't express. But clearly
    this is going to be one of the top five agencies in government.
    I believe third in number of personnel and fourth or fifth in
    budget dollars.
        Chairman Armey. If I might interject, it is difficult for
    me to imagine that the chairman of this committee would forget
    that.
        Mr. Walker. I think it would be.
        Mr. Portman. I think it would be covered anyway because the
    chairman will be sure it is covered. As for a second Deputy
    Secretary, I understand what you are getting at. We need to
    focus on management and some of these, too, but I have a
    concern because I think it is to have that the Deputy
    Secretary, provided, in the proposal and I think the Committee
    on Government Reform also suggested a Deputy Secretary should
    have that function; in other words, rather than having a
    Secretary and a Deputy Secretary who functions more on the
    program side and not on management, it seems to me that deputy
    from management might be left out of some of the crucial
    decisions and rather you want it to be aligned with the
    leadership of the department. How do you feel about that?
        Mr. Walker. I think this is critically important. I have
    run three agencies in the Federal Government, two in the
    executive branch, one in the legislative branch, and in every
    agency I have run I have found that having a triumvirate at the
    top was critically important and I got it done on my own. It
    wasn't a statutory requirement. I got it done on my own and
    basically what I found was you have the agency head, which is
    the CEO and therefore is focused more externally, more on
    policy, more on trying to do what the President wants, and
    obviously they have their own agenda consistent with the
    President's. You have the Deputy Secretary, the traditional
    Deputy Secretary who tends to be more policy oriented, who
    tends to serve more as the alter ego of the Secretary, who
    tends to be focused appropriately on getting the President's
    agenda adopted, typically more policy and operational mission
    oriented, and getting the Secretary's agenda adopted. The
    problem is that many of the Deputy Secretaries don't
    necessarily have a management background, they are not
    necessarily familiar with a lot of these important issues that
    are the key between success and failure.
        The other thing is that when you are dealing with strategic
    planning, financial management, information technology, human
    capital strategy, knowledge management, change management,
    those are inherently good government issues, they are not
    partisan issues, they take years to get it right and they are
    critical parts of a department's basic infrastructure that you
    have to get done. My experience has been those don't get
    handled adequately, and the result of that is it inures to the
    detriment of achieving success and inures to the detriment of
    every administration, Republican or Democrat, because of
    failure to adequately address those issues.
        Mr. Portman. My time has expired and I appreciate the
    indulgence, Mr. Chairman. I would hope that the Deputy would
    focus on that. This is a relatively less political agency and
    if we could in our legislation, I think, express that, I think
    it would be appropriate just to say that we would hope the
    Deputy would be someone who would focus on change management
    and information technology and managing the operation, and with
    that I yield back.
        Mr. Walker. One last thing, I would just respectfully
    suggest that given the huge undertaking this is going to take,
    you are going to need a deputy for policy/operations and a
    deputy for management. I really believe that. This is a huge
    undertaking, and I believe if you don't have both you will
    significantly increase the risk.
        Chairman Armey. Thank you for that point. The gentlelady
    from California.
        Ms. Pelosi. Thank you very much, Mr. Chairman, I have many
    questions for you, Mr. Walker, so we are going to whip right
    through them. I am referencing many of the things you have said
    in your presentation, and I agree with the chairman, you
    managed your presentation very well and it was very clear and
    it raised some questions.
        You talked in here--you spoke about the importance of
    congressional oversight to this new department and all and I
    have found, and maybe it is from my perspective as an
    appropriator, that one of the most eloquent forms of oversight
    is from the standpoint of the purse strings. One of the
    concerns we have here, expressed very well by the chairman and
    the ranking member of the Appropriations Committee this
    morning, was that there was an abdication of the congressional
    purse string weighing in in this legislation that the President
    presented to the point of upsetting the balance of power and
    separation, checks and balances and separation of power that
    our Founding Fathers intended. That it was indeed, to quote the
    chairman of the committee--I don't know if I have it right
    here, but he said if we were to diminish, he talked about two
    things, if we were to take away our constitutional balance we
    are almost as bad as those who would take them away by
    terrorism. That was Chairman Young, a slight paraphrase but
    almost an exact quote. Could you comment on that briefly?
        Mr. Walker. First, make it very clear I am in the
    legislative branch so I come down on Congress' side on
    separation of powers. Secondly, I do think that you need to
    make sure you don't do anything that undercuts your
    constitutional prerogatives. I think there are opportunities to
    work through the appropriations process, and Congress has done
    that, to determine what is the nature of the accounts that you
    ought to have, what are the number of accounts you ought to
    have, to what extent you want to provide no year money, to what
    extent might you want to consider other things. That has been
    done and I think some flexibility ought to be provided, but I
    think you ought to be careful not to undercut your
    constitutional prerogatives.
        Ms. Pelosi. I appreciate that and that was similar to what
    the distinguished chairman had documented for us earlier today.
    I was concerned about some of the references you made about
    some of the laws that would apply here that our distinguished
    chairman had participated in supporting.
        For example, Clinger-Cohen Act, the President's bill
    creates a CIO but does not apply the Clinger-Cohen Act, so none
    of the information management requirements of that law such as
    assuring the security of information system would apply.
        Similarly, the President's bill creates a Chief Financial
    Officer but does not apply the provisions of the Chief
    Financial Officer Act. As a result, the CFO would not be Senate
    confirmed and none of the financial management requirements of
    that law such as annual independent audits would apply to the
    new department. Section 904 of the committee print applies the
    CFO act. That is a recommendation. Can you--.
        Mr. Walker. I would hope that was an unintended omission
    because I think it is important that these major acts do apply
    to this department. It will be the third largest department in
    terms of personnel and top five in terms of budget dollars.
        Ms. Pelosi. Well, I hope that you are right and that they
    are unintended omissions that our distinguished chairman would
    intentionally include back into the legislation. I appreciate
    your discussion of how the increased cost for this was going to
    evolve in and your admonition against moving too quickly rather
    than doing it right, and we hope we are not acting with haste
    as we try to act with speed because this is an emergency. We
    have to reduce risk. It is not like any other consolidation of
    government before in the 5 to 10 years--is almost scary to hear
    you say that but you are the voice of reality and I appreciate
    what you are saying. But for those reasons I would have liked
    to have seen a much leaner--my colleagues are tired of hearing
    me say this--a very strong Office in the White House of
    Homeland Security with statutory authority rather than just by
    executive order, a much leaner operation here because it's
    going to take 5 to 10 years to implement our goal to reduce
    risk, to protect the American people best is not served by
    something that is effective 10 years down the road. So leaner
    to start and then let it grow if we decide that it needs to
    grow. It will take its own direction.
        Could you comment on that?
        Mr. Walker. I think you need to pursue a phased
    implementation. You need to decide which entities need to be in
    this. The separate issue is, is it all or part of them? In what
    order do you end up implementing them? So when I talk about the
    5 to 10 years, what I mean is by the time you get all the parts
    together, by the time you end up harmonizing the many different
    systems that you have to harmonize, the financial management
    systems, the human capital systems, the information technology
    systems, the communication systems, and the performance
    management systems, by the time you design it, implement it, to
    get it to the point where it will stick beyond whoever the
    current leader is, that takes 5 to 10 years. It is hard work.
        Ms. Pelosi. If the chairman would indulge me, therefore I
    am hoping that the distinguished chairman will include in his
    mark a strong Office of Homeland Security in the White House,
    which I think is necessary anyway, but certainly to tide us
    over, an office that oversees all of the agencies of
    government, not only those addressed in this department, and to
    give it statutory basis rather than just its existence
    springing from an executive order.
        Thank you, Mr. Chairman. Thank you, Mr. Walker.
        Chairman Armey. Thank you, Mr. Walker, and thank the
    committee. If I may make a couple of observations. First of
    all, I want to thank the committee and the committee's staff
    for a very long, hard day. I want to thank the witness and the
    witnesses' staff for your patience and again, as I have come to
    expect, the thoroughness and quality of your work and your
    presentation was outstanding.
        If I might make the observation, we will work and produce a
    chairman's mark on this legislation. It will be distributed to
    the members of this committee by, as early as possible, perhaps
    I can say with some certainty no later than the beginning of
    business tomorrow morning, earlier if possible, and we will of
    course be marking that on Friday. Now, between Friday and next
    Wednesday we will be going to the floor.
        Ms. Pelosi. Chairman, may I seek clarification? Could you
    repeat that timetable because I think it is a little different
    from my understanding? Perhaps I misunderstood.
        Chairman Armey. What I have been saying is as soon as
    possible at the conclusion of these hearings, but certainly by
    8 o'clock in the morning.
        Ms. Pelosi. So there is no need to wait around this evening
    for a mark.
        Chairman Armey. I would have your staff check with my
    staff. The best way for us is to continue to stay in touch.
        Ms. Pelosi. Then when we would meet again?
        Chairman Armey. We want to get it in your hands as quickly
    as we can.
        Ms. Pelosi. Would we just meet 9:30 the next morning or--.
        Chairman Armey. We might get a chance to talk together
    tomorrow evening.
        This of course is committee business, Mr. Walker. You don't
    necessarily need to be here, but Mr. Walker--.
        Mr. Walker. I don't need to make a point. I would just say
    that I am more than willing to provide whatever assistance GAO
    canthat could be of help to this committee.
        Chairman Armey. If I may complete my thought, Mr. Walker,
    clearly by Wednesday of next week insofar as we as the
    committee find errors or omissions, things that we cannot
    correct in our own markup on Friday, we would have an
    opportunity, I would presume, under the rule for a manager's
    amendment and I should just like to advise you that this
    committee would probably feel very comforted to know that we
    could draw on you for any assistance we might have, especially
    with respect to some of these very important aspects such as
    the performance results statement and things of this nature for
    technical drafting assistance.
        Ms. Pelosi. I just want to thank you, Mr. Chairman. We look
    forward to receiving the mark and getting down to work and--.
        Mr. Menendez. If I may, I thought--.
        Chairman Armey. If I may, we can certainly give Mr. Walker
    his leave. But go ahead.
        Mr. Menendez. Inquiry as to the process for Friday. The
    chairman has said that at some point early tomorrow he will
    have this mark. What is the chairman's intention as to process
    on Friday in terms of the markup itself? Are amendments going
    to be in order by title? Is the bill going to be open as a
    whole? Are we going to proceed under the 5-minute rule for
    amendments that are offered? I am just trying to get a sense
    of--.
        Chairman Armey. I appreciate that. Let me just say it is
    the chairman's intention to follow such procedure that will be
    as inviting and as inclusive as is possible for members from
    both sides of the aisle. We are caught between the constraint
    of not wanting to start putting final details and completeness
    to the mark until we have had the benefit of today's hearings,
    which I think were well worth our time with respect to all the
    hearings of the day, and the desire to have it in our hands as
    members of committee in time to massage it with respect to our
    desire to amend it. So the chairman will be in no hurry on
    Friday to rush us through our day's work, will invite full
    participation. I believe I would intend to follow the 5-minute
    rule as closely as we can so that we have the opportunity to
    fully discuss amendments that would be presented and to see to
    it that every member has a chance to have every opportunity for
    amendment.
        Mr. Menendez. I thank the chairman for his response, and I
    would just hope tomorrow in addition to--and I know this is the
    chairman's intent to proceed in such a fashion as he has
    proceeded in these hearings, and I want to commend him in that
    regard, that whatever process you finalize in your mind the
    sooner we know so that we can be prepared. If you are going to
    do it by title I want to be here--I intend to be here for all
    of it, but I want to make sure I have a title here that is open
    to amendment and if it is going to be open as a whole that is
    fine, but whatever your process you decide we would like to
    know it as soon as possible.
        Chairman Armey. Let me say to the gentleman your point is
    well taken. I will be sorting through that tonight. My guiding
    interest in determining the process that I will recommend we
    follow would be the two points, as inviting and as inclusive as
    possible. We will all be wanting Friday to finish our work with
    whatever dispatch we can, but we will not sacrifice
    thoroughness and respect for one another to that end.
        Ms. Pelosi. If the chairman would yield, I believe there is
    a good deal of interest on the part of the chairs and the
    ranking members, as they suggested today, that if the mark did
    not contain what they had that they sort of have at it again to
    see if they could have their moment. Obviously the amendment
    process through the committee is the way to do that, but I
    think that as soon as we get that mark tomorrow morning, 8
    o'clock, there is going to be a great deal of interest in it
    beyond the nine of us.
        Chairman Armey. Again, it is my desire to get it to you as
    soon as I can, but I don't want to over promise.
        The gentlelady from Connecticut.
        Ms. DeLauro. I have one question. May I ask one question?
        Chairman Armey. Of the witness.
        Ms. DeLauro. Of the witness.
        Chairman Armey. The witness has made himself available--.
        Ms. DeLauro. I will be brief and I apologize to my--.
        Chairman Armey. And I promised to unchain, and then I
    promise to unchain you from your desk again. Go ahead, the
    gentlelady from Connecticut.
        Ms. DeLauro. This is about the transfer of the CDC's public
    health activities. Your testimony at GAO where there was
    concern expressed that the transferring of these programs, and
    I will quote, ``had the potential to disrupt some programs that
    are critical to basic public health responsibilities.'' let me
    just say that your concern is shared at the local level.
        Dr. Bob England, Director of the Milford, Connecticut
    Public Health Department, he wrote to me saying, quote, ``The
    system needed to identify a bioterrorist attack is the very,
    very same one already employed by the public health system.''.
        My question, couldn't we get the job done simply by
    strengthening the tools we already have in place in our public
    health system and by ensuring coordination between DHS, the
    Department of Homeland Security, and CDC ?
        Mr. Walker. I assume you are referring to a report or
    testimony?
        Ms. DeLauro. Right, the GAO report on this issue and on
    health and about--.
        Mr. Walker. I will be honest to tell you I am not
    personally familiar with that report, but I will tell you this:
    Whatever we said in that report you can take it to the bank, we
    stand behind it.
        Ms. DeLauro. This is, by the way, and quite honestly if
    there is somebody--.
        Mr. Walker. It is the testimony from Jan Heinrich, and one
    of the things we talked about was our concern about a potential
    loss of synergy that could be associated with splitting these
    entities. Now, there are ways to address that, some that we
    have laid out, but we do think it needs to be addressed in
    order to make sure that it does not have an unintended
    consequence, which I think is what Mr. Menendez was talking
    about when he was talking about certain functions, how are they
    going to be handled if they are transferred out.
        Ms. DeLauro. If there is any further information on that or
    Jan Heinrich has any information, obviously immediately we need
    to move on it. That would be helpful.
        Thank you, Mr. Chairman. Thank you, my colleagues.
        Chairman Armey. Thank you again, Mr. Walker, and your staff
    for their patience. Thank you, ladies and gentlemen. This
    committee is now adjourned.
        [The following material was submitted for the record:]

      STATEMENT OF THE HONORABLE MICHAEL G. OXLEY, CHAIRMAN, COMMITTEE ON
                               FINANCIAL SERVICES

        Chairman Armey, Ranking Member Pelosi and Members of the
    Select Committee on Homeland Security, thank you for the
    opportunity to testify before this panel on the President's
    Homeland Security proposal. I am a co-sponsor of this
    legislation and believe that it is critical that Congress work
    quickly to ensure that the President has the tools necessary to
    protect our citizens from the evil acts perpetrated by
    terrorist who hate our free and open society. While the
    Financial Services Committee waived its referral of H.R. 5005,
    I believe that it is important to highlight for the Members the
    critical role this Committee has played and will continue to
    play in the war against terrorism.
        Within one month of the terrorist attacks in New York,
    Washington and Pennsylvania, the Financial Services Committee
    reported three bills critical to the protection of our homeland
    and the stability of our capital markets. The Financial Anti-
    Terrorism Act of 2001, H.R. 3004, the Terrorist Risk Protection
    Act, H.R. 3210, and the Emergency Securities Response Act, H.R.
    3060 were the first comprehensive legislative actions taken by
    this Congress to combat the threat of terrorism.
        The Financial Anti-Terrorism Act provided banks, businesses
    and federal law enforcement agencies with sweeping powers to
    detect and disrupt terrorist funding and combat financial
    crimes. This provision was eventually incorporated into the USA
    PATRIOT Act and was signed into law by President Bush in
    October of 2001. The Committee plans to closely monitor the
    enforcement of this legislation in hearings over the next
    several months.
        The Committee also crafted and approved the Terrorist Risk
    Protection Act, H.R. 3210, in mid October of last year. This
    measure, which was passed by the House, provides a federal
    backstop in order to guarantee that commercial terrorism
    insurance is available to individuals and businesses in the
    event of a terrorist attack, while at the same time ensuring
    that the U.S. taxpayers are not left with the bill. It is
    critical that insurance against terrorist attacks be available
    in order to maintain economic stability and promote
    development. I hope that the House and Senate will resolve
    their differences over this legislation soon so that we can
    protect the property of millions of Americans from and future
    catastrophic losses.
        The Emergency Securities Response Act, the Committee
    empowered the Securities and Exchange Commission to extend some
    emergency orders for up to 90 days and widened the scope of
    emergency relief to all federal securities laws. This provision
    granted the markets the ability to recover quickly from the
    attacks on the U.S. financial infrastructure.
        The President's proposal to create a Department of Homeland
    Security is a logical and necessary one. As you know, there are
    over 100 different federal agencies which are charged with
    protection of our borders. It makes sense to consolidate them
    into one agency in order to eliminate duplication of efforts
    and conserve resources.
        The Financial Services Committee has jurisdiction over
    three programs within the Federal Emergency Management Agency
    that would become the responsibility of the new department.
    These programs are: the National Flood Insurance Programs, the
    Defense Production Act and the Emergency Food and Shelter
    Program. FEMA's mission is to prevent, prepare for, respond to,
    and recover from disasters of all types. The Committee believes
    that FEMA's expertise in consequence management is critical to
    the function of the proposed Office of Homeland Security and
    that all of these programs should remain within FEMA at this
    time.
        The Federal Insurance and Mitigation Administration within
    FEMA manages the National Flood Insurance Program and has
    expertise in risk assessment, mitigation and insurance. Efforts
    such as resident education and flood mapping enable FEMA to
    reach out to residents in flood prone regions and protect
    against preventable losses. These services work in conjunction
    with the National Flood Insurance Program and have proven
    successful in building relationships and resources in areas
    where floods are a threat to property and lives. In order to
    ensure smooth operation of the National Flood Insurance
    Program, the Committee believes that it should remain within
    FEMA at this time.
        The Defense Production Act was established to ensure that
    the United States has the ability to mobilize industrial and
    civilian resources when there is a threat to national security.
    The DPA allows the government to employ economic tools to
    provide uninterrupted supplies of industrial resources in times
    of military crisis and civil emergency. These functions are
    critical to maintaining civil emergency preparedness and
    military readiness for the protection of the United States. The
    DPA will be a valuable resource within the new department of
    Homeland Security.
        It can be argued that FEMA's Emergency Food and Shelter
    Program has little to do with the protection of the United
    States from terrorist activities. However, it is a critical in
    supplying food and shelter to needy people in emergency
    situations. In order to ensure that this program continues to
    be effective and functional, the Committee recommends that it
    remain within FEMA at this time. In the future this program
    could be moved to another federal agency in order to ensure
    effective allocation of Federal resources to aid those in need.
    The Committee may examine the viability of such a move in the
    future.
        Finally, I commend the President for his proposal to move
    the United States Secret Service to the new Department and
    maintain it as a ``distinct entity'' outside the four major
    jurisdictional cylinders established under the new Secretary.
    The long dual-role history of the Service--investigative and
    protective--combined with its more recently developed expertise
    in preventing and investigating cyber crimes and its core
    mission of protecting the financial system of the United
    States, make the Secret Service uniquely suited to draw from
    and augment the work of the other component agencies of the new
    Department.
        I would like to thank the Members of the Committee for the
    opportunity to testify today. The creation of this new
    department will be reflected in the history of our nation as
    occurring at a time when Americans joined together in a unified
    fight against terrorism and against those who seek to suppress
    freedom. While the Financial Services Committee waives its
    referral of H.R. 5005, its Members stand ready to assist in the
    structuring of the envisioned Department of Homeland Security
    if such assistance is requested. Thank you very much.

        [Whereupon, at 8:38 p.m., the committee was adjourned.]

              APPENDIX: RECOMMENDATIONS OF THE STANDING COMMITTEES

                                  ----------

                            COMMITTEE ON AGRICULTURE

                              House of Representatives,
                                      Committee on Agriculture,
                                         Washington, DC, July 11, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Mr. Chairman: I am transmitting herewith the results
    of the Committee on Agriculutre's consideration recommendations
    with respect to H.R. 5005, the ``Homeland Security Act of
    2002''.
        The instructions to this Committee contained in H.Res. 449,
    as passed by the House of Representatives on June 19, 2002
    related to changes in laws within the Committee on
    Agriculture's jurisdiction that dealt largely with moving the
    Animal Plant and Health Inspection Service (APHIS) to the new
    Department of Homeland Security.
        The enclosed recommendations adopted by this Committee in a
    business meeting on this date, in the presence of a majority
    quorum, comply with those instructions. Also submitted for
    inclusion are additional views by Members of this Committee.
            Sincerely,
                                         Larry Combest,
                                                      Chairman.
                                    ------

              [Committee on Agriculture Recommendations Regarding

                                   H.R. 5005]

                          (As Adopted July, 11, 2002)

        Strike section 302(4), relating to the Plum Island Animal Disease
    Center.

        At the end of title III, insert the following new section:

    SEC. 3__. TRANSFER OF PLUM ISLAND ANIMAL DISEASE CENTER, DEPARTMENT OF
                        AGRICULTURE.

        (a) Transfer Required.--In accordance with title VIII, the
    Secretary of Agriculture shall transfer to the Secretary of Homeland
    Security the Plum Island Animal Disease Center of the Department of
    Agriculture, including the assets and liabilities of the Center.
        (b) Continued Department of Agriculture Access.--Upon the transfer
    of the Plum Island Animal Disease Center, the Secretary of Homeland
    Security and the Secretary of Agriculture shall enter into an agreement
    to ensure Department of Agriculture access to the center for research,
    diagnostic, and other activities of the Department of Agriculture.

        In section 401, relating to the Under Secretary for Border and
    Transportation Security, redesignate paragraph (5) as paragraph (6) and
    insert before such paragraph the following new paragraph:

                (5) conducting the inspection and related administrative
            functions of the Department of Agriculture transferred to the
            Secretary of Homeland Security under section 4__.

        Strike section 402(3), relating to the Animal and Plant Health
    Inspection Service.

        At the end of title IV, insert the following new section:

    SEC. 4__. TRANSFER OF CERTAIN AGRICULTURAL INSPECTION FUNCTIONS OF THE
                        DEPARTMENT OF AGRICULTURE.

        (a) Transfer of Agricultural Import and Entry Inspection
    Functions.--There shall be transferred to the Secretary of Homeland
    Security the functions of the Secretary of Agriculture relating to
    agricultural import and entry inspection activities under the laws
    specified in subsection (b).
        (b) Covered Animal and Plant Protection Laws.--The laws referred to
    in subsection (a) are the following:
                (1) The Act commonly known as the Virus-Serum-Toxin Act
            (the eighth paragraph under the heading ``Bureau of Animal
            Industry'' in the Act of March 4, 1913; 21 U.S.C. 151 et seq.).
                (2) Section 1 of the Act of August 31, 1922 (commonly known
            as the Honeybee Act; 7 U.S.C. 281).
                (3) Title III of the Federal Seed Act (7 U.S.C. 1581 et
            seq.).
                (4) The Plant Protection Act (7 U.S.C. 7701 et seq.).
                (5) The Animal Protection Act (subtitle E of title X of
            Public Law 107-171; 7 U.S.C. 8301 et seq.).
                (6) The Lacey Act Amendments of 1981 (16 U.S.C. 3371 et
            seq.).
                (7) Section 11 of the Endangered Species Act of 1973 (16
            U.S.C. 1540).
        (c) Exclusion of Quarantine Activities.--For purposes of this
    section, the term ``functions'' does not include any quarantine
    activities carried out under the laws specified in subsection (b).
        (d) Effect of Transfer.--
                (1) Compliance with department of agriculture
            regulations.--The authority transferred pursuant to subsection
            (a) shall be exercised by the Secretary of Homeland Security in
            accordance with the regulations, policies, and procedures
            issued by the Secretary of Agriculture regarding the
            administration of the laws specified in subsection (b).
                (2) Rulemaking coordination.--The Secretary of Agriculture
            shall coordinate with the Secretary of Homeland Security
            whenever the Secretary of Agriculture prescribes regulations,
            policies, or procedures for administering the laws specified in
            subsection (b) at the locations referred to in subsection (a).
                (3) Effective administration.--The Secretary of Homeland
            Security, in consultation with the Secretary of Agriculture,
            may issue such directives and guidelines as are necessary to
            ensure the effective use of personnel of the Department of
            Homeland Security to carry out the functions transferred
            pursuant to subsection (a).
        (e) Transfer Agreement.--
                (1) Agreement required; revision.--Before the end of the
            transition period, as defined in section 801(2), the Secretary
            of Agriculture and the Secretary of Homeland Security shall
            enter into an agreement to effectuate the transfer of functions
            required by subsection (a). The Secretary of Agriculture and
            the Secretary of Homeland Security may jointly revise the
            agreement as necessary thereafter.
                (2) Required Terms.--The agreement required by this
            subsection shall specifically address the following:
                        (A) The supervision by the Secretary of Agriculture
                    of the training of employees of the Secretary of
                    Homeland Security to carry out the functions
                    transferred pursuant to subsection (a).
                        (B) The transfer of funds to the Secretary of
                    Homeland Security under subsection (f).
                (3) Cooperation and reciprocity.--The Secretary of
            Agriculture and the Secretary of Homeland Security may include
            as part of the agreement the following:
                        (A) Authority for the Secretary of Homeland
                    Security to perform functions delegated to the Animal
                    and Plant Health Inspection Service of the Department
                    of Agriculture regarding the protection of domestic
                    livestock and plants, but not transferred to the
                    Secretary of Homeland Security pursuant to subsection
                    (a).
                        (B) Authority for the Secretary of Agriculture to
                    use employees of the Department of Homeland Security to
                    carry out authorities delegated to the Animal and Plant
                    Health Inspection Service regarding the protection of
                    domestic livestock and plants.
        (f) Periodic Transfer of Funds to Department of Homeland
    Security.--
                (1) Transfer of funds.--Out of funds collected by fees
            authorized under sections 2508 and 2509 of the Food,
            Agriculture, Conservation, and Trade Act of 1990 (21 U.S.C.
            136, 136a), the Secretary of Agriculture shall transfer, from
            time to time in accordance with the agreement under subsection
            (e), to the Secretary of Homeland Security funds for activities
            carried out by the Secretary of Homeland Security for which
            such fees were collected.
                (2) Limitation.--The proportion of fees collected pursuant
            to such sections that are transferred to the Secretary of
            Homeland Security under this subsection may not exceed the
            proportion of the costs incurred by the Secretary of Homeland
            Security to all costs incurred to carry out activities funded
            by such fees.
        (g) Transfer of Department of Agriculture Employees.--During the
    transition period, the Secretary of Agriculture shall transfer to the
    Secretary of Homeland Security not more than 3,200 full-time equivalent
    positions of the Department of Agriculture.
        (h) Protection of Inspection Animals.--Title V of the Agricultural
    Risk Protection Act of 2000 (7 U.S.C. 2279e, 2279f) is amended--
                (1) in section 501(a)--
                        (A) by inserting ``or the Department of Homeland
                    Security'' after ``Department of Agriculture''; and
                        (B) by inserting ``or the Secretary of Homeland
                    Security'' after ``Secretary of Agriculture'';
                (2) by striking ``Secretary'' each place it appears (other
            than in sections 501(a) and 501(e)) and inserting ``Secretary
            concerned''; and
                (3) by adding at the end of section 501 the following new
            subsection:
        ``(e) Secretary Concerned Defined.--In this title, the term
    `Secretary concerned' means--
                ``(1) the Secretary of Agriculture, with respect to an
            animal used for purposes of official inspections by the
            Department of Agriculture; and
                ``(2) the Secretary of Homeland Security, with respect to
            an animal used for purposes of official inspections by the
            Department of Homeland Security.''.

         Section-by-Section Analysis of House Committee on Agriculture
                          Recommendations to H.R. 5005

        The Committee on Agriculture Recommendation to H.R. 5005
    strikes section 302(4) and adds a new section 3__ to the end of
    title III.
    Sec. 3__. Transfer of Plum Island Animal Disease Center, Department of
            Agriculture.
        Transfers the Plum Island Animal Disease Center from the
    Department of Agriculture to the Department of Homeland
    Security and requires the Secretary of Agriculture and the
    Secretary of Homeland Security, upon completion of the
    transfer, to enter into an agreement providing for continued
    access by USDA for research, diagnostic and other programs.
        The Committee recognizes the critical importance of the
    Plum Island Animal Disease Center to the safety and security of
    animal agriculture in the United States. The Committee expects
    that the transfer of this foreign animal disease facility to
    the Department of Homeland Security shall be completed in a
    manner that minimizes any disruption of agricultural research,
    diagnostic or other Department of Agriculture activities.
    Likewise, the Committee expects that funds that have and
    continue to be appropriated for the maintenance, upgrade, or
    replacement of agricultural research, diagnostic and training
    facilities at the Plum Island Animal Disease Center shall
    continue to be expended for those purposes.
        The Committee shares the goal of expanding the capabilities
    of the Plum Island Animal Disease Center. Likewise, the
    Committee supports the accompanying goal of building agro-
    terrorism prevention capabilities within the Department of
    Homeland Security. With this in mind, the Committee fully
    expects that in the absence of alternative facilities for
    current Department of Agriculture activities, the Secretary of
    Homeland Security shall make every possible effort to expand
    and enhance agricultural activities related to foreign animal
    diseases at the Plum Island Animal Disease Center.
        The Recommendations adds a reference to the inspection
    functions of the Department of Agriculture to the list of
    responsibilities of the Under Secretary for Border and
    Transportation Security in section 401.
        The Recommendation to H.R. 5005 strikes section 402(3) and
    adds a new section 4__ to the end of title IV.
    Sec. 4__. Transfer of Certain Agricultural Inspection Functions of the
            Department of Agriculture.
        (a) Transfers to the Secretary of Homeland Security the
    functions of the Secretary of Agriculture relating to
    agricultural import and entry inspection activities.
        The Committee is aware that the Agricultural Quarantine and
    Inspection Program of the Department of Agriculture's Animal
    and Plant Health Inspection Service conducts numerous
    activities with respect to both domestic and international
    commerce in order to protect the health of agriculturally
    important animals and plants within the United States. Within
    the Department of Homeland Security will be created a mission
    area of Border and Transportation Security. In order that the
    new streamlined border security program operates efficiently,
    the Committee has transferred to the Department of Homeland
    Security the responsibility for certain agricultural import and
    entry inspection activities of the Department of Agriculture
    conducted at points of entry. This transfer will include the
    inspection of arriving passengers, luggage, cargo and means of
    conveyance into the United States to the Under Secretary for
    Border and Transportation Security. In addition to inspections
    at points of entry into the United States, responsibility for
    inspections of passengers, luggage and their means of
    conveyance, at points of departure outside the United States,
    where agreements exist for such purposes, shall be the
    responsibility of the Secretary of Homeland Security. The
    provision allows the Secretary of Homeland Security to exercise
    authorities related to import and entry inspection functions
    transferred including conducting warrantless inspections at the
    border, collecting samples, holding and seizing articles that
    are imported into the United States in violation of applicable
    laws and regulations, and assessing and collecting civil
    penalties at the border. The Committee intends that the
    Department of Agriculture will retain the responsibility for
    all other activities of the Agricultural Quarantine and
    Inspection Program regarding imports including pre-clearance of
    commodities, trade protocol verification activities, fumigation
    activities, quarantine, diagnosis, eradication and
    indemnification, as well as other sanitary and phytosanitary
    measures. All functions regarding exports, interstate and
    intrastate activities will remain at the Department of
    Agriculture.
        (b) Delineates the laws governing agricultural import and
    entry inspection activities that are covered by the transfer of
    authorities.
        The Committee is aware that the authority to inspect
    passengers, cargo, and their means of conveyance coming into
    the United States is derived from numerous statutes that date
    back, in some cases, more than 100 years. The Committee does
    not intend that the reference to these statutes should be
    construed to provide any authority to the Secretary of Homeland
    Security beyond the responsibility to carry out inspections
    (including pre-clearance inspections of passengers, luggage and
    their means of conveyance in such countries where agreements
    exist for such purposes) and enforce the regulations of the
    Department of Agriculture at points of entry into the United
    States.
        (c) Excludes quarantine activities from the term
    ``functions'' as defined by this Act for the purposes of this
    section.
        While agricultural inspection functions, as well as those
    related administrative and enforcement functions, shall be
    transferred and become the responsibility of the Secretary of
    Homeland Security, the legislation retains all functions
    related to quarantine activities and quarantine facilities
    within the Department of Agriculture. Although the Committee
    has excluded quarantine activities from those functions
    transferred to the Department of Homeland Security, the
    Committee does not intend to preclude the Secretary of Homeland
    Security from taking actions related to inspection functions
    such as seizure or holding of plant or animal materials
    entering the United States. These authorities fall within the
    purview of inspection related enforcement functions that shall
    be transferred to the Secretary of Homeland Security.
        (d) Requires that the authority transferred to the
    Secretary of Homeland Security shall be exercised in accordance
    with the regulations, policies and procedures issued by
    Secretary of Agriculture; requires the Secretary of Agriculture
    to coordinate with the Secretary of Homeland Security whenever
    the Secretary of Agriculture prescribes regulations, policies,
    or procedures for administering the covered laws related to the
    functions transferred under subsection (a); provides that the
    Secretary of Homeland Security, in consultation with the
    Secretary of Agriculture, may issue guidelines and directives
    to ensure the effective use of personnel of the Department of
    Homeland Security to carry out the transferred functions.
        One intention of this legislation is to create a
    streamlined Border and Transportation Security program at
    points of entry into the United States. With regard to the
    protection of animal and plant health, the Committee does not
    intend or expect the Department of Homeland Security to make
    the determination of what animals, plants, animal or plant
    products, soils, or other biological materials present an
    unacceptable risk to the agriculture of the United States.
    Policies and procedures regarding actions necessary to detect
    and prevent such unacceptable risks shall remain the
    responsibility of the Secretary of Agriculture. Likewise,
    policies and regulations defining restrictions on movement into
    the United States of substances that would pose a threat to
    agriculture shall continue to be the responsibility of the
    Secretary of Agriculture.
        The Committee has provided authority for the Secretary of
    Homeland Security to issue directives and guidelines in
    consultation with the Secretary of Agriculture in order to
    efficiently manage inspection resources. When exercising this
    authority, the Committee expects that the agricultural
    inspection function at points of entry into the United States
    shall not be diminished, and as a result, the Committee expects
    that Secretary of Homeland Security shall ensure that necessary
    resources are dedicated to carrying out the agricultural
    inspection functions transferred from the Department of
    Agriculture.
        (e) Requires the Secretary of Agriculture and the Secretary
    of Homeland Security to enter into an agreement to effectuate
    the transfer of functions. The agreement must address the
    training of employees and the transfer of funds. In addition
    the agreement may include authority for the Secretary of
    Homeland Security to perform functions delegated to APHIS for
    the protection of domestic livestock and plants, as well as
    authority for the Secretary of Agriculture to use employees of
    the Department of Homeland Security to carry out APHIS
    functions.
        The Committee is aware of the unique nature and the
    specialized training necessary for effective and efficient
    border inspection activities carried out by the Agricultural
    Quarantine and Inspection Program. The Committee expects that
    the training of personnel and detector dogs for this highly
    specialized function will continue to be supervised by the
    Department of Agriculture.
        While a large proportion of the personnel employed by the
    Agricultural Quarantine and Inspection Program are permanently
    stationed at one of 186 points of entry into the United States,
    the Committee is aware that the Secretary of Agriculture
    commonly re-deploys up to 20 percent of the border inspection
    force in order to manage agricultural pests and diseases
    throughout the United States. In completing the transfer of
    Agricultural Quarantine and Inspection Program border
    inspectors to the Department of Homeland Security, the
    Committee expects that the Secretary of Agriculture and the
    Secretary of Homeland Security will enter into an agreement
    whereby inspection resources, where possible, would continue to
    be made available to the Secretary of Agriculture in response
    to domestic agricultural needs.
        (f) Provides that the Secretary of Agriculture shall
    transfer funds collected by fee authorities to the Secretary of
    Homeland Security so long as the funds do not exceed the
    proportion of the costs incurred by the Secretary of Homeland
    Security in carrying out activities funded by such fees.
        Beginning in fiscal year 2003, the unobligated balance of
    the Agricultural Quarantine and Inspection Fund will be
    transferred to other accounts within the Department of
    Agriculture and will be used to carry out import and domestic
    inspection activities, as well as animal and plant health
    quarantine activities, without additional appropriations. Fees
    for inspection services shall continue to be collected and
    deposited into these accounts in the manner prescribed by
    regulations issued by the Secretary of Agriculture. In
    effectuating the transfer of agricultural import inspection
    activities at points of entry into the United States, the
    Committee intends that funds from these accounts shall be
    transferred to the Department of Homeland Security in order to
    reimburse the Department of Homeland Security for the actual
    inspections carried out by the Department. The Committee
    expects that the Secretary of Agriculture shall continue to
    manage these accounts in a manner that ensures the availability
    of funds necessary to carry out domestic inspection and
    quarantine programs.
        (g) Provides that during the transition period, the
    Secretary of Agriculture shall transfer to the Secretary of
    Homeland Security up to 3,200 full-time equivalent positions of
    the Department of Agriculture.
        (h) Makes conforming amendments to Title V of the
    Agricultural Risk Protection Act of 2000 related to the
    protection of inspection animals.

                            Committee Consideration

    I. Hearings
        The Committee on Agriculture held a hearing on June 26,
    2002 to review the Administration's proposed legislation on
    creating a Department of Homeland Security. Witnesses
    representing State agencies and the agricultural community
    testified before the Committee.
    II. Full Committee Consideration
        The Committee on Agriculture met in open session pursuant
    to notice on July 11, 2002 and by a voice vote adopted the
    recommendations set forth.

                      Reporting the Bill--Roll Call Votes

        In compliance with clause 3(b) of Rule XIII of the House of
    Representatives, the Committee on Agriculture's recommendation
    to H.R. 5005 was reported by voice vote with a majority quorum
    present. There was no request for a recorded vote.

               Budget Act Compliance (Sections 308, 402, and 423)

        The provisions of clause 3(c)(2) of Rule XIII of the Rules
    of the House of Representatives and section 308(a)(1) of the
    Congressional Budget Act of 1974 (relating to estimates of new
    budget authority, new spending authority, new credit authority,
    or increased or decreased revenues or tax expenditures) are not
    considered applicable. The estimate and comparison required to
    be prepared by the Director of the Congressional Budget Office
    under clause 3(c)(3) of Rule XIII of the Rules of the House of
    Representatives and sections 402 and 423 of the Congressional
    Budget Act of 1974 were not received by the Committee on
    Agriculture prior to submitting its recommendation to the
    Select Committee on Homeland Security. However the Committee
    was notified that this language would not create any new, or
    affect any existing, mandatory spending since this
    recommendation would only transfer employees and functions.

                            Changes in Existing Law

        In compliance with clause 3(e) of Rule XIII of the Rules of
    the House of Representatives changes in existing law made by
    the recommendation of the Committee on Agriculture will be
    provided by Legislative Counsel to the Select Committee on
    Homeland Security.

             Additional Views of the Honorable John Elias Baldacci

                              House of Representatives,
                         Select Committee on Homeland Security,
                                         Washington, DC, July 11, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C. 20515
        Dear Chairman Armey: I am writing to add my opinions to
    those of my colleagues on the House Agriculture Committee with
    regards to the creation of a new Department of Homeland
    Security. I appreciate your attention to my comments.
        The Agriculture Committee has received numerous, pointed
    comments from agriculture groups across the Nation who are
    concerned that the Animal and Plant Health Inspection Service's
    (APHIS) primary mission to prevent and eradicate plant and
    animal diseases may be lost if the entire agency were to be
    moved out of the purview of the US Department of Agriculture
    (USDA). Indeed, many in my home state, including the relevant
    officials in the Maine Department of Agriculture, have
    expressed similar concerns.
        In this process, I feel our first responsibility should be
    to protect the interests of Americans on all fronts. I was
    pleased with the Agriculture Committee's recommendation to
    transfer only the agricultural import and inspection activities
    of APHIS to the Department of Homeland Security. By leaving
    other activities of APHIS within the jurisdiction of USDA, the
    high quality performance of traditional functions such as plant
    and animal disease research, oversight of animal welfare,
    certification of US agricultural products for export, and
    quarantine activities will be maintained.
        Furthermore, the levels of cooperation between the
    Secretaries of Agriculture and Homeland Security recommended by
    the Agriculture Committee will be an important element of any
    future activities to control the vast numbers of imported
    agricultural goods into our country. I applaud the efforts of
    Congress not only in this effort to establish a new Department
    of Homeland Security, but also in earlier actions to boost the
    number of inspectors at US border crossings and points of
    entry.
        My state has one of the longest coastlines in the nation,
    in addition to a significant border with Canada stretching from
    Quebec in our west and New Brunswick in the east. Following the
    horrific events of September 11, imports into the State of
    Maine from Canada were severely delayed due to a lack of
    qualified border inspectors. These delays impacted both the
    economy of my State and, by extension the rest of the nation. I
    would ask that during this reorganization period, that
    additional APHIS inspectors be assigned to border crossings and
    ports in Maine in order to better facilitate the passage of
    agricultural goods into the State and the nation.
        Again, I commend Congress and the Administration on this
    concerted effort to establish a more responsive mechanism to
    address our homeland security needs. I have appreciated the
    opportunity to work with my colleagues on the House Agriculture
    Committee to make responsible recommendations to ensure that
    our nation's food supplies are safe from both terrorist attacks
    and non-terrorism related agricultural disasters. I thank you
    for your attention to my concerns.
            Sincerely,
                                       John E. Baldacci
                                             Member of Congress

                  Additional Views of the Honorable Nick Smith

                              House of Representatives,
                          Select Committee on Homeland Security
                                         Washington, DC, July 11, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C. 20515

        Dear Chairman Armey: It is important that your committee
    consider the attached Amendment to H.R. 5005 that would
    authorize establishment of a National Center for Plant Disease
    Research and Control. The virtual center would utilize existing
    facilities of the Department of Homeland Security, U.S.
    Department of Agriculture and state universities to provide
    coordination of a much-needed first line of defense against
    possible acts of bioterrorism directed at the nation's food
    supply.
        Please review the supporting comments from the American
    Phytopathological Society (APS), the world's largest
    organization of plant health scientists, and the National
    Academy of Sciences.
        The APS and the National Academy of Sciences state that
    while there are many scientists with expertise on the subject,
    there is no established network for coordinating their efforts
    and no standardized methods and procedures for detecting such
    events or preventing them from occurring. Using the Centers for
    Disease Control as a model, the amendment would direct the
    Secretary of Homeland Security to evaluate the need for a
    National Center for Plant Disease Research and Control and
    authorize the Secretary to establish the Center if it is
    determined that a need exists. Under the legislation, the
    center would bring together a network of existing laboratories
    and experts for the purposes of detecting and controlling
    diseases that might result from bioterrorist activities. The
    Center would coordinate a rapid response team, develop a high-
    capacity communication network, oversee continual monitoring
    and risk assessment of potential threats, support the
    development of new tools for rapid detection and diagnosis of
    plant diseases and expand research on genomics and plant
    biotechnology.
        This amendment is much needed to protect our nation's food
    supply, and the formation of such a center is the effective way
    to coordinate such an effort through scientists and experts. I
    appreciate your consideration of our amendment.
            Sincerely,
                                            Nick Smith,
                                             Member of Congress

                                  ------------

                Committee on Science and Technology for
                        Countering Terrorism, National Research
                         Council, National Academy of Sciences,
                                                        Washington, DC.

        Recommendation 5: ... create an agency for control and prevention
    of plant disease. This agency should have the capabilities necessary to
    deal effectively with biothreats.
        For animal disease, USDA operates several laboratories - Plum
    Island and Ames among them - that perform diagnoses, carry out
    research, and provide training for veterinarian. CDC is the central
    agency for the control and prevention of communicable human disease,
    but no center currently exists to serve the same function for plant
    disease. Such a center is desperately needed. Departments of plant
    pathology at various state universities, APHIS, and a wide variety of
    other agencies, all of which often depend on outside experts, currently
    deal with new and unusual plant pathogens as best they can.
        A major research, development, and training center is called for
    that would address fungal, bacterial, and viral diseases of plants.
    Programs would focus on genomics and proteomics, databasing and
    informatics, forensics, pathogenesis, host-parasite interactions,
    diagnostics, sensors, food safety, analytical methods, epidemiology,
    modeling of disease outbreaks, intervention, and management. Other
    efforts could include outreach, technology transfer, collections of
    pathogens, and epidemiological intelligence and response. Close
    linkages could be established with other federal and state agencies, as
    well as with academic institutions, international agencies with
    responsibilities for surveillance of plant diseases and bioterrorism,
    and industrial, extension, and professional organizations. These
    collaborators could, among other functions, provide advice on
    containment and control procedures. Reprinted from: National Academy of
    Sciences: National Research Council ``Making the Nation Safer: The role
    of Science and Technology in Countering Terrorism'' (National Academy
    Press: Washington D.C. 2002) pg.3-ll to 3-12

                                  ------------

           Department of Entomology and Plant Pathology
                Oklahoma State University, Stillwater, OK 74078
                                         Washington, DC, March 14, 2002
        Dear Congressman Smith: I am writing as President-Elect of the
    American Phytopathological Society, the professional scientific society
    representing the plant pathologists of America and the world's largest
    professional society concerned with the diffusion of knowledge of plant
    diseases and their control. Members of the American Phytopathological
    Society promote the practice of plant pathology for the welfare of the
    environment plants, animals and human kind. However, with U.S. and
    global vulnerability to agricultural bioterrorism. the nation's
    research and education infrastructure must now work also to protect our
    gains, continue consumer confidence in the safely of our food, and
    assure sustainable growth in the production of food and fiber products
    produced from plants.Part of the vulnerability of our crops and food
    reserves is due to gaps in the nation's infrastructure that are needed
    to detect, diagnose, and limit or recover from such an attack. Whether
    or not an attack should ever materialize, this infrastructure is still
    needed as part of the continuing improvements in this nation's ability
    to produce high quality food in competitive and sustainable production
    systems.
        We believe that the United States needs a national center that can
    provide many of the same services and national leadership currently
    provided for human diseases by the Centers for Disease Control and
    Prevention. The center could be termed the ``Center for Plant Disease
    Control,--or alternatively, the ``National Plant Disease Center.'' I am
    enclosing a brief description of some activities and responsibilities
    that could be performed by such a center.
        We strongly urge you to support the establishment and activities of
    such a center. We recognize that the planning stages must involve input
    and participation from the various Federal and State agencies whose
    missions include aspects of plant food production and safety. The APS
    stands ready to work with you and others in the development of this
    critical national resource.
        Thank you for your consideration and assistance. Please let us know
    how the APS can assist further in this process.
            Sincerely yours,
                                   Jacqueline Fletcher,
                                               President-Elect,
                         The American Phytopathological Society

                                   AMENDMENT

                        OFFERED BY MR. SMITH OF MICHIGAN

        At the end of title IV, insert the following new section:

    SEC. __.INFORMATION COLLECTION AND NATIONAL CENTER FOR PLANT DISEASE
                        RESEARCH AND CONTROL.

        (a) INFORMATION COLLECTION AND INVESTIGATIVE AUTHORITY.--
    The Secretary of Homeland Security may gather and compile
    information and conduct any investigations the Secretary
    considers necessary for the administration and enforcement of
    the agricultural import and entry inspection functions
    transferred to Secretary under section 4 (a)
        (b) EVALUATION OF NEED FOR NATIONAL CENTER.--The Secretary
    of Homeland Security shall evaluate the feasibility and
    desirability of establishing a National Center for Plant
    Disease Research and Control in the Department of Homeland
    Security (in this section referred to as the ``Center'') that;
            (1) would facilitate the gathering and compiling of
            information and the conducting of basic research and
            investigations related to plant pests and pathogens
            that can directly or indirectly injure, cause damage
            to, or cause disease in plants or plant products; and
            (2) could act as a first responder in the event of an
            accidental or deliberate introduction or use of a plant
            pest or pathogen.
        (c) ESTABLISHMENT OF CENTER.--If the results of the
    evaluation conducted under subsection (b) support the need for
    a Center, the Secretary of Homeland Security may establish the
    Center and ass to it the specific functions referred to
    subsections (b) and (d) and such other duties as the Secretary
    considers appropriate. The Secretary shall utilize existing
    facilities of the Department of Homeland Security and land-
    grant colleges and universities to establish the Center.
        (d) CENTER FUNCTIONS.--The Center, if established by the
    Secretary of Homeland Security, may be used to perform and
    support the following activities:
            (1) Development of new tools for rapid detection and
            diagnosis of plant diseases, including by remote
            sensing.
            (2) Expansion of research on genomics and plant
            biotechnology as the foundation for more rapid and
            effective development of crop plants with resistance to
            pathogens that are potential threat agents.
            (3) Expansion of research on genomics and plant
            biotechnology that can be used for detection of,
            forensics related to, or recovery from a bioterrorist
            attack on plants or plant products.
            (4) Development and maintenance of a data base for the
            identification of known or potential plant pests and
            pathogens and for the collection of risk assessments
            regarding the threat such plant pests and pathogens
            pose to plants and plant products.
            (5) Coordination of new or acquired collections of
            foreign and domestic pathogens and development of
            methods for their characterization and rapid diagnosis.
        (e) COORDINATI0N.--The Secretary of Homeland Security shall
    coordinate the activities of the Center with other Federal and
    State agencies and appropriate experts in the area of plant
    pest control at public and private research institutions.
        (f) FUNDING.There is authorized to be appropriated for each
    fiscal year $5,000,000 to support the activities of the Center.

                          COMMITTEE ON APPROPRIATIONS

                                 July 11, 2002

         [RECOMMENDATIONS TO THE SELECT COMMITTEE ON HOMELAND SECURITY]

                             [concerning h.r. 5005]

        The Committee on Appropriations, to whom was referred the
    bill (H.R. 5005) to establish the Department of Homeland
    Security, and for other purposes, having considered the same,
    report thereon with its recommendations and views on the bill.
    In this opinion, the Committee has limited its specific textual
    recommendations to matters within the jurisdiction of the
    Committee on Appropriations, and for other matters, the
    Committee remains descriptive in those matters in which the
    Committee has expertise to lend.
        The Committee believes that the enactment of H.R. 5005, as
    introduced, would constitute a major erosion of the separation
    of powers as established in the United States Constitution,
    abrogating the central role of the Congress--the direction and
    oversight of public expenditures. The bill would provide the
    Secretary of the Department of Homeland Security with
    extraordinary and unprecedented powers that would in effect be
    both legislative and executive in nature and undermine the
    fundamental precept of the founding fathers, ``checks and
    balances.''
        The Committee has been in the forefront of strengthening
    the nation's capacity to identify, find and destroy terrorist
    organizations and to enhance our nation's defenses and capacity
    to respond to terrorist attacks. We strongly support efforts to
    streamline, centralize and improve the management and
    efficiency of the nation's counter-terrorism and homeland
    security activities. The importance of attaining these goals,
    however, need not involve sacrificing the constitutional
    processes that have remained intact for more than two centuries
    and have served the nation well during foreign invasions, civil
    war and two world wars. In fact, the current administrative
    morass troubling a number of key homeland security agencies
    would argue for even more intense Congressional scrutiny and
    oversight.
        For those matters within the jurisdiction of the Committee
    on Appropriations, the Committee recommends that the bill, H.R.
    5005, be amended, with an amendment as follows:
        Page 38, strike lines 19 through 22 and insert the following:
        ``(4) shall deposit the proceeds of any exercise of the authority
    granted by this subsection into the miscellaneous receipts of the
    Treasury in accordance with section 3302(b) of title 31, United States
    Code.''.
        Page 39, strike lines 5 through 14.
        Page 39, line 15, strike ``; TRANSFER''.
        Page 39, line 16, strike ``(a) Allocation of Functions.--''.
        Page 40, strike lines 6 through 13.
        Page 42, beginning on line 12, strike ``or non-reimbursable''.
        Page 42, strike lines 15 through 22.
        Page 42, line 23, strike ``(d)'' and insert ``(c)''.
        Page 43, line 20, strike ``(e)'' and insert ``(d)''.
        Page 44, beginning on line 2, strike ``and'' the second place it
    appears and all that follows through ``Code'' on line 4.
        Page 44, after line 10, insert the following new subsections:
        ``(e) Use of Transferred Funds.--Except as may be provided in an
    appropriation Act pursuant to subsection (g), balances of
    appropriations and any other funds transferred pursuant to this Act
    shall--
              ``(1) be available only for the purposes for which they were
            originally available; and
              ``(2) remain subject to the same conditions and limitations
            provided by the law originally appropriating or otherwise
            making available the amount, including limitations and
            notification requirements related to the reprogramming of
            appropriated funds.
        ``(f) Notification Regarding Transfers.--The President shall notify
    Congress at least 15 days in advance of any transfer of appropriations
    balances or other funds pursuant to this Act.
        ``(g) Additional Uses of Funds During Transition.--During the
    transition period and provided that the Committees on Appropriations
    are notified at least 15 days in advance, amounts transferred to or
    otherwise made available to the Department may be used for purposes in
    addition to those for which they were originally available (including
    by transfer among accounts of the Department), but only to the extent
    such transfer or use is specifically permitted in advance in an
    appropriation Act and only under the conditions and for the purposes
    specified in such appropriation Act.''.
        Page 47, strike lines 12 through 19.

          Committee Perspective on Provisions of H.R. 5005 Within the
                Jurisdication of the Committee on Appropriations

        H.R. 5005 was referred to the Select Committee on Homeland
    Security, and in addition to several permanent committees,
    including the Committee on Appropriations, in each case for
    consideration of such matters as fall within the jurisdiction
    of the committee concerned. For the Committee on
    Appropriations, the matters within its jurisdiction are
    transfers of certain authorities and appropriations and
    unobligated and unexpended balances of previous appropriations.
        Specifically, H.R. 5005 includes:
        1. the general transfer of several agencies, such as the
    Coast Guard, Secret Service, the Federal Emergency Management
    Agency, etc., to the new department and calls for the transfer
    of ``functions, personnel, assets and liabilities''. The
    legislation defines ``assets'' to include (among other items)
    ``unobligated or unexpended balances of appropriations, and
    other funds and resources''.
        2. broad powers to help finance the operations of the new
    department. Subsections (d) through (f) of section 732
    authorize the Secretary of Homeland Security to acquire real
    estate and sell or exchange assets owned by the Department, and
    to raise funds by leasing or subleasing property owned or
    leased by the Department. The proceeds raised through these
    arrangements would be available for any purpose of the
    Department, without the need for appropriation or other
    congressional action. These amounts could be substantial, as
    the Department would acquire control over considerable property
    when it absorbs agencies such as the Coast Guard, the Animal
    and Plant Health Inspection Service, and various laboratories.
    The broad authorities granted are contrary to longstanding
    principles of existing law which requires governmental receipts
    to be deposited in the Treasury and spent only pursuant to
    appropriations--except where Congress has authorized specific
    uses.
        3. section 733(b) which provides the Secretary of the new
    department the permanent authority to transfer up to five
    percent of any appropriation available to the secretary in any
    fiscal year to any other appropriation (on 15 days' notice to
    the Appropriations Committees). No Congressional approval is
    required. This provision could allow transfers of $2 billion or
    more.
        4. authority in section 803(c) which allows the President
    to transfer to the new department up to five percent of the
    unobligated balances available to any agency being moved to the
    new department before the move takes place. The amounts
    transferred would then be available to finance any of the
    purposes of the new department, without regard to the purposes
    for which they were originally appropriated. In other words,
    the new department could start its operations with initial
    funding of $1 billion or more, provided not through an
    appropriation for that purpose, but rather through a five
    percent surcharge against appropriations made for agencies such
    as the Coast Guard, the Customs Service, and the Federal
    Emergency Management Agency. Again, no Congressional approval
    is required.
        5. section 803(e), a provision that provides that upon the
    transfer of an agency to the new Department, the personnel,
    assets and liabilities of the agency shall be transferred to
    the Secretary for appropriate allocation, subject only to the
    approval of the Director of the Office of Management and
    Budget. This section would expressly override the provision of
    permanent law (31 U.S.C. 1531(a)(2)) that requires funds
    transferred under such circumstances (that is in connection
    with transfers of functions) be used only for the purposes for
    which the appropriation was originally available.
        6. section 806, which authorizes the director of the Office
    of Management and Budget to make additional and incidental
    dispositions of personnel, assets, and liabilities in
    connection with the functions transferred in the Act, as he
    determines appropriate.
        These transfer provisions are overly broad and sweeping. If
    enacted, they could have a serious impact on the appropriations
    process, hinder Congress in the exercise of its constitutional
    duty to direct the expenditure of public funds, and erode the
    role of Congress as established under Article I of the
    Constitution. They would have the effect of vitiating and
    rendering as irrelevant annual appropriations levels
    established by Congress for specific individual programs and
    would undermine Congressionally-imposed restrictions and
    program allocations. As a matter of fact, H.R. 5005 would
    provide the Secretary of the new department the ability to
    unilaterally rewrite fiscal year 2003 and perhaps some of
    fiscal year 2004 appropriations relating to both homeland
    security and to all other functions (such as other missions of
    the Coast Guard) that he wishes to shift to the new department.
    This would amount to giving the Secretary of Homeland Security
    an unrestricted lump-sum appropriation in an amount that could
    exceed $30 billion. Moreover, this transfer authority would be
    available in perpetuity.

                     Explanation of the Proposed Amendment

        The Committee recommends that the bill, H.R. 5005, be
    amended as follows:
        Page 38, strike lines 19 through 22 and insert the following:
        ``(4) shall deposit the proceeds of any exercise of the authority
    granted by this subsection into the miscellaneous receipts of the
    Treasury in accordance with section 3302(b) of title 31, United States
    Code.''.
        Page 39, strike lines 5 through 14.
        Page 39, line 15, strike ``; TRANSFER''.
        Page 39, line 16, strike ``(a) Allocation of Functions.--''.
        Page 40, strike lines 6 through 13.
        Page 42, beginning on line 12, strike ``or non-reimbursable''.
        Page 42, strike lines 15 through 22.
        Page 42, line 23, strike ``(d)'' and insert ``(c)''.
        Page 43, line 20, strike ``(e)'' and insert ``(d)''.
        Page 44, beginning on line 2, strike ``and'' the second place it
    appears and all that follows through ``Code'' on line 4.
        Page 44, after line 10, insert the following new subsections:
        ``(e) Use of Transferred Funds.--Except as may be provided in an
    appropriation Act pursuant to subsection (g), balances of
    appropriations and any other funds transferred pursuant to this Act
    shall--
              ``(1) be available only for the purposes for which they were
            originally available; and
              ``(2) remain subject to the same conditions and limitations
            provided by the law originally appropriating or otherwise
            making available the amount, including limitations and
            notification requirements related to the reprogramming of
            appropriated funds.
        ``(f) Notification Regarding Transfers.--The President shall notify
    Congress at least 15 days in advance of any transfer of appropriations
    balances or other funds pursuant to this Act.
        ``(g) Additional Uses of Funds During Transition.--During the
    transition period and provided that the Committees on Appropriations
    are notified at least 15 days in advance, amounts transferred to or
    otherwise made available to the Department may be used for purposes in
    addition to those for which they were originally available (including
    by transfer among accounts of the Department), but only to the extent
    such transfer or use is specifically permitted in advance in an
    appropriation Act and only under the conditions and for the purposes
    specified in such appropriation Act.''.
        Page 47, strike lines 12 through 19.
        The amendments recommended by the Committee remove the
    various extraordinary transfer authorities and budgetary powers
    that would be conferred on the executive branch by the bill as
    introduced. Instead, the Committee recommends relying on more
    traditional procedures, which allow funds to be transferred
    along with the organizations they finance but which require the
    executive to propose and obtain congressional approval to
    increase funding levels or change the uses of appropriated
    funds.
        The Committee's amendments leave intact the various
    provisions of the introduced bill (such as section 202) that
    provide for transfer to the Department of Homeland Security of
    the assets of the various federal entities being moved to the
    new department, and that define those assets as including
    unobligated or unexpended balances of appropriations.
    Similarly, the amendments leave in place the basic structure of
    section 803(e), which clarifies that the transfer of
    appropriations balances and other assets occurs at the time an
    organization is transferred to the Department of Homeland
    Security and that these balances are transferred to the
    Secretary of Homeland Security for appropriate allocation.
        However, the Committee amendments strike the provision of
    the bill that expressly overrides provisions of permanent law
    requiring that funds transferred under such circumstances be
    used only for the purposes for which they were originally
    appropriated. Instead, the amendments specifically apply the
    basic principles found in sections 1531 and 1532 of title 31,
    United States Code, that transferred funds are available only
    for the same purposes and subject to the same limitations as
    applied prior to the transfer.
        Thus, under the Committee amendments, when an organization
    such as the Immigration and Naturalization Service or the
    Secret Service is moved to the Department of Homeland Security,
    it would bring along its own funding in the form of the
    unobligated and unexpended balances of its appropriations.
    However, such appropriations would not normally be available to
    finance other operations of the new Department. The Committee
    expects the Administration to prepare and propose to Congress a
    specific plan for financing those operations and needs of the
    Department of Homeland Security that do not represent simply
    the continuation of functions for which appropriations are
    already available. Such a plan could consist of any combination
    of appropriations transfers, new appropriations, rescissions
    and other measures as the Administration considers advisable.
    The Committee would expect to act expeditiously on any such
    proposal.
        The process that would be established by H.R. 5005 as
    amended by the Committee is very similar to the process used
    when the Department of Energy was created in 1977 and when the
    Department of Education was created in 1979. In both cases,
    legislation establishing the new departments provided for
    transfer of appropriations balances along with the functions
    being transferred--but only for the purposes for which the
    funds were originally appropriated. In both cases, further
    transfers were allowed only to the extent specifically
    authorized in appropriations legislation.
        The Committee understands the language contained in the
    bill (as amended) transferring appropriations balances and
    other assets to the Department of Homeland Security as applying
    only to the assets of the federal entities specifically
    transferred by sections 202, 302, 402, 502, and 720. Thus,
    nothing in the bill authorizes transfer of any portion of the
    appropriations balances of any agency, such as the National
    Institutes of Health or the Federal Aviation Administration,
    that is not transferred to the Department of Homeland Security
    in whole or in part by the bill. If the Administration wishes
    to shift to the Department of Homeland Security any part of the
    funds appropriated to an agency not being transferred, the
    Administration should propose the necessary specific
    appropriations legislation to Congress.
        Specifically, the amendment recommended by the Committee:
        (1) eliminates provisions of section 732 authorizing the
    Secretary to use, without appropriation, the proceeds from sale
    or lease of Department property. Instead, the Committee
    alternative requires any such proceeds to be deposited in the
    Treasury, where they will be available for spending only by
    appropriation. The Committee also notes, that the General
    Services Administration already possesses authority to recover
    the direct and indirect costs of such sales under 40 U.S.C.
    485, which may be available to the Secretary of Homeland
    Security under section 732(e) of the bill (requiring delegation
    of some GSA authorities to the Secretary). Thus, the Committee
    amendment should not unduly hamper any effort to dispose of the
    Department's surplus property.
        (2) deletes section 733(b) which provides that not to
    exceed five percent of any appropriation available to the
    Secretary of Homeland Security in any fiscal year may be
    transferred between appropriations provided that at least 15
    days' notice is given the Appropriations Committees prior to
    the transfer. The Committee strongly believes that whether and
    in what amounts to grant sweeping transfer authority and the
    restrictions that should apply are matters that should and can
    be addressed through the annual appropriations process, rather
    than through a permanent blanket of general authority.
        (3) amends section 803(b), which allows agencies to provide
    services or detail personnel on a reimbursable or non-
    reimbursable basis to assist the transition. The Committee
    amendment deletes the authority to enter into non-reimbursable
    agreements.
        (4) deletes section 803(c) which provides that, prior to
    the actual transfer of an agency to the Department within the
    twelve-month transition period, the President is authorized to
    transfer to the Secretary of Homeland Security not to exceed
    five percent of the unobligated balance of any appropriation
    available to such agency, to fund the purposes authorized in
    the bill, provided that at least 15 days' notice is given the
    Appropriations Committee prior to the transfer. Additional uses
    of funds are addressed in a new subsection (g) to section 803.
        (5) amends section 803(e) which provides that transfers of
    personnel, assets, liabilities, and functions to the Department
    shall be available for activities of the new department. The
    amendment strikes language that would override permanent law
    (31 U.S.C. 1531(a)(2)) which requires executive agencies to
    obligate funds only for the purposes for which they were
    appropriated.
        (6) includes new subsections (e) through (g) to section 803
    regarding the use and notification of appropriations and other
    funds transferred pursuant to provisions of this Act. These new
    provisions allow the limited transfer of appropriations and
    other funds when expressly provided in an annual appropriations
    Act. Such transfers are currently requested, contemplated and
    contained in such Acts. In addition, the new provisions provide
    that amounts transferred to or otherwise made available to the
    new department may be used for purposes in addition to those
    for which they were originally available, but only to the
    extent such transfer or use is expressly permitted in an
    appropriation Act.
        (7) deletes section 806 which provides the Director of the
    Office of Management and Budget the authority to transfer
    ``incidental'' assets and personnel as he may deem appropriate.

        Matters Which Less Directly Affect the Committee's Jurisdiction

    Coordination and Resource Requirements for Counter-Terrorism Activities
        The Committee is also concerned that at least some of the
    proposed reorganization of administrative authority expressed
    in H.R. 5005 will not improve the efficiency, coordination or
    effectiveness of the nation's counter-terrorism and homeland
    security efforts. We would encourage the committees of
    jurisdiction to weigh carefully the following three principles:
        First, does a proposed transfer of an agency or activity to
    the new department increase the focus and coordination of
    government counter-terrorism activities?
        The organization chart of current government efforts in
    counter-terrorism that accompanied the Administration's
    announcement of plans to create a new department indicates that
    there are approximately 133 programs and offices involved in
    the effort. H.R. 5005 would move less than two-dozen of these
    into the new department. This leaves the overwhelming majority
    of such agencies and activities outside the proposed
    department--including some of the most critical government
    counter-terrorism efforts such as the FBI and the CIA. The
    question that must be asked in each instance is whether or not
    the inclusion of an activity within the department will not
    only improve departmental coordination of counter-terrorism but
    government-wide coordination.
        By the same token, some proposed changes might give the new
    secretary such an unwieldy portfolio as to create serious
    distractions from the underlying mission. H.R. 5005 would place
    functions such as oil spill cleanups, pet store licensing,
    international adoptions, tariff collection and boll weevils
    eradication under the responsibility of the Secretary of
    Homeland Security. While the inclusion of some extraneous
    activities may be unavoidable given the variety of functions
    that many of the agencies proposed for the new department
    perform, having responsibilities as far ranging as those
    proposed in H.R. 5005 would likely increase administrative
    requirements, increase overhead expenditures and make it
    difficult for the leadership of the department to maintain a
    clear focus on security issues.
        Second, will the structure proposed for managing the
    department create a demand for administrative resources that
    will reduce funds available for frontline activities such as
    container inspections or the identification, apprehension and
    deportation of illegal entrants that pose a possible terrorist
    threat?
        In the defense community this question is referred to as
    the relationship between the tooth and the tail. It is easily
    possible to organize government activities in such a way that
    the cost of coordinating the activities becomes more expensive
    than the activities themselves. There is ample reason to be
    concerned that H.R. 5005 could seriously erode resources needed
    to sharpen the tooth.
        This is particularly true if the administration maintains
    its stated intention to fund all activities of the department
    within the existing budgets for those activities. If that
    policy is followed, it will mean that most of the resources
    necessary to fund the activities of the Secretary, Deputy
    Secretary, five proposed Under Secretaries, as many as sixteen
    proposed Assistant Secretaries and six other proposed sub-
    cabinet positions will have to be met through cuts in border
    inspectors, immigration enforcement and first responders.
        Thirdly, will the reorganization disrupt highly sensitive
    security functions during critical threat periods?
        There is a reason that the Executive Reorganization Act of
    1947 took place in 1947 and not 1944. The consolidation of the
    War Department and the Navy may have created more efficiency
    and better coordination of defense activities in the long term
    but it certainly had significant short-term costs with respect
    to both of these goals. Similar disruptions are inevitable in
    any reorganization.
        The severity of such disruptions and time lost resulting
    from reorganization will vary based on the amount of
    administrative change envisaged for a particular program or
    activity. Simply changing the chain of command involves a
    relatively small loss of work effort. Changing network servers
    and phone systems and phone numbers adds to the loss in terms
    of short-term performance. Relocating facilities, restructuring
    personnel assignments and lines of authority often entail
    dislocations that can take months or even years to fully
    recover from. If there is a clear case for greater focus and
    long term efficiency these costs may be acceptable so long as
    they do not reduce performance during periods of potential
    threat.
        Any reorganization should carefully weigh these factors
    with respect to both the entities to be transferred to the new
    department and the timing of that transfer.
    Fiscal Year 2004 Budget Presentation
        The Committee expects that the President's fiscal year 2004
    budget submission will reflect the newly created department of
    homeland security and its component agencies, consistent with
    statements made by the Administration. Budget estimates and
    accompanying justification materials shall be prepared and
    submitted in the same manner and level of detail as provided
    previously to the Committee on Appropriations for the
    department's component agencies, programs and activities.

        Expression of Views on Other Matters Outside the Appropriations
                            Committee's Jurisdiction

        Sec. 733(a) of the bill authorizes the Secretary to
    ``establish, consolidate, alter, or discontinue'' any
    organizational units of the Department. The provision expressly
    allows consolidating or abolishing organizations and entities
    established by statute, provided only that 90 days advance
    notice is given to Congress. Though the bill does prohibit the
    use of its section 733(a) authority to eliminate specific
    agencies (e.g., the Coast Guard and the Secret Service), there
    is no such prohibition on abolishing various other agencies
    transferred to the Department, such as the Animal and Plant
    Health Inspection Service and the Customs Service, thereby
    allowing the Secretary to unilaterally overturn longstanding
    policies set in law. Congress should not authorize the
    Executive Branch to establish, consolidate, alter, or
    discontinue any agency of government that was established by
    statute. To do so would be tantamount to allowing the executive
    branch to unilaterally amend existing laws, and therefore
    contrary to the constitutional principles that vest legislative
    power in Congress rather than the President.

                          Recorded Votes in Committee

        During consideration of the Committee's recommendations and
    views on H.R. 5005, there were no recorded votes taken in the
    Committee.

                       Constitutional Authority Statement

        Pursuant to clause 3(d)(2) of rule XIII of the Rules of the
    House of Representatives, the Committee finds the
    Constitutional authority for this legislation in Article I,
    clause 8, section 18, that grants Congress the power to make
    all laws necessary and proper for carrying out the powers
    vested by Congress in the Government of the United States or in
    department or officer thereof.

                              Oversight Statement

        No summary of oversight findings and recommendations made
    by the Committee on Government Reform, as provided for in
    clause 3(c)(4) of rule XIII of the Rules of the House of
    Representatives, was available to the Committee with reference
    to the subject matter specifically addressed in the Committee
    amendment proposed to H.R. 5005.

                          Committee Oversight Findings

        Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
    House of Representatives, the Committee on Appropriations'
    oversight findings and recommendations are reflected in the
    body of this report.

                          Advisory Committee Statement

        No advisory committee within the meaning of section 5(b) of
    the Federal Advisory Committee Act will be created by the
    amendment recommended by the Committee on this legislation.

                    Applicability to the Legislative Branch

        The Committee finds that the recommended amendment to the
    legislation does not relate to the terms and conditions of
    employment or access to public services or accommodations
    within the meaning of section 102(b)(3) of the Congressional
    Accountability Act (Public Law 104-1).

                           Federal Mandates Statement

        The amendment recommended by the Committee on this
    legislation contains no unfunded mandates.

                            Changes in Existing Law

        The amendment recommended by the Committee on this
    legislation would make no change in existing law.

                            Congressional Budget Act

        With respect to the requirement of clause 3(c)(2) of rule
    XIII of the Rules of the House of Representatives, and section
    308(a) of the Congressional Budget Act of 1974, the Committee
    amendment would not result in the provision of any new budget
    authority.
                          COMMITTEE ON ARMED SERVICES

                              House of Representatives,
                                   Committee on Armed Services,
                                         Washington, DC, July 12, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Mr. Chairman: Pursuant to Section 6 of House
    Resolution 449, I hereby forward to the Select Committee on
    Homeland Security the recommendations of the Committee on Armed
    Services to the bill H.R. 5005, the Homeland Security Act of
    2002.
        On July 10, 2002, the Committee on Armed Services held a
    mark-up on those portions of H.R. 5005 within its jurisdiction
    and reported out favorably recommendations to the bill by voice
    vote.
        The committee devoted considerable attention and effort in
    reviewing the President's proposal and offers recommendations
    that are fully consistent with the important objectives
    inherent in H.R. 5005. I trust that the Select Committee will
    give these recommendations due consideration and stand ready to
    work with you and other members of the Select Committee in
    moving this process forward.
            Sincerely,
                                             Bob Stump,
                                                      Chairman.
                                    ------

                                   Amendments

                            Amendments to H.R. 5005

                   Adopted by the Committee on Armed Services

        Section 2(2) is amended to read as follows:
                (2) The term ``assets'' includes contracts, leases, grants,
            cooperative and other agreements and other transactions,
            facilities, property, records, unobligated or unexpended
            balances of appropriations, and other funds or resources (other
            than personnel).

        Insert after section 2(10) the following new paragraph (and
    redesignate the subsequent paragraph accordingly):
                (11) The term ``State'' has the meaning given in section
            102(4) of the Robert T. Stafford Disaster Relief and Emergency
            Assistance Act (Public Law 93-288; 42 U.S.C. 5122(4)).

        Section 101(b)(2) is amended by inserting the following new
    subparagraph after subparagraph (D) (and redesignating the subsequent
    subparagraph accordingly):
                (E) research, development, test, and evaluation in support
            of such mission;

        Amend section 202(5) to read as follows:
                (5) the Energy Security and Assurance Program of the
            Department of Energy, including the National Infrastructure
            Simulation and Analysis Center and the functions of the
            Secretary of Energy relating thereto; and

        Section 203 is amended by inserting the following new paragraph
    after paragraph (2) (and redesignating the subsequent paragraph
    accordingly):
                (3) the Secretary shall have full access and input with
            respect to information from any national collaborative
            information analysis capability (as referred to in section 924
            of the National Defense Authorization Act for Fiscal Year 2002
            (Public Law 107-107; 115 Stat. 1199) established jointly by the
            Secretary of Defense and the Director of Central Intelligence;
            and

        Amend section 301 to read as follows:

    SEC. 301. UNDER SECRETARY FOR CHEMICAL, BIOLOGICAL, RADIOLOGICAL, AND
                        NUCLEAR COUNTERMEASURES.

        In assisting the Secretary with the responsibilities specified in
    section 101(b)(2)(B), the primary responsibilities of the Under
    Secretary for Chemical, Biological, Radiological, and Nuclear
    Countermeasures shall include--
                (1) securing the people, infrastructures, property,
            resources, and systems in the United States from acts of
            terrorism involving chemical, biological, radiological, or
            nuclear weapons, explosives and explosive materials, and other
            emerging threats;
                (2) conducting a national scientific research, development,
            test, and evaluation program to support the mission of the
            Department, including developing national policy for and
            coordinating the Federal Government's civilian efforts to
            identify, devise, and implement scientific, technological, and
            other countermeasures to chemical, biological, radiological,
            nuclear, and other emerging terrorist threats, including
            directing, funding, and conducting research, development, test,
            and evaluation relating to the same;
                (3) establishing priorities for, directing, funding, and
            conducting national research, development, and procurement of
            technology and systems--
                        (A) for preventing the importation of--
                                (i) chemical, biological, radiological,
                            nuclear, and related weapons and explosives and
                            explosive materials; and
                                (ii) materials, technology, and equipment
                            intended for the illicit research, development,
                            production, or use of chemical, biological,
                            radiological, nuclear, and related weapons and
                            related devices, and explosives and explosive
                            materials, in the United States; and
                        (B) for detecting, preventing, protecting against,
                    and responding to terrorist attacks in the United
                    States that involve such weapons or material;
                (4) establishing guidelines for State and local government
            efforts to develop and implement countermeasures to threats of
            chemical, biological, radiological, and nuclear terrorism, and
            other terrorist threats; and
                (5) establishing an intelligence analysis capability to
            support chemical, biological, radiological, and nuclear
            counterterrorism in the United States.

        Amend section 302 to read as follows:

    SEC. 302. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following entities--
                (1) the select agent registration enforcement programs and
            activities of the Department of Health and Human Services,
            including the functions of the Secretary of Health and Human
            Services relating thereto;
                (2) the following programs and activities of the Department
            of Energy, including the functions of the Secretary of Energy
            relating thereto (but not including programs and activities
            directly relating to the mission of the National Nuclear
            Security Administration, as specified in section 3211 of the
            National Nuclear Security Administration Act (Pub. Law 106-65;
            113 Stat. 957; 50 U.S.C. 2401):
                        (A) the programs and activities relating to
                    chemical and biological national security, and
                    supporting programs and activities directly related to
                    homeland security, of the non-proliferation and
                    verification research and development program;
                        (B) the programs and activities relating to nuclear
                    smuggling, and other programs and activities directly
                    related to homeland security, within the proliferation
                    detection program of the non-proliferation and
                    verification research and development program;
                        (C) those aspects of the nuclear assessment program
                    and activities of the assessment, detection, and
                    cooperation program of the international materials
                    protection and cooperation program that are directly
                    related to homeland security;
                        (D) such life sciences activities of the biological
                    and environmental research program related to microbial
                    pathogens as may be designated by the President for
                    transfer to the Department;
                        (E) the Environmental Measurements Laboratory; and
                        (F) the advanced scientific computing research
                    program and activities at Lawrence Livermore National
                    Laboratory;
                (3) the homeland security projects within the Chemical
            Biological Defense Program of the Department of Defense known
            as the Biological Defense Homeland Security Support Program and
            the Biological Counter-Terrorism Research Program; and
                (4) the Plum Island Animal Disease Center of the Department
            of Agriculture, including the functions of the Secretary of
            Agriculture relating thereto.

        Strike section 304.

        Title III of the bill is amended by adding at the end the following
    new section:

    SEC. 305. ADMINISTRATION OF PROGRAMS AND ACTIVITIES TRANSFERRED FROM
                        THE DEPARTMENT OF ENERGY.

        (a) Homeland Security Center at National Laboratory.--(1) The
    Secretary shall establish at a national security laboratory of the
    National Nuclear Security Administration selected by the Secretary, a
    center to serve as the primary location for carrying out research,
    development, test, and evaluation activities of the Department in
    support of the mission described in section 101. The Secretary shall
    establish, in concurrence with the Secretary of Energy, such additional
    centers at one or more national laboratories of the Department of
    Energy as the Secretary considers appropriate to serve as secondary
    locations for carrying out such activities.
        (2) Each center established under paragraph (1) shall be composed
    of such facilities and assets as are required for the performance of
    such activities. The particular facilities and assets shall be
    designated by the Secretary of Energy with the concurrence of the
    Secretary.
        (3) Facilities and assets designated under paragraph (2) shall be
    transferred to the Department and, with the concurrence of the
    Secretary and the Secretary of Energy, may be so transferred in place
    of facilities and assets otherwise required to be transferred from the
    Department of Energy under this Act.
        (4) For each center established at a laboratory under this
    subsection, every effort shall be made to consolidate Department
    facilities and assets within existing infrastructure of that
    laboratory.
        (b) Separate Contracting.--To the extent programs and activities
    transferred from the Department of Energy or carried out through
    authorities provided under this Act are carried out through contracts,
    the Secretary, and the Secretary of Energy, shall ensure that such
    contracts are separate from contracts of the Department of Energy.
        (c) Indirect Costs.--In the case of an activity carried out by a
    national laboratory of the Department of Energy but paid for by the
    Department on a reimbursable basis, funds for such activity shall be
    provided through a method under which the Secretary of Energy waives
    any requirement for the Department to pay administrative charges or
    personnel costs of the Department of Energy or its contractors in
    excess of the amount that the Secretary of Energy pays for an activity
    carried out by such laboratory and paid for by the Department of
    Energy.
        (d) Laboratory Directed Research and Development by the Department
    of Energy.--No funds authorized to be appropriated or otherwise made
    available to the Department in any fiscal year may be obligated or
    expended for laboratory directed research and development activities
    carried out by the Department of Energy unless such activities support
    the mission of the Department described in section 101.
        (e) Department of Energy Coordination on Homeland Security Related
    Research.--The Secretary of Energy shall ensure that any research,
    development, test, and evaluation activities conducted within the
    Department of Energy that are directly or indirectly related to
    homeland security are fully coordinated with the Secretary to minimize
    duplication of effort and maximize the effective application of Federal
    budget resources.
        (f) Transition.--(1) Subject to paragraph (2), the transfer of
    functions, personnel, assets, and liabilities required to be
    transferred from the Department of Energy to the Department under this
    Act shall be carried out pursuant to a schedule to be prescribed by the
    Secretary of Energy with the concurrence of the Secretary.
        (2) Transfers referred to in paragraph (1)--
                (A) shall commence not later than January 1, 2003; and
                (B) shall be completed not later than September 30, 2003.

        Amend section 501(2) to read as follows:
                (2) with respect to the Nuclear Incident Response Team
            (regardless of whether it is operating as an organizational
            unit of the Department pursuant to this title)--
                        (A) establishing standards, evaluating performance,
                    and certifying when standards have been met; and
                        (B) providing funds to the Department of Energy and
                    the Environmental Protection Agency, as appropriate,
                    for homeland security planning and conducting joint and
                    other exercises and training;

        At the end of section 502(1) insert the following before the
    semicolon ``, and the Integrated Hazard Information System of the
    Department of Defense''.

        Amend section 503 to read as follows:

    SEC. 503. NUCLEAR INCIDENT RESPONSE.

        (a) Nuclear Incident Response Team.--At the direction of the
    Secretary (in connection with an actual or threatened terrorist attack,
    major disaster, or other emergency within the United States), the
    Nuclear Incident Response Team shall operate as an organizational unit
    of the Department. While so operating, the Nuclear Incident Response
    Team shall be subject to the direction, authority, and control of the
    Secretary.
        (b) Construction.--Nothing in this Act shall be construed to affect
    the responsibility of the Secretary of Energy and the Administrator of
    the Environmental Protection Agency for organizing, training,
    equipping, and utilizing their respective entities in the Nuclear
    Incident Response Team, or (subject to the provisions of this title)
    from exercising direction, authority, and control over them when they
    are not operating as a unit of the Department.
        (c) Indemnification of Contractors During Transition Period.--(1)
    To the extent the Department of Energy has a duty under a covered
    contract to indemnify an element of the Nuclear Incident Response Team,
    the Department and the Department of Energy shall each have that duty,
    whether or not the Nuclear Incident Response Team is operating as an
    organizational element of the Department.
        (2) Paragraph (1) applies only to a contract in effect on the date
    of the enactment of this Act, and not to any extension or renewal of
    such contract carried out after the date of the enactment of this Act.

        Amend section 735 to read as follows:

    SEC. 735. MILITARY ACTIVITIES.

        Nothing in this Act shall confer upon the Secretary any authority
    to engage in warfighting, the military defense of the United States, or
    other military activities, nor shall anything in this Act limit the
    existing authority of the Department of Defense or the Armed Forces to
    engage in warfighting, the military defense of the United States, or
    other military activities.

        In section 802, insert ``pursuant to this Act'' after ``The
    transfer of an agency''.

        In section 803, strike ``shall provide'' (page 42, line 6) and
    insert ``may provide''.

        Strike section 904(b) and insert the following new subsections (and
    redesignate the subsequent subsection accordingly):
        (b) Title 10, U.S.C.--(1) Title 10, United States Code, is amended
    in sections 101(9), 130b(a), 130b(c)(4), 130c(h)(1), 379, 513(d),
    575(b)(2), 580(e)(6), 580a(e), 651(a), 671(c)(2), 708(a), 716(a), 717,
    806(d)(2), 815(e), 888,946(c)(1), 973(d), 978(d), 983(b)(1), 985(a),
    1033(b)(1), 1033(d), 1034, 1037(c), 1044d(f), 1058(c), 1059(a),
    1059(k)(1), 1073(a), 1074(c)(1), 1089(g)(2), 1090, 1091(a), 1124, 1143,
    1143a(h), 1144, 1145(e), 1148, 1149, 1150(c), 1152(a), 1152(d)(1),
    1153, 1175, 1212(a), 1408(h)(2), 1408(h)(8), 1463(a)(2), 1482a(b),
    1510, 1552(a)(1), 1565(f), 1588(f)(4), 1589, 2002(a), 2302(1),
    2306b(b), 2323(j)(2), 2376(2), 2396(b)(1), 2410a(a), 2572(a), 2575(a),
    2578, 2601(b)(4), 2634(e), 2635(a), 2734(g), 2734a, 2775, 2830(b)(2),
    2835, 2836, 4745(a), 5013a(a), 7361(b), 10143(b)(2), 10146(a),
    10147(a), 10149(b), 10150, 10202(b), 10203(d), 10205(b), 10301(b),
    12103(b), 12103(d), 12304, 12311(c), 12522(c), 12527(a)(2), 12731(b),
    12731(a)(e), 16131(a), 16136(a), 16301(g), and 18501 by striking ``of
    Transportation'' each place it appears and inserting ``of Homeland
    Security''.
        (2) Section 801(1) of such title is amended by striking ``the
    General Counsel of the Department of Transportation'' and inserting
    ``an official designated to serve as Judge Advocate General of the
    Coast Guard by the Secretary of Homeland Security''.
        (3) Section 983(d)(2)(B) of such title is amended by striking
    ``Department of Transportation'' and inserting ``Department of Homeland
    Security''.
        (4) Section 2664(a) of such title is amended [Note, not sure how to
    address the references to Secretary of Transportation in this
    section]. deg.
        (4) Section 2665(b) of such title is amended by striking
    ``Department of Transportation'' and inserting ``Department in which
    the Coast Guard is operating''.
        (5) Section 7045 of such title is amended--
                (A) in subsections (a)(1) and (b), by striking
            ``Secretaries of the Army, Air Force, and Transportation'' both
            places it appears and inserting ``Secretary of the Army, the
            Secretary of the Air Force, and the Secretary of Homeland
            Security''; and
                (B) in subsection (b), by striking ``Department of
            Transportation'' and inserting ``Department of Homeland
            Security''.
        (6) Section 7361(b) of such title is amended in the subsection
    heading by striking ``Transportation'' and inserting ``Homeland
    Security''.
        (7) Section 12522(b) of such title is amended in the subsection
    heading by striking ``Transportation'' and inserting ``Homeland
    Security''.
        (c) Title 37, U.S.C.--Title 37, United States Code, is amended in
    sections 101(5), 204(i)(4), 301a(a)(3), 306(d), 307(c), 308(a)(1),
    308(d)(2), 308(f), 308b(e), 308c(c), 308d(a), 308e(f), 308g(g),
    308h(f), 308i(e), 309(d), 316(d), 323(b), 323(g)(1), 325(i), 402(d),
    402a(g)(1), 403(f)(3), 403(l)(1), 403b(i)(5), 406(b)(1), 417(a),
    417(b), 418(a), 703, 1001(c), 1006(f), 1007(a), and 1011(d) by striking
    ``of Transportation'' each place it appears and inserting ``of Homeland
    Security''.
        (d) Other Defense-Related Laws.--(1) Section 363 of Public Law 104-
    193 (110 Stat. 2247) is amended--
                (A) in subsection (a)(1) (10 U.S.C. 113 note), by striking
            ``of Transportation'' and inserting ``of Homeland Security'';
            and
                (B) in subsection (b)(1) (10 U.S.C. 704 note), by striking
            ``of Transportation'' and inserting ``of Homeland Security''.
        (2) Section 721(1) of Public Law 104-201 (10 U.S.C. 1073 note) is
    amended by striking ``of Transportation'' and inserting ``of Homeland
    Security''.
        (3) Section 4463(a) of Public Law 102-484 (10 U.S.C. 1143a note) is
    amended by striking ``after consultation with the Secretary of
    Transportation''.
        (4) Section 4466(h) of Public Law 102-484 (10 U.S.C. 1143 note) is
    amended by striking ``of Transportation'' and inserting ``of Homeland
    Security''.
        (5) Section 542(d) of Public Law 103-337 (10 U.S.C. 1293 note) is
    amended by striking ``of Transportation'' and inserting ``of Homeland
    Security''.
        (6) Section 740 of Public Law 106-181 (10 U.S.C. 2576 note) is
    amended in subsections (b)(2), (c), and (d)(1) by striking ``of
    Transportation'' each place it appears and inserting ``of Homeland
    Security''.
        (7) Section 1407(b)(2) of the Defense Dependents' Education Act of
    1978 (20 U.S.C. 926(b)) is amended by striking ``of Transportation''
    both places it appears and inserting ``of Homeland Security''.
        (8) Section 2301(5)(D) of Public Law 107-110 (20 U.S.C. 6671(5)(D))
    is amended by striking ``of Transportation'' and inserting ``of
    Homeland Security''.
        (9) Section 2307(a) of Public Law 107-110 (20 U.S.C. 6677(a)) is
    amended by striking ``of Transportation'' and inserting ``of Homeland
    Security''.
        (10) Section 1034(a) of Public Law 105-85 (21 U.S.C. 1505a(a)) is
    amended by striking ``of Transportation'' and inserting ``of Homeland
    Security''.
        (11) The Military Selective Service Act is amended--
                (A) in section 4(a) (50 U.S.C. App. 454(a)), by striking
            ``of Transportation'' in the fourth paragraph and inserting
            ``of Homeland Security'';
                (B) in section 4(b) (50 U.S.C. App. 454(b)), by striking
            ``of Transportation'' both places it appears and inserting ``of
            Homeland Security'';
                (C) in section 6(d)(1) (50 U.S.C. App. 456(d)(1)), by
            striking ``of Transportation'' both places it appears and
            inserting ``of Homeland Security'';
                (D) in section 9(c) (50 U.S.C. App. 459(c)), by striking
            ``Secretaries of Army, Navy, Air Force, or Transportation'' and
            inserting ``Secretary of a military department, and the
            Secretary of Homeland Security with respect to the Coast
            Guard,''; and
                (E) in section 15(e) (50 U.S.C. App. 465(e)), by striking
            ``of Transportation'' both places it appears and inserting ``of
            Homeland Security''.

        Strike section 907.9/12/2002 10:06:19 AM -
    F:\V7\091202\091202.027 Created by: VLCirks deg.

                             Purpose and Background

        The purpose of H.R. 5005, the Homeland Security Act of
    2002, is to implement the President's proposal to create a new
    Department of Homeland Security (DHS). Several portions of this
    bill affect the Department of Defense (DOD) and the defense-
    related activities of the Department of Energy (DOE)--both of
    which are under the jurisdictional responsibility of the
    Committee on Armed Services. These sections of H.R. 5005 were
    reviewed and studied by the committee, which subsequently
    amended the legislation on July 10, 2002 to provide the
    President and the new Secretary of Homeland Security the
    necessary authority, organizations, and resources needed to
    accomplish the homeland security mission, while ensuring that
    DOD's and DOE's national security, warfighting, and military
    missions are not diminished.
        The new Department of Homeland Security would be created
    through a sweeping re-organization of the federal government
    that would involve over a half dozen departments, multiple
    agencies, and nearly 170,000 people. The mission of this new
    department would be to prevent terrorist attacks within the
    United States, reduce America's vulnerability to terrorism, and
    minimize the damage and recover from attacks that do occur.
    Under the introduced version of this legislation, the
    Department of Homeland Security would have four organizational
    components, each led by an Under Secretary: Border and
    Transportation Security; Emergency Preparedness and Response;
    Chemical, Biological, Radiological, and Nuclear
    Countermeasures; and, Information Analysis and Infrastructure
    Protection.
        Compared to other departments of the federal government,
    the impact of this initiative on the Department of Defense and
    the defense-related activities of the Department of Energy is
    limited. While establishment of the DHS involves transferring
    organizations and people from DOD and DOE to the Department of
    Homeland Security, collectively these moves represent less than
    1 percent of new department's total projected end strength, and
    less than 2 percent of its projected annual budget authority.
        The committee amendment was developed in keeping with the
    following principles:
         Provide the President and the new Secretary of
    Homeland Security the necessary authority, organizations, and
    personnel needed to accomplish the homeland security mission;
         Ensure that DOD's and DOE's national security,
    warfighting, and military missions are not diminished;
         Allow the new Secretary of Homeland Security
    sufficient latitude and flexibility to efficiently implement
    the provisions of H.R. 5005;
         Ensure the new department will have a sufficient
    research, development, testing, and evaluation (RDT&E)
    capability to meet its mission needs; and
         Prevent the creation of duplicative, impaired, or
    unnecessary organizations and activities.
        Based on these principles, the committee held a number of
    meetings with the Departments of Defense and Energy, and the
    White House beginning in late June 2002. A full committee
    hearing was also held on June 26, 2002, with senior officials
    from the Department of Defense and Department of Energy
    appearing as witnesses. These meetings and the hearing
    highlighted several elements of H.R. 5005 that required further
    refinement, and were incorporated into a comprehensive
    committee amendment.
        Most of the provisions contained in the committee amendment
    made no change to the President's fundamental proposal. Rather,
    they simply clarified and fine tuned ``what'' entities and
    activities will be transferred from DOD and DOE to the
    Department of Homeland Security; ``how'' they will be
    transferred; ``where'' they will be located within the new
    department; and what their new role, mission, and authorities
    will be within the new department. Some of these provisions,
    however, clarify the future relationship (authority,
    limitations, and conditions) between the Department of Energy's
    national laboratories and the Department of Homeland Security
    on matters ranging from contracting and accounting, to research
    and development and control of Nuclear Incident Response Teams.
    Further, these provisions ensure that the Department of
    Homeland Security receives from DOD and DOE only those entities
    and activities directly related to homeland security, that ``no
    harm'' will come to DOD and DOE and their activities as a
    result of this reorganization, and that the Secretary of
    Homeland Security has the tools and resources he needs to
    accomplish the homeland security mission.
        The few provisions in the amended bill that substantively
    deviate from the Administration's legislative proposal are
    designed to maximize organizational effectiveness at the new
    Department of Homeland Security, or to preserve essential
    capabilities and activities at the Department of Energy that
    have a broader national security mission. These changes
    include:
         Transferring the entire Energy Security and
    Awareness program to the Department of Homeland Security Under
    Secretary for Information Analysis and Infrastructure
    Protection, rather than separating the program between the
    above office and the Department of Homeland Security Under
    Secretary for Chemical, Biological, Radiological, and Nuclear
    (CBRN) Countermeasures;
         Expanding the responsibilities of the Under
    Secretary for Chemical, Biological, Radiological, and Nuclear
    Countermeasures to include explosives and explosive materials;
         Giving the Secretary of Homeland Security the
    responsibility and authority to conduct research, development,
    testing and evaluation in support of the Department of Homeland
    Security's mission; and,
         Granting authority to the Department of Homeland
    Security's Under Secretary for CBRN Countermeasures to
    establish an intelligence and analysis capability within DHS
    rather than transferring this organization/activity (as the
    Administration proposed) out of DOE, where it currently
    performs a critical national security mission.
        In conclusion, the provisions contained in H.R. 5005, as
    amended by the Committee on Armed Services, will improve the
    effectiveness of the new Department of Homeland Security, while
    ensuring that the Department of Defense and the Department of
    Energy retain the ability to fully conduct their warfighting
    and military missions so critical to our national security.

                              Legislative History

        H.R. 5005 was introduced on June 24, 2002 and was referred
    to the Select Committee on Homeland Security. The bill was also
    referred jointly and sequentially to the Committee on
    Agriculture; Committee on Appropriations; Committee on Armed
    Services; Committee on Energy and Commerce; Committee on
    Financial Services; Committee on Government Reform; House
    Select Committee on Intelligence; Committee on International
    Relations; Committee on Judiciary; Committee on Science;
    Committee on Transportation and Infrastructure; and the
    Committee on Ways and Means, on June 24, 2002.
        On July 10, 2002 the Committee on Armed Services held a
    mark-up session to consider H.R. 5005. The committee adopted
    the bill with amendments and reported the same favorably by
    voice vote.
        Section-by-Section Analysis
        The following is a section-by-section analysis of those
    sections of H.R. 5005 amended by the Committee on Armed
    Services.
    Section 2. Definitions
        This section, as amended, would expand the definition of
    the term ``assets'' to include ``leases, grants, cooperative
    and other agreements and other transactions* * *'' and also
    added a definition of the term ``state''. This latter change
    conforms the definition of the term ``state'' used in this bill
    with that already in existing law in section 102(4) of the
    Robert T. Stafford Disaster Relief and Emergency Assistance Act
    (Public Law 93-288). The effect of this change is to include
    not only the states of the United States, but also the District
    of Columbia, Puerto Rico, the Virgin Islands, Guam, American
    Samoa, and the Commonwealth of the Northern Mariana Islands
    within the defined term ``state''.
    Section 101. Executive Department; Mission
        As amended, subsection 101(b)(2) would specify the conduct
    of research, development, test, and evaluation in support of
    homeland security as an additional mission of the Department of
    Homeland Security.
    Section 202. Functions Transferred
        As amended, the committee endorses the transfer of the
    National Communication Systems (NCS) in this section to the
    Department of Homeland Security with the understanding that the
    Department of Defense's mission will not be adversely affected
    or degraded. The committee also expects that, in light of DOD's
    unique telecommunication requirements, DOD will continue to be
    a key member of the NCS and receive priority recognition when
    appropriate.
        In addition, the committee believes the NCS should maintain
    its mission to advise the President on protecting critical
    communications assets across all infrastructures. To
    successfully fulfill this mission, the NCS should receive high
    visibility and attention from the Secretary of Homeland
    Security.
        This section, as amended, would also transfer the entire
    Energy Security and Assurance program of the Department of
    Energy, including the National Infrastructure Simulation and
    Analysis Center (NISAC), and related functions, to the Under
    Secretary for Information Analysis and Infrastructure
    Protection.
        In the fiscal year 2003 budget request, the Energy Security
    and Assurance program of the Department of Energy includes
    NISAC as the primary component. The President's legislative
    proposal would place NISAC under the Under Secretary for
    Information Analysis and Infrastructure Protection, but
    transfer the balance of the program to the Under Secretary for
    Chemical, Biological, Radiological, and Nuclear
    Countermeasures. Broadly, the functions of the Energy Security
    and Assurance program are coordination activities to ensure a
    secure flow of energy, analysis of energy infrastructure
    vulnerabilities and interdependencies, and planning for
    response and recovery to disruptions of the supply of energy.
    The program also includes critical infrastructure protection
    functions. The committee believes that all such functions
    properly belong with the Under Secretary for Information
    Analysis and Infrastructure Protection, and are only indirectly
    related to CBRN Countermeasures. Consequently, the committee
    recommends the transfer of the entire program to the Under
    Secretary for Information Analysis and Infrastructure
    Protection.
    Section 203. Participation In National Collaborative Intelligence
            Analysis Capability
        As amended, this section would ensure that the Secretary of
    Homeland Security shall have full access, as a full
    participant, to information from any national collaborative
    information analysis capability, and is authorized to provide
    inputs to the same. The committee notes the Administration's
    increased demand for a national-level capability to analyze
    information and intelligence data from all government agencies
    and other sources. Such a capability would dramatically improve
    the United States' efforts to detect and identify threats to
    the nation's security. As such, the committee included
    supportive language in committee report 107-436 accompanying
    H.R. 4546, the Bob Stump National Defense Authorization Act for
    fiscal year 2003, which endorsed the DOD proposal that this new
    development effort be conducted by the Defense Advanced
    Research Projects Agency (DARPA). The committee also notes that
    the DARPA development initiative is consistent with the
    provision contained in the National Defense Authorization Act
    for Fiscal Year 2002 (Public Law 107-107) that directed the
    Secretary of Defense and the Director of Central Intelligence
    to jointly develop an architecture for a national collaborative
    environment that would enable national-level data-mining of
    intelligence and other information.
        In 1998, the committee identified advances in computer-
    based analysis technology that enabled recognition of
    previously undetectable associations and patterns resident
    within large volumes of data compiled from various sources. The
    committee recognized that this capability, commonly known as
    data mining, offered the potential for early detection of
    existing and emerging asymmetric terrorist threats to our
    nation. The committee supported research and development of a
    capability to collect, fuse, and analyze disparate data from
    multiple agencies. The purpose of this capability would be to
    assist policymakers as they decide the actions necessary to
    prevent, preempt, or counter a variety of threats, including
    terrorism, weapons proliferation, espionage, and information
    warfare. Having the ability to better understand the trends and
    relationships between individuals, groups, and actions is
    considered critical to detecting, predicting and preventing
    acts of terrorism. The committee's efforts resulted in the
    eventual increase of $7.0 million for the Army Intelligence
    Command Land Information Warfare Activity in fiscal year 2000.
        After several years of continuous support for research and
    development of the requisite technologies, and successful
    demonstration of this capability, this effort encountered
    another obstacle. Effective data-mining can only occur if it is
    part of a national capability that integrated some 33 separate
    departments, agencies, and other entities into an architecture
    that overcomes the historical stove-piped nature of the
    intelligence community. The committee further recognized that
    full support by all involved agencies for a national
    collaborative intelligence capability would be dependent upon
    the active participation of the administration.
        Therefore, in order to determine the most appropriate
    architecture, the National Defense Authorization Act for Fiscal
    Year 2001 (Public Law 106-398) requires the Secretary of
    Defense, jointly with the Director of Central Intelligence, to
    assess and recommend the best architecture for a multi-agency
    national collaborative information analysis capability (NCIAC).
    The National Defense Authorization Act for Fiscal Year 2002
    (Public Law 107-107) expanded the previous report requirement
    to include a requirement for draft legislation necessary to
    establish such a capability, and identification of any
    legislative or regulatory changes that would be needed to
    implement the preferred architecture.
        The events of September 11, 2001 have added urgency to the
    requirement to establish a national collaborative intelligence
    analysis capability. The committee believes that the Secretary
    of Homeland Security should be a full participant in both
    providing data to a NCIAC and having access to its analyses.
    The committee also believes that the Secretary of Defense and
    the Director of Central Intelligence must, as rapidly as
    possible, determine the best NCIAC architecture, and recommend
    a plan to develop such a capability. The committee believes
    that this capability will transform intelligence analyses, and
    provide a fundamentally new capability to defend our nation
    against both internal and external threats.
    Section 301. Under Secretary For Chemical, Biological, Radiological,
            And Nuclear Countermeasures
        As amended, Section 301 would expand the scope of threats
    for which the Under Secretary for Chemical, Biological,
    Radiological, and Nuclear Countermeasures is responsible by
    including explosives and explosive materials. Additionally,
    subsection 301(3)(A) would clarify that the Under Secretary is
    not only responsible for preventing the importation of CBRN
    weapons, related weapons, and explosives and explosive
    materials, but also the materials, technologies, and equipment
    intended for the illicit research, development, production, or
    use of these weapons and devices.
        The committee recognizes that some weapons of mass
    destruction require explosives in order to be activated or
    disseminated, and that sufficient amounts of explosives or
    explosive materials can be used by terrorists to inflict mass
    casualties or damage. Additionally, there is sufficient
    likelihood that terrorists could not only attempt to covertly
    bring complete CBRN weapons into the country, but that they
    could also import a weapon's key items (goods, technologies,
    and material) into the United States, use these items to
    construct a weapon of mass destruction, and then deliver it to
    their intended target. Therefore, the committee considered it
    imperative that the Under Secretary for CBRN Countermeasures
    not only be responsible for preventing the importation of whole
    weapons, but also the weapons' components.
        The committee recognizes the paramount role intelligence
    will play in preventing future acts of terrorism against the
    United States. This role is particularly heightened by the fact
    that, in the future, terrorists may employ CBRN weapons that
    could prove far more catastrophic than the attacks of September
    11. The committee declined to adopt the Administration's
    proposal to transfer the intelligence program and activities of
    Lawrence Livermore National Laboratory (LLNL) to the Department
    of Homeland Security. The committee is concerned that the
    intelligence effort undertaken by LLNL for the Department of
    Energy is a small part of a much larger program, and questions
    whether that portion is separable without adversely affecting
    Department of Energy nonproliferation programs, as well as
    support for other Federal agencies. Accordingly, as amended,
    subsection 301(5) would authorize the Under Secretary to
    establish a separate intelligence analysis capability to
    support CBRN counterterrorism in the United States.
    Section 302. Functions Transferred
        As amended, subsection 302(2) would specifically exclude
    from transfer to the Department of Homeland Security those
    programs and functions of the Department of Energy that are
    directly related to the mission of the National Nuclear
    Security Administration, as specified in section 3211 of the
    National Nuclear Security Administration Act (Public Law 106-
    65).
        Subsection 302(2)(A), as amended, would further specify
    that only those supporting activities of the Nonproliferation
    and Verification Research and Development program directly
    related to homeland security, as described in the fiscal year
    2003 budget request, shall be transferred to the Department of
    Homeland Security. A similar condition would be incorporated
    into subsections 302(2)(B) and 302(2)(C) of the bill regarding
    transfer of nuclear smuggling activities of the Proliferation
    Detection Program and the Nuclear Assessment Program,
    respectively.
        Finally, as discussed above, the committee declined to
    adopt the part of subsection 302(2)(F) that would have
    transferred the existing intelligence programs at Lawrence
    Livermore National Laboratory to the Department of Homeland
    Security.

    Section 304. Military Activities
        As amended, section 304 was renumbered as section 735. The
    amended section clarifies that nothing in this Act would grant
    authority to the Secretary of Homeland Security to engage in
    warfighting, the military defense of the Untied States, or
    other military activities. This section would further clarify
    that nothing in this Act limits the existing authority of the
    Department of Defense or the Armed Forces to engage in
    warfighting, the military defense of the United States, or
    other military activities.
    Section 305. Administration of Programs and Activities Transferred from
            the Department of Energy
        As amended, Section 305 would specify how certain homeland
    security-related research, development, test, and evaluation
    (RDT&E) activities would be conducted.
        Subsection 305(a) requires the Secretary of Homeland
    Security to establish a primary center for carrying out the
    RDT&E activities of the Department of Homeland Security at a
    national laboratory of the National Nuclear Security
    Administration. This subsection would also provide for the
    establishment of secondary centers at one or more national
    laboratories of the Department of Energy.
        While the committee amendment does not specify which
    laboratory will serve as this center, the committee understands
    that the Administration initially proposed Lawrence Livermore
    National Laboratory as the preferred site for this activity.
    Secondary centers would be established at the discretion of the
    Secretary of Homeland Security with the concurrence of the
    Secretary of Energy.
        This subsection would further provide for the transfer from
    the Department of Energy of facilities and assets required to
    execute the research and development mission of the Department
    of Homeland Security. The Secretary of Energy would designate
    the facilities and assets to be transferred, with the
    concurrence of the Secretary of Homeland Security. The
    facilities and assets transferred under this subsection by the
    Department of Energy could, with the concurrence of the
    Secretary of Homeland Security, substitute for the specific
    transfers of assets required in Titles II and III, provided
    that substitute facilities and assets were substantively
    equivalent.
        It is the intent of the committee to give the Secretary of
    Homeland Security and the Secretary of Energy the flexibility
    to organize and consolidate facilities and assets in a manner
    that is advantageous to the execution of their respective
    missions, consistent with the transfer of functions described
    in this Act. The committee expects this consolidation to occur
    within the existing infrastructure of the national
    laboratories, and for nothing in this section to be construed
    as authorization for new construction.
        The committee wishes to convey special intent with the
    choice of the word ``center''. The committee believes that
    there is great value for the Department of Homeland Security in
    establishing and physically consolidating, within the national
    laboratories, a critical mass of talent and technology whose
    primary focus and application is homeland security. At the same
    time, the committee recognizes that, due to the unique nature
    of some facilities, it will not be possible in all cases to
    achieve such a consolidation.
        Consistent with the committee's intent to consolidate and
    establish a unique identity for homeland security efforts at
    the Department of Energy national laboratories, subsection
    305(b) would require execution of homeland security programs
    under separate contracts with the Department of Homeland
    Security. The committee believes that separate contracts will
    ensure proper focus on the Secretary of Homeland Security's
    unique priorities. The committee expects the Department of
    Homeland Security to take advantage of the unique opportunity
    to stand up a new organizational structure and establish a
    streamlined process for managing these contracts, with clearly
    defined responsibilities and accountability. A small
    headquarters organization can focus on policy, budgeting,
    technical objectives, and strategic planning for research and
    development, with responsibility for day-to-day oversight of
    contract activities delegated to site offices. The committee
    sees no need for intermediate levels of federal management; nor
    does it see a need for the Department of Homeland Security to
    generate detailed guidance for its contractors on how to
    conduct RDT&E activities.
        The committee recognizes that certain activities the
    Department of Homeland Security may wish to conduct at a
    Department of Energy national laboratory might be of limited
    scope or duration. In such cases, it may be more advantageous
    for the Department of Homeland Security to conduct those
    activities on a reimbursable ``work-for-others'' basis, rather
    than through a separate contract. In such a circumstance,
    subsection 305(c) would waive the Department of Energy ``added
    factor'' for pass through of funds from the Department of
    Homeland Security to the national laboratory. It would further
    stipulate that personnel costs charged to the program for
    laboratory contractors could not exceed those that the
    Secretary of Energy authorizes for Department of Energy
    programs at that same laboratory. In other words, this
    subsection would prevent higher personnel costs or pass through
    charges, as is common practice, for future work performed by
    the Department of Energy for the Department of Homeland
    Security on a work-for-others basis.
        The committee understands the value of laboratory-directed
    research and development, but believes that funds should be
    expended for the purpose for which they are authorized and
    appropriated by Congress. Subsection 305(d) would require that
    any laboratory-directed research and development projects
    undertaken at a national laboratory of the Department of
    Energy, with funds derived from the Department of Homeland
    Security, shall support the mission of the Department of
    Homeland Security. This subsection would prevent the use of
    Department of Homeland Security funds for self-directed
    research that is not relevant to homeland security.
        Subsection 305(e) would require the Secretary of Energy to
    coordinate with the Secretary of Homeland Security to ensure
    that homeland security-related RDT&E activities undertaken by
    the Department of Energy are not duplicative of Department of
    Homeland Security efforts. Specifically, the committee cautions
    the Department of Energy against requesting funds in future
    budget submissions for functions that have been assumed by the
    Department of Homeland Security.
        Subsection 305(f) would require the Secretary of Energy,
    with the concurrence of the Secretary of Homeland Security, to
    develop a schedule for transfer of assets from the Department
    of Energy to the Department of Homeland Security. The transfer
    could begin upon enactment of this Act, and must be completed
    by the end of fiscal year 2003.
    Section 501. Under Secretary For Emergency Preparedness And Response
        As amended, this section would clarify the role and
    responsibilities of the Under Secretary for Emergency
    Preparedness and Response with regard to the training of
    nuclear incident response teams.
        The committee understands that, regardless of homeland
    security needs, the Secretary of Energy has a requirement to
    respond to nuclear incidents and emergencies. Accordingly, the
    committee believes that the Secretary of Energy should retain
    primary responsibility for organizing, training, and equipping
    nuclear incident response teams to conduct Department of Energy
    missions, as described in subsection 503(b). Thus, it is the
    committee's intent that the Department of Homeland Security
    should bear the incremental cost of joint planning and training
    for the homeland security missions that exceed the scope of
    capabilities required of the nuclear incident response teams by
    the Secretary of Energy.
    Section 502. Functions Transferred
        As amended, this section would transfer the Integrated
    Hazard Information System (not including personnel) of the
    Department of Defense to the Department of Homeland Security so
    that the latter would have a near real-time capability to
    detect wild fires in North America.
    Section 503. Nuclear Incident Response
        As amended, this section would limit the circumstances
    under which the Secretary of Homeland Security may assume
    operational control of nuclear incident response teams to
    respond to incidents occurring within the United States. This
    section was also amended to ensure that current indemnity
    provisions applicable to these nuclear incident response teams
    remains in place when these teams are activated by the
    Department of Homeland Security.
    Section 735. Authorization Of Appropriations
        As amended, this section would strike the original
    provision in the underlying bill that would have provided a
    permanent authorization of appropriations for the new
    Department of Homeland Security. This section would be replaced
    with an amended version of section 304 of the underlying bill,
    which addresses limits placed on the military activities of the
    Department of Homeland Security.
    Section 904. Coast Guard
        This section, as amended, would modify certain provisions
    of the United States Code relevant to the potential transfer of
    the Coast Guard from the Department of Transportation to the
    Department of Homeland Security. This section would accomplish
    this task by replacing references to the Department of
    Transportation and the Secretary of Transportation with
    references to the new Department and Secretary of Homeland
    Security. The committee did not address the merits of
    transferring the Coast Guard to the Department of Homeland
    Security; consideration of that matter is properly vested in
    the committee with the primary jurisdiction over the Coast
    Guard. Should the decision be made by the Congress, however, to
    transfer the Coast Guard to the Department of Homeland
    Security, the changes made by this section would assure that
    all pay, benefits, and other privileges afforded to the
    uniformed members of the Coast Guard remain in effect.
    Section 907. Transfer Of Department Of Defense Chemical Biological
            Defense Program Homeland Security Projects
        As amended, this section would strike the requirement for
    the Department of Defense to establish a National Bio-weapons
    Defense Analysis Center, as provided for in the underlying
    bill. After the establishment of the Center in the Department
    of Defense, section 302(3) of H.R. 5005, as introduced, would
    have transferred the Center to the Department of Homeland
    Security. Instead of the original proposal, the amended
    subsection 302(3) would transfer two homeland security projects
    from the Department of Defense chemical-biological defense
    program to the Department of Homeland Security: the biological
    counter-terrorism research program and the biological defense
    homeland security support program.
        The President's fiscal year 2003 budget request for the
    Department of Defense contained a total of $420 million for two
    homeland security initiatives, both of which were added to the
    Department of Homeland Security's initial fiscal year 2003
    budget request. These initiatives would strengthen the federal
    government's chemical and biological defense and response
    capabilities. The request included $118 million ($113 million
    in research and development and $5 million in military
    construction funds) for a biological counter-terrorism research
    program that would focus on assessment of the traditional and
    emerging threats from the perspective of counterterrorism, and
    would include the establishment of a Center for Biological
    Counterterrorism Research at Fort Detrick, Maryland.
        The request also included $272 million in research and
    development, and $30 million in procurement, for the biological
    defense homeland security support program to: initiate a
    comprehensive program to build a National Biological Defense
    System; and, provide an integrated homeland security capability
    to detect, mitigate, and respond to biological-related
    incidents.

                           Items of Special Interest

    Transfer of Work-for-Others Activities
        The committee is aware that ``work-for-others'' activities
    compose a significant fraction of the programmatic activities
    of the national laboratories of the National Nuclear Security
    Administration. It is the committee's expectation that work-
    for-others activities related to homeland security, and
    specifically those related to functions transferred from the
    Department of Energy, will also move to the Department of
    Homeland Security where feasible.
    Prioritization of Homeland Security Investments
        The committee believes, as the Department of Homeland
    Security embarks upon its important mission, that it should
    first conduct a thorough and critical analysis of the nation's
    homeland security needs. This assessment would not only help
    the department accomplish its current mission, but also allow
    the Secretary to conduct long-term planning and direct future
    investments. Such analysis should also extend beyond a
    prioritization of research and development efforts, and examine
    homeland security on the basis of a system of systems. For
    example, one might consider the relative national security
    costs and benefits of acquiring additional agents for the
    Border Patrol, as compared to procuring imaging equipment to
    scan cargo containers at ports of entry. The committee believes
    that the earlier such investments are made in these areas, the
    more quickly homeland security can be enhanced and savings
    realized. The committee thus recommends that the Department of
    Homeland Security formalize a process to provide an initial
    assessment, and continuous reassessments, of benefits versus
    costs studies of the nation's homeland security needs.
    Department of Homeland Security use of existing counterterrorism
            capabilities
        The committee notes that, independent of the establishment
    of the new Department of Homeland Security, a variety of
    federal, state and local initiatives have been undertaken in
    recent years that may contribute to an improved ability to
    prevent or help respond to terrorist activities against the
    United States. For example, civilian bioterrorism medical
    response centers already exist. Although not specifically
    incorporated into the new Department of Homeland Security by
    H.R. 5005, such centers and others focused on various aspects
    of domestic counterterrorism have the potential to enhance the
    capabilities of both the Departments of Defense and Homeland
    Security to better prepare for and respond to the terrorist
    threat. Accordingly, the committee encourages the Secretary of
    Homeland Security and the Secretary of Defense to take full
    advantage of these centers as they devise plans for how best to
    respond to this pressing threat.
    Homeland security research and development program
        The committee believes that one of the Secretary of
    Homeland Security's primary responsibilities and capabilities
    should be to conduct research and development in support of the
    homeland security mission.
        The committee notes that the National Research Council's
    recent report, ``Making the Nation Safer--the Role of Science
    and Technology in Countering Terrorism,'' recommends
    establishment of an Under Secretary for Technology in the
    Department of Homeland Security to provide a focal point for
    guiding key research and technology development programs across
    the Department of Homeland Security. This Under Secretary would
    also coordinate the Department of Homeland Security's research
    and development programs with those of the major science,
    engineering, and medical science agencies outside the
    Department of Homeland Security.
        The committee also notes that the council report recommends
    the establishment of a Homeland Security Institute: a
    dedicated, contracted, not-for-profit organization, which would
    provide technical analysis and support to the Department of
    Homeland Security and the Office of Homeland Security.
        The committee recommends the designation of an individual,
    within the secretariat of the Department of Homeland Security,
    who would be responsible for the department's research and
    development (R&D) program. This individual's duties should
    include the integration of the R&D programs and activities of
    each organizational element within the Department of Homeland
    Security, as well as the coordination of the department's R&D
    programs with those of other federal agencies.

                               Committee Position

        On July 10, 2002, the Committee on Armed Services ordered
    H.R. 5005, as amended, reported to the House with a favorable
    recommendation by voice vote, a quorum being present.

                  Additional Views Of Congressman John Spratt

        Soon after Pearl Harbor, President Roosevelt appointed
    James F. Byrnes as head of a War Mobilization Office, and
    vested him with a broad, powerful charter: to marshal the
    nation for war. Byrnes became known as the ``Assistant
    President,''and with the President's proxy and his own personal
    ability, Byrnes made the War Mobilization Office work. I think
    that model is worth remembering and trying in the wake of
    September 11, but I recognize that it is not the only way to
    deal with the threat of terrorism, and not the route we now
    seem bent upon taking. So, I support this legislation and
    accept the need for Congress to act expeditiously. But the bill
    reported by the committee is far from perfect. Efforts to
    improve this bill need to continue in the House Select
    Committee, on the House floor, in conference with the Senate,
    and in the years to come. Merging many organizations, most with
    purposes other than homeland security, into a new department is
    not likely to be done right on the first try, particularly when
    done at a fast clip. In this vein, I want to highlight areas of
    the legislation that I believe could be problematic and that
    warrant continued attention.
        Section 301 of the bill as amended by our committee
    requires the Under Secretary for Chemical, Biological,
    Radiological, and Nuclear (CBRN) Countermeasures to be
    responsible for intelligence analysis of CBRN threats. This
    seems reasonable, but elsewhere the legislation establishes an
    Under Secretary for Information Analysis and Infrastructure
    Protection. I believe placing the CBRN intelligence analysis
    function outside the Under Secretary for Information Analysis
    and Infrastructure Protection may detract from the
    Administration's attempt to establish one threat analysis
    center within the new department. It may also confuse the lines
    of accountability, blurring who is responsible for analyzing
    CBRN threats. I think these provisions need further attention.
        Section 301 also charges the Secretary of CBRN with
    ``developing national policy for and coordinating the Federal
    Government's civilian efforts'' for ``identifying, preventing,
    and responding to'' CRBN attacks. To the extent that all such
    federal efforts are located within DHS, this may be workable,
    but I am skeptical that this will be the case. If not, I do not
    believe that an under secretary in one department will be able
    to develop and coordinate a federal strategy that will be
    binding on other agencies. Such an interagency process is
    probably better chaired and handled by the Executive Office of
    the President.
        Section 302 of the bill transfers parts of the Department
    of Energy (DOE) and National Nuclear Security Administration
    (NNSA) to the new Department of Homeland Security (DHS). The
    Chairman and Ranking Member have tried to revise the
    Administration's original bill and narrow the scope and clarify
    the purpose of these transfers. DOE and NNSA will continue to
    conduct critical national security missions--most notably
    stockpile stewardship of the nation's nuclear arsenal and non-
    proliferation programs. These roles will not be part of the DHS
    mission. The committee made several important changes to
    emphasize that only those programs and activities directly
    related to homeland security, and not part of DOE and NNSA's
    other important national security missions, are to be
    transferred. But most of the scientists in DOE and NNSA wear
    several hats and work multiple projects. Singling out those who
    work only on homeland security and do nothing else related to
    other national security will be virtually impossible.
        I commend the committee's approach to this matter, but I am
    concerned that the bill language could lead to the transfer of
    more programs and activities than the committee intends, either
    because the Administration interprets the legislation
    differently or because it changes the names or scopes of the
    programs identified in Section 302. The legislation is silent
    on the definition of ``homeland security,'' complicating the
    task of identifying those programs ``directly related to
    homeland security.'' It does not specify what should occur
    should the Secretary of Energy and the Secretary of DHS
    disagree on a transfer, an easily foreseeable circumstance. In
    addition, the legislation contains no reporting requirements to
    Congress during the transition phase, which will make it
    difficult for Congress to oversee the transition and intervene
    if it strongly objects to a particular transition proposal.
        In addition, setting a deadline of September 30, 2003 for
    completion of the transition phase when the Administration's
    proposed legislation set no such date may create undue pressure
    that will complicate rather than ease the arduous task of
    merging different entities into one. I hope our committee will
    continue to assess these issues throughout the legislative
    process and will closely monitor the transfers from DOE and
    NNSA throughout the transition phase.
        Section 305 of the bill requires the Secretary of DHS to
    establish a ``center of excellence'' for homeland security at
    one of the three national security laboratories, Lawrence
    Livermore, Los Alamos, or Sandia. This may be wise, but many
    federal labs and the private sector can be useful in developing
    needed homeland security technology, and the center should not
    become a monopoly that stifles competition. One of the reasons
    for the Manhattan Project's success was that Oppenheimer
    staunchly opposed the compartmentalization that General Groves
    insisted upon. Care must also be taken to ensure that DOE and
    NNSA personnel at this ``center of excellence'' working on
    other critical national security missions--particularly
    stockpile stewardship and non-proliferation--are not absorbed
    with homeland security assignments to the detriment of other
    missions. I understand that the committee is continuing to
    consider this issue, and commend it for doing so.
        Finally, I would sound a cautionary note on cost. It is
    difficult to believe the Bush Administration's assertions that
    DHS will be budget-neutral. The Congressional Budget Office
    estimates that H.R. 5005 as introduced will cost $3 billion
    more over 2003--2007 than we are currently spending. The CBO
    estimate assumes extremely limited transition costs, does not
    assume that the majority of this agency will at some point have
    a central headquarters or use a consistent information
    technology system, and it assumes that the DHS will not require
    increases above 2002 levels of spending to enhance homeland
    security. Given the large, sustained budget deficits that are
    forecast, the unacknowledged costs of homeland security, the
    ambitious ramp-up in defense spending, and the advent of the
    Baby Boom retirement era, Congress and the Administration must
    become much more candid in considering budgetary trade-offs. As
    meritorious as homeland security may be, this bill is
    indicative of a recent and disturbing trend toward committing
    the government to an undertaking without frankly considering
    how we will pay for it.
        This is not a perfect bill, but the committee has made a
    good-faith effort in a short period of time to improve the
    Administration's proposal, and despite my concerns, I support
    it, though I do believe that the work of the committee in this
    area is not ending, but just beginning.

                                            John Spratt

                Dissenting Views Of Congresswoman Heather Wilson

        The Committee added to this bill Section 305,
    Administration of Programs and Activities Transferred From the
    Department of Energy. This section directs the Secretary of
    Homeland Security to establish at a national security
    laboratory of the National Nuclear Security Administration a
    center to serve as the primary location for carrying out
    research, development, test, and evaluation activities for the
    Department.
        I offered an amendment, which in part would have removed
    this section. I withdrew the amendment with the consensus of
    the Committee to further develop and submit my concepts
    relating to strengthening the role and ability of the
    Department to conduct and deploy research and technology that
    will be a critical strategic element for securing our homeland.
    Those provisions have been incorporated into the bill reported
    by the Energy and Commerce Committee.
        The Committee discussed whether any laboratory should be
    designated. We did not discuss which laboratory should be
    designated, and intentionally left that undecided. The
    committee made no recommendation at all in that regard nor
    would I have consented to such an approach.
        I believe that creating a Center for Homeland Security at
    one of our national laboratories without giving the Department
    a stronger overall mission in the R&D area could undermine the
    ability of the Department to acquire the best available
    research and technology from wherever it may be available.
        The Department should develop its research and technology
    priorities and employ the capabilities throughout the country
    whether at universities, in industry, at national laboratories,
    or in other federal agencies to best meet its objectives based
    on considerations of technical merit and demonstrated
    performance.
        I want to be clear that I strongly support the use of the
    national laboratories, which have made and will continue making
    vital contributions to homeland security.

                                         Heather Wilson
                        COMMITTEE ON ENERGY AND COMMERCE

                              House of Representatives,
                              Committee on Energy and Commerce,
                                         Washington, DC, July 12, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Majority Leader Armey: We take pride in transmitting
    to you herewith the recommendations of the Committee on Energy
    and Commerce with respect to H.R. 5005, the Homeland Security
    Act of 2002.
        Please find enclosed (1) a Committee Print of the
    Committee's specific legislative recommendations, and (2) a
    Report on those recommendations.
        The Committee on Energy and Commerce looks forward to
    working closely with the Select Committee on H.R. 5005. Please
    do not hesitate to contact us or have your staff contact Mr.
    David V. Marventano, the Staff Director, or Mr. Reid Stuntz,
    the Minority Staff Director, if we can be of assistance.
            Sincerely,
                                 W.J. ``Billy'' Tauzin,
                                                      Chairman,
                                       John D. Dingell,
                                                Ranking Member.
                                    ------

                                Committee Print

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Homeland Security
    Act of 2002''.
        (b) Table of Contents.--The table of contents for this Act is as
    follows:

    Sec. 1. Short title; table of contents.
    Sec. 2. Definitions.
    Sec. 3. Construction; severability.
    Sec. 4. Effective date.

                    TITLE I--DEPARTMENT OF HOMELAND SECURITY

    Sec. 101. Executive department; mission.
    Sec. 102. Secretary; functions.
    Sec. 103. Other officers.

       TITLE II--CYBERSECURITY, INFORMATION ANALYSIS, AND INFRASTRUCTURE
                                   PROTECTION

    Sec. 201. Under Secretary for Cybersecurity, Information Analysis, and
    Infrastructure Protection.
    Sec. 202. Functions transferred.
    Sec. 203. Access to information.
    Sec. 204. Information voluntarily provided.
    Sec. 205. Federal cybersecurity program.

            TITLE III--RESEARCH, DEVELOPMENT AND TECHNOLOGY SYSTEMS

    Sec. 301. Under Secretary for Research, Development, and Technology
    Systems.
    Sec. 302. Functions transferred.
    Sec. 303. Conduct of certain public health-related activities.
    Sec. 304. Security at Federal research laboratories.

                  TITLE IV--BORDER AND TRANSPORTATION SECURITY

    Sec. 401. Under Secretary for Border and Transportation Security.
    Sec. 402. Functions transferred.
    Sec. 403. Visa issuance.

                  TITLE V--EMERGENCY PREPAREDNESS AND RESPONSE

    Sec. 501. Under Secretary for Emergency Preparedness and Response.
    Sec. 502. Functions transferred.
    Sec. 503. Nuclear incident response.
    Sec. 504. Definition.

                              TITLE VI--MANAGEMENT

    Sec. 601. Under Secretary for Management.
    Sec. 602. Chief Financial Officer.
    Sec. 603. Chief Information Officer.

     TITLE VII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL;
                UNITED STATES SECRET SERVICE; GENERAL PROVISIONS

                         Subtitle B--Inspector General

    Sec. 710. Authority of the Secretary.

                    Subtitle C--United States Secret Service

    Sec. 720. Functions transferred.

                         Subtitle D--General Provisions

    Sec. 730. Establishment of human resources management system.
    Sec. 731. Advisory committees.
    Sec. 732. Acquisitions; property.
    Sec. 733. Reorganization; transfer.
    Sec. 734. Miscellaneous provisions.
    Sec. 735. Authorization of appropriations.
    Sec. 736. Military activities.
    Sec. 737. Rule of construction regarding regulatory authority.
    Sec. 738. Provisions regarding transfers from Department of Energy.

                             TITLE VIII--TRANSITION

    Sec. 801. Definitions.
    Sec. 802. Transfer of agencies.
    Sec. 803. Transitional authorities.
    Sec. 804. Savings provisions.
    Sec. 805. Terminations.
    Sec. 806. Incidental transfers.

                 TITLE IX--CONFORMING AND TECHNICAL AMENDMENTS

    Sec. 901. Inspector General Act.
    Sec. 902. Executive schedule.
    Sec. 903. United States Secret Service.
    Sec. 904. Coast Guard.
    Sec. 905. Strategic national stockpile and smallpox vaccine
    development.
    Sec. 906. Biological agents; Public Health Service Act.
    Sec. 907. National Bio-Weapons Defense Analysis Center.

    SEC. 2. DEFINITIONS.

        The following shall apply for purposes of this Act:
                (1) The term ``American homeland'' or ``homeland'' means
            the United States, in a geographic sense.
                (2) The term ``assets'' includes contracts, facilities,
            property, records, unobligated or unexpended balances of
            appropriations, and other funds or resources (other than
            personnel).
                (3) The term ``Department'' means the Department of
            Homeland Security.
                (4) The term ``emergency response providers'' includes
            Federal, State, and local emergency public safety, law
            enforcement, emergency response, emergency medical, and related
            personnel, agencies, and authorities.
                (5) The term ``executive agency'' means an executive agency
            and a military department, as defined, respectively, in
            sections 105 and 102 of title 5, United States Code.
                (6) The term ``functions'' includes authorities, powers,
            rights, privileges, immunities, programs, projects, activities,
            duties, responsibilities, and obligations.
                (7) The term ``local government'' has the meaning given in
            section 102(6) of the Robert T. Stafford Disaster Relief and
            Emergency Assistance Act (Public Law 93-288).
                (8) The term ``major disaster'' has the meaning given in
            section 102(2) of the Robert T. Stafford Disaster Relief and
            Emergency Assistance Act (Public Law 93-288).
                (9) The term ``personnel'' means officers and employees.
                (10) The term ``Secretary'' means the Secretary of Homeland
            Security.
                (11) The term ``United States'', when used in a geographic
            sense, means any State (within the meaning of section 102(4) of
            the Robert T. Stafford Disaster Relief and Emergency Assistance
            Act (Public Law 93-288)), any possession of the United States,
            and any waters within the jurisdiction of the United States.

    SEC. 3. CONSTRUCTION; SEVERABILITY.

        Any provision of this Act held to be invalid or unenforceable by
    its terms, or as applied to any person or circumstance, shall be
    construed so as to give it the maximum effect permitted by law, unless
    such holding shall be one of utter invalidity or unenforceability, in
    which event such provision shall be deemed severable from this Act and
    shall not affect the remainder thereof, or the application of such
    provision to other persons not similarly situated or to other,
    dissimilar circumstances.

    SEC. 4. EFFECTIVE DATE.

        This Act shall take effect thirty days after the date of enactment
    or, if enacted within thirty days before January 1, 2003, on January 1,
    2003.

                    TITLE I--DEPARTMENT OF HOMELAND SECURITY

    SEC. 101. EXECUTIVE DEPARTMENT; MISSION.

        (a) Establishment.--There is established a Department of Homeland
    Security, as an executive department of the United States within the
    meaning of title 5, United States Code.
        (b) Mission.--(1) The primary mission of the Department is to--
                (A) prevent terrorist attacks within the United States;
                (B) reduce the vulnerability of the United States to
            terrorism; and
                (C) minimize the damage, and assist in the recovery, from
            terrorist attacks that occur within the United States.
        (2) The Secretary shall also be responsible for carrying out the
    functions of entities transferred to the Department as provided by law.

    SEC. 102. SECRETARY; FUNCTIONS.

        (a) Secretary.--(1) There is a Secretary of Homeland Security,
    appointed by the President, by and with the advice and consent of the
    Senate.
        (2) The Secretary is the head of the Department and shall have
    direction, authority, and control over it.
        (3) All functions of all officers, employees, and organizational
    units of the Department are vested in the Secretary.
        (b) Functions.--The Secretary--
                (1) may delegate any of his functions to any officer,
            employee, or organizational unit of the Department;
                (2) may promulgate regulations as provided in section 301
            of title 5, United States Code; and
                (3) shall have the authority to make contracts, grants, and
            cooperative agreements, and to enter into agreements with other
            executive agencies, as may be necessary and proper to carry out
            his responsibilities under this Act or otherwise provided by
            law.

    SEC. 103. OTHER OFFICERS.

        (a) Deputy Secretary; Under Secretaries.--To assist the Secretary
    in the performance of his functions, there are the following officers,
    appointed by the President, by and with the advice and consent of the
    Senate:
                (1) A Deputy Secretary of Homeland Security, who shall be
            the Secretary's first assistant for purposes of chapter 33,
            subchapter 3, of title 5, United States Code.
                (2) An Under Secretary for Cybersecurity, Information
            Analysis, and Infrastructure Protection.
                (3) An Under Secretary for Research, Development, and
            Technology Systems.
                (4) An Under Secretary for Border and Transportation
            Security.
                (5) An Under Secretary for Emergency Preparedness and
            Response.
                (6) An Under Secretary for Management.
                (7) Not more than six Assistant Secretaries.
        (b) Inspector General.--To assist the Secretary in the performance
    of his functions, there is an Inspector General, who shall be appointed
    as provided in section 3(a) of the Inspector General Act of 1978.
        (c) Commandant of the Coast Guard.--To assist the Secretary in the
    performance of his functions, there is a Commandant of the Coast Guard,
    who shall be appointed as provided in section 44 of title 14, United
    States Code.
        (d) Other Officers.--To assist the Secretary in the performance of
    his functions, there are the following officers, appointed by the
    President:
                (1) A General Counsel, who shall be the chief legal officer
            of the Department.
                (2) Not more than ten Assistant Secretaries.
                (3) A Director of the Secret Service.
                (4) A Chief Financial Officer.
                (5) A Chief Information Officer.
        (e) Performance of Specific Functions.--Subject to the provisions
    of this Act, every officer of the department shall perform the
    functions specified by law for his office or prescribed by the
    Secretary.

       TITLE II--CYBERSECURITY, INFORMATION ANALYSIS, AND INFRASTRUCTURE
                                   PROTECTION

    SEC. 201. UNDER SECRETARY FOR CYBERSECURITY, INFORMATION ANALYSIS, AND
                        INFRASTRUCTURE PROTECTION.

        The Secretary, acting through the Under Secretary for
    Cybersecurity, Information Analysis, and Infrastructure Protection ,
    shall have responsibility for--
                (1) taking (with respect to those functions established
            under another Act and transferred to the Secretary by this Act)
            or seeking to effect necessary measures to protect the key
            resources and critical infrastructures in the United States, in
            coordination with other executive agencies and in cooperation
            with State and local government personnel, agencies, and
            authorities, the private sector, and other entities;
                (2) receiving and analyzing law enforcement information,
            intelligence, and other information in order to understand the
            nature and scope of the terrorist threat to the American
            homeland and to detect and identify potential threats of
            terrorism within the United States;
                (3) comprehensively assessing (in addition to, and not in
            lieu of, assessments collected, possessed, or prepared by other
            executive agencies) the vulnerabilities of the key resources
            and critical infrastructures in the United States to a
            terrorist attack or other intentional act intended to
            substantially disrupt the functioning of such resources and
            infrastructures;
                (4) integrating relevant information, intelligence
            analyses, and vulnerability assessments (whether such
            information, analyses, or assessments are provided or produced
            by the Department or others) to identify protective priorities
            and to support protective measures by the Department (with
            respect to those functions established under another Act and
            transferred to the Secretary by this Act), by other executive
            agencies, by State and local government personnel, agencies,
            and authorities, by the private sector, and by other entities;
                (5) developing a comprehensive national plan for securing
            the key resources and critical infrastructures in the United
            States to a terrorist attack or other intentional act intended
            to substantially disrupt the functioning of such resources and
            infrastructure;
                (6) administering the Homeland Security Advisory System,
            exercising primary responsibility for public advisories
            relating to terrorist threats, and (in coordination with other
            executive agencies) providing specific warning information to
            State and local government personnel, agencies, and
            authorities, the private sector, other entities, and the
            public, as well as advice about appropriate protective actions
            and countermeasures; and
                (7) reviewing, analyzing, and making recommendations for
            improvements in the policies and procedures governing the
            sharing of law enforcement, intelligence, and other information
            relating to homeland security within the Federal Government and
            between such government and State and local government
            personnel, agencies, and authorities.

    SEC. 202. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The National Infrastructure Protection Center of the
            Federal Bureau of Investigation (other than the Computer
            Investigations and Operations Section), including the functions
            of the Attorney General relating thereto.
                (2) The National Communications System of the Department of
            Defense, including the functions of the Secretary of Defense
            relating thereto.
                (3) The Critical Infrastructure Assurance Office of the
            Department of Commerce, including the functions of the
            Secretary of Commerce relating thereto.
                (4) The Computer Security Division of the National
            Institute of Standards and Technology, including the functions
            of the Secretary of Commerce relating thereto.
                (5) The energy security and assurance program and
            activities of the Department of Energy (including the National
            Infrastructure Simulation and Analysis Center), including the
            functions of the Secretary of Energy relating thereto.
                (6) The Federal Computer Incident Response Center of the
            General Services Administration, including the functions of the
            Administrator of General Services relating thereto.

    SEC. 203. ACCESS TO INFORMATION.

        The Secretary shall have access to all reports, assessments, and
    analytical information relating to threats of terrorism in the United
    States, and to all information concerning the vulnerabilities of key
    resources and critical infrastructures, or other vulnerabilities, of
    the United States to terrorism, whether or not such information has
    been analyzed, that may be collected, possessed, or prepared by any
    executive agency, except as otherwise directed by the President. The
    Secretary shall also have access to other information relating to the
    foregoing matters that may be collected, possessed, or prepared by an
    executive agency, as the President may further provide. With respect to
    the material to which the Secretary has access under this section--
                (1) the Secretary may obtain such material by request, and
            may enter into cooperative arrangements with other executive
            agencies to share such material on a regular or routine basis,
            including requests or arrangements involving broad categories
            of material;
                (2) regardless of whether the Secretary has made any
            request or entered into any cooperative arrangement pursuant to
            paragraph (1), all executive agencies promptly shall provide to
            the Secretary--
                        (A) all intelligence reports, assessments, and
                    analytical information relating to threats of terrorism
                    in the United States;
                        (B) all information relating to significant and
                    credible threats of terrorism in the United States,
                    whether or not such information has been analyzed, if
                    the President has provided that the Secretary shall
                    have access to such information; and
                        (C) such other material as the President may
                    further provide; and
                (3) the Secretary shall ensure that--
                        (A) material to which the Secretary has access
                    under this section is protected from disclosure to the
                    extent provided under Federal laws other than this Act,
                    and is handled and used only for the performance of
                    official duties;
                        (B) such material that is intelligence information
                    is transmitted, retained, and disseminated consistent
                    with the authority of the Director of Central
                    Intelligence to protect intelligence sources and
                    methods under the National Security Act and related
                    procedures; and
                        (C) such material that is sensitive law enforcement
                    information is transmitted, retained, and disseminated
                    consistent with the authority of the Attorney General
                    under applicable law.

    SEC. 204. INFORMATION VOLUNTARILY PROVIDED.

        [Omitted from Committee consideration]

    SEC. 205. FEDERAL CYBERSECURITY PROGRAM.

        (a) In General.--The Secretary, acting through the Under Secretary
    for Cybersecurity, Information Analysis, and Infrastructure Protection,
    shall establish and manage a program to improve the security of Federal
    critical information systems, including carrying out responsibilities
    under paragraphs (2) and (3) of section 201 that relate to such
    systems.
        (b) Duties.--The duties of the Secretary under subsection (a) are--
                (1) to evaluate the increased use by civilian executive
            agencies of techniques and tools to enhance the security of
            Federal critical information systems, including, as
            appropriate, consideration of cryptography;
                (2) to provide assistance to civilian executive agencies in
            protecting the security of Federal critical information
            systems, including identification of significant risks to such
            systems; and
                (3) to coordinate research and development for critical
            information systems relating to supervisory control and data
            acquisition systems, including, as appropriate, the
            establishment of a test bed.
        (c) Federal Information System Security Team.--
                (1) In general.--In carrying out subsection (b)(2), the
            Secretary shall establish, manage, and support a Federal
            information system security team whose purpose is to provide
            technical expertise to civilian executive agencies to assist
            such agencies in securing Federal critical information systems
            by conducting information security audits of such systems,
            including conducting tests of the effectiveness of information
            security control techniques and performing logical access
            control tests of interconnected computer systems and networks,
            and related vulnerability assessment techniques.
                (2) Team members.--The Secretary shall ensure that the team
            under paragraph (1) includes technical experts and auditors,
            computer scientists, and computer forensics analysts whose
            technical competence enables the team to conduct audits under
            such paragraph.
                (3) Agency agreements regarding audits.--Each civilian
            executive agency may enter into an agreement with the team
            under paragraph (1) for the conduct of audits under such
            paragraph of the Federal critical information systems of the
            agency. Such agreement shall establish the terms of the audit
            and shall include provisions to minimize the extent to which
            the audit disrupts the operations of the agency.
                (4) Reports.--Promptly after completing an audit under
            paragraph (1) of a civilian executive agency, the team under
            such paragraph shall prepare a report summarizing the findings
            of the audit and making recommendations for corrective action.
            Such report shall be submitted to the Secretary, the head of
            such agency, and the Inspector General of the agency (if any),
            and upon request of any congressional committee with
            jurisdiction over such agency, to such committee.
        (d) Definition.--For purposes of this section, the term ``Federal
    critical information system'' means an ``information system'' as
    defined in section 3502 of title 44, United States Code, that--
                (1) is, or is a component of, a key resource or critical
            infrastructure;
                (2) is used or operated by a civilian executive agency or
            by a contractor of such an agency; and
                (3) does not include any national security system as
            defined in section 5142 of the Clinger-Cohen Act of 1996.

            TITLE III--RESEARCH, DEVELOPMENT AND TECHNOLOGY SYSTEMS

    SEC. 301. UNDER SECRETARY FOR RESEARCH, DEVELOPMENT AND TECHNOLOGY
                        SYSTEMS.

        The Secretary, acting through the Under Secretary for Research,
    Development, and Technology Systems, shall have responsibility for--
                (1) conducting and supporting a national scientific
            research and development program to support the mission of the
            Department, except that such responsibility does not extend to
            human health-related research and development activities;
                (2) establishing long-term research and development needs
            and capabilities for all elements of the Department;
                (3) integrating similar research and development needs
            between the operating elements of the Department;
                (4) aligning research and development programs with other
            executive agencies to reduce duplication and identify unmet
            needs;
                (5) in consultation with other appropriate executive
            agencies, developing a national policy and strategic plan for,
            identifying priorities for, and coordinating the Federal
            Government's civilian efforts to identify and develop
            countermeasures to chemical, biological, radiological, nuclear,
            and other emerging terrorist threats;
                (6) establishing priorities for, conducting, and supporting
            national research, development, demonstration, and, as
            appropriate, transitional operation of technology and systems--
                        (A) for preventing the importation of chemical,
                    biological, radiological, nuclear weapons and related
                    material;
                        (B) for detecting, preventing, and protecting
                    against terrorist attacks that involve such weapons or
                    related material; and
                        (C) for interoperability of communications systems
                    for emergency response providers;
                (7) establishing a central Federal repository for
            information relating to technologies and systems described in
            paragraph (6) for dissemination to Federal, State and local
            government and private sector personnel, agencies and
            authorities; and
                (8) developing nonmandatory and technology-neutral
            standards, and providing recommendations and technical
            assistance as appropriate, to assist Federal, State and local
            government and private sector efforts to evaluate and implement
            the use of technologies and systems described in subparagraphs
            (A) and (B) of paragraph (6).

    SEC. 302. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The program under section 351A of the Public Health
            Service Act, and functions thereof, including the functions of
            the Secretary of Health and Human Services relating thereto,
            subject to the amendments made by section 906(3), except that
            such transfer shall not occur unless the program under section
            212 of the Agricultural Bioterrorism Protection Act of 2002
            (subtitle B of title II of Public Law 107-188), and functions
            thereof, including the functions of the Secretary of
            Agriculture relating thereto, subject to the amendments made by
            section 907, is transferred to the Department.
                (2) Such aspects of programs and activities of the
            Department of Energy as relate to homeland security, including
            the functions of the Secretary of Energy relating thereto (but
            not including programs and activities relating to the strategic
            nuclear defense posture of the United States), as follows:
                        (A) The chemical and biological national security
                    and supporting programs and activities of the non-
                    proliferation and verification research and development
                    program.
                        (B) The nuclear smuggling programs and activities,
                    and other programs and activities, within the
                    proliferation detection program of the non-
                    proliferation and verification research and development
                    program, except that the programs and activities
                    described in this subparagraph may be designated by the
                    President either for transfer to the Department or for
                    joint operation by the Secretary and the Secretary of
                    Energy.
                        (C) The nuclear assessment program and activities
                    of the assessment, detection, and cooperation program
                    of the international materials protection and
                    cooperation program.
                        (D) Such life sciences activities of the biological
                    and environmental research program related to microbial
                    pathogens as may be designated for transfer to the
                    Department by the President.
                        (E) The Environmental Measurements Laboratory.
                        (F) The advanced scientific computing research
                    program and activities, and the intelligence program
                    and activities, at Lawrence Livermore National
                    Laboratory.
                (3) The National Bio-Weapons Defense Analysis Center of the
            Department of Defense, including the functions of the Secretary
            of Defense related thereto.
                (4) The Plum Island Animal Disease Center of the Department
            of Agriculture, including the functions of the Secretary of
            Agriculture relating thereto.

    SEC. 303. CONDUCT OF CERTAIN PUBLIC HEALTH-RELATED ACTIVITIES.

        With respect to civilian human health-related research and
    development activities relating to countermeasures for chemical,
    biological, radiological, and nuclear and other emerging terrorist
    threats carried out by the Department of Health and Human Services
    (including the Public Health Service), the Secretary of Health and
    Human Services shall set priorities for such activities in
    collaboration with the Secretary of the Department of Homeland
    Security.

    SEC. 304. SECURITY AT FEDERAL RESEARCH LABORATORIES.

    [Former section 304 transferred to title VII]

        The Secretary, in consultation with the Attorney General, shall
    have authority to establish standards for security at Federal civilian
    facilities, other than facilities of the Department of Energy, that
    conduct research and development to identify and develop
    countermeasures to chemical, biological, radiological, nuclear, and
    other emerging terrorist threats.

                  TITLE IV--BORDER AND TRANSPORTATION SECURITY

        [Omitted from Committee consideration]

                  TITLE V--EMERGENCY PREPAREDNESS AND RESPONSE

    SEC. 501. UNDER SECRETARY FOR EMERGENCY PREPAREDNESS AND RESPONSE.

        The Secretary, acting through the Under Secretary for Emergency
    Preparedness and Response, shall have responsibility for--
                (1) assisting in the preparedness of emergency response
            providers for terrorist attacks, major disasters, and other
            emergencies;
                (2) with respect to Federal emergency response providers,
            conducting joint and other exercises and training and
            evaluating performance in consultation with the heads of the
            relevant executive agencies;
                (3) with respect to emergency response functions
            transferred to the Secretary by this Act, providing the Federal
            Government's response to terrorist attacks and major disasters;
                (4) coordinating other Federal response resources in the
            event of a terrorist attack or major disaster;
                (5) assisting in the recovery from terrorist attacks and
            major disasters;
                (6) building a comprehensive national incident management
            system with Federal, State, and local government personnel,
            agencies, and authorities, to respond to such attacks and
            disasters;
                (7) consolidating existing Federal Government emergency
            response plans into a single, coordinated national response
            plan; and
                (8) with respect to Federal programs that provide
            assistance to emergency response providers to enhance
            preparedness and response for terrorist attacks or major
            disasters--
                        (A) identifying preparedness priorities;
                        (B) evaluating the effectiveness of, and
                    coordination among, such programs; and
                        (C) making recommendations to enhance the
                    effectiveness of such programs, and to minimize
                    inconsistencies and duplication among such programs.

    SEC. 502. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The Federal Emergency Management Agency, including the
            functions of the Director of the Federal Emergency Management
            Agency relating thereto.
                (2) The Office for Domestic Preparedness of the Office of
            Justice Programs, including the functions of the Attorney
            General relating thereto.
                (3) The National Domestic Preparedness Office of the
            Federal Bureau of Investigation, including the functions of the
            Attorney General relating thereto.
                (4) The Domestic Emergency Support Teams of the Department
            of Justice, including the functions of the Attorney General
            relating thereto.
                (5) The Office of Emergency Preparedness, the National
            Disaster Medical System, and the Metropolitan Medical Response
            System of the Department of Health and Human Services,
            including the functions of the Secretary of Health and Human
            Services and the Assistant Secretary for Public Health
            Emergency Preparedness relating thereto.
                (6) To the extent provided pursuant to the amendments made
            by section 905, the Strategic National Stockpile of the
            Department of Health and Human Services.

    SEC. 503. NUCLEAR INCIDENT RESPONSE.

        (a) Nuclear Incident Response Team.--At the direction of the
    Secretary (in connection with an actual or threatened terrorist attack
    or major disaster), the Nuclear Incident Response Team shall operate as
    an organizational unit of the Department. While so operating, the
    Nuclear Incident Response Team shall be subject to the direction,
    authority, and control of the Secretary.
        (b) Construction.--Nothing in this title limits the authority of
    the Secretary of Energy or the Administrator of the Environmental
    Protection Agency to organize, train, equip, or utilize their
    respective entities in the Nuclear Incident Response Team, or to
    exercise direction, authority, and control of their respective entities
    when the entities are not operating as a unit of the Department.

    SEC. 504. DEFINITION.

        For purposes of this title, ``nuclear incident response team''
    means a resource that includes--
                (1) those entities of the Department of Energy that perform
            nuclear or radiological emergency support functions (including
            accident response, search response, advisory, and technical
            operations functions), radiation exposure functions at the
            medical assistance facility known as Oak Ridge National
            Laboratory, radiological assistance functions, and related
            functions; and
                (2) those entities of the Environmental Protection Agency
            that perform radiological emergency response and support
            functions.

    [SEC. 505. CONDUCT OF CERTAIN PUBLIC HEALTH-RELATED ACTIVITIES.]

        [The Committee Print strikes section 505.]

                              TITLE VI--MANAGEMENT

        [Omitted from Committee consideration]

     TITLE VII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL;
                UNITED STATES SECRET SERVICE; GENERAL PROVISIONS

        [Omitted from Committee consideration, except section 701; 733; the
    addition of a section 736 (transferred from title III of the bill); and
    the addition of new sections 737 and 738.]

    [SEC. 701. RESPONSIBILITIES.]

        [The Committee Print strikes section 701.]

    SEC. 733. REORGANIZATION; TRANSFER.

        The Secretary may allocate or reallocate functions among the
    officers of the Department, and may establish, consolidate, alter, or
    discontinue organizational units within the Department, but only after
    the expiration of 90 days after providing notice of such action to the
    Congress, which shall include an explanation of the rationale for the
    action. Authority under this section does not extend to the abolition
    of any entity established or required to be maintained as a distinct
    entity by this Act, or to any entity or function transferred to the
    Department by this Act and established by statute.

    SEC. 736. MILITARY ACTIVITIES.

    [Formerly was section 304]

        Except as specifically provided in this Act, nothing in this Act
    shall confer upon the Secretary any authority to engage in warfighting,
    the military defense of the United States, or other traditional
    military activities.

    SEC. 737. RULE OF CONSTRUCTION REGARDING TRANSFER OF AUTHORITY.

        (a) Regulatory Authority.--With respect to regulatory authority
    (whether applying by order, by regulation, or by direct operation of
    law), this Act may not be construed as--
                (1) establishing such authority for the Secretary, except
            to the extent that a function transferred to the Secretary by
            section 202, 302, 402, 403, 502, or 720 includes such
            authority; or
                (2) altering or diminishing such authority of any other
            executive agency, except to the extent that a function of such
            agency that includes such authority is transferred to the
            Secretary by a section specified in paragraph (1).
        (b) Other Authority.--With respect to authority that is not
    regulatory authority, this Act may not be construed as--
                (1) transferring to the Secretary such authority of another
            executive agency, except to the extent that a function
            transferred to the Secretary by a section specified in
            subsection (a)(1) includes such authority; or
                (2) altering or diminishing such authority of any other
            executive agency, except to the extent that--
                        (A) a function of such agency that includes such
                    authority is transferred to the Secretary by a section
                    specified in subsection (a)(1); or
                        (B) with respect to functions not so transferred to
                    the Secretary, such agency is required by this Act to
                    coordinate or collaborate with the Secretary, or to
                    provide information or documents to the Secretary.

    SEC. 738. PROVISIONS REGARDING TRANSFERS FROM DEPARTMENT OF ENERGY.

        (a) Separate Contracting.--To the extent that programs or
    activities transferred by this Act from the Department of Energy to the
    Department of Homeland Security are being carried out through contracts
    with the operator of a national laboratory of the Department of Energy,
    the Secretary of Homeland Security and the Secretary of Energy shall
    ensure that contracts for such programs and activities between the
    Department of Homeland Security and such operator are separate from the
    contracts of the Department of Energy with such operator.
        (b) Reimbursement of Costs.--In the case of an activity carried out
    by the operator of a national laboratory of the Department of Energy
    but under contract with the Department of Homeland Security, the
    Department of Homeland Security shall reimburse the Department of
    Energy for costs of such activity through a method under which the
    Secretary of Energy waives any requirement for the Department of
    Homeland Security to pay administrative charges or personnel costs of
    the Department of Energy or its contractors in excess of the amount
    that the Secretary of Energy pays for an activity carried out by such
    contractor and paid for by the Department of Energy.

                             TITLE VIII--TRANSITION

        [Omitted from Committee consideration]

                 TITLE IX--CONFORMING AND TECHNICAL AMENDMENTS

        [Sections 901 through 904 omitted from Committee consideration]

    SEC. 905. STRATEGIC NATIONAL STOCKPILE AND SMALLPOX VACCINE
                        DEVELOPMENT.

        (a) In General.--The Public Health Security and Bioterrorism
    Preparedness and Response Act of 2002 is amended--
                (1) in section 121(a)(1)--
                        (A) by striking ``Secretary of Health and Human
                    Services'' and inserting ``Secretary of Homeland
                    Security'';
                        (B) by inserting ``the Secretary of Health and
                    Human Services and'' between ``in coordination with''
                    and ``the Secretary of Veterans Affairs''; and
                        (C) by inserting ``of Health and Human Services''
                    after ``as are determined by the Secretary''; and
                (2) in subsections 121(a)(2) and (b), by inserting ``of
            Health and Human Services'' after ``Secretary'' each place it
            appears.
        (b) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the Strategic National Stockpile of
    the Department of Health and Human Services to the Department.

    SEC. 906. BIOLOGICAL AGENT REGISTRATION; PUBLIC HEALTH SERVICE ACT.

        (a) Public Health Service Act.--The Public Health Service Act is
    amended--
                (1) in section 351A(a)(1)(A), by inserting ``(as defined in
            subsection (l)(9))'' after ``Secretary'';
                (2) in section 351A(h)(2)(A), by inserting ``Department of
            Homeland Security, the'' before ``Department of Health and
            Human Services''; and
                (3) in section 351A(l), by inserting after paragraph (8) a
            new paragraph as follows:
                ``(9) The term `Secretary' means the Secretary of Homeland
            Security, in consultation with the Secretary of Health and
            Human Services.''.
        (b) Public Health Security and Bioterrorism Preparedness and
    Response Act of 2002.--Section 201(b) of the Public Health Security and
    Bioterrorism Preparedness and Response Act of 2002 is amended by
    striking ``Secretary of Health and Human Services'' and inserting
    ``Secretary of Homeland Security''.
        (c) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the select agent registration
    enforcement programs and activities of the Department of Health and
    Human Services to the Department.

    SEC. 907. NATIONAL BIO-WEAPONS DEFENSE ANALYSIS CENTER.

        [Omitted from Committee consideration]

      the recommendations of the committee on energy and commerce to the
        select committee on homeland security concerning h.r. 5005, the
                         homeland security act of 2002

                      Background and Need for Legislation

        The events of September 11, 2001, and other acts of
    terrorism since then, have highlighted the need for a stronger
    emphasis on homeland security. President Bush recognized this
    need by mobilizing, upgrading, and coordinating Federal
    resources, and by appointing Governor Tom Ridge as the Director
    of a newly created Office of Homeland Security to lead the
    effort in enhancing the security of our country and its
    citizens.On June 18, 2002, President Bush sent to Congress a
    proposed bill to establish a Department of Homeland Security.
    Majority Leader Dick Armey introduced the President's bill on
    June 24, 2002, as H.R. 5005, the Homeland Security Act of 2002.
    The bill would consolidate a number of Federal agencies,
    offices, programs, and functions in a new Department in an
    effort to streamline and enhance homeland security efforts, and
    to apply increased direction, coordination, and focus to
    homeland security issues. The general concept of creating such
    a Cabinet-level department has been supported on a bipartisan
    basis. The Committee on Energy and Commerce has direct
    jurisdiction over much of H.R. 5005, including issues contained
    in Title II on cybersecurity, information analysis, and
    infrastructure protection; Title III on research and
    development programs within the Department of Energy (DOE) and
    the Department of Health and Human Services (HHS), and on the
    selection, safety and security of dangerous biological agents;
    Title V on emergency preparedness and response; and related
    provisions elsewhere in the bill.
        Given the Committee's decades of experience dealing with
    complex public health and energy-related policy issues, and its
    aggressive oversight of Federal agencies in these same areas,
    the Committee has the primary expertise to ensure that programs
    within DOE and HHS are coordinated with, or transferred to,
    programs in the new Department of Homeland Security in a manner
    that best effectuates the dual goals of increasing homeland
    security and preserving other national priorities in the health
    and energy areas. Indeed, on June 12, 2002, the President
    signed into law the Public Health Security and Bioterrorism
    Preparedness and Response Act of 2002 (Public Law 107-188), on
    which this Committee spent months of careful work and
    thoughtful deliberation. This critical legislation will greatly
    enhance the structure, coordination, and effectiveness of
    Federal programs for bioterrorism and other public health
    emergency preparedness and response by building up the Nation's
    public health infrastructure. This Act also takes important
    steps to improve the safety, security, and tracking of
    dangerous biological agents and toxins, as well as the
    protection of our food and drinking water supplies.
        In the area of critical infrastructure protection
    (including cyber security)--addressed in Title II of H.R.
    5005--the Committee also has extensive expertise, as the
    Committee is responsible for policy and oversight of the
    Nation's key critical infrastructures. These include the energy
    and telecommunications systems, chemical, oil and gas, and
    nuclear facilities, and the food and drinking water supplies.
    The Committee has used its expertise in this area, as well as
    the other areas discussed above, to craft a strongly bipartisan
    Committee Print to enhance homeland security, and to ensure the
    most effective approach with respect to the new Department of
    Homeland Security.

                                    Hearings

        On Tuesday, June 25, 2002, the Subcommittee on Oversight
    and Investigations held a hearing on ``Creating the Department
    of Homeland Security: Consideration of the Administration's
    Proposal,'' focusing on the emergency preparedness and response
    functions proposed for transfer to the new Department. The
    Subcommittee received testimony from: The Honorable Tom Ridge,
    The White House; The Honorable Claude Allen, Deputy Secretary,
    Department of Health and Human Services; General John A.
    Gordon, Administrator, National Nuclear Security
    Administration; Ms. Jan Heinrich, Director, Health Care and
    Public Health Issues, U.S. General Accounting Office; Dr. Harry
    C. Vantine, Program Leader, Counterterrorism and Incident
    Response, Lawrence Livermore National Laboratory; Mr. David
    Nokes, Director, Systems Assessment and Research Center, Sandia
    National Laboratories; Dr. Donald D. Cobb, Associate Director
    for Threat Reduction, Los Alamos National Laboratory; Dr. Lew
    Stringer, Medical Director, Division of Emergency Management,
    North Carolina Department of Crime Control and Public Safety;
    Mr. Edward P. Plaugher, Chief, Arlington County Fire
    Department, Executive Agent for the Washington Area National
    Medical Response Team; Mr. Philip Anderson, Senior Fellow,
    Center for Strategic and International Studies; Dr. Ronald
    Atlas, President-Elect, American Society for Microbiology; and
    Dr. Tara O'Toole, Director, Center for Civilian Biodefense
    Studies, Johns Hopkins University.
        On Tuesday, July 9, 2002, the Subcommittee on Oversight and
    Investigations continued its hearing on ``Creating the
    Department of Homeland Security: Consideration of the
    Administration's Proposal,'' focusing on the research and
    development and critical infrastructure activities proposed for
    transfer to the new Department. The Subcommittee received
    testimony from: Mr. Jerome Hauer, Director, Office of Public
    Health Emergency Preparedness, Department of Health and Human
    Services; Ms. Jan Heinrich, Director, Health Care and Public
    Health Issues, U.S. General Accounting Office; Dr. Gail
    Cassell, Vice President, Scientific Affairs, Distinguished
    Lilly Research Scholar for Infectious Diseases, Eli Lilly and
    Company; Dr. Margaret Hamburg, Vice President, Biological
    Programs, Nuclear Threat Initiative; Mr. John S. Tritak,
    Director, Critical Infrastructure Assurance Office, Department
    of Commerce; Mr. James McDonnell, Director, Energy Security and
    Assurance Program, Department of Energy; Dr. Samuel G. Varnado,
    Director, Infrastructure and Information Systems Center, Sandia
    National Laboratories; Dr. Donald D. Cobb, Associate Director
    for Threat Reduction, Los Alamos National Laboratory; Mr.
    Robert F. Dacey, Director, Information Security Issues, U.S.
    General Accounting Office; Mr. William Smith, Executive Vice
    President, Network Operations, BellSouth; Mr. Guy Copeland,
    Vice President, Information Infrastructure Advisory Programs,
    Federal Sector, Computer Sciences Corporation, on behalf of the
    Information Technology Association of America; Ms. Lynn P.
    Costantini, Director, Online Services, North American Electric
    Reliability Council; Mr. John P. Sullivan, Jr., President and
    Chief Engineer, Boston Water and Sewer Commission, on behalf of
    the Association of Metropolitan Water Agencies; Mr. Kenneth C.
    Watson, President, Partnership for Critical Infrastructure
    Security, Cisco Systems, Inc.; Mr. Jeremiah Baumann,
    Environmental Health Advocate, U.S. Public Interest Research
    Group; Mr. David L. Sobel, General Counsel, Electronic Privacy
    Information Center; Mr. Jason Ahearn, Assistant Commissioner,
    Field Operations, United States Customs Service; Ambassador
    Linton Brooks, Acting Administrator, National Nuclear Security
    Administration; Ms. Gary Jones, Director, Natural Resources and
    Environment Issues, U.S. General Accounting Office; Mr. Frank
    Panico, Manager, International Networks and Transportation,
    United States Postal Service; Mr. David Nokes, Director,
    Systems Assessment and Research Center, Sandia National
    Laboratories; Dr. Wayne J. Shotts, Associate Director for
    Nonproliferation, Arms Control and International Security,
    Lawrence Livermore National Laboratory; Mr. Steven W. Martin,
    Director, Homeland Security Programs, Pacific Northwest
    National Laboratory; Mr. Robert A. Bryden, Vice President,
    Corporate Security, FedEx Corporation; Mr. Jim Holsen, Vice
    President, Engineering, United Parcel Service, Inc.; and Mr.
    Barry Howe, Vice President, Thermo Electron Corporation.

                            Committee Consideration

        On Thursday, July 11, 2002, the Full Committee met in open
    markup session for the consideration of a Committee Print to
    provide recommendations to the Select Committee on Homeland
    Security with respect to H.R. 5005, and approved the Committee
    Print, without amendment, by voice vote.

                 Section-by-Section Analysis of the Legislation

    Section 1. Short Title; Table of Contents.
        Section 1 of H.R. 5005 sets forth the title and table of
    contents of this Act. The Committee Print makes only technical
    and conforming changes to this section.
    Section 2. Definitions.
        Section 2 of H.R. 5005 sets forth the definitions for
    certain terms used in this Act. The Committee Print makes a
    change to the definition of the term ``emergency response
    providers'' to ensure that non-governmental personnel are
    included within the definition used in this Act.
    Section 3. Construction; Severability.
        Section 3 of H.R. 5005 sets forth a rule of construction
    regarding severability of the Act's provisions. The Committee
    Print does not make any changes to this section.
    Section 4. Effective Date.
        Section 4 of H.R. 5005 sets forth the effective date of the
    Act. The Committee Print does not make any changes to this
    section.

                    title i--department of homeland security

    Section 101. Executive Department; Mission.
        Section 101 of H.R. 5005 establishes the Department of
    Homeland Security and sets forth its primary mission and
    responsibilities. The Committee Print alters this section of
    H.R. 5005 by striking subsection (b)(2)--which sets forth
    primary responsibilities of the Department using different
    language than that which is contained in subsequent titles of
    the bill--in order to avoid potential confusion or
    misinterpretation of the specific responsibilities provided to
    the new Department.
    Section 102. Secretary; Functions.
        Section 102 of H.R. 5005 establishes a Secretary for the
    new Department and sets forth the Secretary's functions and
    authorities. The Committee Print alters subsection (b)(2)--
    which authorizes the promulgation of regulations by the
    Secretary--by adding the phrase ``as provided in section 301 of
    title 5, United States Code.'' The intent of this change is to
    ensure that the regulatory authority granted to the Secretary
    in this section is circumscribed to administrative matters
    relating to the organization and functioning of the Department.
    Section 103. Other Officers.
        Section 103 of H.R. 5005 sets forth other officers of the
    Department, including a Deputy Secretary and five Under
    Secretaries. The Committee Print makes only technical and
    conforming changes to this section.

       title ii--cybersecurity, information analysis and infrastructure
                                   protection

    Section 201. Undersecretary for Cybersecurity, Information Analysis and
            Infrastructure Protection.
        Section 201 of H.R. 5005 establishes an Undersecretary for
    Information Analysis and Infrastructure Protection, whose
    responsibilities include: receiving and analyzing law
    enforcement, intelligence, and other information regarding
    terrorist threats; comprehensively assessing the
    vulnerabilities of key resources and critical infrastructures
    in the United States; integrating relevant information,
    intelligence analyses, and vulnerability assessments;
    developing a comprehensive national plan for securing key
    resources and critical infrastructures in the United States;
    taking or seeking to effect necessary measures to protect key
    resources and critical infrastructures in the United States;
    administering the Homeland Security Advisory System; and making
    recommendations for improvements in the policies and procedures
    for sharing of law enforcement, intelligence and other
    information.
        The Committee Print makes six changes to this section as
    introduced. First, the Committee Print clarifies that the
    Secretary's responsibility to comprehensively assess critical
    infrastructure vulnerabilities is a function that is in
    addition to, and not in lieu of, assessments collected,
    possessed, or prepared by other executive agencies. Second, the
    Committee Print clarifies that the responsibilities of the
    Secretary in this section to assess critical infrastructure
    vulnerabilities and to develop a national plan for securing
    those infrastructures are related to threats to those
    infrastructures posed by ``a terrorist attack or other
    intentional act intended to substantially disrupt the
    functioning of such resources and infrastructures.'' Third, the
    Committee Print clarifies that the Secretary's responsibility
    for public advisories is limited to those relating to terrorist
    threats. Fourth, the Committee Print renames the Undersecretary
    for Information Analysis and Infrastructure Protection, as
    proposed in H.R. 5005, to the ``Undersecretary for
    Cybersecurity, Information Analysis and Infrastructure
    Protection,'' in order to emphasize the role of the Department
    relating to cybersecurity.
        Fifth, by striking the word ``primary'' before
    ``responsibility''in the first sentence of this section as
    introduced, the Committee Print makes clear that the
    Secretary's responsibilities do not alter or diminish the
    authority of another executive agency, except to the extent
    that a function of such agency that includes such authority is
    transferred to the Department under this Act. Finally, in
    sections 201(1) and 201(4), the Committee Print clarifies that
    the Secretary's authority to ``take'' necessary measures and to
    ``support protective measures by the Department'' is limited to
    those functions established under another Act and transferred
    to the Department by this Act.
    Section 202. Functions Transferred.
        Section 202 of H.R. 5005 transfers to the Department the
    following functions or programs of other executive agencies:
    the National Infrastructure Protection Center of the Federal
    Bureau of Investigation (FBI) (other than the Computer
    Investigations and Operations Section); the National
    Communications System at the Department of Defense (DOD); the
    Critical Infrastructure Assurance Office of the Department of
    Commerce (DOC); the Computer Security Division of the National
    Institute of Standards and Technology (NIST); the National
    Infrastructure Simulation and Analysis Center (NISAC) of the
    Department of Energy (DOE); and the Federal Computer Incident
    Response Center of the General Services Administration (GSA).
        The Committee Print makes one change to this section from
    H.R. 5005, as introduced. The Committee Print includes the
    transfer of the DOE energy security and assurance program in
    section 202, moving it from section 303 of H.R. 5005. The
    Committee recognizes that the NISAC, which is operated jointly
    by Sandia National Laboratories and Los Alamos National
    Laboratory, has been established as part of the energy security
    and assurance program at DOE. Rather than transferring the
    NISAC and its functions to the Undersecretary for
    Cybersecurity, Information Analysis and Infrastructure
    Protection, and also separately transferring the energy
    assurance and security program to the Undersecretary for
    Research, Development and Technology Systems, the Committee
    Prints consolidates the transfer of both programs in section
    202.
    Section 203. Access to Information
        Section 203 of H.R. 5005 provides the Secretary with access
    to all reports, assessments, and analytical information
    relating to threats of terrorism in the United States, and to
    information concerning the vulnerabilities of key resources and
    critical infrastructures, or other vulnerabilities, of the
    United States to terrorism that may be collected, possessed, or
    prepared by any executive agency. In addition, this section
    requires all executive agencies to promptly provide, regardless
    of whether the Secretary has requested, all intelligence
    reports, assessments and analytical information relating to
    threats of terrorism in the United States, all information
    concerning infrastructure and other vulnerabilities, and all
    information relating to significant and credible threats of
    terrorism in the United States, whether or not such information
    has been analyzed. Section 203 also requires the Secretary to
    ensure that such information is protected from unauthorized
    disclosure.
        The Committee Print makes two changes to section 203 of
    H.R. 5005, as introduced. First, it changes section 203 by
    eliminating the requirement for all executive agencies to
    provide, regardless of whether requested, all information
    concerning infrastructure and other vulnerabilities of the
    United States to terrorism. The Committee is concerned that the
    phrase ``all information concerning infrastructure'' included
    in section 203(2)(B) of H.R. 5005 is overly broad in scope, and
    that requiring all such information to be submitted to the
    Secretary automatically, including in situations where the
    Secretary has not requested such information, could inundate
    the Secretary with information and make it more difficult to
    identify the most significant vulnerabilities to terrorism of
    critical infrastructures in the United States. As a result, the
    Committee strikes the provision from the bill requiring the
    delivery of such information regardless of whether the
    Secretary has requested it; however, the Secretary retains the
    authority to request such information. Second, the Committee
    Print clarifies that the Secretary's obligation to protect from
    unauthorized disclosure information to which the Secretary has
    access under this section means that the Secretary shall ensure
    that such information is protected from disclosure to the
    extent provided under Federal laws other than this Act.
    Section 204 Omitted from Committee consideration.
    Section 205. Federal Cybersecurity Program.
        There is no comparable provision in H.R. 5005. Section 205
    of the Committee Print creates a new Federal cybersecurity
    program. Section 205 directs the Secretary to establish and
    manage a program to improve the security of Federal critical
    information systems. It establishes three duties for the
    Secretary. First, the Secretary is responsible for evaluating
    the increased use by civilian executive agencies of techniques
    and tools to enhance the security of Federal critical systems,
    including, as appropriate, consideration of cryptography.
    Second, the Secretary is responsible for providing assistance
    to civilian executive agencies in protecting the security of
    Federal critical information systems, including identification
    of significant risks to such systems. Third, the Secretary is
    responsible for coordinating research and development to
    enhance the security of critical information systems, including
    supervisory control and data acquisition systems, including, as
    appropriate, the establishment of a test bed.
        Section 205 also establishes, as part of the program to
    improve security of Federal critical information systems, a
    Federal Information System Security Team to provide technical
    expertise to civilian executive agencies by conducting
    cybersecurity audits of civilian executive agency information
    systems (other than national security systems), in accordance
    with agreements between the Secretary and the head of such
    agencies. This team will be comprised of computer security
    technical experts who will conduct tests of the effectiveness
    of logical access controls of interconnected computer systems
    and networks of civilian executive agencies and contractors,
    including penetration tests and other vulnerability assessment
    techniques on Federal critical information systems.
        The Committee includes section 205 in the Committee Print
    because greater emphasis is needed on information security of
    Federal critical information systems, and on research and
    development to enhance security of the Nation's critical
    information systems. Over the past several years, the Committee
    has conducted a series of investigations, including information
    security reviews at HHS, DOE, the Department of Commerce (DOC),
    and the Environmental Protection Agency (EPA). The U.S. General
    Accounting Office (GAO) has performed many of the information
    security audits for the Committee, and has documented the
    results of its penetration testing in a series of reports that
    found pervasive computer security weaknesses.
        Moreover, many of the Nation's critical infrastructures are
    controlled and maintained using process control, operations,
    and maintenance technologies, called supervisory access control
    and data acquisition (SCADA) systems. These are information
    systems and computer networks that serve command and control
    functions for such critical infrastructures as electric power
    distribution and drinking water systems. The Committee supports
    the transfer of the National Infrastructure Simulation and
    Analysis Center to the Department of Homeland Security and
    recognizes the work of Sandia and Los Alamos National
    Laboratories in the area of SCADA systems. As part of its
    cybersecurity program under section 205, the Committee
    encourages the Secretary to develop a program to identify and
    address potential vulnerabilities of SCADA systems.

            title iii--research, development, and technology systems

    Section 301. Under Secretary for Research, Development and Technology
            Systems.
        Section 301 of H.R. 5005 creates an Under Secretary for
    Chemical, Biological, Radiological and Nuclear Countermeasures,
    whose principal responsibilities include: conducting a national
    research and development program to support the mission of the
    Department; coordinating Federal civilian efforts to identify,
    develop, and demonstrate countermeasures and technologies to
    protect against chemical, biological, radiological, and nuclear
    terrorist threats; and establishing guidelines for state and
    local government efforts to implement such countermeasures.
        The Committee Print makes several significant changes to
    section 301. First, it changes the title of this officer to the
    Under Secretary for Research, Development and Technology
    Systems in order to reflect the principal responsibilities
    assigned to the Under Secretary, and to emphasize the critical
    role of research, development, and technology in the new
    Department. Second, the Committee Print clarifies that the
    Department will not conduct human health-related research and
    development activities (for reasons more fully described in
    section 303), but will nonetheless play an important role in
    identifying priorities and developing national policy and a
    strategic plan for such research as it pertains to the threats
    of biological, chemical, radiological, and nuclear terrorism.
    The Committee notes that other executive agencies shall
    continue to carry out their similar responsibilities under
    existing authorities, and the new Department shall consult
    closely with such agencies in carrying out its planning and
    coordination roles. Third, the Committee Print adds additional
    responsibilities to the Secretary with respect to research and
    development within and for the Department, and among its
    various elements.
        Moreover, the Committee Print directs the Secretary to
    establish, acting through the Under Secretary, a central
    Federal repository to receive and, as appropriate, review
    solicited and unsolicited submissions relating to homeland
    security-relevant technologies and systems developed by the
    Department, universities and other academic institutions, other
    governmental agencies, and the private sector. The purpose of
    this repository is to serve as a centralized clearinghouse for
    commercial, governmental, and other technology developers, and
    for the dissemination of information about available
    technologies and systems to appropriate Federal, state and
    local governments, emergency response providers, and private
    sector users of such technologies and systems. The Under
    Secretary shall also recommend to the Secretary changes
    necessary to improve policies relating to the acquisition of
    information about governmental, commercial, and other homeland
    security technologies, and regarding the procurement of those
    technologies. Finally, the Committee Print gives the Secretary
    responsibility for developing nonmandatory and technology-
    neutral standards, and providing recommendations and technical
    assistance as appropriate, to assist the government and private
    sector in evaluating and implementing the use of such
    technologies.
    Section 302. Functions Transferred.
        Section 302 of H.R. 5005 transfers specific functions and
    programs from other executive agencies to the new Department,
    specifically (1) the select agent program of HHS for the
    possession and transfer of dangerous biological agents and
    toxins; (2) various DOE research, development, and assessment
    programs relating to chemical, biological, radiological and
    nuclear agents; and, (3) two other research centers from DOD
    and the Department of Agriculture (USDA).The Committee Print
    amends the transfer of the HHS select agent program by making
    it conditional upon the transfer of the overlapping select
    agent program of USDA to the new Department, as well as upon a
    continuing consultation role for the Secretary of HHS in all
    aspects of the program. While the Committee recognizes the
    disadvantages to transferring the HHS select agent program from
    a scientific, research-oriented agency to a department whose
    focus is combating terrorism, the Committee believes that, on
    balance, the advantages of transferring the program will
    outweigh the disadvantages, provided that the companion program
    currently at USDA is transferred as well. If both programs are
    transferred to a single department, it will enhance the
    coordination and joint registration and regulatory system
    required under the Public Heath Security and Bioterrorism
    Preparedness and Response Act of 2002. However, if the
    agricultural select agent program remains at USDA, then the
    Committee views the transfer of the HHS program to the new
    Department as only exacerbating the existing coordination
    problems by involving yet a third government agency (since the
    HHS consultation role will and must continue).
        With respect to the DOE programs, the Committee Print
    modifies this category of transfers to the new Department by
    emphasizing that only those aspects of these programs that are
    related to homeland security would be transferred to the new
    Department. The Committee recognizes that many of these
    programs serve vital interests and responsibilities of the
    Department of Energy, and thus care must be taken to ensure
    that DOE is not left without critical abilities and resources,
    and that unrelated programs are not transferred.
    Section 303. Conduct of Certain Public Health-Related Activities.
        Section 303 of H.R. 5005 provides that, except as the
    President otherwise may direct, the Secretary shall carry out
    his responsibilities for civilian, human health-related
    biological, biomedical, and infectious disease defense research
    and development through HHS, under agreements with the HHS
    Secretary; may transfer funds to the HHS Secretary for carrying
    out such research; and has the authority to establish the
    research and development program and set its priorities, in
    consultation with the HHS Secretary. It also permits similar
    arrangements between the new Department and other executive
    agencies.
        The Committee Print revises section 303 in accordance with
    amendments made to section 301, which clarify that the new
    Department will not have authority to conduct human health-
    related research and development. In recognition of the fact
    that the new Department will have important intelligence,
    threat, and vulnerability-related information necessary for the
    identification of certain research priorities, the Committee
    Print provides that the Secretary of HHS shall set priorities
    in collaboration with the Secretary of the Department of
    Homeland Security with respect to human health-related research
    and development activities on countermeasures for chemical,
    biological, radiological, and nuclear terrorist threats. The
    Committee Print also eliminates the transfer of funds provision
    in this section.
        The reasons for these changes are substantial. The
    Committee understands, based on testimony from Governor Ridge,
    that it was not the intent behind the Administration's proposal
    in this area to grant the new Secretary authority to conduct or
    unilaterally direct the research and development programs
    carried out by HHS through the National Institutes of Health
    (NIH) and the Centers for Disease Control and Prevention (CDC).
    However, the original statutory language of section 303 appears
    to grant such authority. The Committee's amendments seek to
    ensure that the primary responsibility for such research
    remains with HHS, while requiring that the HHS Secretary
    collaborate with the Secretary of Homeland Security with
    respect to setting priorities for research activities involving
    countermeasures for chemical, biological, radiological, or
    nuclear terrorism. As experts with GAO emphasized in testimony
    before the Committee on H.R. 5005, much of the terrorism-
    related research currently being performed by HHS, through NIH
    and CDC, is dual-purpose in nature, and the Committee believes
    it would be counter-productive to separate such purposes, even
    if it could be done. Accordingly, the Committee believes it
    would be inappropriate for the Homeland Security Department to
    control this research agenda. Similar concerns have been
    expressed by a wide range of national, state, and local health
    and research-related associations. The approach adopted by the
    Committee Print responds to such concerns.
        The Committee also believes it would be unwise,
    unnecessary, and administratively cumbersome for the funds for
    such activities to be appropriated in the first instance to the
    new Department, only to be ``contracted'' back to HHS for
    further distribution to NIH, CDC, and the hundreds of grant
    recipients conducting such research. The Committee understands
    the need and desire of the Administration to improve the
    coordination of funding on such research activities across the
    Federal government. But the Committee believes that such
    coordination can occur without the control of HHS funds that
    H.R. 5005 contemplates, by providing in section 301 an explicit
    grant of authority to the new Secretary to coordinate all
    Federal civilian research efforts in this area. Indeed, under
    the original Administration proposal, the new Secretary would
    not receive control over the substantial research funds of
    other agencies that conduct research activities similar to
    those of HHS, including the Departments of Defense, Veterans'
    Affairs, and Agriculture, the Central Intelligence Agency, and
    others. Given that fact, the Committee does not believe that
    budgetary control is necessary with respect to HHS research
    dollars in order to ensure such coordination.
    Section 304. Security at Federal Research Laboratories.
        The Committee Print moves section 304 of H.R. 5005,
    entitled ``Military Activities,'' to section 736 of this Act
    without further change, and creates a new section 304 regarding
    security at Federal civilian research laboratories. The
    Committee Print adopts the concept for this section from
    section 505(a)(1) of H.R. 5005, which the Committee understands
    to grant certain authorities to the new Secretary with respect
    to security-related enhancements to certain HHS research
    facilities. The Committee Print revises the language to ensure
    that the scope of the new Secretary's authority is broadened to
    include all Federal civilian research facilities (except for
    those of the Department of Energy), but appropriately limits
    such authority to setting standards for the security of
    facilities conducting research to identify and develop
    countermeasures to chemical, biological, radiological, or
    nuclear terrorism.

                  title iv--border and transportation security

        Title IV was omitted from Committee consideration.

                  title v--emergency preparedness and response

    Section 501. Under Secretary for Emergency Preparedness and Response.
        Section 501 of H.R. 5005 creates an Under Secretary for
    Emergency Preparedness and Response, whose principal
    responsibilities include enhancing the preparedness of
    emergency response providers at the Federal, state and local
    levels for terrorist attacks, major disasters, and other
    emergencies; managing the Federal government's response to
    terrorist attacks and major disasters, including directing
    certain response assets under the Department's control and
    coordinating other Federal response resources; assisting in the
    recovery from such attacks or disasters; establishing standards
    and conducting joint and other exercises and training for the
    Federal nuclear incident response teams; and developing and
    promoting acquisition of interoperable communications
    technology for emergency response providers.
        The Committee Print makes modifications to section 501 of
    H.R. 5005, including adding a new paragraph (8) that provides
    the Secretary with additional responsibilities with respect to
    Federal assistance programs to enhance the preparedness of
    state and local emergency response providers for terrorist
    attacks. Specifically, the Secretary will have the
    responsibility to identify preparedness priorities for all such
    programs (including those run by HHS), to evaluate the
    effectiveness and coordination of such programs to eliminate
    inconsistencies and duplication, and to make recommendations to
    enhance the effectiveness of such programs.
        Through amendments to sections 501(3) and (4), the
    Committee Print ensures that the new Homeland Security
    Department will have the responsibility for coordinating all
    Federal response resources in the event of a terrorist attack
    or major disaster. Importantly, however, the Committee Print
    eliminates any suggestion that the new Department will itself
    direct programs that are under the jurisdiction of other
    executive agencies. The Committee believes such language could
    supercede authorizations, duties, and responsibilities under
    other laws, such as the Public Health Service Act, which
    provide specific responsibilities and duties to other executive
    agencies and their officers. The Committee believes that such
    responsibilities should remain with such agencies and
    officials, unless those duties are expressly and specifically
    transferred to the new Department.
    Section 502. Functions Transferred.
        Section 502 of H.R. 5005 transfers specific functions and
    programs from other executive agencies to the new Department,
    including the Federal Emergency Management Agency (FEMA), and
    other emergency preparedness and response functions from the
    Departments of Justice and Health and Human Services. The
    latter category includes, from HHS, the Office of the Assistant
    Secretary for Public Health Emergency Preparedness, the Office
    of Emergency Preparedness, the National Disaster Medical
    System, the National Strategic Stockpile, and the Metropolitan
    Medical Response System.
        The Committee Print transfers all of the offices and
    programs transferred in H.R. 5005, as introduced, with certain
    modifications. Subsection 502(5) of the Committee Print
    provides for a more limited transfer of authorities from HHS,
    by retaining at HHS the coordination, liaison, and other
    functions of the Office of the Assistant Secretary for Public
    Health Emergency Preparedness. The specific functions of the
    Office of Emergency Preparedness, the National Disaster Medical
    System, and the Metropolitan Medical Response System are
    transferred, along with the responsibilities of the Secretary
    and Assistant Secretary relating thereto. Nothing in this
    section should otherwise reduce the responsibilities of the HHS
    Secretary or the Assistant Secretary for Public Health
    Emergency Preparedness. HHS retains primary responsibility for
    public health emergency preparedness. Moreover, all provisions
    of the Public Health Service Act continue to apply to officials
    at HHS, except for any provisions that specifically apply
    directly to the Office of Emergency Preparedness, the National
    Disaster Medical System, or the Metropolitan Medical Response
    System.
    Section 503. Nuclear Incident Response.
        Section 503 of H.R. 5005 provides that the Secretary may
    call into action certain nuclear incident response elements of
    DOE and EPA, in response to a terrorist attack, major disaster,
    or other emergency.The Committee Print provides clarifications
    concerning the nuclear incident response team and the new
    working relationship among the Department of Homeland Security,
    DOE, and EPA. Except as specifically directed by the Secretary
    of Homeland Security in connection with an actual or threatened
    terrorist attack or major disaster, the EPA Administrator and
    the DOE Secretary will continue to exercise control of their
    respective entities in the Nuclear Incident Response Team for
    responding to emergencies and other incidents. For example, the
    radiological and emergency response team at EPA has previously
    responded to emergencies at the Hanford Nuclear Reservation in
    Washington, and in Los Alamos, New Mexico. Similarly, DOE's
    radiological assistance teams often deploy at the request of
    state or local officials to investigate potential radiation
    exposures or contamination events. The Committee intends for
    DOE and EPA to continue to exercise their responsibilities to
    respond to emergencies and other incidents as in the past,
    without the need for direction by the Secretary of Homeland
    Security.
    Section 504. Definition.
        Section 504 of H.R. 5005 defines the term ``nuclear
    incident response team'' as used in section 503. The Committee
    Print makes minor clarifications to this section.
    Section 505. Conduct of Certain Public Health-Related Activities.
        Section 505 of H.R. 5005 provides that the new Secretary
    shall carry out certain responsibilities through HHS, under
    agreements with the HHS Secretary, including (1) preparedness-
    related construction, renovation and enhancement of security
    for research and development or other facilities owned or
    occupied by HHS, and (2) public health-related activities
    carried out by HHS to assist state and local governments and
    other non-Federal public and private health care and
    educational entities to plan or prepare for chemical,
    biological, radiological, and nuclear events and other public
    health emergencies.
        Section 505, as introduced, was eliminated in the Committee
    Print. The Committee found this provision, as introduced,
    highly problematic. While it is not unusual to have statutory
    provisions requiring a Cabinet-level official to have
    responsibilities that flow through certain offices within the
    jurisdiction of that Cabinet-level official, section 505 gave
    broad legal responsibilities to the new Secretary of Homeland
    Security to operate through the Secretary of HHS--a co-equal
    Cabinet-level official. Moreover, section 505, as introduced,
    states that the new Secretary of Homeland Security ``shall have
    authority to establish the preparedness and response program,
    including the setting of priorities.'' The Committee is unclear
    how this provision would impact the duties and authorities of
    the Secretary of HHS with respect to public health emergency
    preparedness and response, including grants and contracting.
    Those responsibilities are specifically spelled out under the
    Public Health Service Act, and the Committee believes that they
    should not be superceded unless there are direct amendments to
    that Act.
        The Committee also is concerned because the language in
    section 505 is unclear in several other respects: would the new
    Secretary have the authority to exercise discretion under the
    provisions of the Public Health Services Act, or even supercede
    or modify those provisions with respect to ``the emergency
    preparedness and response program''? What would be the power to
    ``establish'' the program? Would this include the authority to
    declare public health emergencies? If grants were issued, would
    they need approval from both the Secretary of Homeland Security
    and the Secretary of HHS? The uncertainty created by this
    approach is substantial, and could cause damage to a recently
    implemented HHS preparedness program that has been winning
    praise from States, local governments, and public health and
    emergency response communities across the Nation.
        The Committee does not believe it is feasible to separate
    legal responsibilities from the statutes that authorize those
    responsibilities. Nor is it feasible to separate the officials
    charged with administering those responsibilities from the
    personnel required to do so. The Committee believes these
    activities are properly authorized under the Public Health
    Service Act and administered by the Secretary of HHS. Neither a
    wholesale transfer of these responsibilities, nor some unusual
    splitting of responsibilities in this area, is warranted.
        It also has become clear during the Committee's months of
    deliberation on bioterrorism legislation that many public
    health emergency preparedness programs serve dual roles that
    cannot easily be separated from core public health activities.
    The approach of the Committee Print on this issue is amply
    supported in hearings reviewing this legislation. At a hearing
    on June 25, 2002, Dr. Tara O'Toole, M.D., Director, Center for
    Civilian Biodefense Studies, Johns Hopkins University, stated:
            Instead of consolidating similar programs, the proposed
            agency would split bioterrorism preparedness programs
            from the related but more encompassing mission of
            public health protection which is DHHS' main objective
            * * * [T]he country would be forced to create parallel
            workforces: one in Homeland Security for bioterrorism
            preparedness and another in DHSS for `normal' public
            health functions.
        The same argument was made by Ms. Janet Heinrich, Director,
    Health Care Issues, at GAO:
            Although the HHS programs are important for homeland
            security, they are just as important to the day-to-day
            needs of public health agencies and hospitals, such as
            reporting on disease outbreaks and providing alerts to
            the medical community. The current proposal does not
            clearly provide a structure that ensures that both the
            goals of homeland security and public health will be
            met.
        The Committee Print provides an overall coordination role
    for the new Secretary of Homeland Security, applying to all
    executive agencies, with respect to Federal response resources
    in the event of a terrorist attack or major disaster. The
    Committee believes, however, that the Secretary of HHS must
    maintain the primary role in public health preparedness. Both
    Secretaries, of course, report to the President, and executive
    authority to create task forces or issue executive orders,
    consistent with other provisions of law, remain as the
    traditional way to ensure coordination, cooperation, and
    collaboration among Cabinet officials.
        The Committee also questions why funding authority for
    certain research facilities at HHS should be transferred to the
    new Department. Obviously, there are many Federal research
    facilities and a need for increased security in many areas. As
    discussed above, the Committee Print provides a role for the
    new Department in establishing standards for security at
    certain Federal civilian research facilities. The assignment to
    the new Department of specific responsibilities for
    construction, renovation and enhancement of certain HHS
    facilities is not appropriate.

                              title vi--management

        Title VI was omitted from Committee consideration.

     title vii--coordination with non-federal entities; inspector general;
                united states secret service; general provisions

               Subtitle A--Coordination with Non-Federal Entities

    Section 701. Responsibilities.
        Section 701 of H.R. 5005 sets forth responsibilities of the
    Secretary relating to coordination with state and local
    governments, the private sector, and other entities, with
    respect to planning, equipment, training and exercise
    activities, Federal communications systems, and Federal grant
    programs for emergency response providers.
        The Committee Print strikes section 701. The Committee
    recognizes the critical importance of Federal coordination with
    state and local governments and private sector entities with
    respect to homeland security matters, especially emergency
    response functions. However, the Committee views the
    responsibilities set forth in this section as either
    duplicative of responsibilities contained in other titles of
    the act, or inconsistent with such responsibilities,
    particularly as amended by the Committee Print.

                         Subtitle B--Inspector General

    Section 710. Omitted from Committee consideration.

                    Subtitle C--United States Secret Service

    Section 720. Omitted from Committee consideration.

                         Subtitle D--General Provisions

    Section 730. Omitted from Committee consideration.
    Section 731. Omitted from Committee consideration.
    Section 732. Omitted from Committee consideration.
    Section 733. Reorganization; Transfer.
        Section 733 of H.R. 5005 provides that the Secretary may
    reorganize the Department or reallocate its functions among
    officers of the Department, including establishing,
    discontinuing, or consolidating organizational units within the
    Department. The section prohibits the abolition of any entity
    established or required to be maintained as a distinct entity
    under this Act, or the abolition of any entity or function
    transferred to the Department and established by statute unless
    90 days notice is given to Congress.
        The Committee Print alters the authorities in section 733
    by requiring notice to Congress of any changes to the
    organization of, or allocation of functions within, the
    Department, and expressly prohibits the abolition of entities
    established or required to be maintained as a distinct entity
    under this Act, or the abolition of any entity or function
    transferred to the Department and established by statute,
    regardless of any notification to Congress.
    Section 734. Omitted from Committee consideration.
    Section 735. Omitted from Committee consideration.
    Section 736. Military Activities.
        Section 736 (originally, section 304 of H.R. 5005) provides
    that the Secretary shall have no authority to engage in
    military activities. The Committee Print does not alter this
    language.
    Section 737. Rule of Construction Regarding Transfer of Authority.
        There is no comparable provision in H.R. 5005. The
    Committee Print adds a new Section 737 to provide a rule of
    construction regarding the transfers of authority made by this
    Act. Importantly, the rule of construction ensures that, with
    respect to regulatory authority, this Act does not establish
    such authority for the Secretary, except to the extent that a
    function transferred to the Secretary by sections 202, 302,
    402, 403, 502 or 720 of this Act includes such authority. This
    rule of construction also ensures that the Act does not alter
    or diminish the regulatory authority of any other executive
    agency, except to the extent that a function of such agency
    that includes such authority is transferred to the Secretary by
    one of the sections listed in the preceding sentence. Section
    737 also provides a similar rule of construction for other non-
    regulatory authorities that are transferred to the Secretary.
    Section 738. Provisions Regarding Transfers from Department of Energy.
        There is no comparable provision in H.R. 5005. The
    Committee Print adds a new section 738 to clarify how the
    transfers of authority from DOE to the new Department will
    occur with respect to the activities being carried out for DOE
    by its national laboratories. In such circumstances, the two
    Secretaries shall ensure that the contracts between the
    Department of Homeland Security and the operators of the
    national laboratories are separate from the general management
    contracts between DOE and the operators of the national
    laboratories. Given that the national laboratories performing
    work for the Department of Homeland Security will continue to
    utilize DOE facilities, section 738 further provides that the
    new Department shall reimburse DOE for costs relating to such
    activities. However, the new Department shall not be required
    to pay administrative or personnel costs of DOE or its
    contractors in excess of the amount that the Secretary of
    Energy normally pays for an activity carried out by such a
    contractor. Through this provision, the Committee intends to
    permit direct tasking of the national laboratories by the new
    Department with respect to those transferred activities. The
    Department also may contract with the operators of such
    laboratories to perform other tasks through the existing ``work
    for others'' program of DOE.

                             title viii-transition

        Title VIII was omitted from Committee consideration.

                  title ix-conforming and technical amendments

    Section 901. Omitted from Committee consideration.
    Section 902. Omitted from Committee consideration.
    Section 903. Omitted from Committee consideration.
    Section 904. Omitted from Committee consideration.
    Section 905. Strategic National Stockpile and Small-Pox Vaccine
            Development.
        Section 905 of H.R. 5005 makes technical and conforming
    changes to the Public Health Security and Bioterrorism
    Preparedness and Response Act of 2002, consistent with the
    transfer of certain authorities over the National Strategic
    Stockpile from HHS to the new Department in section 502 of this
    Act. The Committee Print does not alter the language of this
    section.
    Section 906. Biological Agent Registration; Public Health Service Act.
        Section 906 of H.R. 5005 makes technical and conforming
    changes to the Public Health Service Act with respect to the
    program established in section 351A of such Act governing the
    registration of dangerous biological agents and toxins, if the
    program is transferred to the new Department. The Committee
    Print makes minor modifications to this section to address
    errors in the original text.
    Section 907. Omitted from Committee consideration.
                        COMMITTEE ON FINANCIAL SERVICES

                              House of Representatives,
                               Committee on Financial Services,
                                         Washington, DC, July 11, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Chairman Armey: The terrorist attacks of September
    11th demonstrated the need for improved security and prevention
    measures to combat acts of violence against U.S. citizens. The
    Financial Services Committee has contributed to the fight
    against terrorism by cutting off funding for organizations that
    finance terrorist activities and strengthening existing money
    laundering laws through the USA PATRIOT Act (P.L. 107-56).
    Additionally, the Committee has sought to prevent catastrophic
    economic losses from such attacks through the passage of the
    Terrorist Risk Protection Act (H.R. 3210).
        The Financial Services Committee has done an extensive
    review of its jurisdiction as it relates to the President's
    proposal to create a Department of Homeland Security (H.R.
    5005). The Committee strongly supports the efforts of the
    President and the Select Committee on Homeland Security to
    create a new executive department that will coordinate
    resources in an effort to prevent attacks on the United States.
        While the Committee will not mark up H.R. 5005, it would
    like to identify its jurisdiction over this legislation and
    reserve its right to consider the issues within our
    jurisdiction in the future. The Committee believes that it is
    in the best position to continue oversight of these programs,
    regardless of what executive department they are located.
        The following represents our views about how the programs
    within our jurisdiction will integrate into the new Department
    of Homeland Security:

                      Federal Emergency Management Agency

        The Committee has jurisdiction over three programs within
    the Federal Emergency Management Agency (FEMA) that would
    become the responsibility of the new department created through
    H.R. 5005. These programs are: the National Flood Insurance
    Programs, the Defense Production Act and the Emergency Food and
    Shelter Program. FEMA's mission is to prevent, prepare for,
    respond to, and recover from disasters of all types. The
    Committee believes that the expertise of FEMA in consequence
    management is critical to the function of the proposed Office
    of Homeland Security.
        National Flood Insurance Program--The National Flood
    Insurance Act of 1968 (42 USC 4001 et seq.) created the
    National Flood Insurance Program (NFIP) and authorized the
    Director of FEMA to administer the Federal Insurance
    Administration (FIA). The FIA provided insurance protection for
    properties which are vulnerable to floods, but not insured by
    the private sector. Prior to passage of this act, insurance
    companies generally did not offer coverage for flood disasters
    because of the high risks involved. The legislation as amended
    in 1973 and 1994 authorized the FIA and Mitigation Directorate
    to administer the NFIP. In 2001, the FIA and the Mitigation
    Directorate were brought together into a single organization,
    the Federal Insurance and Mitigation Administration (FIMA).
        FIMA has expertise in risk assessment, mitigation or loss
    prevention and insurance. Efforts such as resident education
    and flood mapping enable FEMA to reach out to residents in
    flood prone regions and protect against preventable losses.
    These services work in conjunction with the NFIP and have
    proven successful in building relationships in regions where
    floods are a threat to property and lives. The Committee
    understands that FIMA's risk assessment programs are now being
    designed to assist local communities to identify and address
    their vulnerabilities from natural and man-made disasters.
        The Committee views FEMA's efforts to prevent and mitigate
    damage from floods as critical to the protection of lives and
    property. The Committee further believes that it is important
    that the NFIP and the FIMA to work together efficiently in the
    prevention of losses from floods and from other disasters and
    for that reason should for the time being remain within FEMA as
    it is transferred to the Department of Homeland Security.
    FEMA's programs may be reviewed by the Committee in the future
    in an effort to improve their operation and to ensure that
    users are properly served.
        The Defense Production Act--The goal of the Defense
    Production Act of 1950 (50 USC App. 2062) (DPA) is to ensure
    that the United States has the ability to mobilize industrial
    and other civilian resources in support of national defense an
    civil emergency preparedness maintain military readiness when
    there is a threat to national security. The DPA is essential to
    the protection of the United States in so far as it uses
    economic tools to provide uninterrupted supplies of industrial
    resources in times of military crisis and civil emergency.
        The DPA authorizes FEMA to coordinate Federal agencies'
    decisions concerning the provision of transportation services,
    the priority availability of civil defense resources,
    materials, services and facilities to ensure the dispersal of
    such resources in the interest of national defense. The DPA was
    reauthorized by the Financial Services Committee in 2001 for
    two years (P.L. 107-47).
        The Committee believes the DPA is an important mechanism
    for the protection of the United States and should be located
    in the new Department of Homeland Security. Through the
    President's proposal, the DPA will be very important to
    mobilize national defense and civil emergency preparedness
    resources in the event of a terrorist attack or in an effort to
    ensure that there is adequate preparation to prevent such an
    attack.
        The Emergency Food and Shelter Program--The Emergency Food
    and Shelter Program (EFSP) (P.L. 100-77) is governed by a
    national board consisting of several charitable organizations
    and is chaired by FEMA. The goal of this program is to allocate
    Federal funds for the provision of food and shelter. The
    national board awards funds to jurisdictions based upon a
    formula. Further, a small portion of the overall award is
    allocated by formula to state set-aside committees which then
    allocate funds to jurisdictions based upon the criteria they
    feel is most appropriate. The EFSP seeks to ensure that
    allocations are quickly made to neediest areas of the country,
    that the public and private sectors cooperate, and that
    decisions are made at the local level. In 2001, $140 million in
    aid was distributed through this program.
        It can be argued that the operation of food and shelter
    programs has little to do with the protection of the United
    States from terrorist activities. However, the EFSP is a
    critical program which supplies food and shelter to needy
    people in emergency situations, and to ensure that the program
    remains effective and functional, the Committee recommends that
    it remain within FEMA at this time. The President's 2003 budget
    proposal calls for the EFSP to be moved from FEMA to the
    Department of Housing and Urban Development. This could be an
    effective allocation of Federal resources to aid those in need,
    and the Committee may examine the viability of such a move in
    the future.

                          United States Secret Service

        The Committee commends the President for his proposal to
    move the United States Secret Service (USSS) to the new
    Department and maintain it as a ``distinct entity'' outside the
    four major jurisdictional cylinders established under the new
    Secretary. The Committee believes that the long dual-role
    history of the Service--investigative and protective--combined
    with its more recently developed expertise in preventing and
    investigating cyber crimes and its core mission of protecting
    the financial system of the United States, make the USSS
    uniquely suited to draw from and augment the work of the other
    component agencies of the new Department.
        Since its founding in 1865 as the first investigative arm
    of the United States government and the protector of the
    integrity of U.S. currency, the Service has been the primary
    guardian of the country's financial services--banks, currency
    and payment systems. The added mission of personal protection,
    dating to 1901 following the assassination of President William
    McKinley, built on the Service's expertise at preventing
    crimes. That mission statement was expanded again in 1984 with
    passage of the Omnibus Crime Control Act (P.L. 98-473), adding
    jurisdiction over new crimes involving identity theft, access
    devices such as credit cards, and computer crimes. In 1994,
    further jurisdiction was added, recognizing USSS expertise
    investigating fraud against financial institutions. Today, the
    Secret Service has over 6,000 employees, an annual budget of
    just over $1 billion and 125 field offices across the United
    States and around the world.
        Infrastructure Protection--Springing from the Service's
    personal-protection role is the unique and important duty to
    protect critical infrastructures of the United States. The
    Committee believes this role should become an enhanced portion
    of the Service's duties at the new Department.
        The events of September 11 reinforce lessons the Committee
    learned in efforts to protect against financial-system and
    infrastructure failures due to the Year 2000 problem: that in
    an increasingly computerized and inter-connected world, the
    failure of a seemingly innocuous system can cause panic, deaths
    or economic calamity. Recent news stories indicating that Al
    Qaeda operatives have been probing the cyber security of U.S.
    power systems and dams as well as banks and defense systems
    show that the lesson has not been lost on terrorists, either. A
    serious compromise of these electronic networks could wreak
    havoc on our economy, law enforcement, military, health care,
    transportation and emergency services.
        Cyber Crime--Cyber criminals have devised sophisticated
    programs and techniques to defraud both consumers and private
    industry through electronic means. In response, the Secret
    Service has developed new tools to combat the growing areas of
    cyber terrorism, financial crime and computer fraud. These
    techniques include the widely respected Electronic Crimes
    Special Agent Program and the series of task forces modeled on
    the New York Electronic Crimes Task Force that are now under
    development. The former program provides specialized training
    to select agents in all areas of electronic crimes, qualifying
    those personnel as experts in the forensic examination of
    electronic evidence. The USA PATRIOT Act, to which the
    Committee contributed a major title, authorized the Secret
    Service to establish a nationwide network of cyber crime task
    forces, based on the New York model that uses an innovative
    approach allowing local, state and national law enforcement
    agencies to combine their resources and experience with those
    of prosecutors, the private sector and academic institutions to
    deter electronic crimes of all sorts. In recent months, the
    Service has launched similar task forces across the country.
    The Committee strongly supports these efforts and believes they
    can be instrumental in preventing crimes that could disrupt the
    financial systems of the United States.
        Anti-Counterfeiting--The Service's original mission in 1865
    was to block the counterfeiting of the newly issued national
    currency, and while the mission does not today have the profile
    of protecting the President, it remains a core function.
    Indeed, the USSS anti-counterfeiting efforts may be even more
    important today than they were a century ago, as the U.S.
    dollar is the reserve currency of the world, is the official
    currency of a number of countries, and is the default currency
    of many more. The public's faith in the integrity of the dollar
    is at the heart of the stability of the U.S. economy.
        Thus, the Committee believes that the Service's efforts to
    combat counterfeiting deserve continued and enhanced emphasis.
    Recent discoveries in Colombia of credible counterfeits of the
    new U.S. one-dollar coin and in both Colombia and in areas of
    Eastern Europe of counterfeit plants producing or ready to
    produce both U.S. banknotes and the new Euro banknotes indicate
    the magnitude of the problem. The Committee believes that the
    continued growth of counterfeiting by personal computer in the
    U.S. eventually will be mirrored overseas, where counterfeiting
    still mostly is done on presses and is thus somewhat easier to
    interdict. Also, the Committee believes that the establishment
    of more overseas field offices so that agents can gather and
    act on information first-hand--rather than relying on other
    Federal law agencies or other countries' law-enforcement--will
    increase the ability to stop counterfeiting.
        Given the demonstrated nexus between counterfeiting, drug-
    running, arms-smuggling and terrorism, the Committee strongly
    believes that trying to staff anti-counterfeiting and other
    anti-crime and threat-assessment efforts for all of Central and
    South America and the Caribbean (except Colombia) from a single
    office in Miami is simply not practical anymore. The Committee
    further believes that the Service's recent agreement with
    Europol to jointly police against counterfeiting is an
    important move and a model for other law enforcement that
    should be encouraged. The Committee stands ready to enhance
    other anti-counterfeiting law, as appropriate.
        Financial Crimes--The Service's pedigree as the only
    Federal investigative unit until some of its agents were
    detailed to help form the Federal Bureau of Investigation in
    1907, and its position within the Department of the Treasury,
    naturally led to a good relationship with the financial
    services industry and successes in stopping financial crimes.
    In the 1980s, with the advent of relatively new technologies
    such as computers and credit cards came a wave of an entirely
    new sort of bank and financial fraud, and the 1984 Act created
    three new criminal statutes--Title 18, Sections 1028, 1029 and
    1030--to deal with fraud in conjunction with identity
    documents, access device fraud and computer crimes, giving the
    Service major new authorities and clear jurisdiction. The USA
    PATRIOT Act cemented the Service's jurisdiction over Sections
    1030 and 1344. The Committee believes that the Service's role
    in these areas, as well as the assessment of threats against
    financial services companies and the protection of that
    infrastructure--communications, power, etc.--vital to those
    companies, is invaluable and should be emphasized.
        Monetary Security--While the President's legislative
    proposal for the new Department does not suggest consolidating
    the Treasury Department's monetary security forces into the new
    Department, the Committee believes that this could be an
    important step that should be closely examined. Currently the
    United States Mint and the Bureau of Engraving and Printing
    (BEP) maintain separate security forces that over the years
    have had varying degrees of success. The Committee feels that
    transferring this mission to the Secret Service in the new
    Department would have important benefits both to the security
    of the facilities that produce the country's currency and
    coins, and also to the security of U.S. gold reserves held at
    Fort Knox, currently under the supervision of the Mint. Noting
    that the BEP currently relies on the USSS heavily for
    consultations on its security arrangements, the Committee
    further believes that moving this mission to the Service may
    allow the currency-production arms of the Treasury to
    concentrate on what they do best and allow the Service to train
    its newest agents in a different form of protection detail,
    ultimately enhancing their abilities.
        The Financial Services Committee strongly supports the
    efforts of the President and the Select Committee on Homeland
    Security to protect our citizens from terrorist attacks. While
    the Committee waives its referral of H.R. 5005, its Members
    stand ready to assist in the structuring of the envisioned
    Department of Homeland Security if such assistance is
    requested.
            Yours truly,
                                      Michael G. Oxley,
                                                      Chairman,
                                       John J. LaFalce,
                                                Ranking Member.
                         COMMITTEE ON GOVERNMENT REFORM

                              House of Representatives,
                                Committee on Government Reform,
                                         Washington, DC, July 15, 2002.
    Hon. Richard K. Armey
    Majority Leader and Chairman, House Select Committee on
            Homeland Security, The Capitol, Washington, D.C.
        Dear Chairman Armey: On Thursday, July 11, the Committee on
    Government Reform reported H.R. 5005, the Homeland Security Act
    of 2002, as amended. After adopting a number of amendments to
    help the Department better fulfill its mission, the Committee
    ordered the bill reported with a favorable recommendation by a
    vote of 30 to 1. I am transmitting the final Committee bill to
    you, along with a summary of key provisions adopted by the
    Committee.
        The purpose of this letter is to share with you and other
    Members of the Select Committee my views on a number of
    important issues debated before the Committee.
    1. Transfer of Key Agencies:
        If the Department of Homeland Security is to be successful
    in its mission of better protecting the American people from
    threats of terrorism, we must take a comprehensive approach.
    While it is not possible to include within the Department every
    Federal agency that plays a role in homeland security, we must
    include those agencies that play a pivotal role in border
    security, transportation security and recovery from terrorist
    attacks. The proposal sent to Congress by President Bush takes
    just such an approach.
        Last week, the Government Reform Committee cast several
    votes in support of the President's recommendations to shift
    key agencies and functions to the new Department. The Committee
    voted to retain in H.R. 5005 provisions transferring the Coast
    Guard, the Secret Service, the Federal Emergency Management
    Agency and the INS to the Homeland Security Department. I
    believe that the Committee was correct to do so, and I voted to
    retain these key provisions of the President's plan.
        Supporters of the valuable work done by each of these
    agencies correctly note that they perform important functions
    not directly related to countering terrorist threats. It is my
    view that these functions can continue to be performed
    successfully within the Homeland Security Department. In fact,
    the Committee amended H.R. 5005 to make very clear that the
    Department's mission includes these activities. At the same
    time, those homeland security functions directly related to
    preventing terrorist attacks will benefit immeasurably from
    improved coordination and cooperation within the new
    Department. I urge you to retain these fundamental building
    blocks of the President's plan in H.R. 5005.
    2. Visa Issuance:
        I have been a strong supporter of transferring the function
    of visa issuance from the State Department to the Homeland
    Security Department in its entirety. I continue to support this
    position, although it did not prevail in Committee.
        The Government Reform Committee's oversight of the State
    Department has produced ample evidence that the Consular
    Services Bureau lacks a meaningful commitment to security
    concerns. When the State Department learned that one of its
    consular officials was selling visas for cash and sex in
    Communist China, they swept the problem under the rug. Instead
    of firing him, or having him prosecuted, they brought him back
    to Washington and placed him in a highly sensitive position --
    reviewing visa applications from countries such as Iran and
    Iraq that are state sponsors of terrorism. Despite the fact
    that this official, Charles Parish, took the Fifth before the
    Committee, the State Department vigorously defended its
    inexplicable decision-making in this case.
        More recently, we have learned that the Department
    established a program known as `Visa Express' in Saudi Arabia,
    which allows Saudis to apply for passports through travel
    agencies. Of the 15 Saudi nationals who took part in the
    hijackings of September 11, three received their U.S. visas
    through Visa Express. Because they were able to apply through
    travel agents, U.S. consular officials never interviewed them.
    Although the Visa Express program is a clear example of placing
    convenience ahead of security, the State Department continues
    to defend it.
        In just the last few weeks, we have learned that more than
    70 U.S. visas were illegally sold to foreign nationals in
    Qatar. This is another pertinent example of the State
    Department's inability to police itself.
        State Department officials have made their view clear that
    diplomatic considerations play an important role in the
    consideration of visa applications, and the weight of the
    evidence makes it equally clear that such concerns will
    continue to outweigh security concerns as long as this function
    resides at the State Department.
        After lengthy debate, the Government Reform Committee
    adopted a compromise provision that would authorize the
    Secretary of Homeland Security to place a Homeland Security
    official in each consulate. In addition, it clarifies that the
    final decision to reject a visa rests with the Homeland
    Security Department. I support this provision. I continue to
    prefer the more direct approach of shifting this function in
    its entirety to the Homeland Security Department. However,
    given the contrary votes in three House committees, its
    adoption appears unlikely. I would request that you and your
    colleagues on the Select Committee review the Government Reform
    Committee's provision requiring the State Department to
    discontinue its Visa Express program in Saudi Arabia, and
    maintain it in the legislation when it goes to the House floor.
    3. Personnel Provisions:
        The Administration has asked for a great deal of
    flexibility in managing the personnel of the Department. In an
    undertaking this large, some flexibility is necessary and
    appropriate. The Committee adopted alternative language that
    gives the Administration flexibility where it is needed most,
    while maintaining appropriate safeguards that have strong
    support on the Committee. The Committee has authorized the new
    Secretary to adjust pay levels to correct disparities in pay
    between agencies being inherited by the Department. The
    Committee has authorized the Secretary to put in place a system
    for the expedited suspension and removal of personnel for
    national security reasons, subject to a hearing. The Committee
    has also authorized the Secretary to develop a human resources
    demonstration program to help the Department recruit and retain
    a talented workforce. While we believe that these provisions
    are sound, we are open to further discussions with the
    Administration to refine this legislative language.
        I want to draw your attention to two specific issues of
    concern in this area. First, Congresswoman Morella offered an
    amendment, which was adopted by one vote, limiting the
    President's ability to restrict collective bargaining rights at
    the Homeland Security Department on national security grounds.
    While I believe that the amendment was well-intentioned, I do
    not believe that it sets good policy, and I urge you to
    reconsider it.
        Under current law, the President has the authority to
    restrict collective bargaining at governmental units that are
    critical to national security. This is an authority that has
    been used judiciously by both Republican and Democratic
    Presidents since the late 1970s. The Morella amendment would
    weaken this Presidential authority at the Department of
    Homeland Security. Ironically, at a time when national security
    concerns are paramount, this provision would give the President
    less authority over the Department of Homeland Security than he
    has over any other Department. While I have great respect for
    the author of this amendment, I believe that this language
    should not be included in the final version of H.R. 5005.
        Second, the Committee bill includes language requiring the
    Administration to adhere to current pay ceilings for members of
    the Executive Schedule and Senior Executive Service. Efforts to
    exempt individual agencies from these limitations in the past
    have been controversial. They have cost the taxpayers
    significant sums of money while failing to produce better
    management at those agencies. This Committee has opposed
    piecemeal exemptions from pay ceilings as a matter of fiscal
    responsibility, and I recommend that the Select Committee
    retain these provisions in the final bill.
    4. Indemnification:
        The Committee adopted provisions authorizing Federal
    agencies to indemnify contractors from liability when they
    provide the government with anti-terrorism technology necessary
    to protect critical infrastructures. The Secretary of Homeland
    Security is authorized to provide similar indemnification for
    such technology purchased by state and local governments.
        These provisions were added to address a serious problem.
    While private-sector companies are developing advanced
    technology to help prevent terrorist attacks, they are unable
    to sell it to government agencies because they cannot obtain
    sufficient liability insurance. At a time when terrorist
    organizations are targeting the United States for lethal
    attacks, we must lower the barriers to the use of this
    technology. We have an obligation to do everything we can to
    ensure that we reduce our vulnerabilities to terrorist attacks.
        This legislation is modeled after a law that has
    successfully provided for indemnification of commercial space
    launches for decades. It is fiscally responsible and has been
    constructed to protect the best interests of the government and
    the public. Before offering indemnification, agency heads would
    be required to ensure that contractors have obtained as much
    private insurance coverage in the private marketplace as
    reasonably possible. Agency heads would be required to
    determine that the technology is effective, and would be used
    to protect critical infrastructures. Indemnification would have
    to be approved jointly by the head of an agency and the
    Director of OMB, who would be responsible for protecting the
    overall financial interests of the Federal government.
        These indemnification provisions have been crafted in a
    responsible way to address a serious problem. I hope that the
    Select Committee will approve them and retain them in H.R.
    5005.
        Thank you for your consideration of my views on these
    important issues, and for your consideration of the legislation
    reported by the Government Reform Committee. If you have any
    questions, or are in need of any assistance, please don't
    hesitate to contact me.
            Sincerely,
                                            Dan Burton,
                                                      Chairman.
                                    ------

                                   MEMORANDUM

    From: Chairman Dan Burton
    To: Majority Leader Dick Armey
    Date: July 15, 2002
    Re: Amendments to H.R. 5005

        On Thursday, July 11, the Committee on Government Reform
    marked up H.R. 5005, the Homeland Security Act of 2002. After
    15 hours of debate, during which the Committee considered 37
    amendments, the Committee voted 30-1 to report H.R. 5005 to the
    Select Committee with a favorable recommendation.
        The purpose of this memo is to formally transmit the
    Committee's bill to the Select Committee, and to outline the
    most significant actions taken at the mark-up. The Committee
    cast a series of votes in support of the President's proposals
    to shift key agencies to the Homeland Security Department,
    including the Coast Guard, the INS, FEMA and the Secret
    Service. The Committee also adopted a number of important
    management reforms and safeguards to ensure that the new
    Department is able to function efficiently and fulfill its
    mission.
    Organizational and Policy Provisions Adopted by the Committee:
        1. In a series of votes, the Committee voted to maintain
    the structural integrity of the proposed Department of Homeland
    Security. The Committee voted to shift into the Department the
    Coast Guard, the Immigration and Naturalization Service, the
    Federal Emergency Management Agency, and the Secret Service.
        2. The Committee adopted a modified approach for the
    inclusion of the Department of Agriculture's Animal and Plant
    Health Inspection Service.
        3. The Committee approved a modification to the
    Administration's proposal regarding visa issuance, authorizing
    the Secretary of Homeland Security to place Homeland Security
    personnel at each consulate to monitor the review of visa
    applications. The Committee also added a provision clarifying
    that the final authority to reject a visa application rests
    with the Secretary of Homeland Security. Finally, the Committee
    voted to prohibit the continuation of the "Visa Express"
    program in Saudi Arabia.
        4. The Committee voted to require the President to develop
    an annual threat assessment and a strategic plan related to
    Homeland Security. Also approved was a requirement that the
    President produce a biannual report to Congress on homeland
    security preparedness.
        5. The Committee adopted provisions allowing Federal
    agencies to indemnify from liability contractors that provide
    anti-terrorism technology to protect critical infrastructures.
    The Secretary of Homeland Security would also have the
    authority to indemnify contractors providing such technology to
    state and local governments, with the concurrence of the
    Director of the Office of Management and Budget.
        6. The Committee voted to add the provisions of legislation
    introduced by Representative Saxby Chambliss (GA) to improve
    the sharing of information with state and local governments.
        7. The Committee voted to add the provisions of legislation
    introduced by Representative Tom Davis (VA) to improve
    information security.
        8. The Committee voted to maintain provisions in H.R. 5005
    to exempt from the Freedom of Information Act information
    provided to the Homeland Security Department regarding the
    vulnerability of critical infrastructures. The Committee also
    adopted an amendment to extend a similar exemption to other
    Federal agencies.
        9. The Committee voted to shift the Port Security functions
    of the Department of Transportation, along with reporting
    requirements, to the Homeland Security Department.
        10. The Committee added the Secretary of Homeland Security
    to the National Security Council.
        11. The Committee also defined "terrorism" and "homeland
    security," and expanded the mission statement to reflect the
    importance of non-terrorist functions and the need to respond
    to natural disasters.
    Management Initiatives:
        1. The Committee voted to create a Deputy Secretary for
    Management to oversee critical management functions of the
    Department. Also created by the amendment were a Deputy
    Secretary for Policy, and a Principal Deputy Secretary.
        2. The Committee reduced the number of assistant
    secretaries authorized by the bill from 16 to 12.
        3. The Committee adopted an amendment designating an
    Assistant Secretary for Narcotics Interdiction.
        4. The Committee replaced the Administration's provision
    related to personnel flexibility with a three-part plan. First,
    the Secretary would be authorized to adjust pay rates to
    resolve pay disparities as the Department is being assembled.
    Second, the Secretary would be authorized to suspend or remove
    employees of the Department on national security grounds,
    subject to a hearing. Third, the Secretary would be authorized
    to conduct a demonstration project creating a new human
    resources system designed to help recruit and retain talented
    employees. The Secretary would be required to continue to
    comply with the Whistleblowers Protection Act, veterans'
    preference requirements, and other important safeguards.
        5. The Committee adopted an amendment to limit the
    President's authority to deny collective bargaining rights to
    units of the new Department that have collective bargaining
    agreements in place. The Committee also adopted an amendment
    specifying that, as the Secretary adjusts pay rates to resolve
    pay disparities, he may not reduce pay levels of current
    employees.
        6. The Committee revised the real property provisions of
    H.R. 5005 to give the Secretary flexibility in managing the
    Department's property while ensuring that local zoning
    requirements are taken into consideration and that fair market
    value is obtained when property is sold or leased.
        7. The Committee's modification to H.R. 5005's personal
    services contracts provision allows the Secretary to waive pay
    restrictions for experts and consultants for urgent homeland
    security needs.
        8. With regard to the Federal Advisory Committee Act, the
    Committee deleted provisions in H.R. 5005 exempting the
    Department from public meeting requirements and conflict-of-
    interest rules.
        9. The Committee retained provisions in H.R. 5005 placing
    the Inspector General for Homeland Security on the same footing
    as Inspectors General at the Departments of Defense, Treasury
    and Justice. The Committee added a provision requiring
    notification of committees of jurisdiction in the House and
    Senate whenever an inspector general investigation is
    curtailed.
        10. The Committee voted to authorize funding for the
    Department for five years.
        11. The Committee required the Secretary to submit an
    organizational plan for the Department to Congress.
        12. The Committee clarified that the Department may not
    perform prosecutorial or investigative functions unless
    authorized by Congress to do so.
    Other Provisions:
        The Committee also approved the following by voice votes:
        1. An amendment by Congressman Horn (CA) that would
    establish an Intergovernmental Coordinating Council to promote
    effective coordination and cooperation among Federal, State and
    local governments on homeland security issues. The council
    would be chaired by the Secretary and consist of State and
    local governmental officials as well as officials of the
    Department and other federal agencies.
        2. An amendment by Congressman Waxman (CA) that would
    establish a privacy officer in the Department. The privacy
    officer would be appointed by the Secretary from among senior
    Department officials and would be responsible for ensuring that
    personally identifiable information in the possession of the
    Department is collected, used and disclosed in accordance with
    the Privacy Act.
        3. An amendment by Rep. Carolyn Maloney (NY) that would
    give the Secretary broader authority to provide federal
    assistance to State and local governments following a major
    disaster.
        4. An amendment offered by Rep. Kucinich (OH) that would
    offer whistleblowers new remedies against retaliation when they
    disclose information to Congress. This amendment would allow
    aggrieved employees to bring a civil action in any U.S.
    district court and seek damages including lost wages and
    benefits, reinstatement, costs and attorney fees.
        5. An amendment offered by Rep. Souder (IN) that would
    designate one of the Department's assistant secretary positions
    as the Assistant Secretary for Narcotics Interdiction.
        6. An amendment offered by Rep. Ose (CA) that would require
    the Department to issue common rules with the Department of
    Transportation on transportation security issues and with the
    Nuclear Regulatory Commission on nuclear security issues.
        7. An amendment offered by Rep. Tierney (MA) that would
    require the Secretary to develop a plan to expeditiously
    deliver Potassium Iodide to individuals exposed to radiation
    following a nuclear power plant disaster.
        8. An amendment offered by Rep. Schakowsky (IL) that would
    require the Secretary to report to Congress on the impact on
    immigration caused by the transfer of the Immigration and
    Naturalization Service into the new Department.
        9. An amendment offered by Rep. Schakowsky (IL) that would
    transfer oversight responsibility for internal investigations
    performed by the Customs Service's Office of Internal Affairs
    and the Secret Service's Office of Inspections from the
    Inspector General at the Treasury Department to the Department
    of Homeland Security Inspector General.
        10. An amendment offered by Rep. Schakowsky (IL) that would
    establish an Office for Civil Rights and Civil Liberties to
    review and evaluate allegations of civil rights, civil
    liberties and racial and ethnic profiling abuses by Department
    officials.
        11. An amendment offered by Rep. Schakowsky (IL) that would
    establish a Citizenship and Immigration Services Ombudsman to
    assist individuals and employers on citizenship and immigration
    matters.
        12. An amendment offered by Rep. Tom Davis (VA) that would
    authorize a pilot program for flexible research and development
    negotiating authority to attract high tech companies to perform
    advanced research projects.
        13. An amendment offered by Rep. Tierney (MA) that would
    limit the use of the personnel authorities granted to the
    Transportation Security Administration to employees working for
    or carrying out the functions of the Transportation Security
    Administration in the new Department.
        14. An amendment offered by Rep. Danny Davis (IL) that
    would establish an Office of Small and Disadvantaged Business
    Utilization in the Department.
        15. An amendment offered by Rep. Kucinich (OH) and Rep.
    Barr (GA), establishing minimum standards for private security
    guards.
                                    ------

                                   H.R. 5005

    Showing the Amendment Recommended by the Committee on Government Reform

        Strike all after the enacting clause and insert the following:

    SECTION. 1. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Homeland Security
    Act of 2002''.
        (b) Table of Contents.--The table of contents for this Act is as
    follows:

    Sec. 1. Short title; table of contents.
    Sec. 2. Definitions.
    Sec. 3. Construction; severability.
    Sec. 4. Effective date.

                    TITLE I--DEPARTMENT OF HOMELAND SECURITY

    Sec. 101. Establishment; mission.
    Sec. 102. Secretary; functions.
    Sec. 103. Other officers.

    TITLE II--INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION; CRITICAL
                           INFRASTRUCTURE INFORMATION

         Subtitle A--Information Analysis and Infrastructure Protection

    Sec. 201. Under Secretary for Information Analysis and Infrastructure
    Protection.
    Sec. 202. Functions transferred.
    Sec. 203. Access to information.

                Subtitle B--Critical Infrastructure Information

    Sec. 211. Short title.
    Sec. 212. Definitions.
    Sec. 213. Designation of critical infrastructure protection program.
    Sec. 214. Protection of voluntarily shared critical infrastructure
    information.
    Sec. 215. No private right of action.
    Sec. 216. Applicability.

          TITLE III--CHEMICAL, BIOLOGICAL, RADIOLOGICAL, AND NUCLEAR
                                COUNTERMEASURES

    Sec. 301. Under Secretary for Chemical, Biological, Radiological, and
    Nuclear Countermeasures.
    Sec. 302. Functions transferred.
    Sec. 303. Conduct of certain public health-related activities.
    Sec. 304. Transfer of Plum Island Animal Disease Center, Department of
    Agriculture.

                  TITLE IV--BORDER AND TRANSPORTATION SECURITY

    Sec. 401. Under Secretary for Border and Transportation Security.
    Sec. 402. Functions transferred.
    Sec. 403. Visa issuance.
    Sec. 404. Transfer of certain agricultural inspection functions of the
    Department of Agriculture.
    Sec. 405. Interagency common rules.
    Sec. 406. Immigration functions.
    Sec. 407. Citizenship and Immigration Services Ombudsman.
    Sec. 408. Seaport security functions.

                  TITLE V--EMERGENCY PREPAREDNESS AND RESPONSE

    Sec. 501. Under Secretary for Emergency Preparedness and Response.
    Sec. 502. Functions transferred.
    Sec. 503. Nuclear incident response.
    Sec. 504. Definition.
    Sec. 505. Conduct of certain public health-related activities.
    Sec. 506. Minimum requirements for private security officers.

                              TITLE VI--MANAGEMENT

    Sec. 601. Deputy Secretary for Management.
    Sec. 602. Chief Financial Officer.
    Sec. 603. Chief Information Officer.
    Sec. 604. Establishment of Office for Civil Rights and Civil Liberties.

       TITLE VII--COORDINATION; INSPECTOR GENERAL; UNITED STATES SECRET
        SERVICE; GENERAL PROVISIONS; ACQUISITIONS; INFORMATION SHARING;
                                    PROPERTY

               Subtitle A--Coordination With Non-Federal Entities

    Sec. 701. Responsibilities.
    Sec. 702. Intergovernmental Coordinating Council.

                         Subtitle B--Inspector General

    Sec. 710. Authority of the Secretary.

                    Subtitle C--United States Secret Service

    Sec. 720. Functions transferred.

                         Subtitle D--General Provisions

    Sec. 730. Human resource management.
    Sec. 731. Labor-management relations.
    Sec. 732. Reporting requirements.
    Sec. 733. Requirement to develop comprehensive risk management
    assessment and homeland security strategy.
    Sec. 734. Military activities.
    Sec. 735. Reorganization; transfer.
    Sec. 736. Miscellaneous provisions.
    Sec. 737. Authorization of appropriations.

                            Subtitle E--Acquisitions

    Sec. 740. Research and development projects.
    Sec. 741. Personal services.
    Sec. 742. Special streamlined acquisition authority.
    Sec. 743. Program to encourage and support innovative solutions to
    enhance homeland security.
    Sec. 744. Risk sharing and indemnification.
    Sec. 745. Procurements from small businesses.

                        Subtitle F--Information Sharing

    Sec. 750. Short title.
    Sec. 751. Findings and sense of Congress.
    Sec. 752. Facilitating homeland security information sharing
    procedures.
    Sec. 753. Report.
    Sec. 754. Authorization of appropriations.
    Sec. 755. Authority to share grand jury information.
    Sec. 756. Authority to share electronic, wire, and oral interception
    information.
    Sec. 757. Foreign intelligence information.
    Sec. 758. Information acquired from an electronic surveillance.
    Sec. 759. Information acquired from a physical search.

                              Subtitle G--Property

    Sec. 761. Real property management.
    Sec. 762. Criteria for using authorities.
    Sec. 763. Outleases.
    Sec. 764. Review and revision of transactions by administrator.
    Sec. 765. Transactional reports.

                             TITLE VIII--TRANSITION

    Sec. 801. Definitions.
    Sec. 802. Reorganization plan.
    Sec. 803. Transitional authorities.
    Sec. 804. Savings provisions.
    Sec. 805. Terminations.
    Sec. 806. Incidental transfers.

                 TITLE IX--CONFORMING AND TECHNICAL AMENDMENTS

    Sec. 901. Executive department.
    Sec. 902. Executive Schedule.
    Sec. 903. Inspector General.
    Sec. 904. Chief Financial Officer.
    Sec. 905. Chief Information Officer.
    Sec. 906. United States Secret Service.
    Sec. 907. Coast Guard.
    Sec. 908. Strategic national stockpile and smallpox vaccine
    development.
    Sec. 909. Select agent registration.
    Sec. 910. Membership of Secretary on National Security Council.
    Sec. 911. National Bio-Weapons Defense Analysis Center.

                         TITLE X--INFORMATION SECURITY

    Sec. 1001. Information security.
    Sec. 1002. Management of information technology.
    Sec. 1003. National Institute of Standards and Technology.
    Sec. 1004. Information security and privacy advisory board.
    Sec. 1005. Technical and conforming amendments.
    Sec. 1006. Construction.
    Sec. 1007. Effective date.

               TITLE XI--ADDITIONAL RESPONSIBILITIES OF SECRETARY

    Sec. 1101. Homeland security events.
    Sec. 1102. Standards and reporting.
    Sec. 1103. Special commission to review air quality.

    SEC. 2. DEFINITIONS.

        The following shall apply for purposes of this Act:
                (1) The term ``American homeland'' or ``homeland'' means
            the United States, in a geographic sense.
                (2) The term ``assets'' includes contracts, facilities,
            property, records, unobligated or unexpended balances of
            appropriations, and other funds or resources (other than
            personnel).
                (3) The term ``Department'' means the Department of
            Homeland Security.
                (4) The term ``emergency response providers'' includes
            Federal, State, and local emergency public safety, law
            enforcement, emergency response, emergency medical, and related
            personnel, agencies, and authorities.
                (5) The term ``executive agency'' means an executive agency
            and a military department, as defined, respectively, in
            sections 105 and 102 of title 5, United States Code.
                (6) The term ``functions'' includes authorities, powers,
            rights, privileges, immunities, programs, projects, activities,
            duties, responsibilities, and obligations.
                (7) The term ``homeland security'' means the deterrence,
            detection, preemption, prevention, and defense against
            terrorism targeted at the territory, sovereignty, population,
            or infrastructure of the United States, including the
            management of the programs and policies necessary to respond to
            and recover from terrorist attacks within the United States.
                (8) The term ``local government'' has the meaning given in
            section 102(6) of the Robert T. Stafford Disaster Relief and
            Emergency Assistance Act (Public Law 93-288).
                (9) The term ``major disaster'' has the meaning given in
            section 102(2) of the Robert T. Stafford Disaster Relief and
            Emergency Assistance Act (Public Law 93-288).
                (10) The term ``personnel'' means officers and employees.
                (11) The terms ``terrorism'' and ``terrorist attack'' mean
            the calculated attack or threat of attack against persons,
            property, or infrastructure to inculcate fear and intimidate or
            coerce a government, the civilian population, or any segment of
            such population, in the pursuit of political, religious, or
            ideological goals.
                (12) The term ``Secretary'' means the Secretary of Homeland
            Security.
                (13) The term ``United States'', when used in a geographic
            sense, means any State of the United States, the District of
            Columbia, Puerto Rico, the Virgin Islands, Guam, American
            Samoa, and the Commonwealth of the Northern Mariana Islands,
            any possession of the United States, and any waters within the
            jurisdiction of the United States.

    SEC. 3. CONSTRUCTION; SEVERABILITY.

        Any provision of this Act held to be invalid or unenforceable by
    its terms, or as applied to any person or circumstance, shall be
    construed so as to give it the maximum effect permitted by law, unless
    such holding shall be one of utter invalidity or unenforceability, in
    which event such provision shall be deemed severable from this Act and
    shall not affect the remainder thereof, or the application of such
    provision to other persons not similarly situated or to other,
    dissimilar circumstances.

    SEC. 4. EFFECTIVE DATE.

        This Act shall take effect thirty days after the date of enactment
    or, if enacted within thirty days before January 1, 2003, on January 1,
    2003.

                    TITLE I--DEPARTMENT OF HOMELAND SECURITY

    SEC. 101. ESTABLISHMENT; MISSION.

        (a) Establishment.--There is established a Department of Homeland
    Security as an executive department of the United States within the
    meaning of title 5, United States Code.
        (b) Mission.--(1) The primary mission of the Department is to--
                (A) prevent terrorist attacks within the United States;
                (B) reduce the vulnerability of the United States to
            terrorism;
                (C) minimize the damage, and assist in the recovery, from
            terrorist attacks that do occur within the United States; and
                (D) act as a focal point regarding natural and man-made
            crises and emergency planning, and carry out all functions of
            entities transferred to the Department as provided by law.
        (2) In carrying out the mission described in paragraph (1), and as
    further described in this Act, the Department's primary
    responsibilities shall include--
                (A) information analysis and infrastructure protection;
                (B) chemical, biological, radiological, nuclear, and
            related countermeasures;
                (C) border and transportation security;
                (D) emergency preparedness and response; and
                (E) coordination (including the provision of training and
            equipment) with other executive agencies, with State and local
            government personnel, agencies, and authorities, with the
            District of Columbia, with the private sector, and with other
            entities.
        (3) Responsibility for investigating and prosecuting terrorism.--
    Except as specifically provided by law with respect to entities
    transferred to the Department under this Act, primary responsibility
    for investigating and prosecuting acts of terrorism shall be vested not
    in the Department, but rather in Federal, State, and local law
    enforcement agencies with jurisdiction over the acts in question.

    SEC. 102. SECRETARY; FUNCTIONS.

        (a) Secretary.--(1) There is a Secretary of Homeland Security,
    appointed by the President, by and with the advice and consent of the
    Senate.
        (2) The Secretary is the head of the Department and shall have
    direction, authority, and control over it.
        (3) All functions of all officers, employees, and organizational
    units of the Department are vested in the Secretary.
        (b) Functions.--The Secretary--
                (1) may delegate any of his functions to any officer,
            employee, or organizational unit of the Department, unless
            otherwise provided by this Act;
                (2) may promulgate such regulations as necessary to carry
            out the functions and duties of the Department as set forth in
            this Act;
                (3) shall have the authority to make contracts, grants, and
            cooperative agreements, and to enter into agreements with other
            executive agencies, as may be necessary and proper to carry out
            his responsibilities under this Act or as otherwise provided by
            law;
                (4) shall take reasonable steps to ensure that information
            systems and databases of the Department are compatible with
            each other; and
                (5) shall take reasonable steps to consolidate field
            offices of the Department in a manner that promotes efficiency
            without diminishing effectiveness.
        (c) Construction.--This Act may not be construed as establishing
    any regulatory authority for the Secretary, except to the extent that
    the regulatory authority established by another Act is transferred to
    the Secretary by this Act. Nor shall this Act be construed as altering
    the regulatory authority of any other executive agency, except to the
    extent that a regulatory authority of another executive agency is
    expressly transferred to the Department by this Act.

    SEC. 103. OTHER OFFICERS.

        (a) Deputy Secretaries; Under and Assistant Secretaries; CFO.--To
    assist the Secretary in the performance of his functions, there are the
    following officers, appointed by the President, by and with the advice
    and consent of the Senate:
                (1) A Deputy Secretary of Homeland Security, who shall be
            the Secretary's first assistant for purposes of chapter 33,
            subchapter 3, of title 5, United States Code.
                (2) A Deputy Secretary for Policy.
                (3) A Deputy Secretary for Management.
                (4) An Under Secretary for Information Analysis and
            Infrastructure Protection.
                (5) An Under Secretary for Chemical, Biological,
            Radiological, and Nuclear Countermeasures.
                (6) An Under Secretary for Border and Transportation
            Security.
                (7) An Under Secretary for Emergency Preparedness and
            Response.
                (8) Not more than four Assistant Secretaries.
                (9) A Chief Financial Officer.
        (b) Inspector General.--To assist the Secretary in the performance
    of his functions, there is an Inspector General, who shall be appointed
    as provided in section 3(a) of the Inspector General Act of 1978.
        (c) Commandant of the Coast Guard.--To assist the Secretary in the
    performance of his functions, there is a Commandant of the Coast Guard,
    who shall be appointed as provided in section 44 of title 14, United
    States Code.
        (d) Privacy Officer.--The Secretary shall appoint a senior official
    in the Department to assume primary responsibility for privacy policy,
    including--
                (1) assuring that the use of new technologies sustains, and
            does not erode, the protections provided in all statues
            relating to the use, collection, and disclosure of personal
            information;
                (2) assuring that personal information contained in systems
            of records is handled in full compliance with fair information
            practices under applicable provisions of section 552a of title
            5, United States Code, popularly known as the Privacy Act of
            1974;
                (3) evaluating legislative and regulatory proposals
            involving collection, use, and disclosure of personal
            information by the Federal Government for consistency with
            section 552a of title 5, United States Code;
                (4) conducting a privacy impact assessment of proposed
            rules when the Secretary deems such assessment appropriate; and
                (5) preparing a report to the Congress on an annual basis
            that--
                        (A) identifies any complaints received from the
                    public regarding privacy violations by the Department;
                    and
                        (B) describes how the Department addressed such
                    complaints, and internal controls implemented by the
                    Department to improve privacy protections.
        (e) Other Officers.--To assist the Secretary in the performance of
    his functions, there are the following officers, appointed by the
    President:
                (1) A General Counsel, who shall be the chief legal officer
            of the Department.
                (2) Not more than eight Assistant Secretaries, one of which
            shall be an Assistant Secretary for Narcotics Interdiction.
                (3) A Director of the Secret Service.
                (4) A Chief Information Officer.
        (f) Assistant Secretary for Narcotics Interdiction.--The Assistant
    Secretary for Narcotics Interdiction shall--
                (1) coordinate policy and operations within the Department
            and with other Federal departments and agencies to interdict
            the entry of illicit drugs into the United States;
                (2) ensure the adequacy of resources within the Department
            for illicit drug interdiction; and
                (3) serve as the United States Interdiction Coordinator for
            the Director of National Drug Control Policy.
        (g) Performance of Specific Functions.--Subject to the provisions
    of this Act, every officer of the department shall perform the
    functions specified by law for his office or prescribed by the
    Secretary.

    TITLE II--INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION; CRITICAL
                           INFRASTRUCTURE INFORMATION

         Subtitle A--Information Analysis and Infrastructure Protection

    SEC. 201. UNDER SECRETARY FOR INFORMATION ANALYSIS AND INFRASTRUCTURE
                        PROTECTION.

        The Secretary, acting through the Under Secretary for Information
    Analysis and Infrastructure Protection, shall have responsibility for
    the following:
                (1) Receiving and analyzing law enforcement information,
            intelligence, and other information in order to understand the
            nature and scope of the terrorist threat to the American
            homeland and to detect and identify potential threats of
            terrorism within the United States.
                (2) Comprehensively assessing the vulnerabilities of the
            key resources and critical infrastructures in the United
            States.
                (3) Integrating relevant information, intelligence
            analyses, and vulnerability assessments (whether such
            information, analyses, or assessments are provided or produced
            by the Department or others) to identify protective priorities
            and support protective measures by the Department, by other
            executive agencies, by State and local government personnel,
            agencies, and authorities, by the private sector, and by other
            entities.
                (4) Developing a comprehensive national plan for securing
            the key resources and critical infrastructures in the United
            States.
                (5) Taking or seeking to effect necessary measures to
            protect the key resources and critical infrastructures in the
            United States, in coordination with other executive agencies
            and in cooperation with State and local government personnel,
            agencies, and authorities, the private sector, and other
            entities.
                (6) Administering the Homeland Security Advisory System,
            exercising primary responsibility for public threat advisories,
            and (in coordination with other executive agencies) providing
            specific warning information to State and local government
            personnel, agencies, and authorities, the private sector, other
            entities, and the public, as well as advice about appropriate
            protective actions and countermeasures.
                (7) Reviewing, analyzing, and making recommendations for
            improvements in the policies and procedures governing the
            sharing of law enforcement, intelligence, and other information
            relating to homeland security within the Federal Government and
            between such government and State and local government
            personnel, agencies, and authorities.

    SEC. 202. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The National Infrastructure Protection Center of the
            Federal Bureau of Investigation (other than the Computer
            Investigations and Operations Section), including the functions
            of the Attorney General relating thereto.
                (2) The National Communications System of the Department of
            Defense, including the functions of the Secretary of Defense
            relating thereto.
                (3) The Critical Infrastructure Assurance Office of the
            Department of Commerce, including the functions of the
            Secretary of Commerce relating thereto.
                (4) The Computer Security Division of the National
            Institute of Standards and Technology, including the functions
            of the Secretary of Commerce relating thereto and the functions
            of the National Institute of Standards and Technology and the
            Secretary of Commerce relating to information security
            established by the amendments made by title X.
                (5) The National Infrastructure Simulation and Analysis
            Center of the Department of Energy, including the functions of
            the Secretary of Energy relating thereto.
                (6) The Federal Computer Incident Response Center of the
            General Services Administration, including the functions of the
            Administrator of General Services relating thereto.

    SEC. 203. ACCESS TO INFORMATION.

        The Secretary shall have access to all reports, assessments, and
    analytical information relating to threats of terrorism in the United
    States and to other areas of responsibility described in section
    101(b), and to all information concerning infrastructure or other
    vulnerabilities of the United States to terrorism, whether or not such
    information has been analyzed, that may be collected, possessed, or
    prepared by any executive agency, except as otherwise directed by the
    President. The Secretary shall also have access to other information
    relating to the foregoing matters that may be collected, possessed, or
    prepared by an executive agency, as the President may further provide.
    With respect to the material to which the Secretary has access under
    this section--
                (1) the Secretary may obtain such material by request, and
            may enter into cooperative arrangements with other executive
            agencies to share such material on a regular or routine basis,
            including requests or arrangements involving broad categories
            of material;
                (2) regardless of whether the Secretary has made any
            request or entered into any cooperative arrangement pursuant to
            paragraph (1), all executive agencies promptly shall provide to
            the Secretary--
                        (A) all reports, assessments, and analytical
                    information relating to threats of terrorism in the
                    United States and to other areas of responsibility
                    described in section 101(b);
                        (B) all information concerning infrastructure or
                    other vulnerabilities of the United States to
                    terrorism, whether or not such information has been
                    analyzed;
                        (C) all information relating to significant and
                    credible threats of terrorism in the United States,
                    whether or not such information has been analyzed, if
                    the President has provided that the Secretary shall
                    have access to such information; and
                        (D) such other material as the President may
                    further provide; and
                (3) the Secretary shall ensure that any material received
            pursuant to this section is protected from unauthorized
            disclosure and handled and used only for the performance of
            official duties, and that any intelligence information shared
            under this section shall be transmitted, retained, and
            disseminated consistent with the authority of the Director of
            Central Intelligence to protect intelligence sources and
            methods under the National Security Act and related procedures
            or, as appropriate, similar authorities of the Attorney General
            concerning sensitive law enforcement information.

                Subtitle B--Critical Infrastructure Information

    SEC. 211. SHORT TITLE.

        This subtitle may be cited as the ``Critical Infrastructure
    Information Act of 2002''.

    SEC. 212. DEFINITIONS.

        In this subtitle:
                (1) Agency.--The term ``agency'' has the meaning given it
            in section 551 of title 5, United States Code.
                (2) Covered federal agency.--The term ``covered Federal
            agency'' means the Department of Homeland Security and any
            agency designated by the Department or with which the
            Department shares critical infrastructure information including
            the following:
                        (A) The Department of Justice.
                        (B) The Department of Defense.
                        (C) The Department of Commerce.
                        (D) The Department of Transportation.
                        (E) The Department of the Treasury.
                        (F) The Department of Health and Human Services.
                        (G) The Department of Energy.
                        (H) The Environmental Protection Agency.
                        (I) The General Services Administration.
                        (J) The Federal Communications Commission.
                        (K) The Federal Energy Regulatory Commission.
                        (L) The Nuclear Regulatory Commission.
                (3) Critical infrastructure information.--The term
            ``critical infrastructure information'' means information not
            customarily in the public domain and related to the security of
            critical infrastructure or protected systems--
                        (A) actual, potential, or threatened interference
                    with, attack on, compromise of, or incapacitation of
                    critical infrastructure or protected systems by either
                    physical or computer-based attack or other similar
                    conduct (including the misuse of or unauthorized access
                    to all types of communications and data transmission
                    systems) that violates Federal, State, or local law,
                    harms interstate commerce of the United States, or
                    threatens public health or safety;
                        (B) the ability of any critical infrastructure or
                    protected system to resist such interference,
                    compromise, or incapacitation, including any planned or
                    past assessment, projection, or estimate of the
                    vulnerability of critical infrastructure or a protected
                    system, including security testing, risk evaluation
                    thereto, risk management planning, or risk audit; or
                        (C) any planned or past operational problem or
                    solution regarding critical infrastructure or protected
                    systems, including repair, recovery, reconstruction,
                    insurance, or continuity, to the extent it is related
                    to such interference, compromise, or incapacitation.
                (4) Critical infrastructure protection program.--The term
            ``critical infrastructure protection program'' means any
            component or bureau of a covered Federal agency that has been
            designated by the President or any agency head to receive
            critical infrastructure information.
                (5) Information sharing and analysis organization.--The
            term ``Information Sharing and Analysis Organization'' means
            any formal or informal entity or collaboration created or
            employed by public or private sector organizations, for
            purposes of--
                        (A) gathering and analyzing critical infrastructure
                    information in order to better understand security
                    problems and interdependencies related to critical
                    infrastructure and protected systems, so as to ensure
                    the availability, integrity, and reliability thereof;
                        (B) communicating or disclosing critical
                    infrastructure information to help prevent, detect,
                    mitigate, or recover from the effects of a
                    interference, compromise, or a incapacitation problem
                    related to critical infrastructure or protected
                    systems; and
                        (C) voluntarily disseminating critical
                    infrastructure information to its members, State,
                    local, and Federal Governments, or any other entities
                    that may be of assistance in carrying out the purposes
                    specified in subparagraphs (A) and (B).
                (6) Protected system.--The term ``protected system''--
                        (A) means any service, physical or computer-based
                    system, process, or procedure that directly or
                    indirectly affects the viability of a facility of
                    critical infrastructure; and
                        (B) includes any physical or computer-based system,
                    including a computer, computer system, computer or
                    communications network, or any component hardware or
                    element thereof, software program, processing
                    instructions, or information or data in transmission or
                    storage therein, irrespective of the medium of
                    transmission or storage.
                (7) Voluntary.--
                        (A) In general.--The term ``voluntary'', in the
                    case of any submittal of critical infrastructure
                    information to a covered Federal agency, means the
                    submittal thereof in the absence of such agency's
                    exercise of legal authority to compel access to or
                    submission of such information and may be accomplished
                    by a single entity or an Information Sharing and
                    Analysis Organization on behalf of itself or its
                    members.
                        (B) Exclusions.--The term ``voluntary''--
                                (i) in the case of any action brought under
                            the securities laws as is defined in section
                            3(a)(47) of the Securities Exchange Act of 1934
                            (15 U.S.C. 78c(a)(47))--
                                        (I) does not include information or
                                    statements contained in any documents
                                    or materials filed with the Securities
                                    and Exchange Commission, or with
                                    Federal banking regulators, pursuant to
                                    section 12(i) of the Securities
                                    Exchange Act of 1934 (15 U.S.C.
                                    781(I)); and
                                        (II) with respect to the submittal
                                    of critical infrastructure information,
                                    does not include any disclosure or
                                    writing that when made accompanied the
                                    solicitation of an offer or a sale of
                                    securities; and
                                (ii) does not include information or
                            statements submitted or relied upon as a basis
                            for making licensing or permitting
                            determinations, or during regulatory
                            proceedings.

    SEC. 213. DESIGNATION OF CRITICAL INFRASTRUCTURE PROTECTION PROGRAM.

        A critical infrastructure protection program may be designated as
    such by one of the following:
                (1) The President.
                (2) The Secretary of the Department of Homeland Security.
                (3) The head of a covered Federal agency by notice
            published in the Federal Register. This duty may not be
            delegated.

    SEC. 214. PROTECTION OF VOLUNTARILY SHARED CRITICAL INFRASTRUCTURE
                        INFORMATION.

        (a) Protection.--
                (1) In general.--Notwithstanding any other provision of
            law, critical infrastructure information (including the
            identity of the submitting person or entity) that is
            voluntarily submitted to a covered Federal agency for use by
            that agency regarding the security of critical infrastructure
            and protected systems, if analysis, warning, interdependency
            study, recovery, reconstitution, or other informational
            purpose, when accompanied by an express statement specified in
            paragraph (2)--
                        (A) shall be exempt from disclosure under section
                    552 of title 5, United States Code (commonly referred
                    to as the Freedom of Information Act);
                        (B) shall not be subject to any agency rules or
                    judicial doctrine regarding ex parte communications
                    with a decision making official;
                        (C) shall not, without the written consent of the
                    person or entity submitting such information, be used
                    directly by such agency, any other Federal, State, or
                    local authority, or any third party, in any civil
                    action arising under Federal or State law if such
                    information is submitted in good faith;
                        (D) shall not, without the written consent of the
                    person or entity submitting such information, be used
                    or disclosed by any officer or employee of the United
                    States for purposes other than the purposes of this
                    subtitle, except--
                                (i) in furtherance of an investigation or
                            the prosecution of a criminal act; or
                                (ii) when disclosure of the information
                            would be--
                                        (I) to either House of Congress, or
                                    to the extent of matter within its
                                    jurisdiction, any committee or
                                    subcommittee thereof, any joint
                                    committee thereof or subcommittee of
                                    any such joint committee; or
                                        (II) to the Comptroller General, or
                                    any authorized representative of the
                                    Comptroller General, in the course of
                                    the performance of the duties of the
                                    General Accounting Office.
                        (E) shall not, if provided to a State or local
                    government or government agency--
                                (i) be made available pursuant to any State
                            or local law requiring disclosure of
                            information or records;
                                (ii) otherwise be disclosed or distributed
                            to any party by said State or local government
                            or government agency without the written
                            consent of the person or entity submitting such
                            information; or
                                (iii) be used other than for the purpose of
                            protecting critical infrastructure or protected
                            systems, or in furtherance of an investigation
                            or the prosecution of a criminal act; and
                        (F) does not constitute a waiver of any applicable
                    privilege or protection provided under law, such as
                    trade secret protection.
                (2) Express statement.--For purposes of paragraph (1), the
            term ``express statement'', with respect to information or
            records, means--
                        (A) in the case of written information or records,
                    a written marking on the information or records
                    substantially similar to the following: ``This
                    information is voluntarily submitted to the Federal
                    Government in expectation of protection from disclosure
                    as provided by the provisions of the Critical
                    Infrastructure Information Act of 2002.''; or
                        (B) in the case of oral information, a similar
                    written statement submitted within a reasonable period
                    following the oral communication.
        (b) Limitation.--No communication of critical infrastructure
    information to a covered Federal agency made pursuant to this subtitle
    shall be considered to be an action subject to the requirements of the
    Federal Advisory Committee Act (5 U.S.C. App. 2).
        (c) Independently Obtained Information.--Nothing in this section
    shall be construed to limit or otherwise affect the ability of a State,
    local, or Federal Government entity, agency, or authority, or any third
    party, under applicable law, to obtain critical infrastructure
    information in a manner not covered by subsection (a), including any
    information lawfully and properly disclosed generally or broadly to the
    public and to use such information in any manner permitted by law.
        (d) Treatment of Voluntary Submittal of Information.--The voluntary
    submittal to the Government of information or records that are
    protected from disclosure by this subtitle shall not be construed to
    constitute compliance with any requirement to submit such information
    to a Federal agency under any other provision of law.
        (e) Procedures.--
                (1) In general.--The Secretary of the Department of
            Homeland Security shall, in consultation with appropriate
            representatives of the National Security Council and the Office
            of Science and Technology Policy, establish uniform procedures
            for the receipt, care, and storage by Federal agencies of
            critical infrastructure information that is voluntarily
            submitted to the Government. The procedures shall be
            established not later than 90 days after the date of the
            enactment of this subtitle.
                (2) Elements.--The procedures established under paragraph
            (1) shall include mechanisms regarding--
                        (A) the acknowledgement of receipt by Federal
                    agencies of critical infrastructure information that is
                    voluntarily submitted to the Government;
                        (B) the maintenance of the identification of such
                    information as voluntarily submitted to the Government
                    for purposes of and subject to the provisions of this
                    subtitle;
                        (C) the care and storage of such information; and
                        (D) the protection and maintenance of the
                    confidentiality of such information so as to permit the
                    sharing of such information within the Federal
                    Government and with State and local governments, and
                    the issuance of notices and warnings related to the
                    protection of critical infrastructure and protected
                    systems, in such manner as to protect from public
                    disclosure the identity of the submitting person or
                    entity, or information that is proprietary, business
                    sensitive, relates specifically to the submitting
                    person or entity, and is otherwise not appropriately in
                    the public domain.
        (f) Penalties.--Whoever, being an officer or employee of the United
    States or of any department or agency thereof, publishes, divulges,
    discloses, or makes known in any manner or to any extent not authorized
    by law, any critical infrastructure information protected from
    disclosure by this subtitle coming to him in the course of this
    employment or official duties or by reason of any examination or
    investigation made by, or return, report, or record made to or filed
    with, such department or agency or officer or employee thereof, shall
    be fined under title 18 of the United States Code, imprisoned not more
    that one year, or both, and shall be removed from office or employment.
        (g) Authority To Issue Warnings.--The Federal Government may
    provide advisories, alerts, and warnings to relevant companies,
    targeted sectors, other governmental entities, or the general public
    regarding potential threats to critical infrastructure as appropriate.
    In issuing a warning, the Federal Government shall take appropriate
    actions to protect from disclosure--
                (1) the source of any voluntarily submitted critical
            infrastructure information that forms the basis for the
            warning; or
                (2) information that is proprietary, business sensitive,
            relates specifically to the submitting person or entity, or is
            otherwise not appropriately in the public domain.
        (h) Authority To Delegate.--The President may delegate authority to
    a critical infrastructure protection program, designated under
    subsection (e), to enter into a voluntary agreement to promote critical
    infrastructure security, including with any Information Sharing and
    Analysis Organization, or a plan of action as otherwise defined in
    section 708 of the Defense Production Act of 1950 (50 U.S.C. App.
    2158).

    SEC. 215. NO PRIVATE RIGHT OF ACTION.

        Nothing in this subtitle may be construed to create a private right
    of action for enforcement of any provision of this Act.

    SEC. 216. APPLICABILITY.

        Nothing in this subtitle shall apply to any information submitted
    in the course of lobbying any covered Federal agency.

          TITLE III--CHEMICAL, BIOLOGICAL, RADIOLOGICAL, AND NUCLEAR
                                COUNTERMEASURES

    SEC. 301. UNDER SECRETARY FOR CHEMICAL, BIOLOGICAL, RADIOLOGICAL, AND
                        NUCLEAR COUNTERMEASURES.

        The Secretary, acting through the Under Secretary for Chemical,
    Biological, Radiological, and Nuclear Countermeasures, shall have
    responsibility for the following:
                (1) Securing the people, infrastructures, property,
            resources, and systems in the United States from acts of
            terrorism involving chemical, biological, radiological, or
            nuclear weapons or other emerging threats.
                (2) Conducting a national scientific research and
            development program to support the mission of the Department,
            including developing national policy for and coordinating the
            Federal Government's civilian efforts to identify, devise, and
            implement scientific, technological, and other countermeasures
            to chemical, biological, radiological, nuclear, and other
            emerging terrorist threats, including directing, funding, and
            conducting research and development relating to the same.
                (3) Establishing priorities for, directing, funding, and
            conducting national research, development, and procurement of
            technology and systems--
                        (A) for preventing the importation of chemical,
                    biological, radiological, nuclear, and related weapons
                    and material; and
                        (B) for detecting, preventing, protecting against,
                    and responding to terrorist attacks that involve such
                    weapons or material.
                (4) Establishing guidelines for State and local government
            efforts to develop and implement countermeasures to threats of
            chemical, biological, radiological, and nuclear terrorism, and
            other emerging terrorist threats.
                (5) Promulgating guidelines regarding the health risks of
            short-, medium-, or long-term exposure to acutely or sub-
            actuely toxic chemicals, biological, and radioactive materials
            that may be released into the environment as a consequence of a
            major disaster that the Secretary determines constitutes a
            homeland security event under section 1101. The Director of the
            Centers for Disease Control and Prevention shall provide the
            Under Secretary with such information and analysis as may be
            necessary for the Under Secretary to promulgate guidelines
            under this section in the case of biological materials.
                (6) Providing for standardized and rapid data collection
            and analysis and communication regarding environmental risks
            following any major disaster that the Secretary determines
            constitutes a homeland security event under section 1101, in
            coordination with the Administrator of the Environmental
            Protection Agency or the Director of the Centers for Disease
            Control and Prevention (in the case of a release of biological
            agents) to coordinate all data collection and monitoring and
            dissemination of analysis regarding the release of pollutants
            and contaminants (including biological agents) into the
            environment by reason of any such disaster.
                (7)(A) Providing awards of grants, contracts, and
            cooperative agreements in consultation with the Secretary of
            Health and Human Services to public and nonprofit private
            entities for the purpose of collecting public health data
            during and in the aftermath of public health emergencies, and
            conducting research with respect to such data, in order to
            develop medical therapies and other public health strategies
            for assisting victims of such emergencies in recovering from
            the emergencies; and
                (B) Providing for the approval of applications for awards
            under subparagraph (A) in advance of public health emergencies
            in order that, upon the occurrence of such an emergency, the
            Under Secretary can promptly begin disbursing amounts from the
            awards and the recipients of the awards can promptly begin
            carrying out the purpose described in subsection (a).

    SEC. 302. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The select agent registration enforcement programs and
            activities of the Department of Health and Human Services,
            including the functions of the Secretary of Health and Human
            Services relating thereto.
                (2) The following programs and activities of the Department
            of Energy, including the functions of the Secretary of Energy
            relating thereto (but not including programs and activities
            relating to the strategic nuclear defense posture of the United
            States):
                        (A) The chemical and biological national security
                    and supporting programs and activities of the non-
                    proliferation and verification research and development
                    program.
                        (B) The nuclear smuggling programs and activities,
                    and other programs and activities directly related to
                    homeland security, within the proliferation detection
                    program of the non-proliferation and verification
                    research and development program, except that the
                    programs and activities described in this subparagraph
                    may be designated by the President either for transfer
                    to the Department or for joint operation by the
                    Secretary and the Secretary of Energy.
                        (C) The nuclear assessment program and activities
                    of the assessment, detection, and cooperation program
                    of the international materials protection and
                    cooperation program.
                        (D) The energy security and assurance program and
                    activities.
                        (E) Such life sciences activities of the biological
                    and environmental research program related to microbial
                    pathogens as may be designated by the President for
                    transfer to the Department.
                        (F) The Environmental Measurements Laboratory.
                        (G) The advanced scientific computing research
                    program and activities, and the intelligence program
                    and activities, at Lawrence Livermore National
                    Laboratory.
                (3) The National Bio-Weapons Defense Analysis Center of the
            Department of Defense, including the functions of the Secretary
            of Defense related thereto.

    SEC. 303. CONDUCT OF CERTAIN PUBLIC HEALTH-RELATED ACTIVITIES.

        (a) Certain Activities Carried Out Through HHS.--(1) Except as the
    President may otherwise direct, the Secretary shall carry out his
    civilian human health-related biological, biomedical, and infectious
    disease defense research and development (including vaccine research
    and development) responsibilities through the Department of Health and
    Human Services (including the Public Health Service), under agreements
    with the Secretary of Health and Human Services, and may transfer funds
    to him in connection with such agreements.
        (2) With respect to any responsibilities carried out through the
    Department of Health and Human Services under this subsection, the
    Secretary, in consultation with the Secretary of Health and Human
    Services, shall have the authority to establish the research and
    development program, including the setting of priorities.
        (b) Transfer of Funds.--With respect to such other research and
    development responsibilities under this title, including health-related
    chemical, radiological, and nuclear defense research and development
    responsibilities, as he may elect to carry out through the Department
    of Health and Human Services (including the Public Health Service)
    (under agreements with the Secretary of Health and Human Services) or
    through other Federal agencies (under agreements with their respective
    heads), the Secretary may transfer funds to the Secretary of Health and
    Human Services, or to such heads, as the case may be.

    SEC. 304. TRANSFER OF PLUM ISLAND ANIMAL DISEASE CENTER, DEPARTMENT OF
                        AGRICULTURE.

        (a) Transfer Required.--In accordance with title VIII, the
    Secretary of Agriculture shall transfer to the Secretary of Homeland
    Security the Plum Island Animal Disease Center of the Department of
    Agriculture, including the assets and liabilities of the Center.
        (b) Continued Department of Agriculture Access.--Upon the transfer
    of the Plum Island Animal Disease Center, the Secretary of Homeland
    Security and the Secretary of Agriculture shall enter into an agreement
    to ensure Department of Agriculture access to the center for research,
    diagnostic, and other activities of the Department of Agriculture.

                  TITLE IV--BORDER AND TRANSPORTATION SECURITY

    SEC. 401. UNDER SECRETARY FOR BORDER AND TRANSPORTATION SECURITY.

        The Secretary, acting through the Under Secretary for Border and
    Transportation Security, shall have responsibility for the following:
                (1) Preventing the entry of terrorists and the instruments
            of terrorism into the United States.
                (2) Securing the borders, territorial waters, ports,
            terminals, waterways, and air, land, and sea transportation
            systems of the United States, including managing and
            coordinating governmental activities at ports of entry.
                (3) Administering the immigration and naturalization laws
            of the United States, including the rules governing the
            granting of visas or other forms of permission, including
            parole, to enter the United States to individuals who are not
            citizens or lawful permanent residents thereof.
                (4) Administering the customs laws of the United States.
                (5) Conducting the inspection and related administrative
            functions of the Department of Agriculture transferred to the
            Secretary of Homeland Security under section 404.
                (6) In carrying out the foregoing responsibilities,
            ensuring the speedy, orderly, and efficient flow of lawful
            traffic and commerce.

    SEC. 402. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The United States Customs Service of the Department of
            the Treasury, including the functions of the Secretary of the
            Treasury relating thereto.
                (2) The Immigration and Naturalization Service of the
            Department of Justice, including the functions of the Attorney
            General relating thereto.
                (3) The Visa Office of the Bureau of Consular Affairs of
            the Department of State, including the functions of the
            Secretary of State relating thereto.
                (4) The Coast Guard of the Department of Transportation,
            which shall be maintained as a distinct entity within the
            Department, including the functions of the Secretary of
            Transportation relating thereto.
                (5) The Transportation Security Administration of the
            Department of Transportation, including the functions of the
            Secretary of Transportation, and of the Under Secretary of
            Transportation for Security, relating thereto.
                (6) The Federal Protective Service of the General Services
            Administration, including the functions of the Administrator of
            General Services relating thereto.

    SEC. 403. VISA ISSUANCE.

        (a) In General.--Notwithstanding section 104(a) of the Immigration
    and Nationality Act (8 U.S.C. 1104(a)) or any other provision of law,
    and except as provided in subsection (b) of this section, the
    Secretary--
                (1) shall be vested exclusively with all authorities to
            issue regulations with respect to, administer, and enforce the
            provisions of such Act, and of all other immigration and
            nationality laws, relating to the functions of consular
            officers of the United States in connection with the granting
            or refusal of visas, including the authority to refuse visa
            applications and develop programs of training for consular
            officers, which authorities shall be exercised through the
            Secretary of State, except that the Secretary shall not have
            authority to alter or reverse the decision of a consular
            officer to refuse a visa to an alien; and
                (2) shall have authority to confer or impose upon any
            officer or employee of the United States, with the consent of
            the head of the executive agency under whose jurisdiction such
            officer or employee is serving, any of the functions specified
            in paragraph (1).
        (b) Authority of the Secretary of State.--
                (1) The Secretary of State may direct a consular officer to
            refuse a visa to an alien if the Secretary of State considers
            such refusal necessary or advisable in the foreign policy or
            security interests of the United States.
                (2) Nothing in this section shall be construed as affecting
            the authorities of the Secretary of State under the following
            provisions of law:
                        (A) Section 101(a)(15)(A) of the Immigration and
                    Nationality Act (8 U.S.C. 1101(a)(15)(A)).
                        (B) Section 212(a)(3)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(a)(3)(C)).
                        (C) Section 212(f) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(f)).
                        (D) Section 237(a)(4)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1227(a)(4)(C)).
                        (E) Section 104 of the Cuban Liberty and Democratic
                    Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6034;
                    Public Law 104-114).
                        (F) Section 613 of the Departments of Commerce,
                    Justice, and State, the Judiciary, and Related Agencies
                    Appropriations Act, 1999 (as contained in section
                    101(b) of division A of Public Law 105-277 (Omnibus
                    Consolidated and Emergency Supplemental Appropriations
                    Act, 1999; 112 Stat. 2681; H.R. 4328; (Originally H.R.
                    4276) as amended by section 617 of Public Law 106-553.
                        (G) Section 801 of H.R. 3427, the Admiral James W.
                    Nance and Meg Donovan Foreign Relations Authorization
                    Act, Fiscal Years 2000 and 2001, as enacted by
                    reference in Public Law 106-113.
                        (H) Section 568 of the Foreign Operations, Export
                    Financing, and Related Programs Appropriations Act,
                    2002 (Public Law 107-115).
        (c) Assignment of Homeland Security Employees to Diplomatic and
    Consular Posts.--
                (1) In general.--The Secretary is authorized to assign
            employees of the Department of Homeland Security to any
            diplomatic and consular posts abroad to perform the following
            functions:
                        (A) Provide expert advice and training to consular
                    officers regarding specific security threats relating
                    to the adjudication of individual visa applications or
                    classes of applications.
                        (B) Review any or all such applications prior to
                    their adjudication, either on the initiative of the
                    employee of the Department of Homeland Security or upon
                    request by a consular officer or other person charged
                    with adjudicating such applications.
                        (C) Conduct investigations with respect to matters
                    under the jurisdiction of the Secretary.
                (2) Permanent assignment; participation in terrorist
            lookout committee.--When appropriate, employees of the
            Department of Homeland Security assigned to perform functions
            described in paragraph (1) may be assigned permanently to
            overseas diplomatic or consular posts with country-specific or
            regional responsibility. If the Secretary so directs, any such
            employee, when present at an overseas post, shall participate
            in the terrorist lookout committee established under section
            304 of the Enhanced Border Security and Visa Entry Reform Act
            of 2002 (8 U.S.C. 1733).
                (3) Training and hiring.--
                        (A) The Secretary shall ensure that any employees
                    of the Department of Homeland Security assigned to
                    perform functions described in paragraph (1) shall be
                    provided all necessary training to enable them to carry
                    out such functions, including training in foreign
                    languages, in conditions in the particular country
                    where each employee is assigned, and in other
                    appropriate areas of study.
                        (B) Prior to assigning employees of the Department
                    to perform the functions described in paragraph (1),
                    the Secretary shall promulgate regulations establishing
                    foreign language proficiency requirements for employees
                    of the Department performing the functions described in
                    paragraph (1) and providing that preference shall be
                    given to individuals who meet such requirements in
                    hiring employees for the performance of such functions.
                        (C) The Secretary is authorized to use the National
                    Foreign Affairs Training Center, on a reimbursable
                    basis, to obtain the training described in subparagraph
                    (A).
        (d) No Creation of Private Right of Action.--Nothing in this
    section shall be construed to create or authorize a private right of
    action to challenge a decision of a consular officer or other United
    States official or employee to grant or deny a visa.
        (e) Study Regarding Use of Foreign Nationals.--
                (1) In general.--The Secretary of Homeland Security shall
            conduct a study of the role of foreign nationals in the
            granting or refusal of visas and other documents authorizing
            entry of aliens into the United States. The study shall address
            the following:
                        (A) The proper role, if any, of foreign nationals
                    in the process of rendering decisions on such grants
                    and refusals.
                        (B) Any security concerns involving the employment
                    of foreign nationals.
                        (C) Whether there are cost-effective alternatives
                    to the use of foreign nationals.
                (2) Report.--Not later than 2 years after the date of the
            enactment of this Act, the Secretary shall submit a report
            containing the findings of the study conducted under paragraph
            (1) to the Committee on the Judiciary, the Committee on
            International Relations, and the Committee on Government Reform
            of the House of Representatives, and the Committee on the
            Judiciary, the Committee on Foreign Relations, and the
            Committee on Governmental Affairs of the Senate.
        (f) Termination of Noninterview Programs.--All third-party
    screening, interview waiver, or other noninterview programs in Saudi
    Arabia shall be terminated upon enactment of this Act, and no such
    program may be created after the date of enactment. On-site personnel
    of the Department of Homeland Security shall review all applications
    prior to adjudication. All individuals applying for a visa in Saudi
    Arabia must be interviewed unless on-site personnel of the Department
    of Homeland Security determine, in writing, and pursuant to written
    guidelines issued by the Secretary, that such individual is unlikely to
    present a risk to homeland security. Such guidelines shall be written
    within 30 days of the date of enactment.

    SEC. 404. TRANSFER OF CERTAIN AGRICULTURAL INSPECTION FUNCTIONS OF THE
                        DEPARTMENT OF AGRICULTURE.

        (a) Transfer of Agricultural Import and Entry Inspection
    Functions.--There shall be transferred to the Secretary of Homeland
    Security the functions of the Secretary of Agriculture relating to
    agricultural import and entry inspection activities under the laws
    specified in subsection (b).
        (b) Covered Animal and Plant Protection Laws.--The laws referred to
    in subsection (a) are the following:
                (1) The Act commonly known as the Virus-Serum-Toxin Act
            (the eighth paragraph under the heading ``Bureau of Animal
            Industry'' in the Act of March 4, 1913; 21 U.S.C. 151 et seq.).
                (2) Section 1 of the Act of August 31, 1922 (commonly known
            as the Honeybee Act; 7 U.S.C. 281).
                (3) Title III of the Federal Seed Act (7 U.S.C. 1581 et
            seq.).
                (4) The Plant Protection Act (7 U.S.C. 7701 et seq.).
                (5) The Animal Protection Act (subtitle E of title X of
            Public Law 107-171; 7 U.S.C. 8301 et seq.).
                (6) The Lacey Act Amendments of 1981 (16 U.S.C. 3371 et
            seq.).
                (7) Section 11 of the Endangered Species Act of 1973 (16
            U.S.C. 1540).
        (c) Exclusion of Quarantine Activities.--For purposes of this
    section, the term ``functions'' does not include any quarantine
    activities carried out under the laws specified in subsection (b).
        (d) Effect of Transfer.--
                (1) Compliance with department of agriculture
            regulations.--The authority transferred pursuant to subsection
            (a) shall be exercised by the Secretary of Homeland Security in
            accordance with the regulations, policies, and procedures
            issued by the Secretary of Agriculture regarding the
            administration of the laws specified in subsection (b).
                (2) Rulemaking coordination.--The Secretary of Agriculture
            shall coordinate with the Secretary of Homeland Security
            whenever the Secretary of Agriculture prescribes regulations,
            policies, or procedures for administering the laws specified in
            subsection (b) at the locations referred to in subsection (a).
                (3) Effective administration.--The Secretary of Homeland
            Security, in consultation with the Secretary of Agriculture,
            may issue such directives and guidelines as are necessary to
            ensure the effective use of personnel of the Department of
            Homeland Security to carry out the functions transferred
            pursuant to subsection (a).
        (e) Transfer Agreement.--
                (1) Agreement required; revision.--Before the end of the
            transition period, as defined in section 801(2), the Secretary
            of Agriculture and the Secretary of Homeland Security shall
            enter into an agreement to effectuate the transfer of functions
            required by subsection (a). The Secretary of Agriculture and
            the Secretary of Homeland Security may jointly revise the
            agreement as necessary thereafter.
                (2) Required Terms.--The agreement required by this
            subsection shall specifically address the following:
                        (A) The supervision by the Secretary of Agriculture
                    of the training of employees of the Secretary of
                    Homeland Security to carry out the functions
                    transferred pursuant to subsection (a).
                        (B) The transfer of funds to the Secretary of
                    Homeland Security under subsection (f).
                (3) Cooperation and reciprocity.--The Secretary of
            Agriculture and the Secretary of Homeland Security may include
            as part of the agreement the following:
                        (A) Authority for the Secretary of Homeland
                    Security to perform functions delegated to the Animal
                    and Plant Health Inspection Service of the Department
                    of Agriculture regarding the protection of domestic
                    livestock and plants, but not transferred to the
                    Secretary of Homeland Security pursuant to subsection
                    (a).
                        (B) Authority for the Secretary of Agriculture to
                    use employees of the Department of Homeland Security to
                    carry out authorities delegated to the Animal and Plant
                    Health Inspection Service regarding the protection of
                    domestic livestock and plants.
        (f) Periodic Transfer of Funds to Department of Homeland
    Security.--
                (1) Transfer of funds.--Out of funds collected by fees
            authorized under sections 2508 and 2509 of the Food,
            Agriculture, Conservation, and Trade Act of 1990 (21 U.S.C.
            136, 136a), the Secretary of Agriculture shall transfer, from
            time to time in accordance with the agreement under subsection
            (e), to the Secretary of Homeland Security funds for activities
            carried out by the Secretary of Homeland Security for which
            such fees were collected.
                (2) Limitation.--The proportion of fees collected pursuant
            to such sections that are transferred to the Secretary of
            Homeland Security under this subsection may not exceed the
            proportion of the costs incurred by the Secretary of Homeland
            Security to all costs incurred to carry out activities funded
            by such fees.
        (g) Transfer of Department of Agriculture Employees.--During the
    transition period, the Secretary of Agriculture shall transfer to the
    Secretary of Homeland Security not more than 3,200 full-time equivalent
    positions of the Department of Agriculture.
        (h) Protection of Inspection Animals.--Title V of the Agricultural
    Risk Protection Act of 2000 (7 U.S.C. 2279e, 2279f) is amended--
                (1) in section 501(a)--
                        (A) by inserting ``or the Department of Homeland
                    Security'' after ``Department of Agriculture''; and
                        (B) by inserting ``or the Secretary of Homeland
                    Security'' after ``Secretary of Agriculture'';
                (2) by striking ``Secretary'' each place it appears (other
            than in sections 501(a) and 501(e)) and inserting ``Secretary
            concerned''; and
                (3) by adding at the end of section 501 the following new
            subsection:
        ``(e) Secretary Concerned Defined.--In this title, the term
    `Secretary concerned' means--
                ``(1) the Secretary of Agriculture, with respect to an
            animal used for purposes of official inspections by the
            Department of Agriculture; and
                ``(2) the Secretary of Homeland Security, with respect to
            an animal used for purposes of official inspections by the
            Department of Homeland Security.''.

    SEC. 405. INTERAGENCY COMMON RULES.

        The Secretary shall issue common rules with modal units of the
    Department of Transportation with respect to matters relating to
    transportation security, including with respect to the following:
                (1) Air transportation security matters under the authority
            of the Federal Aviation Administration.
                (2) Road, highway, and bridge security matters under the
            authority of the Federal Highway Administration.
                (3) Railroad security matters under the authority of the
            Federal Railroad Administration.
                (4) Mass transit security matters under the authority of
            the Federal Transit Administration.
                (5) Maritime transportation security matters under the
            authority of the Maritime Administration.

    SEC. 406. IMMIGRATION FUNCTIONS.

        (a) Annual Report.--
                (1) In general.--One year after the date of the enactment
            of this Act, and each year thereafter, the Secretary shall
            submit a report to the President, to the Committees on the
            Judiciary and Government Reform of the United States House of
            Representatives, and to the Committees on the Judiciary and
            Government Affairs of the Senate, on the impact the transfer
            made by section 402(2) has had on immigration functions.
                (2) Matter included.--The report shall address the
            following with respect to the period covered by the report:
                        (A) The aggregate number of all immigration
                    applications and petitions received, and processed, by
                    the Department;
                        (B) Region-by-region statistics on the aggregate
                    number of immigration applications and petitions filed
                    by an alien (or filed on behalf of an alien) and
                    denied, and the reasons for such denials, disaggregated
                    by category of denial and application or petition type.
                        (C) The quantity of backlogged immigration
                    applications and petitions that have been processed,
                    the aggregate number awaiting processing, and a
                    detailed plan for eliminating the backlog.
                        (D) The median processing period for immigration
                    applications and petitions, disaggregated by
                    application or petition type.
                        (E) The number and types of immigration-related
                    grievances filed with any official of the Department,
                    and if those grievances were resolved.
                        (F) Plans to address grievances and improve
                    immigration services.
                        (G) Whether immigration-related fees were used
                    consistent with legal requirements regarding such use.
                        (H) Whether immigration-related questions conveyed
                    by customers to the Department (whether conveyed in
                    person, by telephone, or by means of the Internet) were
                    answered effectively and efficiently.
        (b) Sense of the Congress Regarding Immigration Services.--It is
    the sense of the Congress that--
                (1) the quality and efficiency of immigration services
            rendered by the Federal Government should be improved after the
            transfer made by section 402(2) takes effect; and
                (2) the Secretary should undertake efforts to guarantee
            that concerns regarding the quality and efficiency of
            immigration services are addressed after such effective date.

    SEC. 407. CITIZENSHIP AND IMMIGRATION SERVICES OMBUDSMAN.

        (a) In General.--Within the Department, there shall be a position
    of Citizenship and Immigration Services Ombudsman (in this section
    referred to as the ``Ombudsman''). The Ombudsman shall report directly
    to the Secretary. The Ombudsman shall have a background in customer
    service as well as immigration law. The Ombudsman may establish an
    office (other than the local offices described in this section) within
    the Department, and hire staff as appropriate, consistent with other
    Federal employment law .
        (b) Functions.--It shall be the function of the Ombudsman--
                (1) to assist individuals and employers in resolving
            problems with citizenship and immigration services;
                (2) to identify areas in which individuals and employers
            have problems in dealing with citizenship and immigration
            services personnel of the Department;
                (3) to the extent possible, to propose changes in the
            administrative practices of the Department to mitigate problems
            identified under paragraph (2); and
                (4) to identify potential legislative changes that may be
            appropriate to mitigate such problems.
        (c) Annual Reports.--
                (1) Objectives.--Not later than June 30 of each calendar
            year, the Ombudsman shall report to the Committees on the
            Judiciary and Government Reform of the United States House of
            Representatives, and the Committees on the Judiciary and
            Government Affairs of the Senate, on the objectives of the
            Office of the Ombudsman for the fiscal year beginning in such
            calendar year. Any such report shall contain full and
            substantive analysis, in addition to statistical information,
            and--
                        (A) shall identify the initiatives the Ombudsman
                    has taken on improving services and responsiveness of
                    the Department in providing citizenship and immigration
                    services;
                        (B) shall contain a summary of the most pervasive
                    and serious problems encountered by individuals and
                    employers, including a description of the nature of
                    such problems;
                        (C) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which action
                    has been taken and the result of such action;
                        (D) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which action
                    remains to be completed and the period during which
                    each item has remained on such inventory;
                        (E) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which no
                    action has been taken, the period during which each
                    item has remained on such inventory, the reasons for
                    the inaction, and shall identify any official of the
                    Department who is responsible for such inaction;
                        (F) shall contain recommendations for such
                    administrative and legislative action as may be
                    appropriate to resolve problems encountered by
                    individuals and employers, including problems created
                    by excessive backlogs in the adjudication and
                    processing of immigration benefit petitions and
                    applications; and
                        (G) shall include such other information as the
                    Ombudsman may deem advisable.
                (2) Report to be submitted directly.--Each report required
            under this subsection shall be provided directly to the
            committees described in paragraph (1) without any prior review
            or comment from the Secretary or any other officer or employee
            of the Department or the Office of Management and Budget.
        (d) Other Responsibilities.--The Ombudsman--
                (1) shall monitor the coverage and geographic allocation of
            local offices of the Ombudsman;
                (2) shall develop guidance to be distributed to all
            officers and employees of the Department performing immigration
            functions outlining the criteria for referral of inquiries to
            local offices of the Ombudsman;
                (3) shall ensure that the local telephone number for each
            local office of the Ombudsman is published and available to
            individuals and employers served by the office;
                (4) shall ensure that identifying information about
            individuals and employers seeking assistance is not disclosed
            by the Ombudsman or any employee of the Ombudsman without the
            consent of the individual or employer; and
                (5) shall meet regularly with the Secretary (or the
            Secretary's delegate) to identify serious immigration service
            problems and to present recommendations for such administrative
            action as may be appropriate to resolve problems encountered by
            individuals and employers.
        (e) Personnel Actions.--
                (1) In general.--The Ombudsman shall have the
            responsibility and authority--
                        (A) to appoint local ombudsmen and make available
                    at least 1 such ombudsman for each State; and
                        (B) to evaluate and take personnel actions
                    (including dismissal) with respect to any employee of
                    any local office of the Ombudsman consistent with other
                    Federal employment law.
                (2) Consultation.--The Ombudsman may consult with the
            appropriate supervisory personnel of the Department in carrying
            out the Ombudsman's responsibilities under this subsection.
        (f) Response of Recommendations.--The Secretary shall establish
    procedures requiring a formal response to all recommendations submitted
    by the Ombudsman within 3 months after submission.
        (g) Operation of Local Offices.--
                (1) In general.--Each local ombudsman--
                        (A) shall report to the Ombudsman or the delegate
                    thereof;
                        (B) may consult with the appropriate supervisory
                    personnel of the Department regarding the daily
                    operation of the local office of such ombudsman;
                        (C) shall, at the initial meeting with any
                    individual or employer seeking the assistance of such
                    local office, notify such individual or employer that
                    the local offices of the Ombudsman operate
                    independently of any other component of the Department
                    and report directly to the Congress through the
                    Ombudsman; and
                        (D) at the local ombudsman's discretion, may
                    determine not to disclose to any other component of the
                    Department contact with, or information provided by,
                    such individual or employer.
                (2) Maintenance of independent communications.--Each local
            office of the Ombudsman shall maintain a phone, facsimile, and
            other means of electronic communication access, and a post
            office address, that is separate from those maintained by any
            other component of the Department.

    SEC. 408. SEAPORT SECURITY FUNCTIONS.

        (a) Transfers.--In addition to the other transfers under this
    title, in accordance with title VIII there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    Department of Transportation relating to port security that are
    authorized by the Ports and Waterways Safety Act (33 U.S.C. 1221 et
    seq.), the International Maritime and Port Security Act (46 App. U.S.C.
    1807 et seq.), and chapter 37 of title 46, United States Code.
        (b) Report.--Not later than 2 years after the date of the enactment
    of this Act, the Secretary shall submit to the Congress a report on
    whether or not efforts undertaken on the development of contingency
    plans and procedures to prevent or respond to acts of terrorism under
    section 7 of the Ports and Waterways Safety Act (33 U.S.C. 1226) meet
    the following goals:
                (1) Port of origin goals.--
                        (A) Increasing proactive policing of international
                    cargo.
                        (B) Increasing inspection of arriving cargo based
                    on port of origin cargo screening capability and
                    compliance with security standards.
                        (C) Increasing communications with foreign
                    governments and recommend steps to improve foreign port
                    security and cargo screening.
                (2) Transit goals.--
                        (A) Developing an improved cargo identification and
                    screening system for containerized cargo.
                        (B) Developing standards to improve the physical
                    security of the cargo containers themselves, including
                    standards for seals and locks.
                        (C) Developing a plan to extend the seaward
                    jurisdiction of the Coast Guard to a point farther than
                    three miles from shore.
                (3) Port of entry goals.--
                        (A) Developing an improved import cargo information
                    system enabling shippers and carriers of containerized
                    cargo to provide import cargo information 24 hours
                    before the container is loaded on a ship destined for
                    the United States.
                        (B) Developing an improved system to require ocean
                    carriers to provide crew and passenger manifests in
                    advance of a vessel's arrival in the United States.
                (4) Port security technical security goals.--
                        (A) Conducting vulnerability assessments at each
                    seaport.
                        (B) Conducting regular mandatory security meetings
                    at each seaport between Federal, State, and local law
                    enforcement organizations, the trade, and port
                    authorities.
                        (C) Developing a plan that assigns first responder
                    duties and responsibilities among Federal, State, and
                    local government agencies and sets minimum training,
                    drills, and antiterrorism action standards for vessel
                    and facility personnel.
                        (D) Establishing a system of surveillance to
                    safeguard against and provide the earliest possible
                    notice of a terrorist act.
                        (E) Developing a system of standard security cards
                    to be used in identifying personnel with access to
                    sensitive areas.
                        (F) Developing standardized guidelines for
                    physical, procedural, and personnel security for
                    seaports.
                        (G) Developing a central database of the
                    individuals responsible for implementing antiterrorism
                    actions at each seaport.
                (5) Inspections goals.--
                        (A) Increasing inspections based on each ship's
                    threat potential as assessed before it is allowed to
                    enter a United States port.
                        (B) Creating teams of specifically trained
                    inspectors to assess threats.
                        (C) Creating teams of specially trained incident
                    managers to manage identified threats.
                        (D) Developing a plan to consolidate federal
                    inspection facilities and co-locate Federal inspectors
                    in joint facilities.
                        (E) Develop a plan to move remotely located
                    inspection facilities to the docks.

                  TITLE V--EMERGENCY PREPAREDNESS AND RESPONSE

    SEC. 501. UNDER SECRETARY FOR EMERGENCY PREPAREDNESS AND RESPONSE.

        The Secretary, acting through the Under Secretary for Emergency
    Preparedness and Response, shall have responsibility for the following:
                (1) Helping to ensure the preparedness of emergency
            response providers for terrorist attacks, major disasters, and
            other emergencies.
                (2) With respect to the Nuclear Incident Response Team
            (regardless of whether it is operating as an organizational
            unit of the Department pursuant to this title)--
                        (A) establishing standards and certifying when
                    those standards have been met;
                        (B) conducting joint and other exercises and
                    training and evaluating performance; and
                        (C) providing funds to the Department of Energy and
                    the Environmental Protection Agency, as appropriate,
                    for homeland security planning, exercises and training,
                    and equipment.
                (3) Providing the Federal Government's response to
            terrorist attacks and major disasters, including--
                        (A) managing such response;
                        (B) directing the Domestic Emergency Support Team,
                    the Strategic National Stockpile, the National Disaster
                    Medical System, and (when operating as an
                    organizational unit of the Department pursuant to this
                    title) the Nuclear Incident Response Team;
                        (C) overseeing the Metropolitan Medical Response
                    System; and
                        (D) coordinating other Federal response resources
                    in the event of a terrorist attack or major disaster.
                (4) Aiding the recovery from terrorist attacks and major
            disasters.
                (5) Building a comprehensive national incident management
            system with Federal, State, and local government personnel,
            agencies, and authorities, to respond to such attacks and
            disasters.
                (6) Consolidating existing Federal Government emergency
            response plans into a single, coordinated national response
            plan while maintaining the programmatic integrity of existing
            Federal-State-local partnerships including under the FIRE Act
            and the COPS program.
                (7) Developing comprehensive programs for developing
            interoperative communications technology, and helping to ensure
            that emergency response providers acquire such technology.
                (8) Providing direct assistance with amounts appropriated
            by the Congress to State and local emergency responders through
            a block grant program that--
                        (A) meets short- and long-term security needs and
                    complies with applicable laws;
                        (B) funds, among other activities, additional law
                    enforcement, fire, public health and emergency
                    resources, improving cyber and infrastructure security,
                    and devising a homeland security plan; and
                        (C) provides that grants may be used to cover costs
                    incurred for eligible activities on or after September
                    11, 2001, so as to allow local communities a soft match
                    of overtime and security expenses incurred as a result
                    of the September 11, 2001, terrorist attacks and
                    Federal directives to secure communities thereafter.

    SEC. 502. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    following:
                (1) The Federal Emergency Management Agency, including the
            functions of the Director of the Federal Emergency Management
            Agency relating thereto.
                (2) The Office for Domestic Preparedness of the Office of
            Justice Programs, including the functions of the Attorney
            General relating thereto.
                (3) The National Domestic Preparedness Office of the
            Federal Bureau of Investigation, including the functions of the
            Attorney General relating thereto.
                (4) The Domestic Emergency Support Teams of the Department
            of Justice, including the functions of the Attorney General
            relating thereto.
                (5) The Office of the Assistant Secretary for Public Health
            Emergency Preparedness (including the Office of Emergency
            Preparedness, the National Disaster Medical System, and the
            Metropolitan Medical Response System) of the Department of
            Health and Human Services, including the functions of the
            Secretary of Health and Human Services relating thereto.
                (6) The Strategic National Stockpile of the Department of
            Health and Human Services, including the functions of the
            Secretary of Health and Human Services relating thereto.

    SEC. 503. NUCLEAR INCIDENT RESPONSE.

        (a) Nuclear Incident Response Team.--At the direction of the
    Secretary (in connection with an actual or threatened terrorist attack,
    major disaster, or other emergency), the Nuclear Incident Response Team
    shall operate as an organizational unit of the Department. While so
    operating, the Nuclear Incident Response Team shall be subject to the
    direction, authority, and control of the Secretary.
        (b) Delivery of Potassium Iodide.--In the event of a terrorist
    attack, major disaster, or other emergency, the Secretary shall devise
    a plan to deliver Potassium Iodide (KI) to the people for whom it is
    intended within 4 hours after exposure to radioactive iodines from a
    nuclear power plant, and as expeditiously as possible to persons beyond
    the immediate 20-mile radius of protection.
        (c) Common Interagency Rules.--The Secretary shall issue common
    rules with the Nuclear Regulatory Commission with respect to matters
    relating to nuclear security.
        (d) Construction.--Nothing in this title shall be understood to
    limit the ordinary responsibility of the Secretary of Energy, the
    Administrator of the Environmental Protection Agency, and the Nuclear
    Regulatory Commission for organizing, training, equipping, and
    utilizing their respective entities in the Nuclear Incident Response
    Team, or (subject to the provisions of this title) from exercising
    direction, authority, and control over them when they are not operating
    as a unit of the Department.

    SEC. 504. DEFINITION.

        For purposes of this title, ``nuclear incident response team''
    means a resource that includes--
                (1) those entities of the Department of Energy that perform
            nuclear or radiological emergency support functions (including
            accident response, search response, advisory, and technical
            operations functions), radiation exposure functions at the
            medical assistance facility known as Oak Ridge National
            Laboratory, radiological assistance functions, and related
            functions;
                (2) those entities of the Environmental Protection Agency
            that perform such support functions (including radiological
            emergency response functions) and related functions; and
                (3) those entities of the Nuclear Regulatory Commission
            that perform such support and related functions.

    SEC. 505. CONDUCT OF CERTAIN PUBLIC HEALTH-RELATED ACTIVITIES.

        (a) In General.--Except as the President may otherwise direct, the
    Secretary shall carry out the following responsibilities through the
    Department of Health and Human Services (including the Public Health
    Service), under agreements with the Secretary of Health and Human
    Services, and may transfer funds to such Secretary in connection with
    such agreements:
                (1) All biological, chemical, radiological, and nuclear
            preparedness-related construction, renovation, and enhancement
            of security for research and development or other facilities
            owned or occupied by the Department of Health and Human
            Services.
                (2) All public health-related activities being carried out
            by the Department of Health and Human Services on the effective
            date of this Act (other than activities under functions
            transferred by this Act to the Department) to assist State and
            local government personnel, agencies, or authorities, non-
            Federal public and private health care facilities and
            providers, and public and non-profit health and educational
            facilities, to plan, prepare for, prevent, identify, and
            respond to biological, chemical, radiological, and nuclear
            events and public health emergencies, by means including direct
            services, technical assistance, communications and
            surveillance, education and training activities, and grants.
        (b) Preparedness and Response Program.--With respect to any
    responsibilities carried out through the Department of Health and Human
    Services under this section, the Secretary, in consultation with the
    Secretary of Health and Human Services, shall have the authority to
    establish the preparedness and response program, including the setting
    of priorities.

    SEC. 506. MINIMUM REQUIREMENTS FOR PRIVATE SECURITY OFFICERS.

        (a) Increase of Grants.--The Secretary shall increase grants
    awarded by the Federal Emergency Management Agency to a State for
    purposes other than emergency relief by 10 percent if the Secretary has
    certified that the State meets the requirements of subsection (b).
        (b) Minimum Requirements.--In order to be eligible under subsection
    (a), the following requirements shall apply with respect to private
    security officers employed within the State:
                (1) Each private security officer shall receive 24 hours of
            training before any security assignment, an additional 16 hours
            within 90 days of the initial security assignment, and an
            additional 8 hours of training each year. All training
            described in this paragraph shall be certified by the State.
                (2) The State shall perform criminal background checks on
            all private security officers, including State and Federal name
            and fingerprint checks.
                (3) No private security officer may work in the State
            without a license that verifies that the officer has completed
            the requirements of this subsection.
                (4) The State shall have an advisory council regarding
            requirements for private security officers representing various
            stakeholders, including private security officers.
                (5) The State shall maintain a registry of all licensed
            private security officers which shall be open to public
            inquiry.
                (6) The State shall establish enforcement mechanisms that
            include dedicated enforcement personnel, a complaint procedure
            open to any member of the public, open record keeping, and the
            ability to fine, suspend, and revoke private security officer
            licenses.
                (7) Whistleblower protections shall be afforded to private
            security officers in the State.
        (c) Private Security Officer Defined.--In this section, the term
    ``private security officer'' means any individual working as a contract
    security officer or a proprietary security officer who--
                (1) advertises as providing or performs bodyguard services
            or otherwise guards persons or property;
                (2) attempts to prevent theft or unlawful taking of goods,
            wares, or merchandise; or
                (3) attempts to prevent the misappropriation or concealment
            of goods, wares, or merchandise.
        (d) User Fee.--As specified in subsection (b)(2), an association of
    employers of private security officers, designated for the purposes of
    this section by the State Attorney General, may submit fingerprints or
    other methods of positive identification approved by the appropriate
    Federal authority to the appropriate Federal authority on behalf of any
    applicant for a State license or certificate of registration as a
    private security officer or employer of private security officers. In
    response to such a submission, the State Attorney General may, to the
    extent provided by State law conforming to the requirements of the
    second paragraph under the heading ``Federal Bureau of Investigation''
    and the subheading ``Salaries and Expenses'' in title II of Public Law
    92-544 (86 Stat. 1115), exchange, for licensing and employment
    purposes, identification and criminal history records with the
    appropriate Federal authority.

                              TITLE VI--MANAGEMENT

    SEC. 601. DEPUTY SECRETARY FOR MANAGEMENT.

        The Secretary, acting through the Deputy Secretary for Management,
    shall have responsibility for the following with respect to the
    Department:
                (1) The budget, appropriations, expenditures of funds,
            accounting, and finance.
                (2) Procurement.
                (3) Human resources and personnel.
                (4) Information technology and communications systems.
                (5) Facilities, property, equipment, and other material
            resources.
                (6) Security for personnel, information technology and
            communications systems, facilities, property, equipment, and
            other material resources.
                (7) Identification and tracking of performance measures
            relating to the responsibilities of the Department.
                (8) Grants and other assistance management programs.
                (9) The transition process, to ensure an efficient and
            orderly transfer of functions and personnel to the Department,
            including the development of a transition plan.
                (10) The conduct of internal audits and management analyses
            of the programs and activities of the Department.
                (11) Any other management duties that the Secretary may
            designate.

    SEC. 602. CHIEF FINANCIAL OFFICER.

        Notwithstanding section 902(a)(1) of title 31, United States Code,
    the Chief Financial Officer of the Department shall report to the
    Secretary, or to the Deputy Secretary for Management, as the Secretary
    may direct.

    SEC. 603. CHIEF INFORMATION OFFICER.

        Notwithstanding section 3506(a)(2) of title 44, United States Code,
    the Chief Information Officer shall report to the Secretary, or to the
    Deputy Secretary for Management, as the Secretary may direct.

    SEC. 604. ESTABLISHMENT OF OFFICE FOR CIVIL RIGHTS AND CIVIL LIBERTIES.

        The Secretary shall establish in the Department an Office for Civil
    Rights and Civil Liberties, the head of which shall be the Director for
    Civil Rights and Civil Liberties. The Director shall--
                (1) review and assess information alleging abuses of civil
            rights, civil liberties, and racial and ethnic profiling by
            employees and officials of the Department;
                (2) make public through the Internet, radio, television, or
            newspaper advertisements information on the responsibilities
            and functions of, and how to contact, the Office; and
                (3) submit to the President of the Senate, the Speaker of
            the House of Representatives, and the appropriate committees
            and subcommittees of the Congress on a semiannual basis a
            report on the implementation of this section, including the use
            of funds appropriated to carry out this section, and detailing
            any allegations of abuses described in paragraph (1) and any
            actions taken by the Department in response to such
            allegations.

       TITLE VII--COORDINATION; INSPECTOR GENERAL; UNITED STATES SECRET
        SERVICE; GENERAL PROVISIONS; ACQUISITIONS; INFORMATION SHARING;
                                    PROPERTY

               Subtitle A--Coordination With Non-Federal Entities

    SEC. 701. RESPONSIBILITIES.

        In discharging his responsibilities relating to coordination
    (including the provision of training and equipment) with State and
    local government personnel, agencies, and authorities, with the private
    sector, and with other entities, the responsibilities of the Secretary
    shall include--
                (1) coordinating with State and local government personnel,
            agencies, and authorities, and with the private sector, to
            ensure adequate planning, equipment, training, and exercise
            activities;
                (2) coordinating and, as appropriate, consolidating, the
            Federal Government's communications and systems of
            communications relating to homeland security with State and
            local government personnel, agencies, and authorities, the
            private sector, other entities, and the public;
                (3) directing and supervising grant programs of the Federal
            Government for State and local government emergency response
            providers; and
                (4) distributing or, as appropriate, coordinating the
            distribution of, warnings and information to State and local
            government personnel, agencies, and authorities and to the
            public.

    SEC. 702. INTERGOVERNMENTAL COORDINATING COUNCIL.

        (a) Establishment and Purposes.--The Secretary shall establish an
    Intergovernmental Coordinating Council to serve as an ongoing advisory
    forum for promoting effective coordination and cooperation among
    Federal, State, and local governments on matters relevant to the work
    of the Department. The subjects to be addressed by the Council shall
    include--
                (1) ensuring that State and local officials have the
            information they need to prepare for and respond to homeland
            security threats;
                (2) ensuring the greatest possible coordination and
            consistent operation of Federal homeland security programs and
            activities;
                (3) ensuring that State and local governments provide the
            greatest cooperation and support for the work of the Department
            and other Federal agencies with respect to homeland security;
                (4) ensuring that the needs and perspectives of State and
            local government officials are integrated into all relevant
            aspects of the homeland security strategies and work of the
            Department and other Federal agencies; and
                (5) such other subjects as the Chair or Vice Chair of the
            Council may suggest.
        (b) Chair and Vice Chair.--The Secretary shall chair the Council
    and shall designate an official of a State or local government to serve
    as Vice Chair of the Council.
        (c) Composition.--The Council shall consist of officials of State
    and local governments as well as such officials of the Department and
    of other Federal agencies as the Secretary designates. The Secretary
    shall determine the size and composition of the Council in accordance
    with the criteria set forth in this subsection and in consultation with
    the Vice Chair. With respect to State and local government members, the
    Council shall be representative of--
                (1) the full range of emergency response providers;
                (2) the geographical regions of the country;
                (3) different levels and sizes of governments; and
                (4) jurisdictions that face different homeland security
            threats.
        (d) Meetings.--The Council shall hold regular meetings at such
    times and locations as the Secretary determines, in consultation with
    the Vice Chair.
        (e) Definition of State.--For the purposes of this section,
    ``State'' includes the District of Columbia, Puerto Rico, the Virgin
    Islands, Guam, American Samoa, and the Commonwealth of the Northern
    Mariana Islands.

                         Subtitle B--Inspector General

    SEC. 710. AUTHORITY OF THE SECRETARY.

        (a) In General.--Notwithstanding the last two sentences of section
    3(a) of the Inspector General Act of 1978, the Inspector General shall
    be under the authority, direction, and control of the Secretary with
    respect to audits or investigations, or the issuance of subpoenas, that
    require access to information concerning--
                (1) intelligence, counterintelligence, or counterterrorism
            matters;
                (2) ongoing criminal investigations or proceedings;
                (3) undercover operations;
                (4) the identity of confidential sources, including
            protected witnesses;
                (5) other matters the disclosure of which would, in the
            Secretary's judgment, constitute a serious threat to the
            protection of any person or property authorized protection by
            section 3056 of title 18, United States Code, section 202 of
            title 3 of such Code, or any provision of the Presidential
            Protection Assistance Act of 1976; or
                (6) other matters the disclosure of which would, in the
            Secretary's judgment, constitute a serious threat to national
            security.
        (b) Prohibition of Certain Investigations.--With respect to the
    information described in subsection (a), the Secretary may prohibit the
    Inspector General from carrying out or completing any audit or
    investigation or from issuing any subpoena, or may delay the issuance
    of any report by the Inspector General, after the Inspector General has
    decided to initiate, carry out, or complete such audit or
    investigation, issue such subpoena, or issue such report, if the
    Secretary determines that such prohibition or delay, respectively, is
    necessary to prevent the disclosure of any information described in
    subsection (a), to preserve the national security, or to prevent a
    significant impairment to the interests of the United States.
        (c) Notifications Required.--
                (1) Notification by secretary.--The Secretary shall, within
            7 days after any exercise of authority under subsection (b),
            transmit a written statement of the reasons for the exercise of
            such authority to the President of the Senate, the Speaker of
            the House of Representatives, the Committee on Government
            Reform of the House of Representatives, and the Committee on
            Governmental Affairs of the Senate.
                (2) Notification by inspector general.--The Inspector
            General shall provide written notification to the Committee on
            Government Reform of the House of Representatives and the
            Committee on Governmental Affairs of the Senate of any exercise
            of authority by the Secretary under subsection (b) by not later
            than 7 days after receiving notice of such exercise of
            authority.
        (d) Access to Information by Congress.--The exercise of authority
    by the Secretary described in subsection (b) should not be construed as
    limiting the right of Congress or any committee of Congress to access
    any information it seeks.
        (e) Oversight Responsibility--The Inspector General Act of 1978 (5
    U.S.C. App.) is further amended by inserting after section 8I the
    following:
      ``special provisions concerning the department of homeland security
        ``Sec. 8J. Notwithstanding any other provision of law, in carrying
    out the duties and responsibilities specified in this Act, the
    Inspector General of the Department of Homeland Security shall have
    oversight responsibility for the internal investigations performed by
    the Office of Internal Affairs of the United States Customs Service and
    the Office of Inspections of the United States Secret Service. The head
    of each such office shall promptly report to the Inspector General the
    significant activities being carried out by such office.''.

                    Subtitle C--United States Secret Service

    SEC. 720. FUNCTIONS TRANSFERRED.

        In accordance with title VIII, there shall be transferred to the
    Secretary the functions, personnel, assets, and liabilities of the
    United States Secret Service, which shall be maintained as a distinct
    entity within the Department, including the functions of the Secretary
    of the Treasury relating thereto.

                         Subtitle D--General Provisions

    SEC. 730. HUMAN RESOURCE MANAGEMENT.

        (a) Authority To Adjust Pay Schedules.--
                (1) In general.--Notwithstanding any provision of title 5,
            United States Code, the Secretary may, under regulations
            prescribed jointly with the Director of the Office of Personnel
            Management, provide for such adjustments in rates of basic pay
            as may be necessary to address inequitable pay disparities
            among employees within the Department performing similar work
            in similar circumstances.
                (2) Applicability.--No authority under paragraph (1) may be
            exercised with respect to any employee who serves in--
                        (A) an Executive Schedule position under subchapter
                    II of chapter 53 of title 5, United States Code; or
                        (B) a position for which the rate of basic pay is
                    fixed in statute by reference to a section or level
                    under subchapter II of chapter 53 of such title 5.
                (3) Limitations.--Nothing in this subsection shall
            constitute authority--
                        (A) to fix pay at a rate greater than the maximum
                    amount of cash compensation allowable under section
                    5307 of title 5, United States Code, in a year; or
                        (B) to exempt any employee from the application of
                    such section 5307.
                (4) Sunset provision.--Effective 5 years after the
            effective date of this Act, all authority to issue regulations
            under this subsection (including regulations which would
            modify, supersede, or terminate any regulations previously
            issued under this subsection) shall cease to be available.
        (b) Suspension and Removal of Employees in the Interests of
    National Security.--The Secretary shall establish procedures consistent
    with section 7532 of title 5, United States Code, to provide for the
    suspension and removal of employees of the Department when necessary in
    the interests of national security or homeland security. Such
    regulations shall provide for written notice, hearings, and review
    similar to that provided by such section 7532.
        (c) Demonstration Project.--
                (1) In general.--Not later than 5 years after the effective
            date of this Act, the Secretary shall submit to Congress a
            proposal for a demonstration project, the purpose of which
            shall be to help attain a human resources management system
            which in the judgment of the Secretary is necessary in order to
            enable the Department best to carry out its mission.
                (2) Requirements.--The proposal shall--
                        (A) ensure that veterans' preference and
                    whistleblower protection rights are retained;
                        (B) ensure that existing collective bargaining
                    agreements and rights under chapter 71 of title 5,
                    United States Code, remain unaffected;
                        (C) ensure the availability of such measures as may
                    be necessary in order to allow the Department to
                    recruit and retain the best persons possible to carry
                    out its mission;
                        (D) include one or more performance appraisal
                    systems which shall--
                                (i) provide for periodic appraisals of the
                            performance of covered employees;
                                (ii) provide for meaningful participation
                            of covered employees in the establishment of
                            employee performance plans; and
                                (iii) use the results of performance
                            appraisals as a basis for rewarding, reducing
                            in grade, retaining, and removing covered
                            employees; and
                        (E) contain recommendations for such legislation or
                    other actions by Congress as the Secretary considers
                    necessary.
                (3) Definition of a covered employee.--For purposes of
            paragraph (2)(D), the term ``covered employee'' means a
            supervisor or management official (as defined in paragraphs
            (10) and (11) of section 7103(a) of title 5, United States
            Code, respectively) who occupies a position within the
            Department which is in the General Schedule.
        (d) Merit System Principles.--All authorities under subsections (a)
    and (b) shall be exercised in a manner, and all personnel management
    flexibilities or authorities proposed under subsection (c) shall be,
    consistent with merit system principles under section 2301 of title 5,
    United States Code.
        (e) Remedies for Retaliation Against Whistleblowers.--
        Section 7211 of title 5, United States Code, is amended--
                (1) by inserting ``(a)'' before ``The right''; and
                (2) by adding at the end the following:
        ``(b) Any employee aggrieved by a violation of subsection (a) may
    bring a civil action in the appropriate United States district court,
    within 3 years after the date on which such violation occurs, against
    any agency, organization, or other person responsible for the
    violation, for lost wages and benefits, reinstatement, costs and
    attorney fees, compensatory damages, and equitable, injunctive, or any
    other relief that the court considers appropriate. Any such action
    shall, upon request of the party bringing the action, be tried by the
    court with a jury.
        ``(c) The same legal burdens of proof in proceedings under
    subsection (b) shall apply as under sections 1214(b)(4)(B) and 1221(e)
    in the case of an alleged prohibited personnel practice described in
    section 2302(b)(8).
        ``(d) For purposes of this section, the term `employee' means an
    employee (as defined by section 2105) and any individual performing
    services under a personal services contract with the Government
    (including as an employee of an organization).''.
        (f) Nonreduction in Pay.--Nothing in this section shall, with
    respect to any employee who is transferred to the Department pursuant
    to this Act, constitute authority to reduce the rate of basic pay
    (including any comparability pay) payable to such employee below the
    rate last payable to such employee before the date on which such
    employee is so transferred.

    SEC. 731. LABOR-MANAGEMENT RELATIONS.

        (a) Limitation on Exclusionary Authority.--
                (1) In general.--No agency or subdivision of an agency
            which is transferred to the Department pursuant to this Act
            shall be excluded from the coverage of chapter 71 of title 5,
            United States Code, as a result of any order issued under
            section 7103(b)(1) of such title 5 after June 18, 2002.
                (2) Exclusions allowable.--Nothing in paragraph (1) shall
            affect the effectiveness of any order to the extent that such
            order excludes any portion of an agency or subdivision of an
            agency as to which--
                        (A) recognition as an appropriate unit has never
                    been conferred for purposes of chapter 71 of such title
                    5; or
                        (B) any such recognition has been revoked or
                    otherwise terminated as a result of a determination
                    under subsection (b)(1).
        (b) Provisions Relating to Bargaining Units.--
                (1) Limitation relating to appropriate units.--Each unit
            which is recognized as an appropriate unit for purposes of
            chapter 71 of title 5, United States Code, as of the day before
            the effective date of this Act (and any subdivision of any such
            unit) shall, if such unit (or subdivision) is transferred to
            the Department pursuant to this Act, continue to be so
            recognized for such purposes, unless--
                        (A) the mission and responsibilities of such unit
                    (or subdivision) materially change; and
                        (B) a majority of the employees within such unit
                    (or subdivision) have as their primary duty
                    intelligence, counterintelligence, or investigative
                    work directly related to terrorism investigation.
                (2) Limitation relating to positions or employees.--No
            position or employee within a unit (or subdivision of a unit)
            as to which continued recognition is given in accordance with
            paragraph (1) shall be excluded from such unit (or
            subdivision), for purposes of chapter 71 of such title 5,
            unless the primary job duty of such position or employee--
                        (A) materially changes; and
                        (B) consists of intelligence, counterintelligence,
                    or investigative work directly related to terrorism
                    investigation.
            In the case of any positions within a unit (or subdivision)
            which are first established on or after the effective date of
            this Act and any employees first appointed on or after such
            date, the preceding sentence shall be applied disregarding
            subparagraph (A).
        (c) Coordination Rule.--No other provision of this Act or of any
    amendment made by this Act may be construed or applied in a manner so
    as to limit, supersede, or otherwise affect the provisions of this
    section, except to the extent that it does so by specific reference to
    this section.

    SEC. 732. REPORTING REQUIREMENTS.

        (a) Biennial Reports.--Every 2 years the Secretary shall submit to
    Congress--
                (1) a report assessing the resources and requirements of
            executive agencies relating to border security and emergency
            preparedness issues;
                (2) a report certifying the preparedness of the United
            States to prevent, protect against, and respond to natural
            disasters, cyber attacks, and incidents involving weapons of
            mass destruction; and
                (3) a report assessing the emergency preparedness of each
            State, including an assessment of each State's coordination
            with the Department with respect to the responsibilities
            specified in section 501.
        (b) Additional Report.--Not later than 1 year after the effective
    date of this Act, the Secretary shall submit to Congress a report--
                (1) assessing the progress of the Department in--
                        (A) implementing this Act; and
                        (B) ensuring the core functions of each entity
                    transferred to the Department are maintained and
                    strengthened; and
                (2) recommending any conforming changes in law necessary as
            a result of the enactment and implementation of this Act.

    SEC. 733. REQUIREMENT TO DEVELOP COMPREHENSIVE RISK MANAGEMENT
                        ASSESSMENT AND HOMELAND SECURITY STRATEGY.

        (a) Requirement To Develop Strategy.--The President shall develop a
    comprehensive strategy for homeland security under which Federal,
    State, and local government organizations coordinate and cooperate to
    meet homeland security objectives.
        (b) Components of Strategy.--The homeland security strategy
    required to be developed under subsection (a) shall include the
    following components:
                (1) Identification of specific homeland security threats
            based upon the results of the assessment under subsection (c).
                (2) Development of a specific strategy with respect to
            antiterrorism activities and consequence management that
            includes specific, measurable objectives by which the efficacy
            of the execution of the strategy may be determined.
                (3) Identification of the executive departments, agencies,
            and other organizations that should play a role in protecting
            homeland security and specification of the role of each such
            organization.
                (4) Providing for the selective use of personnel and assets
            of the Armed Forces in circumstances in which those personnel
            and assets would provide unique capability and could be used
            without infringing on the civil liberties of the people of the
            United States.
                (5) Optimization of the use of intelligence assets and
            capabilities, including improvement of the processes by which
            intelligence information is provided to State and local
            governments.
                (6) Providing for augmentation of existing medical response
            capability and equipment stockpiles at the Federal, State, and
            local levels.
                (7) Development of a multiyear plan for phased
            implementation of the strategy and a comprehensive projected
            budget.
        (c) Requirement To Develop Risk Assessment.--The President shall
    conduct a comprehensive threat and risk assessment with respect to
    homeland security to be used as the basis for the identification of
    specific homeland security threats for purposes of subsection (b)(1).
    Not later than six months after the enactment of this Act, and annually
    thereafter, the President shall submit to Congress a comprehensive,
    national-level risk management assessment, which shall be submitted in
    unclassified form to the maximum extent possible, with a classified
    annex, if necessary.
        (d) Components of Risk Assessment.--The assessment required to be
    developed under subsection (c) shall include the following components:
                (1) A description of the most significant threats to the
            United States, including military, terrorist, State, non-State,
            foreign, domestic, conventional, and unconventional threats.
                (2) A description of the most significant vulnerabilities
            of the United States, including those relating to population
            and infrastructure.
                (3) A prioritization of the most significant risks to the
            United States, based on the likelihood of the threats
            identified under subsection (b)(1) and the potential damage
            they could cause by exploiting vulnerabilities identified under
            subsection (b)(2).
        (e) Participation of Executive Agencies.--The President shall
    direct the participation of any executive agencies, departments, or
    offices to develop the assessment required in subsection (c), including
    the provision of all necessary intelligence and other information.

    SEC. 734. MILITARY ACTIVITIES.

        Except as specifically provided in this Act, nothing in this Act
    shall confer upon the Secretary any authority to engage in warfighting,
    the military defense of the United States, or other traditional
    military activities.

    SEC. 735. REORGANIZATION; TRANSFER.

        (a) Allocation of Functions.--The Secretary is authorized to
    allocate or reallocate functions among the officers of the Department,
    and to establish, consolidate, alter, or discontinue such
    organizational units within the Department, as the Secretary may deem
    necessary or appropriate, but such authority does not extend to the
    abolition of any entity established or required to be maintained as a
    distinct entity by this Act.
        (b) Transfer of Appropriations.--Except as otherwise specifically
    provided by law, not to exceed five percent of any appropriation
    available to the Secretary in any fiscal year may be transferred
    between such appropriations, except that not less than fifteen days'
    notice shall be given to the Committees on Appropriations of the Senate
    and House of Representatives before any such transfer is made.
        (c) Limitation.--Notwithstanding any other provision of this
    section, and except as otherwise specifically provided in this Act, the
    Secretary may not abolish any entity that is transferred to the
    Department, or terminate any function that is transferred to the
    Secretary, the Department, or any of the personnel of the Department,
    if such entity or function, respectively, is established or required by
    statute.

    SEC. 736. MISCELLANEOUS PROVISIONS.

        (a) Seal.--The Department shall have a seal, whose design is
    subject to the approval of the President.
        (b) Gifts, Devises, and Bequests.--With respect to the Department,
    the Secretary shall have the same authorities that the Attorney General
    has with respect to the Department of Justice under section 524(d) of
    title 28, United States Code.
        (c) Participation of Members of the Armed Forces.--With respect to
    the Department, the Secretary shall have the same authorities that the
    Secretary of Transportation has with respect to the Department of
    Transportation under section 324 of title 49, United States Code.
        (d) Redelegation of Functions.--Unless otherwise provided in the
    delegation or by law, any function delegated under this Act may be
    redelegated to any subordinate.

    SEC. 737. AUTHORIZATION OF APPROPRIATIONS.

        There are authorized to be appropriated for each of fiscal years
    2003 through 2007 such sums as maybe necessary to carry out this Act.

                            Subtitle E--Acquisitions

    SEC. 740. RESEARCH AND DEVELOPMENT PROJECTS.

        (a) Authority.--During the five-year period following the effective
    date of this Act, the Secretary may carry out a pilot program under
    which the Secretary may exercise the following authorities:
                (1)(A) In carrying out basic, applied, and advanced
            research and development projects for response to existing or
            emerging terrorist threats, the Secretary may exercise the same
            authority (subject to the same limitations and conditions) with
            respect to such research and projects as the Secretary of
            Defense may exercise under section 2371 of title 10, United
            States Code (except for subsections (b) and (f) of such
            section), after making a determination that--
                        (i) the use of a contract, grant, or cooperative
                    agreement for such projects is not feasible or
                    appropriate; and
                        (ii) use of other authority to waive Federal
                    procurement laws or regulations would not be feasible
                    or appropriate to accomplish such projects.
                (B) The annual report required under subsection (h) of such
            section 2371, as applied to the Secretary by this paragraph,
            shall be submitted to the President of the Senate and the
            Speaker of the House of Representatives.
                (2)(A) Under the authority of paragraph (1) and subject to
            the limitations of such paragraph, the Secretary may carry out
            prototype projects, in accordance with the requirements and
            conditions provided for carrying out prototype projects under
            section 845 of the National Defense Authorization Act for
            Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note).
                (B) In applying the authorities of such section 845--
                        (i) subsection (c) thereof shall apply with respect
                    to prototype projects under this paragraph, except that
                    in applying such subsection any reference in such
                    subsection to the Comptroller General shall be deemed
                    to refer to the Comptroller General and the Inspector
                    General of the Department; and
                        (ii) the Secretary shall perform the functions of
                    the Secretary of Defense under subsection (d) thereof.
        (b) Report.--Not later than one year after the effective date of
    this Act, and annually thereafter, the Comptroller General shall report
    to the Committee on Government Reform of the House of Representatives
    and the Committee on Governmental Affairs of the Senate on--
                (1) whether use of the authorities described in subsection
            (a) attracts nontraditional Government contractors and results
            in the acquisition of needed technologies; and
                (2) if such authorities were to be made permanent, whether
            additional safeguards are needed with respect to the use of
            such authorities.
        (c) Definition of Nontraditional Government Contractor.--In this
    section, the term ``nontraditional Government contractor'' has the same
    meaning as the term ``nontraditional defense contractor'' as defined in
    section 845(e) of the National Defense Authorization Act for Fiscal
    Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note).

    SEC. 741. PERSONAL SERVICES.

        The Secretary--
                (1) may procure the temporary or intermittent services of
            experts or consultants (or organizations thereof) in accordance
            with section 3109 of title 5, United States Code; and
                (2) may, whenever necessary due to an urgent homeland
            security need, procure temporary (not to exceed 1 year) or
            intermittent personal services, including the services of
            experts or consultants (or organizations thereof), without
            regard to the pay limitations of such section 3109.

    SEC. 742. SPECIAL STREAMLINED ACQUISITION AUTHORITY.

        (a) Authority.--(1) The Secretary may use the authorities set forth
    in this section with respect to any procurement made during the period
    beginning on the effective date of this Act and ending September 30,
    2007, if the Secretary determines in writing that the mission of the
    Department (as described in section 101) would be seriously impaired
    without the use of such authorities.
        (2) The authority to make the determination described in paragraph
    (1) may not be delegated by the Secretary to an officer of the
    Department who is not appointed by the President with the advice and
    consent of the Senate.
        (3) Not later than the date that is seven days after the date of
    any determination under paragraph (1), the Secretary shall submit to
    the Committee on Government Reform of the House of Representatives and
    the Committee on Governmental Affairs of the Senate--
                (A) notification of such determination; and
                (B) the justification for such determination.
        (b) Increased Micro-Purchase Threshold For Certain Procurements.--
    (1) The Secretary may designate certain employees of the Department to
    make procurements described in subsection (a) for which in the
    administration of section 32 of the Office of Federal Procurement
    Policy Act (41 U.S.C. 428) the amount specified in subsections (c),
    (d), and (f) of such section 32 shall be deemed to be $5,000.
        (2) The number of employees designated under paragraph (1) shall
    be--
                (A) fewer than the number of employees of the Department
            who are authorized to make purchases without obtaining
            competitive quotations, pursuant to section 32(c) of the Office
            of Federal Procurement Policy Act (41 U.S.C. 428(c));
                (B) sufficient to ensure the geographic dispersal of the
            availability of the use of the procurement authority under such
            paragraph at locations reasonably considered to be potential
            terrorist targets; and
                (C) sufficiently limited to allow for the careful
            monitoring of employees designated under such paragraph.
        (3) Procurements made under the authority of this subsection shall
    be subject to review by a designated supervisor on not less than a
    monthly basis. The supervisor responsible for the review shall be
    responsible for no more than 7 employees making procurements under this
    subsection.
        (c) Simplified Acquisition Procedures.--(1) With respect to a
    procurement described in subsection (a), the Secretary may deem the
    simplified acquisition threshold referred to in section 4(11) of the
    Office of Federal Procurement Policy Act (41 U.S.C. 403(11)) to be
    $175,000.
        (2) Section 18(c)(1) of the Office of Federal Procurement Policy
    Act is amended by adding at the end the following new subparagraph:
                        ``(H) the procurement is by the Secretary of
                    Homeland Security pursuant to the special procedures
                    provided in section 742(c) of the Homeland Security Act
                    of 2002.''.
        (d) Application of Certain Commercial Items Authorities.--(1) With
    respect to a procurement described in subsection (a), the Secretary may
    deem any item or service to be a commercial item for the purpose of
    Federal procurement laws.
        (2) The $5,000,000 limitation provided in section 31(a)(2) of the
    Office of Federal Procurement Policy Act (41 U.S.C. 427(a)(2)) and
    section 303(g)(1)(B) of the Federal Property and Administrative
    Services Act of 1949 (41 U.S.C. 253(g)(1)(B)) shall be deemed to be
    $7,500,000 for purposes of property or services under the authority of
    this subsection.
        (3) Authority under a provision of law referred to in paragraph (2)
    that expires under section 4202(e) of the Clinger-Cohen Act of 1996
    (divisions D and E of Public Law 104-106; 10 U.S.C. 2304 note) shall,
    notwithstanding such section, continue to apply for a procurement
    described in subsection (a).
        (e) Report.--Not later than 180 days after the end of fiscal year
    2005, the Comptroller General shall submit to the Committee on
    Governmental Affairs of the Senate and the Committee on Government
    Reform of the House of Representatives a report on the use of the
    authorities provided in this section. The report shall contain the
    following:
                (1) An assessment of the extent to which property and
            services acquired using authorities provided under this section
            contributed to the capacity of the Federal workforce to
            facilitate the mission of the Department as described in
            section 101.
                (2) An assessment of the extent to which prices for
            property and services acquired using authorities provided under
            this section reflected the best value.
                (3) The number of employees designated by each executive
            agency under subsection (b)(1).
                (4) An assessment of the extent to which the Department has
            implemented subsections (b)(2) and (b)(3) to monitor the use of
            procurement authority by employees designated under subsection
            (b)(1).
                (5) Any recommendations of the Comptroller General for
            improving the effectiveness of the implementation of the
            provisions of this section.

    SEC. 743. PROGRAM TO ENCOURAGE AND SUPPORT INNOVATIVE SOLUTIONS TO
                        ENHANCE HOMELAND SECURITY.

        (a) Establishment of Program.--The Secretary shall establish and
    promote a program to encourage and recognize contractor innovation and
    excellence in facilitating the mission of the Department (as described
    in section 101).
        (b) Issuance of Announcements Seeking Innovative Solutions.--Under
    the program, the Secretary shall issue announcements seeking unique and
    innovative solutions to advance the mission of the Department.
        (c) Technical Assistance Team.--(1) The Secretary shall convene a
    multifunction technical assistance team to assist in screening
    proposals submitted to the Secretary to provide unique and innovative
    solutions to advance the mission of the Department. The team shall be
    composed of Department employees who have expertise in scientific and
    technical disciplines that would facilitate the assessment of the
    feasibility of the proposals.
        (2) The technical assistance team shall--
                (A) assess the feasibility, scientific and technical
            merits, and estimated cost of each proposal; and
                (B) submit each proposal, and the assessment of the
            proposal, to each Under Secretary of the Department whose
            duties most coincide with the subject matter of the proposal
            and to any other executive agency whose mission would, in the
            opinion of the technical assistance team, be facilitated by the
            subject matter of the proposal.
        (3) The technical assistance team shall not consider or evaluate
    proposals submitted in response to a solicitation for offers for a
    pending procurement or for a specific agency requirement.
        (d) Monetary Awards for Innovative Solutions.--(1) Under the
    program carried out under this section, the Secretary shall provide
    monetary awards in recognition of unique and innovative solutions with
    the potential to significantly advance the mission of the Department.
        (2) The Secretary shall use a competitive process to select
    recipients of monetary awards under this subsection which shall include
    the widely advertised solicitation (including the announcements
    described in subsection (b)) of descriptive submissions on technology
    developments and prototypes, the substance of which are not otherwise
    available to the United States. The Secretary shall work with the
    technical assistance team described in subsection (c) in carrying out
    the competitive selection process.
        (3) An award made under this subsection may not exceed $20,000. The
    total amount of awards made under this subsection in a fiscal year may
    not exceed $500,000.
        (4) At least one quarter of the total amount awarded under this
    subsection during a fiscal year shall be awarded to small business
    concerns, within the meaning of such term as used in the Small Business
    Act (15 U.S.C. 632 et seq.).

    SEC. 744. RISK SHARING AND INDEMNIFICATION.

        (a) Definitions.--Section 4 of the Office of Federal Procurement
    Policy Act (41 U.S.C. 403) is amended by adding at the end the
    following new paragraphs:
                ``(16) The term `anti-terrorism technology and services'
            means any product, equipment, service or device, including
            information technology as defined in section 5002 of the
            Clinger-Cohen Act of 1996, system integration and any other
            kind of services (including support services) related to
            technology, designed, developed, modified or procured for the
            purpose of preventing, detecting, identifying, or otherwise
            deterring acts of terrorism.
                ``(17) The term `act of terrorism,' means the calculated
            attack or threat of attack against persons, property or
            infrastructure to inculcate fear, intimidate or coerce a
            government, the civilian population, or any segment thereof, in
            the pursuit of political, religious or ideological grounds.
                ``(18) The term `insurance carrier' means any corporation,
            association, society, order, firm, company, mutual,
            partnership, individual, aggregation of individuals, or any
            other legal entity that provides commercial property and
            casualty insurance. Such term includes any affiliates of a
            commercial insurance carrier.
                ``(19) The term `liability insurance' means insurance for
            legal liabilities incurred by the insured resulting from--
                        ``(A) loss of or damage to property of others;
                        ``(B) ensuing loss of income or extra expense
                    incurred because of loss of or damage to property of
                    others;
                        ``(C) bodily injury (including death) to persons
                    other than the insured or its employees; or
                        ``(D) loss resulting from debt or default of
                    another.
                ``(20) The term `homeland security procurement' means any
            procurement of anti-terrorism technology and services, as
            determined by the head of the agency, procured for the purpose
            of preventing, detecting, or otherwise deterring acts of
            terrorism.''
        (b) Federal Risk Sharing and Indemnification.--The Office of
    Federal Procurement Policy Act is further amended by adding at the end
    the following new sections:

    ``SEC. 40. FEDERAL RISK SHARING AND INDEMNIFICATION.

        ``(a) When conducting a homeland security procurement the head of
    an agency may include in a contract an indemnification provision
    specified in subsection (e) if the head of the agency determines in
    writing that it is in the best interest of the Government to do so and
    determines that--
                ``(1) the anti-terrorism technology and services are needed
            to protect critical infrastructure services or facilities;
                ``(2) the anti-terrorism technology and services would be
            effective in facilitating the defense against acts of
            terrorism; and
                ``(3) the supplier of the anti-terrorism technology is
            unable to secure insurance coverage adequate to make the anti-
            terrorism technology and services available to the Government.
        ``(b) The head of the agency may exercise the authority in this
    section only if authorized by the Director of the Office of Management
    and Budget to do so.
        ``(c) In order to be eligible for an indemnification provision
    specified in this section, any entity that provides anti-terrorism
    technology and services to an agency identified in this Act shall
    obtain liability insurance of such types and in such amounts, to the
    maximum extent practicable as determined by the agency, to satisfy
    otherwise compensable third party claims resulting from an act of
    terrorism when anti-terrorism technologies and services have been
    deployed in defense against acts of terrorism.
        ``(d) An indemnification provision included in a contract under the
    authority of this section shall be without regard to other provisions
    of law relating to the making, performance, amendment or modification
    of contracts.
        ``(e)(1) The indemnification provision to be included in a contract
    under the authority of this section shall indemnify, in whole or in
    part, the contractor for liability, including reasonable expenses of
    litigation and settlement, that is not covered by the insurance
    required under subsection (c), for:
                ``(A) Claims by third persons, including employees of the
            contractor, for death, personal injury, or loss of, damage to,
            or loss of use of property, or economic losses resulting from
            an act of terrorism;
                ``(B) Loss of, damage to, or loss of use of property of the
            Government; and
                ``(C) Claims arising (i) from indemnification agreements
            between the contractor and a subcontractor or subcontractors,
            or (ii) from such arrangements and further indemnification
            arrangements between subcontractors at any tier, provided that
            all such arrangements were entered into pursuant to the terms
            of this section.
        ``(2) Liabilities arising out of the contractor's willful
    misconduct or lack of good faith shall not be entitled to
    indemnification under the authority of this section.
        ``(f) An indemnification provision included in a contract under the
    authority of this section shall be negotiated and signed by the agency
    contracting officer and an authorized representative of the contractor
    and approved by the head of the agency prior to the commencement of
    performance of the contract.
        ``(g) The authority conferred by this section shall be limited to
    the following agencies:
                ``(1) The Department of Homeland Security;
                ``(2) The Department of Agriculture;
                ``(3) The Department of Commerce;
                ``(4) The Department of Defense;
                ``(5) The Department of Energy;
                ``(6) The Department of Health and Human Services;
                ``(7) The Department of the Interior;
                ``(8) The Department of Justice;
                ``(9) The Department of State;
                ``(10) The Department of the Treasury;
                ``(11) The Department of Transportation;
                ``(12) The Federal Emergency Management Agency;
                ``(13) The Federal Reserve System;
                ``(14) The General Services Administration;
                ``(15) The National Aeronautics and Space Administration;
                ``(16) The Tennessee Valley Authority;
                ``(17) The U.S. Postal Service;
                ``(18) The Central Intelligence Agency;
                ``(19) The Architect of the Capitol; and
                ``(20) Any other agency designated by the Secretary of
            Homeland Security that engages in homeland security contracting
            activities.
        ``(h) If any suit or action is filed or any claim is made against
    the contractor for any losses to third parties arising out of an act of
    terrorism when its anti-terrorism technologies and services have been
    deployed such that the cost and expense of the losses may be
    indemnified by the United States under this section, the contractor
    shall--
                ``(1) immediately notify the Secretary and promptly furnish
            copies of all pertinent papers received;
                ``(2) authorize United States Government representatives to
            collaborate with counsel for the contractor's insurance carrier
            in settling or defending the claim when the amount of the
            liability claimed may exceed the amount of insurance coverage;
            and
                ``(3) authorize United States Government representatives to
            settle or defend the claim and to represent the contractor in
            or to take charge of any litigation, if required by the United
            States Government, when the liability is not insured.
    The contractor may, at its own expense, be associated with the United
    States Government representatives in any such claim or litigation.''.
        (c) State and Local Risk Sharing and Indemnification.--(1) The
    Secretary may, upon the application of a State or local government,
    provide for indemnification of contractors who provide anti-terrorism
    technologies and services to State or local governments if the
    Secretary determines in writing that--
                (A) it is in the best interest of the Government to do so;
                (B) the State or local government is unable to provide the
            required indemnification; and
                (C) the anti-terrorism technology and services are needed
            to protect critical infrastructure services or facilities,
            would be effective in facilitating the defense against acts of
            terrorism, and would not be reasonably available absent
            indemnification.
        (2) The Secretary may exercise the authority in this subsection
    only if authorized by the Director of the Office of Management and
    Budget to do so.
        (3) In order to be eligible for indemnification, any entity that
    provides anti-terrorism technology and services to a State or local
    government shall obtain liability insurance of such types and in such
    amounts to the maximum extent practicable, as determined by the
    Secretary, to satisfy otherwise compensable third party claims
    resulting from an act of terrorism when anti-terrorism technologies and
    services have been deployed in defense against acts of terrorism.
        (4) The indemnification provided under the authority of this
    subsection shall indemnify, in whole or in part, the contractor for
    liability, including reasonable expenses of litigation and settlement,
    that is not covered by the insurance required under paragraph (3) for--
                (A) claims by third persons, including employees of the
            contractor, for death, personal injury, or loss of, damage to,
            or loss of use of property, or economic losses resulting from
            an act of terrorism;
                (B) loss of, damage to, or loss of use of property of the
            Government; and
                (C) claims arising--
                        (i) from indemnification agreements between the
                    contractor and a subcontractor or subcontractors; or
                        (ii) from such arrangements and further
                    indemnification arrangements between subcontractors at
                    any tier, provided that all such arrangements were
                    entered into pursuant to the terms of this subsection.
    Liabilities arising out of the contractor's willful misconduct or lack
    of good faith shall not be entitled to indemnification under the
    authority of this subsection.
        (5) If any suit or action is filed or any claim is made against the
    contractor for any losses to third parties arising out of an act of
    terrorism when its anti-terrorism technologies and services have been
    deployed such that the cost and expense of the losses may be
    indemnified by the United States under this subsection, the contractor
    shall--
                (A) immediately notify the Secretary and promptly furnish
            copies of all pertinent papers received;
                (B) authorize United States Government representatives to
            collaborate with counsel for the contractor's insurance carrier
            in settling or defending the claim when the amount of the
            liability claimed may exceed the amount of insurance coverage;
            and
                (C) authorize United States Government representatives to
            settle or defend the claim and to represent the contractor in
            or to take charge of any litigation, if required by the United
            States Government, when the liability is not insured.
    The contractor may, at its own expense, be associated with the United
    States Government representatives in any such claim or litigation.
        (6) In this subsection, the definitions in paragraphs (16) through
    (20) of section 4 of the Office of Federal Procurement Policy Act shall
    apply.
        (c) Implementing Regulations.--Not later than 120 days after the
    date of the enactment of this Act, the Federal Acquisition Regulation
    shall be amended to ensure consistency between the Federal Acquisition
    Regulation and this section.

    SEC. 745. PROCUREMENTS FROM SMALL BUSINESSES.

        There is established in the Department an office to be known as the
    ``Office of Small and Disadvantaged Business Utilization''. The
    management of such office shall be vested in the manner described in
    section 15(k) of the Small Business Act (15 U.S.C. 644(k)) and shall
    carry out the functions described in such section.

                        Subtitle F--Information Sharing

    SEC. 750. SHORT TITLE.

        This subtitle may be cited as the ``Homeland Security Information
    Sharing Act''.

    SEC. 751. FINDINGS AND SENSE OF CONGRESS.

        (a) Findings.--The Congress finds the following:
                (1) The Federal Government is required by the Constitution
            to provide for the common defense, which includes terrorist
            attack.
                (2) The Federal Government relies on State and local
            personnel to protect against terrorist attack.
                (3) The Federal Government collects, creates, manages, and
            protects classified and sensitive but unclassified information
            to enhance homeland security.
                (4) Some homeland security information is needed by the
            State and local personnel to prevent and prepare for terrorist
            attack.
                (5) The needs of State and local personnel to have access
            to relevant homeland security information to combat terrorism
            must be reconciled with the need to preserve the protected
            status of such information and to protect the sources and
            methods used to acquire such information.
                (6) Granting security clearances to certain State and local
            personnel is one way to facilitate the sharing of information
            regarding specific terrorist threats among Federal, State, and
            local levels of government.
                (7) Methods exist to declassify, redact, or otherwise adapt
            classified information so it may be shared with State and local
            personnel without the need for granting additional security
            clearances.
                (8) State and local personnel have capabilities and
            opportunities to gather information on suspicious activities
            and terrorist threats not possessed by Federal agencies.
                (9) The Federal Government and State and local governments
            and agencies in other jurisdictions may benefit from such
            information.
                (10) Federal, State, and local governments and
            intelligence, law enforcement, and other emergency preparation
            and response agencies must act in partnership to maximize the
            benefits of information gathering and analysis to prevent and
            respond to terrorist attacks.
                (11) Information systems, including the National Law
            Enforcement Telecommunications System and the Terrorist Threat
            Warning System, have been established for rapid sharing of
            classified and sensitive but unclassified information among
            Federal, State, and local entities.
                (12) Increased efforts to share homeland security
            information should avoid duplicating existing information
            systems.
        (b) Sense of Congress.--It is the sense of Congress that Federal,
    State, and local entities should share homeland security information to
    the maximum extent practicable, with special emphasis on hard-to-reach
    urban and rural communities.

    SEC. 752. FACILITATING HOMELAND SECURITY INFORMATION SHARING
                        PROCEDURES.

        (a) Procedures for Determining Extent of Sharing of Homeland
    Security Information.--
                (1) The Secretary shall prescribe procedures under which
            relevant Federal agencies determine--
                        (A) whether, how, and to what extent homeland
                    security information may be shared with appropriate
                    State and local personnel, and with which such
                    personnel it may be shared;
                        (B) how to identify and safeguard homeland security
                    information that is sensitive but unclassified; and
                        (C) to the extent such information is in classified
                    form, whether, how, and to what extent to remove
                    classified information, as appropriate, and with which
                    such personnel it may be shared after such information
                    is removed.
                (2) The Secretary shall ensure that such procedures apply
            to all agencies of the Federal Government.
                (3) Such procedures shall not change the substantive
            requirements for the classification and safeguarding of
            classified information.
                (4) Such procedures shall not change the requirements and
            authorities to protect sources and methods.
        (b) Procedures for Sharing of Homeland Security Information.--
                (1) Under procedures prescribed by the Secretary, all
            appropriate agencies, including the intelligence community,
            shall, through information sharing systems, share homeland
            security information with appropriate State and local personnel
            to the extent such information may be shared, as determined in
            accordance with subsection (a), together with assessments of
            the credibility of such information.
                (2) Each information sharing system through which
            information is shared under paragraph (1) shall--
                        (A) have the capability to transmit unclassified or
                    classified information, though the procedures and
                    recipients for each capability may differ;
                        (B) have the capability to restrict delivery of
                    information to specified subgroups by geographic
                    location, type of organization, position of a recipient
                    within an organization, or a recipient's need to know
                    such information;
                        (C) be configured to allow the efficient and
                    effective sharing of information; and
                        (D) be accessible to appropriate State and local
                    personnel.
                (3) The procedures prescribed under paragraph (1) shall
            establish conditions on the use of information shared under
            paragraph (1)--
                        (A) to limit the redissemination of such
                    information to ensure that such information is not used
                    for an unauthorized purpose;
                        (B) to ensure the security and confidentiality of
                    such information;
                        (C) to protect the constitutional and statutory
                    rights of any individuals who are subjects of such
                    information; and
                        (D) to provide data integrity through the timely
                    removal and destruction of obsolete or erroneous names
                    and information.
                (4) The procedures prescribed under paragraph (1) shall
            ensure, to the greatest extent practicable, that the
            information sharing system through which information is shared
            under such paragraph include existing information sharing
            systems, including, but not limited to, the National Law
            Enforcement Telecommunications System, the Regional Information
            Sharing System, and the Terrorist Threat Warning System of the
            Federal Bureau of Investigation.
                (5) Each appropriate Federal agency, as determined by the
            Secretary, shall have access to each information sharing system
            through which information is shared under paragraph (1), and
            shall therefore have access to all information, as appropriate,
            shared under such paragraph.
                (6) The procedures prescribed under paragraph (1) shall
            ensure that appropriate State and local personnel are
            authorized to use such information sharing systems--
                        (A) to access information shared with such
                    personnel; and
                        (B) to share, with others who have access to such
                    information sharing systems, the homeland security
                    information of their own jurisdictions, which shall be
                    marked appropriately as pertaining to potential
                    terrorist activity.
                (7) Under procedures prescribed jointly by the Director of
            Central Intelligence and the Attorney General, each appropriate
            Federal agency, as determined by the Secretary, shall review
            and assess the information shared under paragraph (6) and
            integrate such information with existing intelligence.
        (c) Sharing of Classified Information and Sensitive but
    Unclassified Information With State and Local Personnel.--
                (1) The Secretary shall prescribe procedures under which
            Federal agencies may, to the extent the President considers
            necessary, share with appropriate State and local personnel
            homeland security information that remains classified or
            otherwise protected after the determinations prescribed under
            the procedures set forth in subsection (a).
                (2) It is the sense of Congress that such procedures may
            include one or more of the following means:
                        (A) Carrying out security clearance investigations
                    with respect to appropriate State and local personnel.
                        (B) With respect to information that is sensitive
                    but unclassified, entering into nondisclosure
                    agreements with appropriate State and local personnel.
                        (C) Increased use of information-sharing
                    partnerships that include appropriate State and local
                    personnel, such as the Joint Terrorism Task Forces of
                    the Federal Bureau of Investigation, the Anti-Terrorism
                    Task Forces of the Department of Justice, and regional
                    Terrorism Early Warning Groups.
        (d) Responsible Officials.--For each affected Federal agency, the
    head of such agency shall designate an official to administer this Act
    with respect to such agency.
        (e) Federal Control of Information.--Under procedures prescribed
    under this section, information obtained by a State or local government
    from a Federal agency under this section shall remain under the control
    of the Federal agency, and a State or local law authorizing or
    requiring such a government to disclose information shall not apply to
    such information.
        (f) Definitions.--As used in this section:
                (1) The term ``homeland security information'' means any
            information possessed by a Federal, State, or local agency
            that--
                        (A) relates to the threat of terrorist activity;
                        (B) relates to the ability to prevent, interdict,
                    or disrupt terrorist activity;
                        (C) would improve the identification or
                    investigation of a suspected terrorist or terrorist
                    organization;
                        (D) would improve the response to a terrorist act;
                    or
                        (E) does not include individually identifiable
                    information collected solely for statistical purposes.
                (2) The term ``intelligence community'' has the meaning
            given such term in section 3(4) of the National Security Act of
            1947 (50 U.S.C. 401a(4)).
                (3) The term ``State and local personnel'' means any of the
            following persons involved in prevention, preparation, or
            response for terrorist attack:
                        (A) State Governors, mayors, and other locally
                    elected officials.
                        (B) State and local law enforcement personnel and
                    firefighters.
                        (C) Public health and medical professionals.
                        (D) Regional, State, and local emergency management
                    agency personnel, including State adjutant generals.
                        (E) Other appropriate emergency response agency
                    personnel.
                        (F) Employees of private-sector entities that
                    affect critical infrastructure, cyber, economic, or
                    public health security, as designated by the Federal
                    government in procedures developed pursuant to this
                    section.
                (4) The term ``State'' includes the District of Columbia
            and any commonwealth, territory, or possession of the United
            States.

    SEC. 753. REPORT.

        (a) Report Required.--Not later than 12 months after the date of
    the enactment of this Act, the Secretary shall submit to the
    congressional committees specified in subsection (b) a report on the
    implementation of section 752. The report shall include any
    recommendations for additional measures or appropriation requests,
    beyond the requirements of section 752, to increase the effectiveness
    of sharing of information among Federal, State, and local entities.
        (b) Specified Congressional Committees.--The congressional
    committees referred to in subsection (a) are the following committees:
                (1) The Permanent Select Committee on Intelligence and the
            Committee on the Judiciary of the House of Representatives.
                (2) The Select Committee on Intelligence and the Committee
            on the Judiciary of the Senate.

    SEC. 754. AUTHORIZATION OF APPROPRIATIONS.

        There are authorized to be appropriated such sums as may be
    necessary to carry out section 752.

    SEC. 755. AUTHORITY TO SHARE GRAND JURY INFORMATION.

        Rule 6(e) of the Federal Rules of Criminal Procedure is amended--
                (1) in paragraph (2), by inserting ``, or of guidelines
            jointly issued by the Attorney General and Director of Central
            Intelligence pursuant to Rule 6,'' after ``Rule 6''; and
                (2) in paragraph (3)--
                        (A) in subparagraph (A)(ii), by inserting ``or of a
                    foreign government'' after ``(including personnel of a
                    state or subdivision of a state'';
                        (B) in subparagraph (C)(i)--
                                (i) in subclause (I), by inserting before
                            the semicolon the following: ``or, upon a
                            request by an attorney for the government, when
                            sought by a foreign court or prosecutor for use
                            in an official criminal investigation'';
                                (ii) in subclause (IV)--
                                        (I) by inserting ``or foreign''
                                    after ``may disclose a violation of
                                    State'';
                                        (II) by inserting ``or of a foreign
                                    government'' after ``to an appropriate
                                    official of a State or subdivision of a
                                    State''; and
                                        (III) by striking ``or'' at the
                                    end;
                                (iii) by striking the period at the end of
                            subclause (V) and inserting ``; or''; and
                                (iv) by adding at the end the following:
                                ``(VI) when matters involve a threat of
                            actual or potential attack or other grave
                            hostile acts of a foreign power or an agent of
                            a foreign power, domestic or international
                            sabotage, domestic or international terrorism,
                            or clandestine intelligence gathering
                            activities by an intelligence service or
                            network of a foreign power or by an agent of a
                            foreign power, within the United States or
                            elsewhere, to any appropriate federal, state,
                            local, or foreign government official for the
                            purpose of preventing or responding to such a
                            threat.''; and
                        (C) in subparagraph (C)(iii)--
                                (i) by striking ``Federal'';
                                (ii) by inserting ``or clause (i)(VI)''
                            after ``clause (i)(V)''; and
                                (iii) by adding at the end the following:
                            ``Any state, local, or foreign official who
                            receives information pursuant to clause (i)(VI)
                            shall use that information only consistent with
                            such guidelines as the Attorney General and
                            Director of Central Intelligence shall jointly
                            issue.''.

    SEC. 756. AUTHORITY TO SHARE ELECTRONIC, WIRE, AND ORAL INTERCEPTION
                        INFORMATION.

        Section 2517 of title 18, United States Code, is amended by adding
    at the end the following:
        ``(7) Any investigative or law enforcement officer, or attorney for
    the government, who by any means authorized by this chapter, has
    obtained knowledge of the contents of any wire, oral, or electronic
    communication, or evidence derived therefrom, may disclose such
    contents or derivative evidence to a foreign investigative or law
    enforcement officer to the extent that such disclosure is appropriate
    to the proper performance of the official duties of the officer making
    or receiving the disclosure, and foreign investigative or law
    enforcement officers may use or disclose such contents or derivative
    evidence to the extent such use or disclosure is appropriate to the
    proper performance of their official duties.
        ``(8) Any investigative or law enforcement officer, or attorney for
    the government, who by any means authorized by this chapter, has
    obtained knowledge of the contents of any wire, oral, or electronic
    communication, or evidence derived therefrom, may disclose such
    contents or derivative evidence to any appropriate Federal, State,
    local, or foreign government official to the extent that such contents
    or derivative evidence reveals a threat of actual or potential attack
    or other grave hostile acts of a foreign power or an agent of a foreign
    power, domestic or international sabotage, domestic or international
    terrorism, or clandestine intelligence gathering activities by an
    intelligence service or network of a foreign power or by an agent of a
    foreign power, within the United States or elsewhere, for the purpose
    of preventing or responding to such a threat. Any official who receives
    information pursuant to this provision may use that information only as
    necessary in the conduct of that person's official duties subject to
    any limitations on the unauthorized disclosure of such information, and
    any State, local, or foreign official who receives information pursuant
    to this provision may use that information only consistent with such
    guidelines as the Attorney General and Director of Central Intelligence
    shall jointly issue.''.

    SEC. 757. FOREIGN INTELLIGENCE INFORMATION.

        (a) Dissemination Authorized.--Section 203(d)(1) of the Uniting and
    Strengthening America by Providing Appropriate Tools Required to
    Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001 (Public
    Law 107-56; 50 U.S.C. 403-5d) is amended by adding at the end the
    following: ``It shall be lawful for information revealing a threat of
    actual or potential attack or other grave hostile acts of a foreign
    power or an agent of a foreign power, domestic or international
    sabotage, domestic or international terrorism, or clandestine
    intelligence gathering activities by an intelligence service or network
    of a foreign power or by an agent of a foreign power, within the United
    States or elsewhere, obtained as part of a criminal investigation to be
    disclosed to any appropriate Federal, State, local, or foreign
    government official for the purpose of preventing or responding to such
    a threat. Any official who receives information pursuant to this
    provision may use that information only as necessary in the conduct of
    that person's official duties subject to any limitations on the
    unauthorized disclosure of such information, and any State, local, or
    foreign official who receives information pursuant to this provision
    may use that information only consistent with such guidelines as the
    Attorney General and Director of Central Intelligence shall jointly
    issue.''.
        (b) Conforming Amendments.--Section 203(c) of that Act is amended--
                (1) by striking ``section 2517(6)'' and inserting
            ``paragraphs (6) and (8) of section 2517 of title 18, United
            States Code,''; and
                (2) by inserting ``and (VI)'' after ``Rule
            6(e)(3)(C)(i)(V)''.

    SEC. 758. INFORMATION ACQUIRED FROM AN ELECTRONIC SURVEILLANCE.

        Section 106(k)(1) of the Foreign Intelligence Surveillance Act of
    1978 (50 U.S.C. 1806) is amended by inserting after ``law enforcement
    officers'' the following: ``or law enforcement personnel of a State or
    political subdivision of a State (including the chief executive officer
    of that State or political subdivision who has the authority to appoint
    or direct the chief law enforcement officer of that State or political
    subdivision)''.

    SEC. 759. INFORMATION ACQUIRED FROM A PHYSICAL SEARCH.

        Section 305(k)(1) of the Foreign Intelligence Surveillance Act of
    1978 (50 U.S.C. 1825) is amended by inserting after ``law enforcement
    officers'' the following: ``or law enforcement personnel of a State or
    political subdivision of a State (including the chief executive officer
    of that State or political subdivision who has the authority to appoint
    or direct the chief law enforcement officer of that State or political
    subdivision)''.

                              Subtitle G--Property

    SEC. 761. REAL PROPERTY MANAGEMENT.

        The Secretary, in accordance with this title and regulations
    prescribed jointly by the Secretary, the Administrator of General
    Services, and the Director of the Office of Management and Budget--
                (1) may acquire replacement real property (including
            interests therein)--
                        (A) by transfer or exchange of real property under
                    the jurisdiction, custody, and control of the
                    Department with other executive agencies; or
                        (B) by sale to or exchange of such property with
                    non-Federal entities, if--
                                (i) the transaction does not conflict with
                            other applicable laws governing the acquisition
                            of interests in real property by Federal
                            agencies;
                                (ii) following consultation with the
                            Administrator, the agency first made the
                            property available for transfer or exchange to
                            other Federal agencies; and
                                (iii) the transaction results in the agency
                            receiving fair market value, which shall be
                            based upon an appraisal;
                (2) by lease, permit, license, or other similar instrument,
            may make available to other executive agencies and to non-
            Federal entities, on a fair market rental value basis, the
            unexpired portion of any Government lease for real property
            under the jurisdiction, custody, and control of the Director;
                (3) may make available by outlease agreements with other
            executive agencies or with non-Federal entities, any unused or
            underused portion of or interest in any real property and
            related personal property under the jurisdiction, custody, and
            control of the Department; and
                (4) obligate or expend amounts received by the United
            States as a result of any exercise of the authority granted by
            paragraph (2) or (3) without regard to fiscal year limitations,
            for the capital asset expenditures of the Department.

    SEC. 762. CRITERIA FOR USING AUTHORITIES.

        (a) In General.--Subject to the requirements of subsection (b), the
    Secretary may apply authority under section 761 to a real property
    interest only if--
                (1) the Secretary has determined that such real property
            interest is not excess property, and includes as part of the
            documentation required under subsection (b)(3) a description of
            the need and mission requirement fulfilled by the Federal
            property;
                (2) the real property interest is used to fulfill or
            support a continuing mission requirement of the Department; and
                (3) the real property interest can, by the application of
            the authority, improve the support of such mission.
        (b) Criteria for Application.--Before applying authority under
    section 761 to a real property interest, the Secretary, in consultation
    with the Administrator of General Services, must determine that such
    application meets all of the following criteria:
                (1) The application supports the goals and objectives set
            forth in the Department's strategic plan under section 306 of
            title 5, United States Code.
                (2) Use of the real property is economical, cost effective,
            and in the best interests of the United States.
                (3) The application is documented in a business plan that,
            commensurate with the nature of the authority applied--
                        (A) analyzes all reasonable options for using the
                    property;
                        (B) describes how the application will be in
                    compliance with applicable provisions of law, including
                    such provisions of--
                                (i) the National Environmental Policy Act
                            of 1969 (42 U.S.C. 4321 et seq.); and
                                (ii) the McKinney-Vento Homeless Assistance
                            Act (42 U.S.C. 11301 et seq.), including by--
                                        (I) describing the result of the
                                    determination under that Act by the
                                    Secretary of Housing and Urban
                                    Development of the suitability of the
                                    property for use to assist the
                                    homeless; and
                                        (II) explaining the rationale for
                                    the Department's decision not to make
                                    the property available for use to
                                    assist the homeless; and
                        (C) establishes effective procedures for
                    soliciting, assessing, and taking into account input
                    from the local community.

    SEC. 763. OUTLEASES.

        (a) In General.--The Secretary may make property available by an
    outlease agreement authorized by section 761 only if--
                (1) the Secretary finds that--
                        (A) there is no long-term mission requirement for
                    the property, but the Federal Government is not
                    permitted to dispose of it; or
                        (B)(i) there is a continuing, long-term mission
                    requirement of the Department for the property to
                    remain in Government ownership; and
                        (ii) the use of the real property by the lessee
                    will not be inconsistent with such mission;
                (2) in the case of an outlease to a non-Federal entity, the
            outlease is conducted competitively; and
                (3) the agreement--
                        (A) is for a term no longer than 50 years; and
                        (B) will result in the Department receiving fair
                    market value which, in the case of an exchange or sale
                    of Federal real property, shall be based upon an
                    appraisal.
        (b) Construction on Outleased Property; Applicable Law.--
                (1) Property subject to retained authority.--If the
            Secretary retains authority over any decision to construct or
            alter buildings on property outleased to a non-Federal entity
            under section 761, then any such construction or alteration
            shall comply with section 21 of the Public Buildings Act of
            1959 (40 U.S.C. 619).
                (2) Property not subject to retained authority.--(A) If the
            Secretary does not retain authority over any decision to
            construct or alter buildings on property outleased to a non-
            Federal entity under section 761, then any such construction or
            alteration shall comply with all laws described in subparagraph
            (B) that would apply to such construction or alteration if the
            property were not Federal property.
                (B) The laws referred to in subparagraph (A) are all laws
            of a State, and of a political subdivision of a State, relating
            to zoning, landscaping, open space, minimum distance of a
            building from a property line, maximum building height,
            historic preservation, esthetic qualities of a building,
            building codes, and similar matters, and any other State or
            local laws relating to construction or alteration of a
            building, respectively, by the non-Federal entity on non-
            Federal lands.
                (C) The Secretary may waive the application of subparagraph
            (A) if the Secretary determines that application of that
            subparagraph would hinder fulfillment of the mission of the
            Department under section 101(b).
        (c) Reports.--The Comptroller General of the United States shall
    submit biennial reports to the Congress, including to the Committee on
    Government Reform of the House of Representatives and the Committee on
    Governmental Affairs of the Senate, on the effectiveness of the use of
    outlease authority under section 761.

    SEC. 764. REVIEW AND REVISION OF TRANSACTIONS BY ADMINISTRATOR.

        The Administrator of General Services may, in the sole discretion
    of the Administrator, review any transaction of the Department
    undertaken utilizing authority under section 761. After such review,
    the Administrator may disapprove such transaction if the Administrator
    determines the transaction does not reflect due diligence by the
    Department, is not in the best interest of the United States, or does
    not comply with the requirements of this title.

    SEC. 765. TRANSACTIONAL REPORTS.

        (a) In General.--For those transactions authorized under section
    761 involving the sale, exchange, or outlease to a non-Federal entity
    of any asset valued in excess of $700,000 at the time of the
    transaction, the Secretary shall submit the business plan required by
    section 762(b)(3) to the Director of the Office of Management and
    Budget, the Committee on Governmental Affairs of the Senate, and the
    Committee on Government Reform of the House of Representatives at least
    30 calendar days before the final execution of such transaction.
        (b) Disposal of Real Property by Negotiation.--The Secretary shall
    prepare and submit to the Committee on Governmental Affairs of the
    Senate and the Committee on Government Reform of the House of
    Representatives, a statement explaining the circumstances of each
    disposal by negotiation, under section 761, of any real property that
    has an estimated fair market value in excess of $700,000.
        (c) Adjustment of Threshold.--The Administrator of General Services
    may increase or decrease the dollar amounts in subsections (a) and (b)
    to reflect a percentage increase or decrease in the Department of
    Commerce Consumer Price Index.

                             TITLE VIII--TRANSITION

    SEC. 801. DEFINITIONS.

        For purposes of this title--
                (1) the term ``agency'' includes any entity, organizational
            unit, or function; and
                (2) the term ``transition period'' means the 12-month
            period beginning on the effective date of this Act.

    SEC. 802. REORGANIZATION PLAN.

        (a) Submission of Plan.--Not later than 60 days after the date of
    the enactment of this Act, the President shall transmit to the
    appropriate congressional committees a reorganization plan regarding
    the following:
                (1) The transfer of agencies, personnel, assets, and
            obligations to the Department pursuant to sections 202, 302,
            402, and 502.
                (2) Any consolidation, reorganization, or streamlining of
            agencies transferred to the Department pursuant to sections
            202, 302, 402, and 502.
        (b) Plan Elements.--The plan transmitted under subsection (a) shall
    contain, consistent with this Act, such elements as the President deems
    appropriate, including the following:
                (1) Identification of any functions of agencies transferred
            to the Department pursuant to sections 202, 302, 402, and 502
            that will not be transferred to the Department under the plan.
                (2) Specification of the steps to be taken by the Secretary
            to organize the Department, including the delegation or
            assignment of functions transferred to the Department among
            officers of the Department in order to permit the Department to
            carry out the functions transferred under the plan.
                (3) Specification of the funds available to each agency
            that will be transferred to the Department as a result of
            transfers under the plan.
                (4) Specification of the proposed allocations within the
            Department of unexpended funds transferred in connection with
            transfers under the plan.
                (5) Specification of any proposed disposition of property,
            facilities, contracts, records, and other assets and
            obligations of agencies transferred under the plan.
        (c) Modification of Plan.--The President may, on the basis of
    consultations with the appropriate congressional committees, modify or
    revise any part of the plan until that part of the plan becomes
    effective in accordance with subsection (d).
        (d) Effective Date.--
                (1) In general.--The reorganization plan described in this
            section, including any modifications or revisions of the plan
            under subsection (d), shall become effective for an agency on
            the earlier of--
                        (A) the date specified in the plan (or the plan as
                    modified pursuant to subsection (d)), except that such
                    date may not be earlier than 90 days after the date the
                    President has transmitted the reorganization plan to
                    the appropriate congressional committees pursuant to
                    subsection (a); or
                        (B) the end of the transition period.
                (2) Statutory construction.--Nothing in this subsection may
            be construed to require the transfer of functions, personnel,
            records, balances of appropriations, or other assets of an
            agency on a single date.
                (3) Supersedes existing law.--Paragraph (1) shall apply
            notwithstanding section 905(b) of title 5, United States Code.

    SEC. 803. TRANSITIONAL AUTHORITIES.

        (a) Provision of Assistance by Officials.--Until the transfer of an
    agency to the Department, any official having authority over or
    functions relating to the agency immediately before the effective date
    of this Act shall provide to the Secretary such assistance, including
    the use of personnel and assets, as he may request in preparing for the
    transfer and integration of the agency into the Department.
        (b) Services and Personnel.--During the transition period, upon the
    request of the Secretary, the head of any executive agency may, on a
    reimbursable or nonreimbursable basis, provide services or detail
    personnel to assist with the transition.
        (c) Transfer of Funds.--Until the transfer of an agency to the
    Department, the President is authorized to transfer to the Secretary
    not to exceed five percent of the unobligated balance of any
    appropriation available to such agency, to fund the purposes authorized
    in this Act, except that not less than 15 days' notice shall be given
    to the Committees on Appropriations of the Senate and House of
    Representatives before any such funds transfer is made.
        (d) Acting Officials.--(1) During the transition period, pending
    the advice and consent of the Senate to the appointment of an officer
    required by this Act to be appointed by and with such advice and
    consent, the President may designate any officer whose appointment was
    required to be made by and with such advice and consent and who was
    such an officer immediately before the effective date of this Act (and
    who continues in office) or immediately before such designation, to act
    in such office until the same is filled as provided in this Act. While
    so acting, such officers shall receive compensation at the higher of--
                (A) the rates provided by this Act for the respective
            offices in which they act; or
                (B) the rates provided for the offices held at the time of
            designation.
        (2) Nothing in this Act shall be understood to require the advice
    and consent of the Senate to the appointment by the President to a
    position in the Department of any officer whose agency is transferred
    to the Department pursuant to this Act and whose duties following such
    transfer are germane to those performed before such transfer.
        (e) Transfer of Personnel, Assets, Liabilities, and Functions.--
    Upon the transfer of an agency to the Department--
                (1) the personnel, assets, and liabilities held by or
            available in connection with the agency shall be transferred to
            the Secretary for appropriate allocation, subject to the
            approval of the Director of the Office of Management and Budget
            and notwithstanding the provisions of section 1531(a)(2) of
            title 31, United States Code; and
                (2) the Secretary shall have all functions relating to the
            agency that any other official could by law exercise in
            relation to the agency immediately before such transfer, and
            shall have in addition all functions vested in the Secretary by
            this Act or other law.

    SEC. 804. SAVINGS PROVISIONS.

        (a) Completed Administrative Actions.--(1) Completed administrative
    actions of an agency shall not be affected by the enactment of this Act
    or the transfer of such agency to the Department, but shall continue in
    effect according to their terms until amended, modified, superseded,
    terminated, set aside, or revoked in accordance with law by an officer
    of the United States or a court of competent jurisdiction, or by
    operation of law.
        (2) For purposes of paragraph (1), the term ``completed
    administrative action'' includes orders, determinations, rules,
    regulations, personnel actions, permits, agreements, grants, contracts,
    certificates, licenses, registrations, and privileges.
        (b) Pending Proceedings.--Subject to the authority of the Secretary
    under this Act--
                (1) pending proceedings in an agency, including notices of
            proposed rulemaking, and applications for licenses, permits,
            certificates, grants, and financial assistance, shall continue
            notwithstanding the enactment of this Act or the transfer of
            the agency to the Department, unless discontinued or modified
            under the same terms and conditions and to the same extent that
            such discontinuance could have occurred if such enactment or
            transfer had not occurred; and
                (2) orders issued in such proceedings, and appeals
            therefrom, and payments made pursuant to such orders, shall
            issue in the same manner and on the same terms as if this Act
            had not been enacted or the agency had not been transferred,
            and any such orders shall continue in effect until amended,
            modified, superseded, terminated, set aside, or revoked by an
            officer of the United States or a court of competent
            jurisdiction, or by operation of law.
        (c) Pending Civil Actions.--Subject to the authority of the
    Secretary under this Act, pending civil actions shall continue
    notwithstanding the enactment of this Act or the transfer of an agency
    to the Department, and in such civil actions, proceedings shall be had,
    appeals taken, and judgments rendered and enforced in the same manner
    and with the same effect as if such enactment or transfer had not
    occurred.
        (d) References.--References relating to an agency that is
    transferred to the Department in statutes, Executive orders, rules,
    regulations, directives, or delegations of authority that precede such
    transfer or the effective date of this Act shall be deemed to refer, as
    appropriate, to the Department, to its officers, employees, or agents,
    or to its corresponding organizational units or functions. Statutory
    reporting requirements that applied in relation to such an agency
    immediately before the effective date of this Act shall continue to
    apply following such transfer if they refer to the agency by name.
        (e) Employment Provisions.--(1) Notwithstanding the generality of
    the foregoing (including subsections (a) and (d)), in and for the
    Department the Secretary may, in regulations prescribed jointly with
    the Director of the Office of Personnel Management, adopt the rules,
    procedures, terms, and conditions, established by statute, rule, or
    regulation before the effective date of this Act, relating to
    employment in any agency transferred to the Department pursuant to this
    Act, except that the rules, procedures, terms, and conditions relating
    to employment in the Transportation Security Administration before the
    effective date of this Act may be applied only to the personnel
    employed by or carrying out the functions of the Transportation
    Security Administration.
        (2) Except as otherwise provided in this Act, or under authority
    granted by this Act, the transfer pursuant to this Act of personnel
    shall not alter the terms and conditions of employment, including
    compensation, of any employee so transferred.

    SEC. 805. TERMINATIONS.

        Except as otherwise provided in this Act, whenever all the
    functions vested by law in any agency have been transferred pursuant to
    this Act, each position and office the incumbent of which was
    authorized to receive compensation at the rates prescribed for an
    office or position at level II, III, IV, or V, of the Executive
    Schedule, shall terminate.

    SEC. 806. INCIDENTAL TRANSFERS.

        The Director of the Office of Management and Budget, in
    consultation with the Secretary, is authorized and directed to make
    such additional incidental dispositions of personnel, assets, and
    liabilities held, used, arising from, available, or to be made
    available, in connection with the functions transferred by this Act, as
    he may deem necessary to accomplish the purposes of this Act.

                 TITLE IX--CONFORMING AND TECHNICAL AMENDMENTS

    SEC. 901. EXECUTIVE DEPARTMENT.

        Section 101 of title 5, United States Code, is amended by inserting
    after ``The Department of Housing and Urban Development.'' the
    following:
                ``The Department of Homeland Security.''.

    SEC. 902. EXECUTIVE SCHEDULE.

        Title 5, United States Code, is amended--
                (1) in section 5312, by inserting ``Secretary of Homeland
            Security.'' as a new item after ``Affairs.'';
                (2) in section 5313, by inserting the following new items
            after ``Affairs.'':
                ``Deputy Secretary, Department of Homeland Security.''
                ``Deputy Secretary for Policy, Department of Homeland
            Security.''
                ``Deputy Secretary for Management, Department of Homeland
            Security.''
                (3) in section 5314, by inserting ``Under Secretaries,
            Department of Homeland Security.'' as a new item after
            ``Affairs.'' the third place it appears;
                (4) in section 5315, by inserting after ``Affairs.'' the
            first place it appears the following:
                ``Assistant Secretaries, Department of Homeland Security.
                ``General Counsel, Department of Homeland Security.
                ``Chief Financial Officer, Department of Homeland Security.
                ``Chief Information Officer, Department of Homeland
            Security.
                ``Inspector General, Department of Homeland Security.''.

    SEC. 903. INSPECTOR GENERAL.

        (a) IN General.--Section 11 of the Inspector General Act of 1978
    (Public Law 95-452) is amended--
                (1) by inserting ``Homeland Security,'' after
            ``Transportation,'' each place it appears;
                (2) by striking ``; and'' each place it appears and
            inserting ``;'';
                (3) by striking ``,,'' and inserting ``,''; and
                (4) by striking ``;;'' and inserting ``;''.
        (b) Oversight Responsibility.--Section 8D of the Inspector General
    Act of 1978 (5 U.S.C. App.) is amended--
                (1) in subsection (b) by striking ``, the Office of
            Internal Affairs of the United States Customs Service, and the
            Office of Inspections of the United States Secret Service,'';
                (2) in subsection (c) by striking ``and services''; and
                (3) in subsection (d) by striking ``or service'' each place
            it appears.

    SEC. 904. CHIEF FINANCIAL OFFICER.

        Section 901(b)(1) of title 31, United States Code, is amended--
                (1) by redesignating subparagraphs (G) through (P) as
            subparagraphs (H) through (Q), respectively; and
                (2) by inserting the following new subparagraph after
            subparagraph (F):
                        ``(G) The Department of Homeland Security.''.

    SEC. 905. CHIEF INFORMATION OFFICER.

        (a) Clinger-Cohen Act.--(1) The provisions enacted in section 5125
    of the Clinger-Cohen Act of 1996 (division E of Public Law 104-106; 110
    Stat. 684) shall apply with respect to the Chief Information Officer of
    the Department.
        (2) Section 5131(c) of the Clinger-Cohen Act of 1996 (40 U.S.C.
    1441(c)) is amended by inserting ``or appointed'' after ``the Chief
    Information Officer designated''.
        (b) Title 44.--Chapter 35 of title 44, United States Code, is
    amended--
                (1) in section 3506(a)(2)--
                        (A) in subparagraph (A) by striking ``subparagraph
                    (B)'' and inserting ``subparagraphs (B) and (C)''; and
                        (B) by adding at the end the following:
        ``(C) The Chief Information Officer of the Department of Homeland
    Security shall be an individual who is appointed by the President.'';
                (2) in each of subsections (a)(3), (a)(4), and (c)(1) of
            section 3506 by inserting ``or appointed'' after ``the Chief
            Information Officer designated''; and
                (3) in section 3507(i) by inserting ``or appointed'' after
            ``the Chief Information Officer designated''.

    SEC. 906. UNITED STATES SECRET SERVICE.

        (a) In General.--The United States Code is amended in sections 202
    and 208 of title 3, and in section 3056 of title 18, by striking ``of
    the Treasury'', each place it appears and inserting ``of Homeland
    Security''.
        (b) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the United States Secret Service to
    the Department.

    SEC. 907. COAST GUARD.

        (a) Title 14, U.S.C.--Title 14 of the United States Code is
    amended--
                (1) in sections 1, 3, 53, 95, 145, 516, 666, 669, 673 (as
            added by Public Law 104-201), 673 (as added by Public Law 104-
            324), 674, 687, and 688, by striking ``of Transportation'',
            each place it appears, and inserting ``of Homeland Security'';
            and
                (2) after executing the other amendments required by this
            subsection, by redesignating the section 673 added by Public
            Law 104-324 as section 673a.
        (b) Title 10, U.S.C.--Section 801(1) of title 10, United States
    Code, is amended by striking ``the General Counsel of the Department of
    Transportation'' and inserting ``an official designated to serve as
    Judge Advocate General of the Coast Guard by the Secretary of Homeland
    Security''.
        (c) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the Coast Guard to the Department.

    SEC. 908. STRATEGIC NATIONAL STOCKPILE AND SMALLPOX VACCINE
                        DEVELOPMENT.

        (a) In General.--The Public Health Security and Bioterrorism
    Preparedness and Response Act of 2002 is amended--
                (1) in section 121(a)(1)--
                        (A) by striking ``Secretary of Health and Human
                    Services'' and inserting ``Secretary of Homeland
                    Security'';
                        (B) by inserting ``the Secretary of Health and
                    Human Services and'' between ``in coordination with''
                    and ``the Secretary of Veterans Affairs''; and
                        (C) by inserting ``of Health and Human Services''
                    after ``as are determined by the Secretary''; and
                (2) in subsections 121(a)(2) and (b), by inserting ``of
            Health and Human Services'' after ``Secretary'' each place it
            appears.
        (b) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the Strategic National Stockpile of
    the Department of Health and Human Services to the Department.

    SEC. 909. SELECT AGENT REGISTRATION.

        (a) Public Health Service Act.--The Public Health Service Act is
    amended--
                (1) in section 351A(a)(1)(A), by inserting ``(as defined in
            subsection (l)(9))'' after ``Secretary'';
                (2) in section 351A(h)(2)(A), by inserting ``Department of
            Homeland Security, the'' before ``Department of Health and
            Human Services'';
                (3) in section 351A(l), by inserting after paragraph (8) a
            new paragraph as follows:
                ``(9) The term `Secretary' means the Secretary of Homeland
            Security, in consultation with the Secretary of Health and
            Human Services.''; and
                (4) in section 352A(i)--
                        (A) by striking ``(1)'' the first place it appears;
                    and
                        (B) by striking paragraph (2).
        (b) Public Health Security and Bioterrorism Preparedness and
    Response Act of 2002.--Section 201(b) of the Public Health Security and
    Bioterrorism Preparedness and Response Act of 2002 is amended by
    striking ``Secretary of Health and Human Services'' and inserting
    ``Secretary of Homeland Security''.
        (c) Effective Date.--The amendments made by this section shall take
    effect on the date of transfer of the select agent registration
    enforcement programs and activities of the Department of Health and
    Human Services to the Department.

    SEC. 910. MEMBERSHIP OF SECRETARY ON NATIONAL SECURITY COUNCIL.

        Section 101(a) of the National Security Act of 1947 (50 U.S.C.
    402(a)) is amended in the fourth sentence--
                (1) in paragraph (6), by striking ``and'' at the end;
                (2) by redesignating paragraph (7) as paragraph (8); and
                (3) by inserting after paragraph (6) the following new
            paragraph:
                ``(7) the Secretary of Homeland Security.''.

    SEC. 911. NATIONAL BIO-WEAPONS DEFENSE ANALYSIS CENTER.

        There is established in the Department of Defense a National Bio-
    Weapons Defense Analysis Center, whose mission is to develop
    countermeasures to potential attacks by terrorists using weapons of
    mass destruction.

                         TITLE X--INFORMATION SECURITY

    SEC. 1001. INFORMATION SECURITY.

        (a) Short Title.--The amendments made by this title may be cited as
    the ``Federal Information Security Management Act of 2002''.
        (b) Information Security.--
                (1) In general.--Subchapter II of chapter 35 of title 44,
            United States Code, is amended to read as follows:

                     ``SUBCHAPTER II--INFORMATION SECURITY

    ``Sec. 3531. Purposes

        ``The purposes of this subchapter are to--
                ``(1) provide a comprehensive framework for ensuring the
            effectiveness of information security controls over information
            resources that support Federal operations and assets;
                ``(2) recognize the highly networked nature of the current
            Federal computing environment and provide effective
            governmentwide management and oversight of the related
            information security risks, including coordination of
            information security efforts throughout the civilian, national
            security, and law enforcement communities;
                ``(3) provide for development and maintenance of minimum
            controls required to protect Federal information and
            information systems;
                ``(4) provide a mechanism for improved oversight of Federal
            agency information security programs;
                ``(5) acknowledge that commercially developed information
            security products offer advanced, dynamic, robust, and
            effective information security solutions, reflecting market
            solutions for the protection of critical information
            infrastructures important to the national defense and economic
            security of the nation that are designed, built, and operated
            by the private sector; and
                ``(6) recognize that the selection of specific technical
            hardware and software information security solutions should be
            left to individual agencies from among commercially developed
            products.''.

    ``Sec. 3532. Definitions

        ``(a) In General.--Except as provided under subsection (b), the
    definitions under section 3502 shall apply to this subchapter.
        ``(b) Additional Definitions.--As used in this subchapter--
                ``(1) the term `information security' means protecting
            information and information systems from unauthorized access,
            use, disclosure, disruption, modification, or destruction in
            order to provide--
                        ``(A) integrity, which means guarding against
                    improper information modification or destruction, and
                    includes ensuring information nonrepudiation and
                    authenticity;
                        ``(B) confidentiality, which means preserving
                    authorized restrictions on access and disclosure,
                    including means for protecting personal privacy and
                    proprietary information;
                        ``(C) availability, which means ensuring timely and
                    reliable access to and use of information; and
                        ``(D) authentication, which means utilizing digital
                    credentials to assure the identity of users and
                    validate their access;
                ``(2) the term `national security system' means any
            information system (including any telecommunications system)
            used or operated by an agency or by a contractor of an agency,
            or other organization on behalf of an agency--
                        ``(A) the function, operation, or use of which--
                                ``(i) involves intelligence activities;
                                ``(ii) involves cryptologic activities
                            related to national security;
                                ``(iii) involves command and control of
                            military forces;
                                ``(iv) involves equipment that is an
                            integral part of a weapon or weapons system; or
                                ``(v) is critical to the direct fulfillment
                            of military or intelligence missions provided
                            that this definition does not apply to a system
                            that is used for routine administrative and
                            business applications (including payroll,
                            finance, logistics, and personnel management
                            applications); or
                        ``(B) is protected at all times by procedures
                    established for information that have been specifically
                    authorized under criteria established by an Executive
                    order or an Act of Congress to be kept secret in the
                    interest of national defense or foreign policy; and
                ``(3) the term `information technology' has the meaning
            given that term in section 5002 of the Clinger-Cohen Act of
            1996 (40 U.S.C. 1401).

    ``Sec. 3533. Authority and functions of the Director

        ``(a) The Director shall oversee agency information security
    policies and practices, including--
                ``(1) developing and overseeing the implementation of
            policies, principles, standards, and guidelines on information
            security, including through the oversight of standards
            promulgated under section 5131 of the Clinger-Cohen Act of 1996
            (40 U.S.C. 1441);
                ``(2) requiring agencies, consistent with the standards
            promulgated under such section 5131 and the requirements of
            this subchapter, to identify and provide information security
            protections commensurate with the risk and magnitude of the
            harm resulting from the unauthorized access, use, disclosure,
            disruption, modification, or destruction of--
                        ``(A) information collected or maintained by or on
                    behalf of an agency; or
                        ``(B) information systems used or operated by an
                    agency or by a contractor of an agency or other
                    organization on behalf of an agency;
                ``(3) coordinating the development of standards and
            guidelines under section 20 of the National Institute of
            Standards and Technology Act (15 U.S.C. 278g-3) with agencies
            and offices operating or exercising control of national
            security systems (including the National Security Agency) to
            assure, to the maximum extent feasible, that such standards and
            guidelines are complementary with standards and guidelines
            developed for national security systems;
                ``(4) overseeing agency compliance with the requirements of
            this subchapter, including through any authorized action under
            section 5113(b)(5) of the Clinger-Cohen Act of 1996 (40 U.S.C.
            1413(b)(5)) to enforce accountability for compliance with such
            requirements;
                ``(5) reviewing at least annually, and approving or
            disapproving, agency information security programs required
            under section 3534(b);
                ``(6) coordinating information security policies and
            procedures with related information resources management
            policies and procedures; and
                ``(7) reporting to Congress no later than March 1 of each
            year on agency compliance with the requirements of this
            subchapter, including--
                        ``(A) a summary of the findings of evaluations
                    required by section 3535;
                        ``(B) significant deficiencies in agency
                    information security practices;
                        ``(C) planned remedial action to address such
                    deficiencies; and
                        ``(D) a summary of, and the views of the Director
                    on, the report prepared by the National Institute of
                    Standards and Technology under section 20(e)(7) of the
                    National Institute of Standards and Technology Act (15
                    U.S.C. 278g-3).''.
        ``(b) Except for the authorities described in paragraphs (4) and
    (7) of subsection (a), the authorities of the Director under this
    section shall not apply to national security systems.

    ``Sec. 3534. Federal agency responsibilities

        ``(a) The head of each agency shall--
                ``(1) be responsible for--
                        ``(A) providing information security protections
                    commensurate with the risk and magnitude of the harm
                    resulting from unauthorized access, use, disclosure,
                    disruption, modification, or destruction of--
                                ``(i) information collected or maintained
                            by or on behalf of the agency; and
                                ``(ii) information systems used or operated
                            by an agency or by a contractor of an agency or
                            other organization on behalf of an agency;
                        ``(B) complying with the requirements of this
                    subchapter and related policies, procedures, standards,
                    and guidelines, including--
                                ``(i) information security standards
                            promulgated under section 5131 of the Clinger-
                            Cohen Act of 1996 (40 U.S.C. 1441); and
                                ``(ii) information security standards and
                            guidelines for national security systems issued
                            in accordance with law and as directed by the
                            President; and
                        ``(C) ensuring that information security management
                    processes are integrated with agency strategic and
                    operational planning processes;
                ``(2) ensure that senior agency officials provide
            information security for the information and information
            systems that support the operations and assets under their
            control, including through--
                        ``(A) assessing the risk and magnitude of the harm
                    that could result from the unauthorized access, use,
                    disclosure, disruption, modification, or destruction of
                    such information or information systems;
                        ``(B) determining the levels of information
                    security appropriate to protect such information and
                    information systems in accordance with standards
                    promulgated under section 5131 of the Clinger-Cohen Act
                    of 1996 (40 U.S.C. 1441) for information security
                    classifications and related requirements;
                        ``(C) implementing policies and procedures to cost-
                    effectively reduce risks to an acceptable level; and
                        ``(D) periodically testing and evaluating
                    information security controls and techniques to ensure
                    that they are effectively implemented;
                ``(3) delegate to the agency Chief Information Officer
            established under section 3506 (or comparable official in an
            agency not covered by such section) the authority to ensure
            compliance with the requirements imposed on the agency under
            this subchapter, including--
                        ``(A) designating a senior agency information
                    security officer who shall--
                                ``(i) carry out the Chief Information
                            Officer's responsibilities under this section;
                                ``(ii) possess professional qualifications,
                            including training and experience, required to
                            administer the functions described under this
                            section;
                                ``(iii) have information security duties as
                            that official's primary duty; and
                                ``(iv) head an office with the mission and
                            resources to assist in ensuring agency
                            compliance with this section;
                        ``(B) developing and maintaining an agencywide
                    information security program as required by subsection
                    (b);
                        ``(C) developing and maintaining information
                    security policies, procedures, and control techniques
                    to address all applicable requirements, including those
                    issued under section 3533 of this title, and section
                    5131 of the Clinger-Cohen Act of 1996 (40 U.S.C. 1441);
                        ``(D) training and overseeing personnel with
                    significant responsibilities for information security
                    with respect to such responsibilities; and
                        ``(E) assisting senior agency officials concerning
                    their responsibilities under subparagraph (2);
                ``(4) ensure that the agency has trained personnel
            sufficient to assist the agency in complying with the
            requirements of this subchapter and related policies,
            procedures, standards, and guidelines; and
                ``(5) ensure that the agency Chief Information Officer, in
            coordination with other senior agency officials, reports
            annually to the agency head on the effectiveness of the agency
            information security program, including progress of remedial
            actions.
        ``(b) Each agency shall develop, document, and implement an
    agencywide information security program, approved by the Director under
    section 3533(a)(5), to provide information security for the information
    and information systems that support the operations and assets of the
    agency, including those provided or managed by another agency,
    contractor, or other source, that includes--
                ``(1) periodic assessments of the risk and magnitude of the
            harm that could result from the unauthorized access, use,
            disclosure, disruption, modification, or destruction of
            information and information systems that support the operations
            and assets of the agency;
                ``(2) policies and procedures that--
                        ``(A) are based on the risk assessments required by
                    subparagraph (1);
                        ``(B) cost-effectively reduce information security
                    risks to an acceptable level;
                        ``(C) ensure that information security is addressed
                    throughout the life cycle of each agency information
                    system; and
                        ``(D) ensure compliance with--
                                ``(i) the requirements of this subchapter;
                                ``(ii) policies and procedures as may be
                            prescribed by the Director, and information
                            security standards promulgated under section
                            5131 of the Clinger-Cohen Act of 1996 (40
                            U.S.C. 1441);
                                ``(iii) minimally acceptable system
                            configuration requirements, as determined by
                            the agency; and
                                ``(iv) any other applicable requirements,
                            including standards and guidelines for national
                            security systems issued in accordance with law
                            and as directed by the President;
                ``(3) subordinate plans for providing adequate information
            security for networks, facilities, and systems or groups of
            information systems, as appropriate;
                ``(4) security awareness training to inform personnel,
            including contractors and other users of information systems
            that support the operations and assets of the agency, of--
                        ``(A) information security risks associated with
                    their activities; and
                        ``(B) their responsibilities in complying with
                    agency policies and procedures designed to reduce these
                    risks;
                ``(5) periodic testing and evaluation of the effectiveness
            of information security policies, procedures, and practices, to
            be performed with a frequency depending on risk, but no less
            than annually, of which such testing--
                        ``(A) shall include testing of management,
                    operational, and technical controls of every
                    information system identified in the inventory required
                    under section 3505(c); and
                        ``(B) may include testing relied on in a evaluation
                    under section 3535;
                ``(6) a process for planning, implementing, evaluating, and
            documenting remedial action to address any deficiencies in the
            information security policies, procedures, and practices of the
            agency;
                ``(7) procedures for detecting, reporting, and responding
            to security incidents, consistent with guidance issued under
            section 3536, including--
                        ``(A) mitigating risks associated with such
                    incidents before substantial damage is done;
                        ``(B) notifying and consulting with the Federal
                    information security incident center established under
                    section 3536; and
                        ``(C) notifying and consulting with, as
                    appropriate--
                                ``(i) law enforcement agencies and relevant
                            Offices of Inspector General;
                                ``(ii) an office designated by the
                            President for any incident involving a national
                            security system; and
                                ``(iii) any other agency or office, in
                            accordance with law or as directed by the
                            President; and
                ``(8) plans and procedures to ensure continuity of
            operations for information systems that support the operations
            and assets of the agency.
        ``(c) Each agency shall--
                ``(1) report annually to the Director, the Committees on
            Government Reform and Science of the House of Representatives,
            the Committees on Governmental Affairs and Commerce, Science,
            and Transportation of the Senate, the appropriate authorization
            and appropriations committees of Congress, and the Comptroller
            General on the adequacy and effectiveness of information
            security policies, procedures, and practices, and compliance
            with the requirements of this subchapter, including compliance
            with each requirement of subsection (b);
                ``(2) address the adequacy and effectiveness of information
            security policies, procedures, and practices in plans and
            reports relating to--
                        ``(A) annual agency budgets;
                        ``(B) information resources management under
                    subchapter 1 of this chapter;
                        ``(C) information technology management under the
                    Clinger-Cohen Act of 1996 (40 U.S.C. 1401 et seq.);
                        ``(D) program performance under sections 1105 and
                    1115 through 1119 of title 31, and sections 2801 and
                    2805 of title 39;
                        ``(E) financial management under chapter 9 of title
                    31, and the Chief Financial Officers Act of 1990 (31
                    U.S.C. 501 note; Public Law 101-576) (and the
                    amendments made by that Act);
                        ``(F) financial management systems under the
                    Federal Financial Management Improvement Act (31 U.S.C.
                    3512 note); and
                        ``(G) internal accounting and administrative
                    controls under section 3512 of title 31, United States
                    Code, (known as the `Federal Managers Financial
                    Integrity Act'); and
                ``(3) report any significant deficiency in a policy,
            procedure, or practice identified under paragraph (1) or (2)--
                        ``(A) as a material weakness in reporting under
                    section 3512 of title 31, United States Code; and
                        ``(B) if relating to financial management systems,
                    as an instance of a lack of substantial compliance
                    under the Federal Financial Management Improvement Act
                    (31 U.S.C. 3512 note).
        ``(d)(1) In addition to the requirements of subsection (c), each
    agency, in consultation with the Director, shall include as part of the
    performance plan required under section 1115 of title 31 a description
    of--
                ``(A) the time periods, and
                ``(B) the resources, including budget, staffing, and
            training,
    that are necessary to implement the program required under subsection
    (b).
        ``(2) The description under paragraph (1) shall be based on the
    risk assessments required under subsection (b)(2)(1).
        ``(e) Each agency shall provide the public with timely notice and
    opportunities for comment on proposed information security policies and
    procedures to the extent that such policies and procedures affect
    communication with the public.

    ``Sec. 3535. Annual independent evaluation

        ``(a)(1) Each year each agency shall have performed an independent
    evaluation of the information security program and practices of that
    agency to determine the effectiveness of such program and practices.
        ``(2) Each evaluation by an agency under this section shall
    include--
                ``(A) testing of the effectiveness of information security
            policies, procedures, and practices of a representative subset
            of the agency's information systems;
                ``(B) an assessment (made on the basis of the results of
            the testing) of compliance with--
                        ``(i) the requirements of this subchapter; and
                        ``(ii) related information security policies,
                    procedures, standards, and guidelines; and
                ``(C) separate presentations, as appropriate, regarding
            information security relating to national security systems.
        ``(b) Subject to subsection (c)--
                ``(1) for each agency with an Inspector General appointed
            under the Inspector General Act of 1978, the annual evaluation
            required by this section shall be performed by the Inspector
            General or by an independent external auditor, as determined by
            the Inspector General of the agency; and
                ``(2) for each agency to which paragraph (1) does not
            apply, the head of the agency shall engage an independent
            external auditor to perform the evaluation.
        ``(c) For each agency operating or exercising control of a national
    security system, that portion of the evaluation required by this
    section directly relating to a national security system shall be
    performed--
                ``(1) only by an entity designated by the agency head; and
                ``(2) in such a manner as to ensure appropriate protection
            for information associated with any information security
            vulnerability in such system commensurate with the risk and in
            accordance with all applicable laws.
        ``(d) The evaluation required by this section--
                ``(1) shall be performed in accordance with generally
            accepted government auditing standards; and
                ``(2) may be based in whole or in part on an audit,
            evaluation, or report relating to programs or practices of the
            applicable agency.
        ``(e) Each year, not later than such date established by the
    Director, the head of each agency shall submit to the Director the
    results of the evaluation required under this section.
        ``(f) Agencies and evaluators shall take appropriate steps to
    ensure the protection of information which, if disclosed, may adversely
    affect information security. Such protections shall be commensurate
    with the risk and comply with all applicable laws and regulations.
        ``(g)(1) The Director shall summarize the results of the
    evaluations conducted under this section in the report to Congress
    required under section 3533(a)(8).
        ``(2) The Director's report to Congress under this subsection shall
    summarize information regarding information security relating to
    national security systems in such a manner as to ensure appropriate
    protection for information associated with any information security
    vulnerability in such system commensurate with the risk and in
    accordance with all applicable laws.
        ``(3) Evaluations and any other descriptions of information systems
    under the authority and control of the Director of Central Intelligence
    or of National Foreign Intelligence Programs systems under the
    authority and control of the Secretary of Defense shall be made
    available to Congress only through the appropriate oversight committees
    of Congress, in accordance with applicable laws.
        ``(h) The Comptroller General shall periodically evaluate and
    report to Congress on--
                ``(1) the adequacy and effectiveness of agency information
            security policies and practices; and
                ``(2) implementation of the requirements of this
            subchapter.

    ``Sec. 3536. Federal information security incident center

        ``(a) The Secretary of Homeland Security shall cause to be
    established and operated a central Federal information security
    incident center to--
                ``(1) provide timely technical assistance to operators of
            agency information systems regarding security incidents,
            including guidance on detecting and handling information
            security incidents;
                ``(2) compile and analyze information about incidents that
            threaten information security;
                ``(3) inform operators of agency information systems about
            current and potential information security threats, and
            vulnerabilities; and
                ``(4) consult with agencies or offices operating or
            exercising control of national security systems (including the
            National Security Agency) and such other agencies or offices in
            accordance with law and as directed by the President regarding
            information security incidents and related matters.
        ``(b) Each agency operating or exercising control of a national
    security system shall share information about information security
    incidents, threats, and vulnerabilities with the Federal information
    security incident center to the extent consistent with standards and
    guidelines for national security systems, issued in accordance with law
    and as directed by the President.

    ``Sec. 3537. National security systems

        ``The head of each agency operating or exercising control of a
    national security system shall be responsible for ensuring that the
    agency--
                ``(1) provides information security protections
            commensurate with the risk and magnitude of the harm resulting
            from the unauthorized access, use, disclosure, disruption,
            modification, or destruction of the information contained in
            such system;
                ``(2) implements information security policies and
            practices as required by standards and guidelines for national
            security systems, issued in accordance with law and as directed
            by the President; and
                ``(3) complies with the requirements of this subchapter.

    ``Sec. 3538. Authorization of appropriations

        ``There are authorized to be appropriated to carry out the
    provisions of this subchapter such sums as may be necessary for each of
    fiscal years 2003 through 2007.

    ``Sec. 3539. Effect on existing law

        ``Nothing in this subchapter, section 5131 of the Clinger-Cohen Act
    of 1996 (40 U.S.C. 1441), or section 20 of the National Standards and
    Technology Act (15 U.S.C. 278g-3) may be construed as affecting the
    authority of the President, the Office of Management and Budget or the
    Director thereof, the National Institute of Standards and Technology,
    or the head of any agency, with respect to the authorized use or
    disclosure of information, including with regard to the protection of
    personal privacy under section 552a of title 5, the disclosure of
    information under section 552 of title 5, the management and
    disposition of records under chapters 29, 31, or 33 of title 44, the
    management of information resources under subchapter I of chapter 35 of
    this title, or the disclosure of information to the Congress or the
    Comptroller General of the United States.''.
                (2) Clerical amendment.--The items in the table of sections
            at the beginning of such chapter 35 under the heading
            ``SUBCHAPTER II'' are amended to read as follows:

    ``3531. Purposes.
    ``3532. Definitions.
    ``3533. Authority and functions of the Director.
    ``3534. Federal agency responsibilities.
    ``3535. Annual independent evaluation.
    ``3536. Federal information security incident center.
    ``3537. National security systems.
    ``3538. Authorization of appropriations.
    ``3539. Effect on existing law.''.
        (c) Information Security Responsibilities of Certain Agencies.--
                (1) National security responsibilities.--(A) Nothing in
            this Act (including any amendment made by this Act) shall
            supersede any authority of the Secretary of Defense, the
            Director of Central Intelligence, or other agency head, as
            authorized by law and as directed by the President, with regard
            to the operation, control, or management of national security
            systems, as defined by section 3532(3) of title 44, United
            States Code.
                (B) Section 2224 of title 10, United States Code, is
            amended--
                        (i) in subsection 2224(b), by striking ``(b)
                    Objectives and Minimum Requirements.--(1)'' and
                    inserting ``(b) Objectives of the Program.--'';
                        (ii) in subsection 2224(b), by striking ``(2) the
                    program shall at a minimum meet the requirements of
                    section 3534 and 3535 of title 44, United States
                    Code.''; and
                        (iii) in subsection 2224(c), by inserting
                    ``, including through compliance with subtitle II of
                    chapter 35 of title 44'' after ``infrastructure''.
                (2) Atomic energy act of 1954.--Nothing in this Act shall
            supersede any requirement made by or under the Atomic Energy
            Act of 1954 (42 U.S.C. 2011 et seq.). Restricted Data or
            Formerly Restricted Data shall be handled, protected,
            classified, downgraded, and declassified in conformity with the
            Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).

    SEC. 1002. MANAGEMENT OF INFORMATION TECHNOLOGY.

        Section 5131 of the Clinger-Cohen Act of 1996 (40 U.S.C. 1441) is
    amended to read as follows:

    ``SEC. 5131. RESPONSIBILITIES FOR FEDERAL INFORMATION SYSTEMS
                        STANDARDS.

        ``(a)(1)(A) Except as provided under paragraph (2), the Secretary
    of Commerce shall, on the basis of proposed standards developed under
    paragraphs (2) and (3) of section 20(a) of the National Institute of
    Standards and Technology Act (15 U.S.C. 278g-3(a)) and in consultation
    with the Director of the Office of Management and Budget, promulgate
    standards pertaining to Federal information systems.
        ``(B) Standards promulgated under subparagraph (A) shall include--
                ``(i) standards that provide minimum information security
            requirements as determined under section 20(b) of the National
            Institute of Standards and Technology Act (15 U.S.C. 278g-
            3(b)); and
                ``(ii) such standards that are otherwise necessary to
            improve the efficiency of operation or security of Federal
            information systems.
        ``(C) Standards described under subparagraph (B) shall be
    compulsory and binding.
        ``(2) Standards and guidelines for national security systems, as
    defined under section 3532(3) of title 44, United States Code, shall be
    developed, promulgated, enforced, and overseen as otherwise authorized
    by law and as directed by the President.
        ``(b) The head of an agency may employ standards for the cost-
    effective information security for all operations and assets within or
    under the supervision of that agency that are more stringent than the
    standards promulgated under this section, if such standards--
                ``(1) contain, at a minimum, the provisions of those
            applicable standards made compulsory and binding by the
            Secretary of Commerce; and
                ``(2) are otherwise consistent with policies and guidelines
            issued under section 3533 of title 44, United States Code.
        ``(c)(1) The decision regarding the promulgation of any standard by
    the Secretary of Commerce under subsection (a) shall occur not later
    than 6 months after the submission of the proposed standard to the
    Secretary of Commerce under section 20 of the National Institute of
    Standards and Technology Act (15 U.S.C. 278g-3).
        ``(2) A decision by the Secretary of Commerce to significantly
    modify, or not promulgate, a proposed standard developed as provided
    under section 20 of the National Institute of Standards and Technology
    Act (15 U.S.C. 278g-3), shall be made after the public is given an
    opportunity to comment on the Secretary of Commerce's proposed
    decision.''.
        ``(d) In this section, the term `information security' has the
    meaning given that term in section 3532(b)(1) of title 44, United
    States Code.''.

    SEC. 1003. NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY.

        Section 20 of the National Institute of Standards and Technology
    Act (15 U.S.C. 278g-3), is amended by striking the text and inserting
    the following:
        ``(a) The Institute shall--
                ``(1) have the mission of developing standards, guidelines,
            and associated methods and techniques for information systems;
                ``(2) develop standards and guidelines, including minimum
            requirements, for information systems used or operated by an
            agency or by a contractor of an agency or other organization on
            behalf of an agency, other than national security systems (as
            defined in section 3532(b)(2) of title 44, United States Code);
                ``(3) develop standards and guidelines, including minimum
            requirements, for providing adequate information security for
            all agency operations and assets, but such standards and
            guidelines shall not apply to national security systems; and
                ``(4) carry out the responsibilities described in paragraph
            (3) through the Computer Security Division.
        ``(b) The standards and guidelines required by subsection (a) shall
    include, at a minimum--
                ``(1)(A) standards to be used by all agencies to categorize
            all information and information systems collected or maintained
            by or on behalf of each agency based on the objectives of
            providing appropriate levels of information security according
            to a range of risk levels;
                ``(B) guidelines recommending the types of information and
            information systems to be included in each such category; and
                ``(C) minimum information security requirements for
            information and information systems in each such category;
                ``(2) a definition of and guidelines concerning detection
            and handling of information security incidents; and
                ``(3) guidelines developed in coordination with the
            National Security Agency for identifying an information system
            as a national security system consistent with applicable
            requirements for national security systems, issued in
            accordance with law and as directed by the President.
        ``(c) In developing standards and guidelines required by
    subsections (a) and (b), the Institute shall--
                ``(1) consult with other agencies and offices (including,
            but not limited to, the Director of the Office of Management
            and Budget, the Departments of Defense and Energy, the National
            Security Agency, and the General Accounting Office) to assure--
                        ``(A) use of appropriate information security
                    policies, procedures, and techniques, in order to
                    improve information security and avoid unnecessary and
                    costly duplication of effort; and
                        ``(B) that such standards and guidelines are
                    complementary with standards and guidelines employed
                    for the protection of national security systems and
                    information contained in such systems;
                ``(2) provide the public with an opportunity to comment on
            proposed standards and guidelines;
                ``(3) submit to the Secretary of Commerce for promulgation
            under section 5131 of the Clinger-Cohen Act of 1996 (40 U.S.C.
            1441)--
                        ``(A) standards, as required under subsection
                    (b)(1)(A), no later than 12 months after the date of
                    the enactment of this section; and
                        ``(B) minimum information security requirements for
                    each category, as required under subsection (b)(1)(C),
                    no later than 36 months after the date of the enactment
                    of this section;
                ``(4) issue guidelines as required under subsection
            (b)(1)(B), no later than 18 months after the date of the
            enactment of this Act;
                ``(5) ensure that such standards and guidelines do not
            require specific technological solutions or products, including
            any specific hardware or software security solutions;
                ``(6) ensure that such standards and guidelines provide for
            sufficient flexibility to permit alternative solutions to
            provide equivalent levels of protection for identified
            information security risks; and
                ``(7) use flexible, performance-based standards and
            guidelines that, to the greatest extent possible, permit the
            use of off-the-shelf commercially developed information
            security products.''
        ``(d) The Institute shall--
                ``(1) submit standards developed pursuant to subsection
            (a), along with recommendations as to the extent to which these
            should be made compulsory and binding, to the Secretary of
            Commerce for promulgation under section 5131 of the Clinger-
            Cohen Act of 1996 (40 U.S.C. 1441);
                ``(2) provide assistance to agencies regarding--
                        ``(A) compliance with the standards and guidelines
                    developed under subsection (a);
                        ``(B) detecting and handling information security
                    incidents; and
                        ``(C) information security policies, procedures,
                    and practices;
                ``(3) conduct research, as needed, to determine the nature
            and extent of information security vulnerabilities and
            techniques for providing cost-effective information security;
                ``(4) develop and periodically revise performance
            indicators and measures for agency information security
            policies and practices;
                ``(5) evaluate private sector information security policies
            and practices and commercially available information
            technologies to assess potential application by agencies to
            strengthen information security;
                ``(6) evaluate security policies and practices developed
            for national security systems to assess potential application
            by agencies to strengthen information security;
                ``(7) periodically assess the effectiveness of standards
            and guidelines developed under this section and undertake
            revisions as appropriate;
                ``(8) solicit and consider the recommendations of the
            Information Security and Privacy Advisory Board, established by
            section 21, regarding standards and guidelines developed under
            subsection (a) and submit such recommendations to the Secretary
            of Commerce with such standards submitted to the Secretary; and
                ``(9) prepare an annual public report on activities
            undertaken in the previous year, and planned for the coming
            year, to carry out responsibilities under this section.
        ``(e) As used in this section--
                ``(1) the term `agency' has the same meaning as provided in
            section 3502(1) of title 44, United States Code;
                ``(2) the term `information security' has the same meaning
            as provided in section 3532(1) of such title;
                ``(3) the term `information system' has the same meaning as
            provided in section 3502(8) of such title;
                ``(4) the term `information technology' has the same
            meaning as provided in section 5002 of the Clinger-Cohen Act of
            1996 (40 U.S.C. 1401); and
                ``(5) the term `national security system' has the same
            meaning as provided in section 3532(b)(2) of such title.
        ``(f) There are authorized to be appropriated to the Secretary of
    Commerce $20,000,000 for each of fiscal years 2003, 2004, 2005, 2006,
    and 2007 to enable the National Institute of Standards and Technology
    to carry out the provisions of this section.''.

    SEC. 1004. INFORMATION SECURITY AND PRIVACY ADVISORY BOARD.

        Section 21 of the National Institute of Standards and Technology
    Act (15 U.S.C. 278g-4), is amended--
                (1) in subsection (a), by striking ``Computer System
            Security and Privacy Advisory Board'' and inserting
            ``Information Security and Privacy Advisory Board'';
                (2) in subsection (a)(1), by striking ``computer or
            telecommunications'' and inserting ``information technology'';
                (3) in subsection (a)(2)--
                        (A) by striking ``computer or telecommunications
                    technology'' and inserting ``information technology'';
                    and
                        (B) by striking ``computer or telecommunications
                    equipment'' and inserting ``information technology'';
                (4) in subsection (a)(3)--
                        (A) by striking ``computer systems'' and inserting
                    ``information system''; and
                        (B) by striking ``computer systems security'' and
                    inserting ``information security'';
                (5) in subsection (b)(1) by striking ``computer systems
            security'' and inserting ``information security'';
                (6) in subsection (b) by striking paragraph (2) and
            inserting the following:
                ``(2) to advise the Institute and the Director of the
            Office of Management and Budget on information security and
            privacy issues pertaining to Federal Government information
            systems, including through review of proposed standards and
            guidelines developed under section 20; and'';
                (7) in subsection (b)(3) by inserting ``annually'' after
            ``report'';
                (8) by inserting after subsection (e) the following new
            subsection:
        ``(f) The Board shall hold meetings at such locations and at such
    time and place as determined by a majority of the Board.'';
                (9) by redesignating subsections (f) and (g) as subsections
            (g) and (h), respectively;
                (10) by striking subsection (h), as redesignated by
            paragraph (9), and inserting the following:
        ``(h) As used in this section, the terms ``information system'' and
    ``information technology'' have the meanings given in section 20.'';
    and
                (11) by inserting at the end the following:
        ``(i) There are authorized to be appropriated to the Secretary of
    Commerce $1,250,000 for each of fiscal years 2003, 2004, 2005, 2006,
    and 2007 to enable the Information Security and Privacy Advisory Board
    to identify emerging issues related to information security and
    privacy, and to convene public meetings on those subjects, receive
    presentations, and publish reports and recommendations for public
    distribution.''.

    SEC. 1005. TECHNICAL AND CONFORMING AMENDMENTS.

        (a) Computer Security Act.--Sections 5 and 6 of the Computer
    Security Act of 1987 (40 U.S.C. 1441 note) are repealed.
        (b) Floyd D. Spence National Defense Authorization Act for Fiscal
    Year 2001.--The Floyd D. Spence National Defense Authorization Act for
    Fiscal Year 2001 (Public Law 106-398) is amended by striking subtitle G
    of title X.
        (c) Paperwork Reduction Act.--(1) Section 3504(g) of title 44,
    United States Code, is amended--
                (A) by adding ``and'' at the end of paragraph (1);
                (B) in paragraph (2)--
                        (i) by striking ``sections 5 and 6 of the Computer
                    Security Act of 1987 (40 U.S.C. 759 note)'' and
                    inserting ``subchapter II of this title''; and
                        (ii) by striking the semicolon and inserting a
                    period; and
                (C) by striking paragraph (3).
        (2) Section 3505 of such title is amended by adding at the end--
        ``(c)(1) The head of each agency shall develop and maintain an
    inventory of the information systems (including national security
    systems) operated by or under the control of such agency;
        ``(2) The identification of information systems in an inventory
    under this subsection shall include an identification of the interfaces
    between each such system and all other systems or networks, including
    those not operated by or under the control of the agency;
        ``(3) Such inventory shall be--
                ``(A) updated at least annually;
                ``(B) made available to the Comptroller General; and
                ``(C) used to support information resources management,
            including--
                        ``(i) preparation and maintenance of the inventory
                    of information resources under section 3506(b)(4);
                        ``(ii) information technology planning, budgeting,
                    acquisition, and management under section 3506(h), the
                    Clinger-Cohen Act of 1996, and related laws and
                    guidance;
                        ``(iii) monitoring, testing, and evaluation of
                    information security controls under subchapter II;
                        ``(iv) preparation of the index of major
                    information systems required under section 552(g) of
                    title 5, United States Code; and
                        ``(v) preparation of information system inventories
                    required for records management under chapters 21, 29,
                    31, and 33.
        ``(4) The Director shall issue guidance for and oversee the
    implementation of the requirements of this subsection.''.
        (3) Section 3506(g) of such title is amended--
                (A) by adding ``and'' at the end of paragraph (1);
                (B) in paragraph (2)--
                        (i) by striking ``the Computer Security Act of 1987
                    (40 U.S.C. 759 note)'' and inserting ``subchapter II of
                    this title''; and
                        (ii) by striking the semicolon and inserting a
                    period; and
                (C) by striking paragraph (3).

    SEC. 1006. CONSTRUCTION.

        Nothing in this Act, or the amendments made by this Act, affects
    the authority of the National Institute of Standards and Technology or
    the Department of Commerce relating to the development and promulgation
    of standards or guidelines under paragraphs (1) and (2) of section
    20(a) of the National Institute of Standards and Technology Act (15
    U.S.C. 278g-3(a)).

    SEC. 1007. EFFECTIVE DATE.

        This title and the amendments made by this title shall take effect
    30 days after the date of the enactment of this Act.

               TITLE XI--ADDITIONAL RESPONSIBILITIES OF SECRETARY

    SEC. 1101. HOMELAND SECURITY EVENTS.

        (a) In General.--At the request of the Governor of the affected
    State, the Secretary may declare that a major disaster constitutes a
    homeland security event for the purposes of this section. Such a
    request shall be based on a finding that Federal assistance is
    necessary because the event poses a significant risk to the security of
    the people and property of the Nation and is of such severity and
    magnitude that effective response is beyond the capability of the
    effected State and local government.
        (b) Federal Assistance.--In any homeland security event, in
    addition to providing other assistance made available under title IV of
    the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
    U.S.C. 5170 et seq.) in a major disaster, the Secretary may--
                (1) establish a coordinating office and appoint a disaster
            recovery director--
                        (A) to work with and coordinate efforts with the
                    Federal coordinating officer appointed under section
                    302 of such Act;
                        (B) to oversee and coordinate the timely
                    distribution of Federal compensation to persons injured
                    in such disaster;
                        (C) develop methods to expedite claims for relief
                    and assistance by individuals and businesses;
                        (D) coordinate long-term recovery efforts with
                    State and local authorities; and
                        (E) work with Federal agencies to develop more
                    effective methods to assist affected parties;
                (2) require that if an office described in paragraph (1) is
            established, the disaster recovery director--
                (A) shall consult with local officials in developing a
            recovery plan; and
                (B) may appoint an independent claims manager to assist in
            providing assistance;
                (3) in any case in which a Federal official issues a high
            security alert after a homeland security event, provide
            technical assistance and reimbursement to State and local
            governments in the disaster area for expenses incurred related
            to such alert, including overtime for law enforcement officers
            for a period of time that the Secretary determines is
            necessary;
                (4) provide grants to a local government which may suffer a
            substantial loss of tax and other revenues;
                (5) authorize reimbursement to a school system for--
                        (A) providing additional classroom instruction time
                    and related activities to students who lost
                    instructional time as a result of the homeland security
                    event;
                        (B) providing mental health and trauma counseling
                    and other appropriate support services to students
                    suffering from trauma-related disorders resulting from
                    the homeland security event;
                        (C) providing guidance and grief counseling and
                    mental health services, including overtime payment for
                    counselors and mental health professionals, for
                    students and school staff;
                        (D) clean up and structural inspections and repairs
                    of school facilities;
                        (E) textbooks and other school supplies and
                    equipment used to support the relocation of students
                    from schools in the disaster area;
                        (F) the cost of relocating students, including
                    transportation of students to temporary school
                    facilities; and
                        (G) loss of perishable food stock and revenue lost
                    from food services; and
                (6) provide grants, equipment, supplies, and personnel, to
            any non-profit medical facility that has--
                        (A) lost equipment or revenue due to a major
                    disaster;
                        (B) incurred additional costs for security
                    enhancements in anticipation of a homeland security
                    event;
                        (C) purchased emergency supplies, medicine, or
                    equipment, or contracted with medical specialists, in
                    order to respond to casualties expected to be treated
                    as a result of a major disaster; or
                        (D) complied with Federal and state requirements
                    concerning maintenance of health service treatment
                    procedures (such as dialysis facilities) that may not
                    be used as a result of a major disaster;
                (7) Provide reimbursement to for-profit telecommunications
            and phone services and for-profit utilities (including power,
            water (including water provided by an irrigation organization
            or facility), sewer, and wastewater treatment) except that
            these for-profit entities shall be reimbursed only for
            structures and property losses that occur during a homeland
            security event if such losses are not covered by such entity's
            insurance policies: and
                (8) authorize testing of indoor air quality deemed
            necessary by the Under Secretary for Chemical, Biological,
            Radiological, and Nuclear Countermeasures and to undertake such
            remedial actions as may be necessary, in the discretion of the
            Under Secretary, to protect human health and safety from the
            contamination of indoor air quality following any such event.

    SEC. 1102. STANDARDS AND REPORTING.

        The Director of the Office of Management and Budget shall--
                (1) establish standards for reporting information regarding
            disaster efforts made by each agency that assists in providing
            relief in a disaster that the Secretary has determined
            constitutes a homeland security event under section 1101;
                (2) collect data from each such agency regarding the
            efforts of such agency for each major disaster described in
            paragraph (1) not less than once each year;
                (3) report such data to the appropriate committees of
            Congress annually.

    SEC. 1103. SPECIAL COMMISSION TO REVIEW AIR QUALITY.

        The Secretary shall appoint a special commission to undertake a
    study of the authorities available to the Environmental Protection
    Agency following a major disaster that the Secretary determines
    constitutes a homeland security event under section 1101, particularly
    a terrorist attack using chemical, biological, or nuclear weapons. The
    Commission shall examine the agency's authorities to--
                (1) monitor the environment,
                (2) evaluate health risks associated with air pollutants
            that may be released into the environment as result of such a
            disaster; and
                (3) communicate with affected communities and first
            responders.
    The Commission shall submit a report to the Secretary and to the
    Congress containing the results of such study and including any
    recommendations of the special commission regarding the clarification
    and recommendation of Environmental Protection Agency authorities in
    such situations.
                   PERMANENT SELECT COMMITTEE ON INTELLIGENCE

                              House of Representatives,
                    Permanant Select Committee on Intelligence,
                                         Washington, DC, July 12, 2002.
    Hon. Dick Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Chairman Armey: Yesterday, in open session, the House
    Permanent Select Committee approvied the attached
    recommendations to H.R. 5005, by a recorded vote of 17 ayes to
    1 no vote. The amendment to Title II of H.R. 5005 would
    establish an all-source Intelligence Analysis Center within the
    Department of Homeland Security headed by the Under Secretary
    for Information Analysis and Infrastructure Protection.
        We also appreciate your invitation to testify on the
    Committee's recommendations next Wednesday before the Select
    Committee on Homeland Security and look forward to sharing the
    Committee's views on its recommendations.
            Sincerely,
                                           Porter Goss,
                                                      Chairman,
                                           Nancy Pelosi
                                                Ranking Member.
                                    ------

                        Proposed Amendment to H.R. 5005

       (Recommended to the Select Committee on Homeland Security by the
                  Permanent Select Committee on Intelligence)

        Amend title II to read as follows:

          TITLE II--INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION

    Subtitle A--Under Secretary for Information Analysis and Infrastructure
                                   Protection

    SEC. 201. UNDER SECRETARY FOR INFORMATION ANALYSIS AND INFRASTRUCTURE
                        PROTECTION.

        (a) In General.--The Under Secretary for Information Analysis and
    Infrastructure Protection (hereinafter in this title referred to as the
    ``Under Secretary'') shall assist the Secretary with the
    responsibilities specified in section 101. The primary responsibility
    of the Under Secretary shall be to provide for information analysis and
    infrastructure protection to reduce the vulnerability of the United
    States to acts of terrorism.
        (b) Duties.--In carrying out subsection (a), the Under Secretary
    shall--
                (1) conduct analysis of information, including foreign
            intelligence and open source information, lawfully collected by
            Federal, State and local law enforcement agencies and by
            elements of the intelligence community with respect to threats
            of terrorist acts against the United States;
                (2) integrate information, intelligence, and intelligence
            analyses to produce and disseminate infrastructure
            vulnerability assessments with respect to such threats;
                (3) identify priorities for protective and support measures
            by the Department, by other executive agencies, by State and
            local governments, by the private sector, and by other
            entities;
                (4) review, analyze, and recommend improvements in law,
            policy, and procedure for the sharing of intelligence and other
            information with respect to threats against the United States
            within the Federal Government and between the Federal
            Government and State and local governments;
                (5) under the direction of the Secretary, develop a
            comprehensive national plan to provide for the security of key
            resources and critical infrastructures;
                (6) coordinate with other executive agencies, State and
            local government personnel, agencies, and authorities, and the
            private sector, to provide advice on implementation of such
            comprehensive national plan;
                (7) establish and administer a system to advise Federal,
            State, and local authorities, the private sector, other
            entities, and the public, of the likelihood of an act of
            terrorism committed in the United States (such system to be
            known as the Homeland Security Advisory System) under which the
            Under Secretary exercises primary responsibility for public
            threat advisories, and (in coordination with other executive
            agencies) provides specific warning information to such
            authorities, the private sector, other entities, and the
            public, as well as advice about appropriate protective actions
            and countermeasures;
                (8) support the intelligence and information requirements
            of the Department;
                (9) establish requirements for the collection of
            information or foreign intelligence by elements of the
            intelligence community authorized to undertake such collection,
            Federal law enforcement agencies, other executive agencies, and
            for the request of information from State and local law
            enforcement agencies or private sector entities as appropriate;
            and
                (10) perform such other functions as the Secretary may
            direct.

                    Subtitle B--Intelligence Analysis Center

    SEC. 211. INTELLIGENCE ANALYSIS CENTER

        (a) Establishment; NFIP Agency.--(1) There is established within
    the Department the Intelligence Analysis Center. The Under Secretary
    shall be the head of the Intelligence Analysis Center.
        (2) The Intelligence Analysis Center is a program of the
    intelligence community for purposes of the National Foreign
    Intelligence Program (as defined in section 3(6) of the National
    Security Act of 1947 (50 U.S.C. 401a(6))).
        (b) Functions.--The Under Secretary, through the Intelligence
    Analysis Center, shall carry out the duties specified in paragraphs
    (1), (2), (3), (8), (9), and (10) of section 201(b).
        (c) Detail of Certain Personnel.--
                (1) In general.--The Secretary and the Director of Central
            Intelligence, the Secretary of Defense, the Attorney General,
            the Secretary of State, or the head of another agency or
            Department as the case may be, shall enter into cooperative
            arrangements to provide for an appropriate number of
            individuals to be detailed to the Under Secretary to perform
            analytical functions and duties with respect to the mission of
            the Department from the following agencies:
                        (A) The Central Intelligence Agency.
                        (B) The Federal Bureau of Investigation.
                        (C) The National Security Agency.
                        (D) The National Imagery and Mapping Agency.
                        (E) The Department of State.
                        (F) The Defense Intelligence Agency.
                        (G) Any other agency or department that the
                    President determines appropriate.
                (2) Terms of detail.--Any officer or employee of the United
            States or a member of the Armed Forces who is detailed to the
            Under Secretary under paragraph (1) shall be detailed on a
            reimbursable basis for a period of less than two years for the
            performance of temporary functions as required by the Under
            Secretary.
        (d) Inclusion of Office of Intelligence as an Element of the
    Intelligence Community.--Section 3(4) of the National Security Act of
    1947 (50 U.S.C. 401a(4)) is amended--
        (1) by striking ``and'' at the end of subparagraph (I);
        (2) by redesignating subparagraph (J) as subparagraph (K); and
        (3) by inserting after subparagraph (I) the following new
    subparagraph:
                        ``(J) the Intelligence Analysis Center of the
                    Department of Homeland Security; and''.

    SEC. 212. MISSION OF THE INTELLIGENCE ANALYSIS CENTER.

        (a) In General.--The mission of the Intelligence Analysis Center is
    as follows:
                (1) Analysis and production.--
                        (A) Correlating and evaluating information and
                    intelligence related to the mission of the Department
                    collected from all sources available.
                        (B) Producing all-source collaborative intelligence
                    analysis, warnings, tactical assessments, and strategic
                    assessments of the terrorist threat and infrastructure
                    vulnerabilities of the United States.
                        (C) Providing apprporiate dissemination of such
                    assessments.
                        (D) Improving the lines of communication with
                    respect to homeland security between the Federal
                    Government and State and local public safety agencies
                    and the private sector through the timely dissemination
                    of information pertaining to threats of acts of
                    terrorism against the United States.
                (2) Requests for the collection and coordination of
            information.--
                        (A) Requesting the collection of information or
                    national intelligence by elements of the intelligence
                    community authorized to undertake such collection,
                    Federal law enforcement agencies, other executive
                    agencies, or request information from State and local
                    law enforcement agencies or private sector entities as
                    appropriate.
                        (B) Coordinating with elements of the intelligence
                    community and with Federal, State, and local law
                    enforcement agencies, and the private sector as
                    appropriate.
                (3) Additional Duties.--Performing such other functions as
            the Secretary may direct.
        (b) Strategic and Tactical Missions of the Intelligence Analysis
    Center.--The Under Secretary shall conduct strategic and tactical
    assessments and warnings through the Intelligence Analysis Center,
    including research, analysis, and the production of assessments on the
    following as they relate to the mission of the Department:
                (1) Domestic terrorism.
                (2) International terrorism.
                (3) Counterintelligence.
                (4) Transnational crime.
                (5) Proliferation of weapons of mass destruction.
                (6) Illicit financing of terrorist activities.
                (7) Cybersecurity and cybercrime.
                (8) Key resources and critical infrastructures.
        (c) Staffing of the Intelligence Analysis Center.--
                (1) Functions transferred.--In accordance with title VIII,
            for purposes of carrying out this title, there is transferred
            to the Under Secretary the functions, personnel, assets, and
            liabilities of the following entities:
                        (A) The National Infrastructure Protection Center
                    of the Federal Bureau of Investigation (other than the
                    Computer Investigations and Operations Section).
                        (B) The Critical Infrastructure Assurance Office of
                    the Department of Commerce.
                        (C) The Computer Security Division of the National
                    Institute of Standards and Technology.
                        (D) The Federal Computer Incident Response Center
                    of the General Services Administration.
                        (E) The National Infrastructure Simulation and
                    Analysis Center of the Department of Energy.
                        (F) The National Communications System of the
                    Department of Defense.
                        (G) The intelligence element of the Coast Guard.
                        (H) The intelligence element of the United States
                    Customs Service.
                        (I) The intelligence element of the Immigration and
                    Naturalization Service.
                        (J) The intelligence element of the Transportation
                    Security Administration.
                        (K) The intelligence element of the Federal
                    Protective Service.
                        (L) The El Paso Intelligence Center of the Drug
                    Enforcement Administration.
                (2) Structure.--It is the sense of Congress that the Under
            Secretary should model the Intelligence Analysis Center on the
            technical, analytic approach of the Information Dominance
            Center of the Department of the Army to the maximum extent
            feasible and appropriate.

                       Subtitle C--Additional Provisions

    SEC. 221. ACCESS TO INTELLIGENCE.

        (a) In General.--To the extent approved by the President, the
    Secretary and the Under Secretary shall have access to all intelligence
    which is collected by any department, agency, or other entity of the
    United States that is related to threats of acts of terrorism against
    the United States and to other areas of responsibility described in
    section 101(b).
        (b) Immediate Provision of Certain Intelligence.--Without regard to
    whether the Secretary or the Under Secretary has made any request or
    entered into any cooperative arrangement to receive material on a
    regular or routine basis, all executive agencies promptly shall provide
    to the Secretary and the Under Secretary--
                        (1) all reports, assessments, and analytical
                    information relating to threats of terrorism in the
                    United States and to other areas of responsibility
                    described in section 101(b);
                        (2) all information concerning infrastructure or
                    other vulnerabilities of the United States to
                    terrorism, whether or not such information has been
                    analyzed;
                        (3) all information relating to significant and
                    credible threats of terrorism in the United States,
                    whether or not such information has been analyzed, if
                    the President has provided that the Secretary or the
                    Under Secretary shall have access to such information;
                    and
                        (4) such other material as the President may
                    further provide.
        (c) Protection from Unauthorized Disclosure.--The Secretary shall
    ensure that any material received pursuant to this section is protected
    from unauthorized disclosure and handled and used only for the
    performance of official duties, and that any intelligence information
    shared under this section shall be transmitted, retained, and
    disseminated consistent with the authority of the Director of Central
    Intelligence to protect intelligence sources and methods under the
    National Security Act and related procedures or, as appropriate,
    similar authorities of the Attorney General concerning sensitive law
    enforcement information.

    SEC. 222. PROTECTION OF INFORMATION.

        (a) Information Voluntarily Provided.--Information provided
    voluntarily by non-Federal entities or individuals that relates
    directly to the duties of the Under Secretary for Information Analysis
    and Infrastructure Protection to reduce the vulnerability of the United
    States to acts of terrorism and is or has been in the possession of the
    Department shall not be subject to section 552 of title 5, United
    States Code.
        (b) Information Provided to State and Local Governments.--
    Information obtained by a State or local government from a Federal
    agency under this section shall remain under the control of the Federal
    agency, and a State or local law authorizing or requiring such a
    government to disclose information shall not apply to such information.

    SEC. 223. CONFORMING AMENDMENTS.

        (a) Inclusion of Under Secretary on the Committee on Transnational
    Threats of the National Security Council.--Section 101(i)(2) of the
    National Security Act of 1947 (50 U.S.C. 402(i)(2)) is amended--
                (1) by redesignating subparagraph (F) as subparagraph (G);
            and
                (2) by inserting after subparagraph (E) the following new
            subparagraph:
                ``(F) The Under Secretary for Information Analysis and
            Infrastructure Protection of the Department of Homeland
            Security.
        (b) Title 5, United States Code.--Section 5313 of title 5, United
    States Code, is amended by adding at the end the following:
                ``The Under Secretary for Information Analysis and
            Infrastructure Protection of the Department of Homeland
            Security.''.9/12/2002 10:07:59 AM -
            F:\V7\091202\091202.028 Created by: VLCirks deg.
                      COMMITTEE ON INTERNATIONAL RELATIONS

                              House of Representatives,
                          Committee on International Relations,
                                         Washington, DC, July 12, 2002.
    Hon. Dick Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Mr. Chairman: Pursuant to H.Res. 449, the Committee on
    International Relations submits its recommendations on portions
    of the bill, H.R. 5005, the ``Homeland Security Act of 2002,''
    which were referred to it by the Speaker pursuant to Rule X of
    the House Rules. The text of these recommendations and
    supporting explanatory material are included herein.
            Sincerely,
                                         Henry J. Hyde,
                                                      Chairman.
                                    ------

                    House International Relations Committee

    submission of recommendations to the house select committee on homeland
                                    security

                         HOMELAND SECURITY ACT OF 2002

                                 July 12, 2002

        Mr. Hyde, from the Committee on International
    Relations,submitted the following

                                RECOMMENDATIONS

                  to the Select Committee on Homeland Security

                            [To accompany H.R. 5005]

        The Committee on International Relations, to whom was
    referred portions of the bill, H.R. 5005, the Homeland Security
    Act of 2002, hereby submits its recommendations to the
    Committee on Homeland Security.

                                 The Amendments

                       Showing the Amendment to H.R. 5005

                       Offered by Mr. Hyde and Mr. Lantos

             As Adopted by the Committee on International Relations

        Page 18, beginning on line 18, strike ``and activities of the
    assessment, detection, and cooperation program''.
        Page 23, strike line 10 and all that follows through line 6 on page
    24, and insert the following:

    SEC. 403. VISA ISSUANCE.

        (a) In General.--Notwithstanding section 104(a) of the Immigration
    and Nationality Act (8 U.S.C. 1104(a)) or any other provision of law,
    and except as provided in subsection (b) of this section, the
    Secretary--
                (1) shall be vested exclusively with all authorities to
            issue regulations with respect to, administer, and enforce the
            provisions of such Act, and of all other immigration and
            nationality laws, relating to the functions of consular
            officers of the United States in connection with the granting
            or refusal of visas, which authorities shall be exercised
            through the Secretary of State, except that the Secretary shall
            not have authority to alter or reverse the decision of a
            consular officer to refuse a visa to an alien; and
                (2) shall have authority to confer or impose upon any
            officer or employee of the United States, with the consent of
            the head of the executive agency under whose jurisdiction such
            officer or employee is serving, any of the functions specified
            in paragraph (1).
        (b) Authority of the Secretary of State.--
                (1) The Secretary of State may direct a consular officer to
            refuse a visa to an alien if the Secretary of State considers
            such refusal necessary or advisable in the foreign policy or
            security interests of the United States.
                (2) Nothing in this section shall be construed as affecting
            the authorities of the Secretary of State under the following
            provisions of law:
                        (A) Section 101(a)(15)(A) of the Immigration and
                    Nationality Act (8 U.S.C. 1101(a)(15)(A)).
                        (B) Section 212(a)(3)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(a)(3)(C)).
                        (C) Section 212(f) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(f)).
                        (D) Section 237(a)(4)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1227(a)(4)(C)).
                        (E) Section 401 of the Cuban Liberty and Democratic
                    Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6091;
                    Public Law 104-114).
                        (F) Section 613 of the Departments of Commerce,
                    Justice, and State, the Judiciary, and Related Agencies
                    Appropriations Act, 1999 (as contained in section
                    101(b) of division A of Public Law 105-277 (Omnibus
                    Consolidated and Emergency Supplemental Appropriations
                    Act, 1999; 112 Stat. 2681; H.R. 4328; (Originally H.R.
                    4276) as amended by section 617 of Public Law 106-553.
                        (G) Section 801 of H.R. 3427, the Admiral James W.
                    Nance and Meg Donovan Foreign Relations Authorization
                    Act, Fiscal Years 2000 and 2001, as enacted by
                    reference in Public Law 106-113.
                        (H) Section 568 of the Foreign Operations, Export
                    Financing, and Related Programs Appropriations Act,
                    2002 (Public Law 107-115).
                (3) Procedure for Issuance of Student Visas.--
            Notwithstanding any other provision of law, an alien may not be
            granted a visa for study in the United States under
            subparagraphs (F), (J), or (M) of section 101(a)(15) of the
            Immigration and Nationality Act without review by the Secretary
            of State if the alien is a national of a country designated
            under section 620A of the Foreign Assistance Act of 1961 (22
            U.S.C. 2371) as a country that has repeatedly provided support
            for acts of international terrorism, section 6(j) of the Export
            Administration Act (50 U.S.C. app. 2405(j)) as a country that
            supports acts of international terrorism, or section 40A of the
            Arms Export Control Act (22 U.S.C. 2781) as a country not
            cooperating fully with United States antiterrorism efforts.
                (4) Procedure for Issuance of Diversity Immigrant Visas.--
            Notwithstanding any other provision of law, an alien may not be
            granted an immigrant visa under section 203(c) of the
            Immigration and Nationality Act (8 U.S.C. 1153(c)) relating to
            diversity immigrants without review by the Secretary of State
            if the alien is a national of a country designated under
            section 620A of the Foreign Assistance Act of 1961 (22 U.S.C.
            2371) as a country that has repeatedly provided support for
            acts of international terrorism, section 6(j) of the Export
            Administration Act (50 U.S.C. app. 2405(j)) as a country that
            supports acts of international terrorism, or section 40A of the
            Arms Export Control Act (22 U.S.C. 2781) as a country not fully
            cooperating with United States antiterrorism efforts.
        (c) Assignment of Homeland Security Employees to Diplomatic and
    Consular Posts.--
                (1) In general.--The Secretary is authorized to assign
            employees of the Department of Homeland Security to diplomatic
            and consular posts abroad to perform the following functions:
                        (A) Provide expert advice to consular officers
                    regarding specific security threats relating to the
                    adjudication of individual visa applications or classes
                    of applications.
                        (B) Review any such applications, either on the
                    initiative of the employee of the Department of
                    Homeland Security or upon request by a consular officer
                    or other person charged with adjudicating such
                    applications.
                        (C) Conduct investigations with respect to matters
                    under the jurisdiction of the Secretary.
                (2) Permanent assignment; participation in terrorist
            lookout committee.--When appropriate, employees of the
            Department of Homeland Security assigned to perform functions
            described in paragraph (1) may be assigned permanently to
            overseas diplomatic or consular posts with country-specific or
            regional responsibility. If the Secretary so directs, any such
            employee, when present at an overseas post, shall participate
            in the terrorist lookout committee established under section
            304 of the Enhanced Border Security and Visa Entry Reform Act
            of 2002 (8 U.S.C. 1733).
                (3) Training and hiring.--
                        (A) The Secretary shall ensure that any employees
                    of the Department of Homeland Security assigned to
                    perform functions described in paragraph (1) shall be
                    provided all necessary training to enable them to carry
                    out such functions, including training in foreign
                    languages, in conditions in the particular country
                    where each employee is assigned, and in other
                    appropriate areas of study.
                        (B) Prior to assigning employees of the Department
                    to perform the functions described in paragraph (1),
                    the Secretary shall promulgate regulations establishing
                    foreign language proficiency requirements for employees
                    of the Department performing the functions described in
                    paragraph (1) and providing that preference shall be
                    given to individuals who meet such requirements in
                    hiring employees for the performance of such functions.
                        (C) The Secretary is authorized to use the National
                    Foreign Affairs Training Center, on a reimbursable
                    basis, to obtain the training described in subparagraph
                    (A).
        (d) No Creation of Private Right of Action.--Nothing in this
    section shall be construed to create or authorize a private right of
    action to challenge a decision of a consular officer or other United
    States official or employee to grant or deny a visa.

                          Section by Section Analysis

        Section 302, as amended by the Committee, will transfer
    from the Department of Energy to the Department of Homeland
    Security certain programs related to nuclear safety, but not
    overseas assistance programs for the countries of the former
    Soviet Union relating to the protection of nuclear materials in
    these countries.
        Section 403(a)(1), as amended in the Committee markup,
    provides that (with certain exceptions provided in subsection
    (b)), the Secretary shall be vested exclusively with
    regulatory, administrative, and enforcement authority over
    immigration and nationality laws relating to the functions of
    consular officers in connection with the granting or refusal of
    visas. This paragraph further provides that the visa-related
    authorities conferred upon the Secretary of Homeland Security
    shall be exercised through the Secretary of State, and that the
    Secretary of Homeland Security shall not have authority to
    alter or reverse a decision of a consular officer to refuse a
    visa.
        Section 403(a)(2) provides that the Secretary of Homeland
    Security may confer or impose the visa-related authorities
    specified in paragraph (1) on any officer or employee of the
    United States, with the consent of the head of the agency by
    which such person is employed. This could include, for
    instance, a delegation of some or all of these authorities back
    to the Secretary of State.
        Section 403(b)(1) provides that the Secretary of State may
    direct a consular officer to refuse a visa on foreign policy or
    security grounds. This authority is similar to the authority
    currently provided the Secretary of State under section
    212(a)(3)(c) of the Immigration and Nationality Act.
        Section 403(b)(2) specifies a number of foreign policy-
    related authorities under the Immigration and Nationality Act
    which will be retained by the Secretary of State.
        Section 403(b)(3) provides that no student visa may be
    issued to a national of a state that has been designated a
    sponsor of international terrorism, or that is not cooperating
    fully with United States antiterrorism efforts, without a
    review by the Secretary of State.
        Section 403(b)(4) provides that no diversity immigrant visa
    may be issued to a national of a state that has been designated
    a sponsor of international terrorism, or that is not
    cooperating fully with United States antiterrorism efforts,
    without a review by the Secretary of State.
        Section 403 (c)(1) provides that the Secretary of Homeland
    Security shall have authority to assign Homeland Security
    employees to diplomatic and consular posts abroad to advise
    consular officers on homeland security issues, to review visa
    applications, and to conduct investigations on threats to
    homeland security.
        Section 403(c)(2) provides that the overseas assignments
    described in paragraph (1) may, where appropriate, be permanent
    assignments, and that the Secretary of Homeland Security may
    direct that employees on such permanent assignments shall
    participate in terrorist lookout committees at such posts.
        Section 403(c)(3) provides that the Secretary of Homeland
    Security shall provide training for Homeland Security employees
    assigned abroad in foreign languages, country conditions, and
    other appropriate areas of study; shall establish foreign
    language requirements for such positions and employment
    preferences for persons who meet such requirements; and may use
    the National Foreign Affairs Training Center for the purpose of
    training described in subparagraph (a).
        Section 403(d) provides that nothing in section 403 shall
    be construed to create a private right of action to challenge a
    decision of a consular officer to grant or deny a visa. This is
    to ensure that the amendment provided by this section does not
    affect current law with respect to non-reviewability of visa
    decisions.

                              Purpose and Summary

    Sections 302 and 403 of H.R. 5005.
        The Speaker referred H.R. 5005 to the Committee on
    International Relations for action on provisions within its
    rule X jurisdiction. Those provisions are Section 302, dealing
    with the nonproliferation programs of the Department of Energy,
    and Section 403, dealing with issuance and denial of visas.
        The Committee considered and adopted three amendments. An
    amendment to section 302(2)(C) was offered by Chairman Hyde at
    the request of the Administration. This amendment deletes a
    clause relating to certain assistance programs designed to
    reduce the risk of nuclear proliferation abroad. Under
    subsection 302(2)(c) certain programs and activities of the
    Department of Energy, including the Nuclear Assessment Program,
    would move to the new Department of Homeland Security.
    Subsection 302(c) of the bill as introduced also included a
    clause which would transfer to the new Department certain
    assistance programs to the countries of the former Soviet
    Union. These programs, which are currently part of the
    Cooperative Threat Reduction Program, are designed to prevent
    the proliferation of nuclear materials in the recipient
    countries.
        The amendment adopted by the Committee strikes the clause
    that would have transferred these assistance programs based on
    the representation from the Administration officials that the
    transfer of such assistance programs was no longer
    contemplated.
        The Committee also considered and adopted an substitute
    amendment to section 403. This amendment is intended to improve
    the President's proposal for reforming the processes by which
    applications for visas to the United States are considered at
    United States diplomatic and consular posts abroad. It
    preserves the fundamental recommendation of the President to
    transfer to the Secretary of Homeland Security exclusive
    authority to issue regulations with respect to, administer, and
    enforce provisions of the Immigration and Nationality Act and
    other immigration and nationality laws relating to the
    functions of consular officers of the United States in
    connection with the granting or refusal of visas. However,
    under both the bill as introduced and the amendment adopted by
    the Committee, the actual processing of visa applications will
    continue to be done primarily by consular officers and other
    employees of the Department of State. United States Ambassadors
    and other heads of United States missions abroad would also
    continue to exercise their authority as chiefs of mission under
    Section 207 of the Foreign Service Act of 1980.
        The Committee amendment to Section 403 embodies a
    compromise between the Administration's original plan for visa
    processing, as reflected in H.R. 5005 as introduced, and a
    dramatically different proposal which was offered and
    ultimately rejected in the Committees on the Judiciary and
    Government Reform, under which all visa processing would have
    been performed by employees of the Department of Homeland
    Security. The amendment adopted by the International Relations
    Committee explicitly authorizes the assignment of Homeland
    Security employees in U.S. diplomatic and consular posts
    abroad. Rather than assume all visa processing functions,
    however, these employees will concentrate on identifying and
    reviewing cases that present homeland security issues.
        Under the amendment, Homeland Security officers at U.S.
    embassies and other overseas posts would provide expert advice
    and training to consular officers, ensure their access to
    appropriate information, investigate threats to the homeland
    security of the United States (including but not limited to
    participating in ``terrorist lookout committees'' mandated for
    each Embassy by the Enhanced Border Security and Visa Entry
    Reform Act of 2002), and review individual visa petitions. This
    will preserve the essence of the Administration's proposal
    while ensuring that security concerns will be central to key
    decisions made abroad.
        The amendment makes clear that the Secretary of Homeland
    Security would have no authority to reverse a visa denial by a
    consular officer. It also provides that nothing in section 403
    would create or authorize a private right of action to
    challenge such a decision. This change is designed to avoid an
    unintended consequence of the original language, which might
    have subjected denials of visas by consular officers to various
    types of administrative and judicial review that do not apply
    to such decisions under current law.
        The amendment also preserves the authority of the Secretary
    of State to refuse a visa on foreign policy grounds, and
    extends this authority to cover security grounds.
        The amendment also includes a provision that makes clear
    that nothing in section 403 shall be construed to affect the
    Secretary's authorities under certain laws. The Committee
    believes that these are some of the key authorities that the
    Secretary currently has, but that other authorities vested in
    the Secretary of State by the Immigration and Nationality Act
    and other relevant laws will continue to remain with the
    Secretary, consistent with Section 403(a)(1). The Committee
    believes that the list of provisions in its recommendation
    should be further refined as the legislative process moves
    forward and is prepared to work with the Select Committee in
    this regard.
        The amendment also makes other technical and conforming
    changes, including requirements for language training of
    certain Homeland Security employees.
        A perfecting amendment to the substitute amendment to
    section 403 was adopted by the Committee requiring that no
    application for a nonimmigrant student visa or a diversity
    lottery immigrant visa may be granted without a review by the
    Secretary of State if the applicant is a national of a country
    designated as supporting terrorism, or a country that is not
    fully cooperating with U.S. antiterrorism efforts. The
    substitute amendment as amended was adopted.
        The Committee believes that the Secretary of Homeland
    Security should review the effectiveness of the student visa
    program with the goal of ensuring that no student visas be
    granted to nationals of: (1) countries on the State
    Department's list of state sponsors of terrorism; or (2)
    countries in which the governments or persons operating with
    the complicity or protection of such governments that have been
    sanctioned for the proliferation of weapons of mass destruction
    or the means to deliver them for a period of at least five
    years from the date of imposition of such sanctions, if the
    visa applicant is seeking to engage in a commercial activity or
    academic pursuit related to one of the critical fields on the
    government's Technology Alert List. This list, which has been
    distributed to all of our consular posts, includes such
    subjects as: nuclear technology; missile technology,
    propulsion, and guidance systems; chemical and biotechnology
    engineering; and remote imaging technologies.

                    Background and Need for the Legislation

        On June 6, 2002, President Bush proposed creating a new
    Department of Homeland Security. On June 18, 2002, the White
    House issued proposed legislative language, which was
    introduced on June 24, 2002 by Mr. Armey (by request) as H.R.
    5005.
        The September 11 terrorist attacks on the United States
    brought to light serious shortcomings in current United States
    visa adjudication processes and policies. While efforts to
    encourage courtesy and facilitate legitimate travel, such as
    the reunification of families, commercial activities, tourism,
    cultural and educational exchange, and the admission of those
    with needed skills, to the United States are entirely
    appropriate, they must be accompanied by an abiding commitment
    to security and by more vigorous and effected methods of
    investigation to help identify and exclude persons who threaten
    the security of the United States.
        In order to identify persons who are known or reasonably
    believed to present security or other concerns for the United
    States, State Department consular officers must rely on a
    database the content of which is supplied by law enforcement
    and intelligence agencies. To the extent this database is
    insufficient, the consular officers will be at a disadvantage
    when making determinations on whether to issue or deny visas.
    The transfer of ultimate authority over visa processing to the
    Department of Homeland Security should facilitate the
    integration and sharing of information among intelligence and
    law enforcement agencies and with United States Government
    personnel charged with considering visa applications.

                                    Hearings

        The Committee held one day of hearings on H.R. 5005 on June
    26, 2002. Testimony was received from Under Secretary of State
    for Political Affairs Marc Grossman, representing the
    Department of State and the Bush Administration.Committee
    Consideration
        On July 10, 2002 the Committee met in open session and
    recommended 3 amendments be submitted to the Committee on
    Homeland Security by voice vote, a quorum being present.

                    Congressional Budget Ofice Cost Estimate

        CBO estimates these amendments would not affect direct
    spending or revenues.
                           COMMITTEE ON THE JUDICIARY

                              House of Representatives,
                                    Committee on the Judiciary,
                                         Washington, DC, July 12, 2002.
    Hon. Richard Armey
    Chairman,
    Hon. Nancy Pelosi
    Ranking Member, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Chairman Armey and Ranking Member Pelosi: Pursuant to H. Res.
    449, we are pleased to transmit to the Select Committee on Homeland
    Security the Committee on the Judiciary's views and recommendations
    concerning H.R. 5005, the ``Homeland Security Act of 2002.'' The
    recommendations represent the Judiciary Committee's bipartisan support
    for the creation of a Department of Homeland Security and reflect the
    Committee's judgment that H.R. 5005 can be further refined to ensure
    that this Department fulfills its fundamental purpose to prevent
    terrorist attacks on American soil.
        On June 26, 2002, the Committee on the Judiciary received testimony
    from Homeland Security Director Tom Ridge concerning H.R. 5005. In
    addition, the Judiciary Committee Subcommittees on Crime, Terrorism,
    and Homeland Security, Immigration Border Security, and Claims, and
    Commercial and Administrative Law conducted separate hearings which
    examined this proposed legislation. The Committee recommendations
    reflect the views received at these hearings as well as extensive
    consultation with Administration officials, outside experts, and the
    conclusions of several congressionally-chartered antiterrorism
    commissions.
        The proposed Department's central, predominate purpose is to
    assess, prevent, and respond to terrorism and other threats affecting
    America's internal security. The Judiciary Committee has a special
    responsibility to help effectuate this goal. As it has done repeatedly
    since September 11, 2001, the Committee has responded to the
    President's call to action by diligently and expeditiously discharging
    its responsibility to ensure the security of all Americans. Given the
    Committee's jurisdiction over subversive activities affecting the
    internal security of the United States, the nation's immigration and
    naturalization laws, federal civil and criminal procedure, and federal
    administrative practice and procedure, the Committee is uniquely
    positioned to assist the creation of a focused and effective Department
    of Homeland Security.
        The amendments to H.R. 5005 discussed in this letter were favorably
    reported by the Judiciary Committee on July 10, 2002. Most of these
    changes were contained in a Manager's Amendment which we jointly
    introduced. We have included a summary of these recommendations and
    additional views presented by the members of the Judiciary Committee
    for your review. While consistent with the articulated mission of the
    Department of Homeland Security, the proposed amendments recommend
    important structural changes which would strengthen the Department's
    ability to effectively assess, deter, and respond to terrorist threats.
    Of no less importance, the Committee makes critical recommendations to
    help safeguard the civil liberties and freedoms cherished by all
    Americans.
        The Judiciary Committee strongly supports the establishment of a
    federal Department primarily dedicated to homeland security. Our
    recommendations help advance this goal and should provide valuable
    guidance to the Select Committee as it completes the critical task of
    shaping the Department of Homeland Security.
            Sincerely,
                           F. James Sensenbrenner, Jr.,
                                                      Chairman,
                                     John Conyers, Jr.,
                                                Ranking Member.
                                     ______

                            Amendments to H.R. 5005

                   Adopted by the Committee on the Judiciary

                                (July 10, 2002)

          (Page & line nos. refer to the text of the introduced bill)

        Strike ``emergency response providers'' each place it appears in
    the bill and insert ``emergency responders''.

        Page 4, strike lines 2 and 3 and insert the following:

        For purposes of this Act:

        Page 4, strike lines 13 through 17 and insert the following:

                (4) The term ``emergency responder''--
                        (A) means those organizations that represent or
                    support the first arriving agent or unit capable of
                    moderating an emergency condition or administering to
                    the needs created by an emergency event; and
                        (B) includes Federal, State, and local law
                    enforcement, emergency medical services, emergency
                    management, fire, hazardous materials response, public
                    works, public safety communications personnel; public
                    health and medical care personnel; and chief executive
                    governmental officials.

        Page 5, strike lines 3 through 6 and insert the following:

                (7) The term ``local government'' means--
                        (A) a county, municipality, city, town, township,
                    local public authority, school district, special
                    district, intrastate district, council of governments
                    (regardless of whether the council of governments is
                    incorporated as a non-profit corporation under state
                    law), or regional or interstate government.
                        (B) an Indian tribe or authorized tribal
                    organization, or an Alaska Native village or
                    organization; and
                        (C) a rural community, unincorporated town or
                    village, or other public entity.

        Page 5, strike lines 7 through 10.

        Page 5, strike lines 15 through 21 and insert the following:

                (11) The term ``United States'', when used in a geographic
            sense, means any State of the United States, the District of
            Columbia, Puerto Rico, the Virgin Islands, Guam, American
            Samoa, and the Commonwealth of the Northern Mariana Islands,
            any possession of the United States, and any waters within the
            jurisdiction of the United States.

        Page 5, after line 21, insert the following:

                (12)(A) The term ``crisis management''--
                        (i) means a function that is predominantly a law
                    enforcement function;
                        (ii) includes measures to identify, acquire, and
                    plan the use of resources needed to anticipate,
                    prevent, or resolve a threat or act of terrorism.
                (B) With respect to a terrorist incident, the term--
                        (i) includes traditional law enforcement missions,
                    such as intelligence, surveillance, tactical
                    operations, negotiations, forensics, and
                    investigations, as well as technical support missions,
                    such as agent identification, search, render safe
                    procedures, transfer and disposal, and limited
                    decontamination;
                        (ii) in addition to the traditional law enforcement
                    missions, also includes assurance of public health and
                    safety.
                (13) The term ``consequence management'' means a function
            that is predominantly emergency management and includes
            measures to protect public health and safety, restore essential
            government services, and provide emergency relief to
            governments, businesses, and individuals affected by the
            consequences of terrorism.
                (14)(A) The term ``terrorism'' includes international
            terrorism or domestic terrorism.
                (B) In this paragraph the term ``international terrorism''
            means activities that occur primarily outside the territorial
            jurisdiction of the United States, or transcend national
            boundaries in terms of the means by which they are
            accomplished, the persons they appear intended to intimidate or
            coerce, or the locale in which their perpetrators operate or
            seek asylum, and--
                        (i) involve violent acts or acts dangerous to human
                    life that are a violation of the criminal laws of the
                    United States or of any State, or that would be a
                    criminal violation if committed within the jurisdiction
                    of the United States or of any State; or
                        (ii) appear to be intended--
                                (I) to intimidate or coerce a civilian
                            population;
                                (II) to influence the policy of a
                            government by intimidation or coercion;
                                (III) to affect the conduct of a government
                            by mass destruction, assassination or
                            kidnapping; or
                                (IV) to retaliate against a government or
                            its civilian population.
                (C) In this paragraph the term ``domestic terrorism'' means
            activities that occur primarily within the territorial
            jurisdiction United States, and--
                        (i) involve violent acts or acts dangerous to human
                    life that are a violation of the criminal laws of the
                    United States or of any State, or that would be a
                    criminal violation if committed within the jurisdiction
                    of the United States or of any State; or
                        (ii) appear to be intended--
                                (I) to intimidate or coerce a civilian
                            population;
                                (II) to influence the policy of a
                            government by intimidation or coercion;
                                (III) to affect the conduct of a government
                            by mass destruction, assassination or
                            kidnapping; or
                                (IV) to retaliate against a government or
                            its civilian population.
                (15) The term ``critical infrastructure'' means physical
            and cyber-based public and private systems essential to the
            minimum operations of the economy and government, including
            information and telecommunications, energy, banking and
            finance, transportation, and water systems and emergency
            services.

        Page 7, strike lines 1 through 3 and insert the following:

                        (C) coordinate Federal, State, and local government
                    personnel, agencies, and authorities with each other
                    and with the private sector to prevent, prepare, and
                    disrupt terrorist activities.''

        Page 7, strike line 11 and insert the following:

                (C) enforcement and security; and

        Page 7, strike line 12 and insert the following:

                (D) crisis and consequence training and coordination.

        Page 7, strike lines 13 through 17.

        Page 8, strike line 18 and insert the following:

        (a) Deputy Secretary; Under Secretaries; General Counsel.--

        Page 9, strike lines 7 through 8 and insert the following:

                (4) An Under Secretary for Enforcement and Security.

        Page 9, strike lines 9 through 10.

        Page 9, after line 12, insert the following:

                (8) A General Counsel, who shall be the chief legal officer
            of the Department.

        Page 10, strike lines 1 and 2 (and redesignate provisions
    accordingly).

        Page 10, strike line 4 (and redesignate provisions accordingly).

        Page 12, line 4, after ``countermeasures'' insert ``related to the
    warnings''.

        Page 12, strike ``and'' at line 5, strike the period at line 12 and
    insert ``; and'', and after line 12 insert the following:

                (8) securing the people, infrastructures, property,
            resources, and systems in the United States from acts of
            terrorism involving chemical, biological, radiological, or
            nuclear weapons or other emerging threats.

        Page 13, line 17, strike ``The'' and insert ``(a) In General.--
    The''.

        Page 13, line 17, strike ``reports, assessments, and analytical''.

        Page 14, line 16, strike ``reports, assessments, and analytical''.

        Page 15, after line 18, insert the following:

        (b) Information Sharing.--The Secretary shall make regulations to
    provide that information required to be made available to the Secretary
    under subsection (a) is shared with Federal, State, and local agencies
    and employees as necessary to guard against threats to homeland
    security.

        Page 15, after line 24 insert the following (and redesignate
    provisions and amend the table of contents accordingly):

    SEC. 205. PROCEDURES FOR SHARING INFORMATION.

        The Secretary shall establish procedures on the use of information
    shared under this title that--
        (1) limit the redissemination of such information to ensure that it
    is not used for an unauthorized purpose;
        (2) ensure the security and confidentiality of such information;
        (3) protect the constitutional and statutory rights of any
    individuals who are subjects of such information; and
        (4) provide data integrity through the timely removal and
    destruction of obsolete or erroneous names and information.

    SEC. 206. PRIVACY OFFICER.

        The Secretary shall appoint a senior official in the Department to
    assume primary responsibility for privacy policy, including-
                (1) assuring that the use of new technologies sustain, and
            do not erode, the protections provided in all statues relating
            to the use, collection, and disclosure of personal information;
                (2) assuring that personal information contained in Privacy
            Act systems of records is handled in full compliance with fair
            information practices as set out in the Privacy Act of 1974 and
            section 552a of title 5, United States Code;
                (3) evaluating legislative and regulatory proposals
            involving collection, use, and disclosure of personal
            information by the Federal government for consistency with the
            Privacy Act of 1974 and section 552a of title 5, United States
            Code;
                (4) conducting a privacy impact assessment of proposed
            rules when the Secretary deems such assessment appropriate; and
                (5) preparing a report to the Congress on an annual basis
            that identifies any complaints received from the public as to
            privacy violations and how the Department addressed such
            complaints as well as internal controls implemented to improve
            privacy protections.

        Page 16, strike lines 11 through 15.

        Page 16, line 16, strike ``(2)`` and insert ``(1)''.

        Page 16, line 25, insert ``and'' after the semicolon.

        Page 17, line 1, strike ``(3)'' and insert ``(2)''.

        Page 17, line 9, strike ``; and'' and insert a period.

        Page 17, strike lines 10 through 14.

        Page 21, after line 2, insert the following (and redesignate
    provisions and amend the table of contents accordingly):

    SEC. 305. COMPELLING NEED FOR SCIENCE AND TECHNOLOGY RESEARCH AND
                        DEVELOPMENT.

        It is the sense of the Committee on the Judiciary of the House of
    Representatives that there is a compelling need for the Department of
    Homeland Security to carry out science and technology research and
    development in a robust and effective manner to prevent and detect
    terrorist attacks, including weapons of mass destruction and cyber
    security attacks.

        Page 21, strike lines 3 through 4 and insert the following (and
    amend the table of contents accordingly):

                       TITLE IV--ENFORCEMENT AND SECURITY

    Subtitle A--Assignment of Responsibilities for Enforcement and Security

        Page 21, strike lines 5 through 6, and insert the following:

    SEC. 401. UNDER SECRETARY FOR ENFORCEMENT AND SECURITY.

        Page 21, beginning at line 9, strike ``Border and Transportation''
    and insert with ``Enforcement and''.

        Page 21, strike lines 18 through 24 and insert the following (and
    redesignate provisions accordingly):

                (3) carrying out the immigration enforcement functions
            vested by statute in, or performed by, the Commissioner of
            Immigration and Naturalization (or any officer, employee, or
            component of the Immigration and Naturalization Service)
            immediately before the date on which the transfer of functions
            specified under section 411 takes effect;
                (4) establishing and administering rules, in accordance
            with section 403, governing the granting of visas or other
            forms of permission, including parole, to enter the United
            States to individuals who are not a citizen or an alien
            lawfully admitted for permanent residence in the United States;

        Page 22, line 2, strike ``and''.

        Page 22, line 5, strike the period and insert a semicolon.

        Page 22, after line 5, insert the following:

                (7) developing a national program to enhance the capacity
            of State and local agencies in crisis and consequence
            management to prepare for and respond to incident of terrorism
            and other emergencies, through coordinated training, equipment
            acquisition, technical assistance, and support for Federal,
            State, and local exercises;
                (8) with respect to the Nuclear Incident Response Team
            (regardless of whether it is operating as an organizational
            unit of the Department pursuant to this title)--
                        (A) establishing standards and certifying when
                    those standards have been met;
                        (B) conducting joint and other exercises and
                    training and evaluating performance; and
                        (C) providing funds to the Department of Energy and
                    the Environmental Protection Agency, as appropriate,
                    for homeland security planning, exercises and training,
                    and equipment;
                (9) coordinating other Federal response resources in the
            event of a terrorist attack and other emergencies;
                (10) aiding the recovery from terrorist attacks and other
            emergencies;
                (11) building a comprehensive national incident management
            system with Federal, State, and local government personnel,
            agencies, and authorities, to respond to such attacks and other
            emergencies;
                (12) consolidating existing Federal Government emergency
            response plans into a single, coordinated national response
            plan; and
                (13) developing comprehensive programs for developing
            interoperative communications technology, and helping to ensure
            that emergency response providers acquire such technology.

        Page 22, strike lines 13 through 15 (and redesignate provisions
    accordingly).

        Page 23, line 5, strike ``and''.

        Page 23, line 9, strike the period and insert a semicolon.

        Page 23, after line 9, insert the following:

                (7) the Office of National Preparedness of the Federal
            Emergency Management Agency, including the functions of the
            Director of the Federal Emergency Management Agency relating
            thereto;
                (8) the Office for Domestic Preparedness of the Office of
            Justice Programs, including the functions of the Attorney
            General relating thereto;
                (9) the National Domestic Preparedness Office of the
            Federal Bureau of Investigation, including the functions of the
            Attorney General relating thereto;
                (10) the Domestic Emergency Support Teams of the Department
            of Justice, including the functions of the Attorney General
            relating thereto;
                (11) the Office of the Assistant Secretary for Public
            Health Emergency Preparedness (including the Office of
            Emergency Preparedness, the National Disaster Medical System,
            and the Metropolitan Medical Response System) of the Department
            of Health and Human Services, including the functions of the
            Secretary of Health and Human Services relating thereto; and
                (12) the Strategic National Stockpile of the Department of
            Health and Human Services, including the functions of the
            Secretary of Health and Human Services relating thereto.

        Beginning on page 23, strike line 10 through page 24, line 6, and
    insert the following:

    SEC. 403. VISA ISSUANCE.

        (a) In General.--Notwithstanding section 104(a) of the Immigration
    and Nationality Act (8 U.S.C. 1104(a)) or any other provision of law,
    and except as provided in subsection (b) of this section, the
    Secretary--
                (1) shall be vested exclusively with all authorities to
            issue regulations with respect to, administer, and enforce the
            provisions of such Act, and of all other immigration and
            nationality laws, relating to the functions of consular
            officers of the United States in connection with the granting
            or refusal of visas, which authorities shall be exercised
            through the Secretary of State, except that the Secretary shall
            not have authority to alter or reverse the decision of a
            consular officer to refuse a visa to an alien; and
                (2) shall have authority to confer or impose upon any
            officer or employee of the United States, with the consent of
            the head of the executive agency under whose jurisdiction such
            officer or employee is serving, any of the functions specified
            in paragraph (1).
        (b) Authority of the Secretary of State.--
                (1) Foreign Policy or Security Interests of the United
            States.--The Secretary of State may direct a consular officer
            to refuse a visa to an alien if the Secretary of State
            considers such refusal necessary or advisable in the foreign
            policy or security interests of the United States.
                (2) Construction.--Nothing in this section shall be
            construed as affecting the authorities of the Secretary of
            State under the following provisions of law:
                        (A) Section 101(a)(15)(A) of the Immigration and
                    Nationality Act (8 U.S.C. 1101(a)(15)(A)).
                        (B) Section 212(a)(3)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(a)(3)(C)).
                        (C) Section 212(f) of the Immigration and
                    Nationality Act (8 U.S.C. 1182(f)).
                        (D) Section 237(a)(4)(C) of the Immigration and
                    Nationality Act (8 U.S.C. 1227(a)(4)(C)).
                        (E) Section 401 of the Cuban Liberty and Democratic
                    Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6091).
                        (F) Section 613 of the Departments of Commerce,
                    Justice, and State, the Judiciary, and Related Agencies
                    Appropriations Act, 1999 (as contained in section
                    101(b) of division A of Public Law 105-277 (Omnibus
                    Consolidated and Emergency Supplemental Appropriations
                    Act, 1999; 112 Stat. 2681; H.R. 4328; (Originally H.R.
                    4276) as amended by section 617 of Public Law 106-553.
                        (G) Section 801 of H.R. 3427, the Admiral James W.
                    Nance and Meg Donovan Foreign Relations Authorization
                    Act, Fiscal Years 2000 and 2001, as enacted by
                    reference in Public Law 106-113.
                        (H) Section 568 of the Foreign Operations, Export
                    Financing, and Related Programs Appropriations Act,
                    2002 (Public Law 107-115).
        (c) Assignment of Homeland Security Employees to Diplomatic and
    Consular Posts.--
                (1) In general.--The Secretary is authorized to assign
            employees of the Department of Homeland Security to diplomatic
            and consular posts abroad to perform the following functions:
                        (A) Provide expert advice to consular officers
                    regarding specific security threats relating to the
                    adjudication of individual visa applications or classes
                    of applications.
                        (B) Review any such applications, either on the
                    initiative of the employee of the Department of
                    Homeland Security or upon request by a consular officer
                    or other person charged with adjudicating such
                    applications.
                        (C) Conduct investigations with respect to matters
                    under the jurisdiction of the Secretary.
                (2) Permanent assignment; participation in terrorist
            lookout committee.--When appropriate, employees of the
            Department of Homeland Security assigned to perform functions
            described in paragraph (1) may be assigned permanently to
            overseas diplomatic or consular posts with country-specific or
            regional responsibility. If the Secretary so directs, any such
            employee, when present at an overseas post, shall participate
            in the terrorist lookout committee established under section
            304 of the Enhanced Border Security and Visa Entry Reform Act
            of 2002 (8 U.S.C. 1733).
                (3) Training and hiring.--
                        (A) In general.--The Secretary shall ensure that
                    any employees of the Department of Homeland Security
                    assigned to perform functions described in paragraph
                    (1) and, as appropriate, consular officers, shall be
                    provided all necessary training to enable them to carry
                    out such functions, including training in foreign
                    languages, interview techniques, fraud detection
                    techniques, and other skills required by such
                    employees, in conditions in the particular country
                    where each employee is assigned, and in other
                    appropriate areas of study.
                        (B) Foreign language proficiency.--Prior to
                    assigning employees of the Department to perform the
                    functions described in paragraph (1), the Secretary
                    shall promulgate regulations establishing foreign
                    language proficiency requirements for employees of the
                    Department performing the functions described in
                    paragraph (1) and providing that preference shall be
                    given to individuals who meet such requirements in
                    hiring employees for the performance of such functions.
                        (C) Use of national foreign affairs training
                    center.--The Secretary is authorized to use the
                    National Foreign Affairs Training Center, on a
                    reimbursable basis, to obtain the training described in
                    subparagraph (A).
        (d) No Creation of Private Right of Action.--Nothing in this
    section shall be construed to create or authorize a private right of
    action to challenge a decision of a consular officer or other United
    States official or employee to grant or deny a visa.
        (e) Study Regarding Use of Foreign Nationals.--
                (1) In general.--The Secretary of Homeland Security shall
            conduct a study of the role of foreign nationals in the
            granting or refusal of visas and other documents authorizing
            entry of aliens into the United States. The study shall address
            the following:
                        (A) The proper role, if any, of foreign nationals
                    in the process of rendering decisions on such grants
                    and refusals.
                        (B) Any security concerns involving the employment
                    of foreign nationals.
                        (C) Whether there are cost-effective alternatives
                    to the use of foreign nationals.
                (2) Report.--Not later than 2 years after the date of the
            enactment of this Act, the Secretary shall submit a report
            containing the findings of the study conducted under paragraph
            (1) to the Committee on the Judiciary, the Committee on
            International Relations, and the Committee on Government Reform
            of the House of Representatives, and the Committee on the
            Judiciary, the Committee on Foreign Relations, and the
            Committee on Governmental Affairs of the Senate.

        Page 24, after line 6, insert the following (and amend the table of
    contents accordingly):

               Subtitle B--Immigration and Nationality Functions

                       CHAPTER 1--IMMIGRATION ENFORCEMENT

    SEC. 411. TRANSFER OF FUNCTIONS TO UNDER SECRETARY FOR ENFORCEMENT AND
                        SECURITY.

        In accordance with title VIII, there shall be transferred from the
    Commissioner of Immigration and Naturalization to the Under Secretary
    for Enforcement and Security all functions performed under the
    following programs, and all personnel, assets, and liabilities
    pertaining to such programs, immediately before such transfer occurs:
                (1) The Border Patrol program.
                (2) The detention and removal program.
                (3) The intelligence program.
                (4) The investigations program.
                (5) The inspections program.

    SEC. 412. ESTABLISHMENT OF BUREAU OF IMMIGRATION ENFORCEMENT.

        (a) Establishment of Bureau.--
                (1) In general.--There is established in the Department of
            Homeland Security a bureau to be known as the ``Bureau of
            Immigration Enforcement''.
                (2) Director.--The head of the Bureau of Immigration
            Enforcement shall be the Director of the Bureau of Immigration
            Enforcement, who--
                        (A) shall report directly to the Under Secretary
                    for Enforcement and Security; and
                        (B) shall have a minimum of 10 years professional
                    experience in law enforcement, at least 5 of which
                    shall have been years of service in a managerial
                    capacity.
                (3) Functions.--The Director of the Bureau of Immigration
            Enforcement--
                        (A) shall establish the policies for performing
                    such functions as are--
                                (i) transferred to the Under Secretary for
                            Enforcement and Security by section 411 and
                            delegated to the Director by the Under
                            Secretary for Enforcement and Security; or
                                (ii) otherwise vested in the Director by
                            law;
                        (B) shall oversee the administration of such
                    policies; and
                        (C) shall advise the Under Secretary for
                    Enforcement and Security with respect to any policy or
                    operation of the Bureau of Immigration Enforcement that
                    may affect the Bureau of Citizenship and Immigration
                    Services of the Department of Justice established under
                    chapter 2, including potentially conflicting policies
                    or operations.
                (4) Program to collect information relating to foreign
            students.--The Director of the Bureau of Immigration
            Enforcement shall be responsible for administering the program
            to collect information relating to nonimmigrant foreign
            students and other exchange program participants described in
            section 641 of the Illegal Immigration Reform and Immigrant
            Responsibility Act of 1996 (8 U.S.C. 1372), including the
            Student and Exchange Visitor Information System established
            under that section, and shall use such information to carry out
            the enforcement functions of the Bureau.
                (5) Managerial rotation program.--
                        (A) In general.--Not later than 1 year after the
                    date on which the transfer of functions specified under
                    section 411 takes effect, the Director of the Bureau of
                    Immigration Enforcement shall design and implement a
                    managerial rotation program under which employees of
                    such bureau holding positions involving supervisory or
                    managerial responsibility and classified, in accordance
                    with chapter 51 of title 5, United States Code, as a
                    GS-14 or above, shall, as a condition on further
                    promotion--
                                (i) gain some experience in all the major
                            functions performed by such bureau; and
                                (ii) work in at least one local office of
                            such bureau.
                        (B) Report.--Not later than 2 years after the date
                    on which the transfer of functions specified under
                    section 411 takes effect, the Secretary shall submit a
                    report to the Congress on the implementation of such
                    program.
        (b) Chief of Policy and Strategy.--
                (1) In general.--There shall be a position of Chief of
            Policy and Strategy for the Bureau of Immigration Enforcement.
                (2) Functions.--In consultation with Bureau of Immigration
            Enforcement personnel in local offices, the Chief of Policy and
            Strategy shall be responsible for--
                        (A) establishing national immigration enforcement
                    policies and priorities;
                        (B) performing policy research and analysis on
                    immigration enforcement issues; and
                        (C) coordinating immigration policy issues with the
                    Chief of Policy and Strategy for the Bureau of
                    Citizenship and Immigration Services of the Department
                    of Justice (established under chapter 2), and the
                    Assistant Attorney General for Citizenship and
                    Immigration Services, as appropriate.
        (c) General Counsel.--
                (1) In general.--There shall be a position of General
            Counsel for the Bureau of Immigration Enforcement.
                (2) Functions.--The General Counsel shall serve as the
            principal legal advisor to the Director of the Bureau of
            Immigration Enforcement. The General Counsel shall be
            responsible for--
                        (A) providing specialized legal advice, opinions,
                    determinations, regulations, and any other assistance
                    to the Director of the Bureau of Immigration
                    Enforcement with respect to legal matters affecting the
                    Bureau of Immigration Enforcement; and
                        (B) representing the Bureau of Immigration
                    Enforcement in all exclusion, deportation, or removal
                    proceedings before the Executive Office for Immigration
                    Review, including in proceedings to adjudicate relief
                    from exclusion, deportation, or removal, and in other
                    legal or administrative proceedings involving
                    immigration enforcement issues.
        (d) Chief Budget Officer.--
                (1) In general.--There shall be a position of Chief Budget
            Officer for the Bureau of Immigration Enforcement.
                (2) Functions.--
                        (A) In general.--The Chief Budget Officer shall be
                    responsible for--
                                (i) formulating and executing the budget of
                            the Bureau of Immigration Enforcement;
                                (ii) financial management of the Bureau of
                            Immigration Enforcement; and
                                (iii) collecting all payments, fines, and
                            other debts for the Bureau of Immigration
                            Enforcement.
                (3) Authority and functions of agency chief financial
            officers.--The Chief Budget Officer for the Bureau of
            Immigration Enforcement shall have the authorities and
            functions described in section 902 of title 31, United States
            Code, in relation to financial activities of such bureau.
        (e) Chief of Congressional, Intergovernmental, and Public
    Affairs.--
                (1) In general.--There shall be a position of Chief of
            Congressional, Intergovernmental, and Public Affairs for the
            Bureau of Immigration Enforcement.
                (2) Functions.--The Chief of Congressional,
            Intergovernmental, and Public Affairs shall be responsible
            for--
                        (A) providing information relating to immigration
                    enforcement to the Congress, including information on
                    specific cases relating to immigration enforcement;
                        (B) serving as a liaison with other Federal
                    agencies on immigration enforcement issues; and
                        (C) responding to inquiries from the media and the
                    general public on immigration enforcement issues.
        (f) Citizenship and Immigration Services Liaison.--
                (1) In general.--There shall be a position of Citizenship
            and Immigration Services Liaison for the Bureau of Immigration
            Enforcement.
                (2) Functions.--The Citizenship and Immigration Services
            Liaison shall be responsible for the appropriate allocation and
            coordination of resources involved in supporting shared support
            functions for the Bureau of Citizenship and Immigration
            Services of the Department of Justice (established under
            chapter 2) and the Bureau of Immigration Enforcement,
            including--
                        (A) information resources management, including
                    computer databases and information technology;
                        (B) records and file management; and
                        (C) forms management.

    SEC. 413. PROFESSIONAL RESPONSIBILITY AND QUALITY REVIEW.

        (a) In General.--The Under Secretary for Enforcement and Security
    shall be responsible for--
                (1) conducting investigations of noncriminal allegations of
            misconduct, corruption, and fraud involving any employee of the
            Bureau of Immigration Enforcement that are not subject to
            investigation by the Inspector General for the Department;
                (2) inspecting the operations of the Bureau of Immigration
            Enforcement and providing assessments of the quality of the
            operations of such bureau as a whole and each of its
            components; and
                (3) providing an analysis of the management of the Bureau
            of Immigration Enforcement.
        (b) Special Considerations.--In providing assessments in accordance
    with subsection (a)(2) with respect to a decision of the Bureau of
    Immigration Enforcement, or any of its components, consideration shall
    be given to--
                (1) the accuracy of the findings of fact and conclusions of
            law used in rendering the decision;
                (2) any fraud or misrepresentation associated with the
            decision; and
                (3) the efficiency with which the decision was rendered.

    SEC. 414. EMPLOYEE DISCIPLINE.

        The Under Secretary for Enforcement and Security may,
    notwithstanding any other provision of law, impose disciplinary action,
    including termination of employment, pursuant to policies and
    procedures applicable to employees of the Federal Bureau of
    Investigation, on any employee of the Bureau of Immigration Enforcement
    who willfully deceives the Congress or agency leadership on any matter.

    SEC. 415. REPORT ON IMPROVING ENFORCEMENT FUNCTIONS.

        (a) In General.--The Secretary, not later than 1 year after the
    effective date of this Act, shall submit to the Committees on
    Appropriations and the Judiciary of the United States House of
    Representatives and of the Senate a report with a plan detailing how
    the Bureau of Immigration Enforcement, after the transfer of functions
    specified under section 411 takes effect, will enforce comprehensively,
    effectively, and fairly all the enforcement provisions of the
    Immigration and Nationality Act (8 U.S.C. 1101 et seq.) relating to
    such functions.
        (b) Consultation.--In carrying out subsection (a), the Secretary of
    Homeland Security shall consult with the Attorney General, the
    Secretary of State, the Assistant Attorney General for Citizenship and
    Immigration Services, the Director of the Federal Bureau of
    Investigation, the Secretary of the Treasury, the Secretary of Labor,
    the Commissioner of Social Security, the Director of the Executive
    Office for Immigration Review, and the heads of State and local law
    enforcement agencies to determine how to most effectively conduct
    enforcement operations.

    SEC. 416. REPORT ON INTERIOR CHECKPOINTS.

        Not later than 6 months after the date of the enactment of this
    Act, the Attorney General shall submit to the Congress a report on
    whether all permanent interior checkpoints operated by the Immigration
    and Naturalization Service ought to be closed, and the funds that
    otherwise would be expended for the operation of such checkpoints ought
    to be reallocated for protecting and maintaining the integrity of the
    borders of the United States and increasing enforcement at other points
    of entry into the United States.

                CHAPTER 2--CITIZENSHIP AND IMMIGRATION SERVICES

                      Subchapter A--Transfers of Functions

    SEC. 421. ESTABLISHMENT OF BUREAU OF CITIZENSHIP AND IMMIGRATION
                        SERVICES.

        (a) Establishment of Bureau.--
                (1) In general.--There is established in the Department of
            Justice a bureau to be known as the ``Bureau of Citizenship and
            Immigration Services''.
                (2) Assistant attorney general.--The head of the Bureau of
            Citizenship and Immigration Services shall be the Assistant
            Attorney General for Citizenship and Immigration Services,
            who--
                        (A) shall report directly to the Deputy Attorney
                    General; and
                        (B) shall have a minimum of 10 years professional
                    experience in the rendering of adjudications on the
                    provision of government benefits or services, at least
                    5 of which shall have been years of service in a
                    managerial capacity or in a position affording
                    comparable management experience.
                (3) Functions.--The Assistant Attorney General for
            Citizenship and Immigration Services--
                        (A) shall establish the policies for performing
                    such functions as are transferred to the Assistant
                    Attorney General by this section or this Act or
                    otherwise vested in the Assistant Attorney General by
                    law;
                        (B) shall oversee the administration of such
                    policies;
                        (C) shall advise the Deputy Attorney General with
                    respect to any policy or operation of the Bureau of
                    Citizenship and Immigration Services that may affect
                    the Bureau of Immigration Enforcement of the Department
                    of Homeland Security, including potentially conflicting
                    policies or operations;
                        (D) shall meet regularly with the Ombudsman
                    described in section 422 to correct serious service
                    problems identified by the Ombudsman; and
                        (E) shall establish procedures requiring a formal
                    response to any recommendations submitted in the
                    Ombudsman's annual report to the Congress within 3
                    months after its submission to the Congress.
                (4) Managerial rotation program.--
                        (A) In general.--Not later than 1 year after the
                    effective date specified in section 427, the Assistant
                    Attorney General for Citizenship and Immigration
                    Services shall design and implement a managerial
                    rotation program under which employees of such bureau
                    holding positions involving supervisory or managerial
                    responsibility and classified, in accordance with
                    chapter 51 of title 5, United States Code, as a GS-14
                    or above, shall, as a condition on further promotion--
                                (i) gain some experience in all the major
                            functions performed by such bureau; and
                                (ii) work in at least one field office and
                            one service center of such bureau.
                        (B) Report.--Not later than 2 years after the
                    effective date specified in section 427, the Attorney
                    General shall submit a report to the Congress on the
                    implementation of such program.
                (5) Pilot initiatives for backlog elimination.--The
            Assistant Attorney General for Citizenship and Immigration
            Services is authorized to implement innovative pilot
            initiatives to eliminate any remaining backlog in the
            processing of immigration benefit applications, and to prevent
            any backlog in the processing of such applications from
            recurring, in accordance with section 204(a) of the Immigration
            Services and Infrastructure Improvements Act of 2000 (8 U.S.C.
            1573(a)). Such initiatives may include measures such as
            increasing personnel, transferring personnel to focus on areas
            with the largest potential for backlog, and streamlining
            paperwork.
        (b) Transfer of Functions From Commissioner.--There are transferred
    from the Commissioner of Immigration and Naturalization to the
    Assistant Attorney General for Citizenship and Immigration Services the
    following functions, and all personnel, infrastructure, and funding
    provided to the Commissioner in support of such functions immediately
    before the effective date specified in section 427:
                (1) Adjudications of immigrant visa petitions.
                (2) Adjudications of naturalization petitions.
                (3) Adjudications of asylum and refugee applications.
                (4) Adjudications performed at service centers.
                (5) All other adjudications performed by the Immigration
            and Naturalization Service immediately before the effective
            date specified in section 427.
        (c) Chief of Policy and Strategy.--
                (1) In general.--There shall be a position of Chief of
            Policy and Strategy for the Bureau of Citizenship and
            Immigration Services.
                (2) Functions.--In consultation with Bureau of Citizenship
            and Immigration Services personnel in field offices, the Chief
            of Policy and Strategy shall be responsible for--
                        (A) establishing national immigration services
                    policies and priorities;
                        (B) performing policy research and analysis on
                    immigration services issues; and
                        (C) coordinating immigration policy issues with the
                    Chief of Policy and Strategy for the Bureau of
                    Immigration Enforcement of the Department of Homeland
                    Security.
        (d) General Counsel.--
                (1) In general.--There shall be a position of General
            Counsel for the Bureau of Citizenship and Immigration Services.
                (2) Functions.--The General Counsel shall serve as the
            principal legal advisor to the Assistant Attorney General for
            Citizenship and Immigration Services. The General Counsel shall
            be responsible for--
                        (A) providing specialized legal advice, opinions,
                    determinations, regulations, and any other assistance
                    to the Assistant Attorney General for Citizenship and
                    Immigration Services with respect to legal matters
                    affecting the Bureau of Citizenship and Immigration
                    Services; and
                        (B) representing the Bureau of Citizenship and
                    Immigration Services in visa petition appeal
                    proceedings before the Executive Office for Immigration
                    Review and in other legal or administrative proceedings
                    involving immigration services issues.
        (e) Chief Budget Officer.--
                (1) In general.--There shall be a position of Chief Budget
            Officer for the Bureau of Citizenship and Immigration Services.
                (2) Functions.--
                        (A) In general.--The Chief Budget Officer shall be
                    responsible for--
                                (i) formulating and executing the budget of
                            the Bureau of Citizenship and Immigration
                            Services;
                                (ii) financial management of the Bureau of
                            Citizenship and Immigration Services; and
                                (iii) collecting all payments, fines, and
                            other debts for the Bureau of Citizenship and
                            Immigration Services.
                (3) Authority and functions of agency chief financial
            officers.--The Chief Budget Officer for the Bureau of
            Citizenship and Immigration Services shall have the authorities
            and functions described in section 902 of title 31, United
            States Code, in relation to financial activities of such
            bureau.
        (f) Chief of Congressional, Intergovernmental, and Public
    Affairs.--
                (1) In general.--There shall be a position of Chief of
            Congressional, Intergovernmental, and Public Affairs for the
            Bureau of Citizenship and Immigration Services.
                (2) Functions.--The Chief of Congressional,
            Intergovernmental, and Public Affairs shall be responsible
            for--
                        (A) providing information relating to immigration
                    services to the Congress, including information on
                    specific cases relating to immigration services issues;
                        (B) serving as a liaison with other Federal
                    agencies on immigration services issues; and
                        (C) responding to inquiries from the media and the
                    general public on immigration services issues.
        (g) Immigration Enforcement Liaison.--
                (1) In general.--There shall be a position of Immigration
            Enforcement Liaison for the Bureau of Citizenship and
            Immigration Services.
                (2) Functions.--The Immigration Enforcement Liaison shall
            be responsible for the appropriate allocation and coordination
            of resources involved in supporting shared support functions
            for the Bureau of Immigration Enforcement of the Department of
            Homeland Security and the Bureau of Citizenship and Immigration
            Services, including--
                        (A) information resources management, including
                    computer databases and information technology;
                        (B) records and file management; and
                        (C) forms management.
        (h) Chief of Office of Citizenship.--
                (1) In general.--There shall be a position of Chief of the
            Office of Citizenship for the Bureau of Citizenship and
            Immigration Services.
                (2) Functions.--The Chief of the Office of Citizenship for
            the Bureau of Citizenship and Immigration Services shall be
            responsible for promoting instruction and training on
            citizenship responsibilities for aliens interested in becoming
            naturalized citizens of the United States, including the
            development of educational materials.

    SEC. 422. CITIZENSHIP AND IMMIGRATION SERVICES OMBUDSMAN.

        (a) In General.--Within the Department of Justice, there shall be a
    position of Citizenship and Immigration Services Ombudsman (in this
    section referred to as the ``Ombudsman''). The Ombudsman shall report
    directly to the Deputy Attorney General. The Ombudsman shall have a
    background in customer service as well as immigration law.
        (b) Functions.--It shall be the function of the Ombudsman--
                (1) to assist individuals and employers in resolving
            problems with the Bureau of Citizenship and Immigration
            Services;
                (2) to identify areas in which individuals and employers
            have problems in dealing with the Bureau of Citizenship and
            Immigration Services;
                (3) to the extent possible, to propose changes in the
            administrative practices of the Bureau of Citizenship and
            Immigration Services to mitigate problems identified under
            paragraph (2); and
                (4) to identify potential legislative changes that may be
            appropriate to mitigate such problems.
        (c) Annual Reports.--
                (1) Objectives.--Not later than June 30 of each calendar
            year, the Ombudsman shall report to the Committee on the
            Judiciary of the United States House of Representatives and the
            Senate on the objectives of the Office of the Ombudsman for the
            fiscal year beginning in such calendar year. Any such report
            shall contain full and substantive analysis, in addition to
            statistical information, and--
                        (A) shall identify the initiatives the Office of
                    the Ombudsman has taken on improving services and
                    responsiveness of the Bureau of Citizenship and
                    Immigration Services;
                        (B) shall contain a summary of the most pervasive
                    and serious problems encountered by individuals and
                    employers, including a description of the nature of
                    such problems;
                        (C) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which action
                    has been taken and the result of such action;
                        (D) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which action
                    remains to be completed and the period during which
                    each item has remained on such inventory;
                        (E) shall contain an inventory of the items
                    described in subparagraphs (A) and (B) for which no
                    action has been taken, the period during which each
                    item has remained on such inventory, the reasons for
                    the inaction, and shall identify any official of the
                    Bureau of Citizenship and Immigration Services who is
                    responsible for such inaction;
                        (F) shall contain recommendations for such
                    administrative and legislative action as may be
                    appropriate to resolve problems encountered by
                    individuals and employers, including problems created
                    by excessive backlogs in the adjudication and
                    processing of immigration benefit petitions and
                    applications; and
                        (G) shall include such other information as the
                    Ombudsman may deem advisable.
                (2) Report to be submitted directly.--Each report required
            under this subsection shall be provided directly to the
            committees described in paragraph (1) without any prior review
            or comment from the Attorney General, Deputy Attorney General,
            Assistant Attorney General for Citizenship and Immigration
            Services, or any other officer or employee of the Department of
            Justice or the Office of Management and Budget.
        (d) Other Responsibilities.--The Ombudsman--
                (1) shall monitor the coverage and geographic allocation of
            local offices of the Ombudsman;
                (2) shall develop guidance to be distributed to all
            officers and employees of the Bureau of Citizenship and
            Immigration Services outlining the criteria for referral of
            inquiries to local offices of the Ombudsman;
                (3) shall ensure that the local telephone number for each
            local office of the Ombudsman is published and available to
            individuals and employers served by the office; and
                (4) shall meet regularly with the Assistant Attorney
            General for Citizenship and Immigration Services to identify
            serious service problems and to present recommendations for
            such administrative action as may be appropriate to resolve
            problems encountered by individuals and employers.
        (e) Personnel Actions.--
                (1) In general.--The Ombudsman shall have the
            responsibility and authority--
                        (A) to appoint local ombudsmen and make available
                    at least 1 such ombudsman for each State; and
                        (B) to evaluate and take personnel actions
                    (including dismissal) with respect to any employee of
                    any local office of the Ombudsman.
                (2) Consultation.--The Ombudsman may consult with the
            appropriate supervisory personnel of the Bureau of Citizenship
            and Immigration Services in carrying out the Ombudsman's
            responsibilities under this subsection.
        (f) Responsibilities of Bureau of Citizenship and Immigration
    Services.--The Assistant Attorney General for Citizenship and
    Immigration Services shall establish procedures requiring a formal
    response to all recommendations submitted to such Assistant Attorney
    General by the Ombudsman within 3 months after submission to such
    director.
        (g) Operation of Local Offices.--
                (1) In general.--Each local ombudsman--
                        (A) shall report to the Ombudsman or the delegate
                    thereof;
                        (B) may consult with the appropriate supervisory
                    personnel of the Bureau of Citizenship and Immigration
                    Services regarding the daily operation of the local
                    office of such ombudsman;
                        (C) shall, at the initial meeting with any
                    individual or employer seeking the assistance of such
                    local office, notify such individual or employer that
                    the local offices of the Ombudsman operate
                    independently of any other component of the Department
                    of Justice and report directly to the Congress through
                    the Ombudsman; and
                        (D) at the local ombudsman's discretion, may
                    determine not to disclose to the Bureau of Citizenship
                    and Immigration Services contact with, or information
                    provided by, such individual or employer.
                (2) Maintenance of independent communications.--Each local
            office of the Ombudsman shall maintain a phone, facsimile, and
            other means of electronic communication access, and a post
            office address, that is separate from those maintained by the
            Bureau of Citizenship and Immigration Services, or any
            component of the Bureau of Citizenship and Immigration
            Services.

    SEC. 423. PROFESSIONAL RESPONSIBILITY AND QUALITY REVIEW.

        (a) In General.--The Assistant Attorney General for Citizenship and
    Immigration Services shall be responsible for--
                (1) conducting investigations of noncriminal allegations of
            misconduct, corruption, and fraud involving any employee of the
            Bureau of Citizenship and Immigration Services that are not
            subject to investigation by the Department of Justice Office of
            the Inspector General;
                (2) inspecting the operations of the Bureau of Citizenship
            and Immigration Services and providing assessments of the
            quality of the operations of such bureau as a whole and each of
            its components; and
                (3) providing an analysis of the management of the Bureau
            of Citizenship and Immigration Services.
        (b) Special Considerations.--In providing assessments in accordance
    with subsection (a)(2) with respect to a decision of the Bureau of
    Citizenship and Immigration Services, or any of its components,
    consideration shall be given to--
                (1) the accuracy of the findings of fact and conclusions of
            law used in rendering the decision;
                (2) any fraud or misrepresentation associated with the
            decision; and
                (3) the efficiency with which the decision was rendered.

    SEC. 424. EMPLOYEE DISCIPLINE.

        The Assistant Attorney General for Citizenship and Immigration
    Enforcement may, notwithstanding any other provision of law, impose
    disciplinary action, including termination of employment, pursuant to
    policies and procedures applicable to employees of the Federal Bureau
    of Investigation, on any employee of the Bureau of Citizenship and
    Immigration Services who willfully deceives the Congress or agency
    leadership on any matter.

    SEC. 425. OFFICE OF IMMIGRATION STATISTICS WITHIN BUREAU OF JUSTICE
                        STATISTICS.

        (a) In General.--Part C of title I of the Omnibus Crime Control and
    Safe Streets Act of 1968 (42 U.S.C. 3731 et seq.) is amended by adding
    at the end the following:
                       ``office of immigration statistics
        ``Sec. 305. (a) There is established within the Bureau of Justice
    Statistics of the Department of Justice an Office of Immigration
    Statistics (in this section referred to as the `Office'), which shall
    be headed by a Director who shall be appointed by the Attorney General
    and who shall report to the Director of Justice Statistics.
        ``(b) The Director of the Office shall be responsible for the
    following:
                ``(1) Maintenance of all immigration statistical
            information of the Bureau of Citizenship and Immigration
            Services and the Executive Office for Immigration Review. Such
            statistical information shall include information and
            statistics of the type contained in the publication entitled
            `Statistical Yearbook of the Immigration and Naturalization
            Service' prepared by the Immigration and Naturalization Service
            (as in effect on the day prior to the effective date specified
            in section 427 of the Homeland Security Act of 2002), including
            region-by-region statistics on the aggregate number of
            applications and petitions filed by an alien (or filed on
            behalf of an alien) and denied by such offices and bureaus, and
            the reasons for such denials, disaggregated by category of
            denial and application or petition type.
                ``(2) Establishment of standards of reliability and
            validity for immigration statistics collected by the Bureau of
            Citizenship and Immigration Services and the Executive Office
            for Immigration Review.
        ``(c) The Bureau of Citizenship and Immigration Services and the
    Executive Office for Immigration Review shall provide statistical
    information to the Office of Immigration Statistics from the
    operational data systems controlled by the Bureau of Citizenship and
    Immigration Services and the Executive Office for Immigration Review,
    respectively, for the purpose of meeting the responsibilities of the
    Director.''.
        (b) Transfer of Functions.--There are transferred to the Office of
    Immigration Statistics established under section 305 of the Omnibus
    Crime Control and Safe Streets Act of 1968, as added by subsection (a),
    the functions performed immediately before such transfer occurs by the
    Statistics Branch of the Office of Policy and Planning of the
    Immigration and Naturalization Service with respect to the following:
                (1) Adjudications of immigrant visa petitions.
                (2) Adjudications of naturalization petitions.
                (3) Adjudications of asylum and refugee applications.
                (4) Adjudications performed at service centers.
                (5) All other adjudications performed by the Immigration
            and Naturalization Service.
        (c) Conforming Amendments.--Section 302(c) of the Omnibus Crime
    Control and Safe Streets Act of 1968 (42 U.S.C. 3732(c)) is amended--
                (1) by striking ``and'' at the end of paragraph (22);
                (2) by striking the period at the end of paragraph (23) and
            inserting ``; and''; and
                (3) by adding at the end the following:
                ``(24) collect, maintain, compile, analyze, publish, and
            disseminate information and statistics involving the functions
            of the Bureau of Citizenship and Immigration Services and the
            Executive Office for Immigration Review.''.

    SEC. 426. PRESERVATION OF ATTORNEY GENERAL'S AUTHORITY.

        (a) In General.--Any function for which this subchapter vests
    responsibility in an official other than the Attorney General, or which
    is transferred by this subchapter to such an official, may,
    notwithstanding any provision of this subchapter, be performed by the
    Attorney General, or the Attorney General's delegate, in lieu of such
    official.
        (b) References.--In a case in which the Attorney General performs a
    function described in subsection (a), any reference in any other
    Federal law, Executive order, rule, regulation, document, or delegation
    of authority to the official otherwise responsible for the function is
    deemed to refer to the Attorney General.

    SEC. 427. EFFECTIVE DATE.

        Notwithstanding section 4, this subchapter, and the amendments made
    by this subchapter, shall take effect on the date on which the transfer
    of functions specified under section 411 takes effect.

    SEC. 428. TRANSITION.

        (a) References.--With respect to any function transferred by this
    subchapter to, and exercised on or after the effective date specified
    in section 427 by, the Assistant Attorney General for Citizenship and
    Immigration Services, any reference in any other Federal law, Executive
    order, rule, regulation, or delegation of authority, or any document of
    or pertaining to a component of government from which such function is
    transferred--
                (1) to the head of such component is deemed to refer to the
            Assistant Attorney General for Citizenship and Immigration
            Services; or
                (2) to such component is deemed to refer to the Bureau of
            Citizenship and Immigration Services.
        (b) Other Transition Issues.--
                (1) Exercise of authorities.--Except as otherwise provided
            by law, a Federal official to whom a function is transferred by
            this subchapter may, for purposes of performing the function,
            exercise all authorities under any other provision of law that
            were available with respect to the performance of that function
            to the official responsible for the performance of the function
            immediately before the effective date specified in section 427.
                (2) Savings provisions.--Subsections (a), (b), and (c) of
            section 804 shall apply to a transfer of functions under this
            subchapter in the same manner as such provisions apply to a
            transfer of functions under this Act to the Department of
            Homeland Security.
                (3) Transfer and allocation of appropriations and
            personnel.--The personnel of the Department of Justice employed
            in connection with the functions transferred by this subchapter
            (and functions that the Attorney General determines are
            properly related to the functions of the Bureau of Citizenship
            and Immigration Services), and the assets, liabilities,
            contracts, property, records, and unexpended balance of
            appropriations, authorizations, allocations, and other funds
            employed, held, used, arising from, available to, or to be made
            available to, the Immigration and Naturalization Service in
            connection with the functions transferred by this subchapter,
            subject to section 202 of the Budget and Accounting Procedures
            Act of 1950, shall be transferred to the Assistant Attorney
            General for Citizenship and Immigration Services for allocation
            to the appropriate component of the Department of Justice.
            Unexpended funds transferred pursuant to this paragraph shall
            be used only for the purposes for which the funds were
            originally authorized and appropriated. The Attorney General
            shall have the right to adjust or realign transfers of funds
            and personnel effected pursuant to this subchapter for a period
            of 2 years after the effective date specified in section 427.
                (4) Authorities of attorney general.--The Attorney General
            (or a delegate of the Attorney General), at such time or times
            as the Attorney General (or the delegate) shall provide, may
            make such determinations as may be necessary with regard to the
            functions transferred by this subchapter, and may make such
            additional incidental dispositions of personnel, assets,
            liabilities, grants, contracts, property, records, and
            unexpended balances of appropriations, authorizations,
            allocations, and other funds held, used, arising from,
            available to, or to be made available in connection with such
            functions, as may be necessary to carry out the provisions of
            this subchapter. The Attorney General shall provide for such
            further measures and dispositions as may be necessary to
            effectuate the purposes of this subchapter.

                         Subchapter B--Other Provisions

    SEC. 431. FUNDING FOR CITIZENSHIP AND IMMIGRATION SERVICES.

        (a) Establishment of Fees for Adjudication and Naturalization
    Services.--Section 286(m) of the Immigration and Nationality Act (8
    U.S.C. 1356(m)) is amended by striking ``services, including the costs
    of similar services provided without charge to asylum applicants or
    other immigrants.'' and inserting ``services.''.
        (b) Authorization of Appropriations for Refugee and Asylum
    Adjudications.--There are authorized to be appropriated such sums as
    may be necessary to carry out the provisions of sections 207 through
    209 of the Immigration and Nationality Act (8 U.S.C. 1157-1159). All
    funds appropriated under this subsection shall be deposited into the
    Immigration Examinations Fee Account established under section 286(m)
    of the Immigration and Nationality Act (8 U.S.C. 1356(m)) and shall
    remain available until expended.

    SEC. 432. BACKLOG ELIMINATION.

        Section 204(a) of the Immigration Services and Infrastructure
    Improvements Act of 2000 (8 U.S.C. 1573(a)) is amended by striking
    ``October 17, 2000;'' and inserting ``1 year after the date of the
    enactment of the Homeland Security Act of 2002;''.

    SEC. 433. REPORT ON IMPROVING IMMIGRATION SERVICES.

        (a) In General.--The Attorney General, not later than 1 year after
    the effective date of this Act, shall submit to the Committees on the
    Judiciary and Appropriations of the United States House of
    Representatives and of the Senate a report with a plan detailing how
    the Bureau of Citizenship and Immigration Services, after the transfer
    of functions specified in subchapter 1 takes effect, will complete
    efficiently, fairly, and within a reasonable time, the adjudications
    described in paragraphs (1) through (5) of section 421(b).
        (b) Contents.--For each type of adjudication to be undertaken by
    the Assistant Attorney General for Citizenship and Immigration
    Services, the report shall include the following:
                (1) Any potential savings of resources that may be
            implemented without affecting the quality of the adjudication.
                (2) The goal for processing time with respect to the
            application.
                (3) Any statutory modifications with respect to the
            adjudication that the Attorney General considers advisable.
        (c) Consultation.--In carrying out subsection (a), the Attorney
    General shall consult with the Secretary of State, the Secretary of
    Labor, the Director of the Bureau of Immigration Enforcement of the
    Department of Homeland Security, and the Director of the Executive
    Office for Immigration Review to determine how to streamline and
    improve the process for applying for and making adjudications described
    in section 421(b) and related processes.

    SEC. 434. REPORT ON RESPONDING TO FLUCTUATING NEEDS.

        Not later than 30 days after the date of the enactment of this Act,
    the Attorney General shall submit to the Congress a report on changes
    in law, including changes in authorizations of appropriations and in
    appropriations, that are needed to permit the Immigration and
    Naturalization Service, and, after the transfer of functions specified
    in subchapter 1 takes effect, the Bureau of Citizenship and Immigration
    Services, to ensure a prompt and timely response to emergent,
    unforeseen, or impending changes in the number of applications for
    immigration benefits, and otherwise to ensure the accommodation of
    changing immigration service needs.

    SEC. 435. APPLICATION OF INTERNET-BASED TECHNOLOGIES.

        (a) Establishment of Tracking System.--The Attorney General, not
    later than 1 year after the effective date of this Act, in consultation
    with the Technology Advisory Committee established under subsection
    (c), shall establish an Internet-based system, that will permit a
    person, employer, immigrant, or nonimmigrant who has filings with the
    Attorney General for any benefit under the Immigration and Nationality
    Act (8 U.S.C. 1101 et seq.), access to online information about the
    processing status of the filing involved.
        (b) Feasibility Study for Online Filing and Improved Processing.--
                (1) Online filing.--The Attorney General, in consultation
            with the Technology Advisory Committee established under
            subsection (c), shall conduct a feasibility study on the online
            filing of the filings described in subsection (a). The study
            shall include a review of computerization and technology of the
            Immigration and Naturalization Service relating to the
            immigration services and processing of filings related to
            immigrant services. The study shall also include an estimate of
            the timeframe and cost and shall consider other factors in
            implementing such a filing system, including the feasibility of
            fee payment online.
                (2) Report.--A report on the study under this subsection
            shall be submitted to the Committees on the Judiciary of the
            United States House of Representatives and the Senate not later
            than 1 year after the effective date of this Act.
        (c) Technology Advisory Committee.--
                (1) Establishment.--The Attorney General shall establish,
            not later than 60 days after the effective date of this Act, an
            advisory committee (in this section referred to as the
            ``Technology Advisory Committee'') to assist the Attorney
            General in--
                        (A) establishing the tracking system under
                    subsection (a); and
                        (B) conducting the study under subsection (b).
            The Technology Advisory Committee shall be established after
            consultation with the Committees on the Judiciary of the United
            States House of Representatives and the Senate.
                (2) Composition.--The Technology Advisory Committee shall
            be composed of representatives from high technology companies
            capable of establishing and implementing the system in an
            expeditious manner, and representatives of persons who may use
            the tracking system described in subsection (a) and the online
            filing system described in subsection (b)(1).

    SEC. 436. CHILDREN'S AFFAIRS.

        (a) Transfer of Functions.--There are transferred to the Director
    of the Office of Refugee Resettlement of the Department of Health and
    Human Services functions under the immigration laws of the United
    States with respect to the care of unaccompanied alien children that
    were vested by statute in, or performed by, the Commissioner of
    Immigration and Naturalization (or any officer, employee, or component
    of the Immigration and Naturalization Service) immediately before the
    effective date specified in subsection (d).
        (b) Functions.--
                (1) In general.--Pursuant to the transfer made by
            subsection (a), the Director of the Office of Refugee
            Resettlement shall be responsible for--
                        (A) coordinating and implementing the care and
                    placement of unaccompanied alien children who are in
                    Federal custody by reason of their immigration status,
                    including developing a plan to be submitted to the
                    Congress on how to ensure that qualified and
                    independent legal counsel is timely appointed to
                    represent the interests of each such child;
                        (B) ensuring that the interests of the child are
                    considered in decisions and actions relating to the
                    care and custody of an unaccompanied alien child;
                        (C) making placement determinations for all
                    unaccompanied alien children who are in Federal custody
                    by reason of their immigration status;
                        (D) implementing the placement determinations;
                        (E) implementing policies with respect to the care
                    and placement of unaccompanied alien children;
                        (F) identifying a sufficient number of qualified
                    individuals, entities, and facilities to house
                    unaccompanied alien children;
                        (G) overseeing the infrastructure and personnel of
                    facilities in which unaccompanied alien children
                    reside;
                        (H) reuniting unaccompanied alien children with a
                    parent abroad in appropriate cases;
                        (I) compiling, updating, and publishing at least
                    annually a state-by-state list of professionals or
                    other entities qualified to provide guardian and
                    attorney representation services for unaccompanied
                    alien children;
                        (J) maintaining statistical information and other
                    data on unaccompanied alien children for whose care and
                    placement the Director is responsible, which shall
                    include--
                                (i) biographical information, such as a
                            child's name, gender, date of birth, country of
                            birth, and country of habitual residence;
                                (ii) the date on which the child came into
                            Federal custody by reason of his or her
                            immigration status;
                                (iii) information relating to the child's
                            placement, removal, or release from each
                            facility in which the child has resided;
                                (iv) in any case in which the child is
                            placed in detention or released, an explanation
                            relating to the detention or release; and
                                (v) the disposition of any actions in which
                            the child is the subject;
                        (K) collecting and compiling statistical
                    information from the Department of Justice, the
                    Department of Homeland Security, and the Department of
                    State on each department's actions relating to
                    unaccompanied alien children; and
                        (L) conducting investigations and inspections of
                    facilities and other entities in which unaccompanied
                    alien children reside.
                (2) Coordination with other entities; no release on own
            recognizance.--In making determinations described in paragraph
            (1)(C), the Director of the Office of Refugee Resettlement--
                        (A) shall consult with appropriate juvenile justice
                    professionals, the Director of the Bureau of
                    Citizenship and Immigration Services of the Department
                    of Justice, and the Director of the Bureau of
                    Immigration Enforcement of the Department of Homeland
                    Security to ensure that such determinations ensure that
                    unaccompanied alien children described in such
                    subparagraph--
                                (i) are likely to appear for all hearings
                            or proceedings in which they are involved;
                                (ii) are protected from smugglers,
                            traffickers, or others who might seek to
                            victimize or otherwise engage them in criminal,
                            harmful, or exploitive activity; and
                                (iii) are placed in a setting in which they
                            not likely to pose a danger to themselves or
                            others; and
                        (B) shall not release such children upon their own
                    recognizance.
                (3) Duties with respect to foster care.--In carrying out
            the duties described in paragraph (1)(G), the Director of the
            Office of Refugee Resettlement is encouraged to use the refugee
            children foster care system established pursuant to section
            412(d) of the Immigration and Nationality Act (8 U.S.C.
            1522(d)) for the placement of unaccompanied alien children.
        (c) Rule of Construction.--Nothing in this section may be construed
    to transfer the responsibility for adjudicating benefit determinations
    under the Immigration and Nationality Act (8 U.S.C. 1101 et seq.) from
    the authority of any official of the Department of Justice, the
    Department of Homeland Security, or the Department of State.
        (d) Effective Date.--Notwithstanding section 4, this section shall
    take effect on the date on which the transfer of functions specified
    under section 411 takes effect.
        (e) References.--With respect to any function transferred by this
    section, any reference in any other Federal law, Executive order, rule,
    regulation, or delegation of authority, or any document of or
    pertaining to a component of government from which such function is
    transferred--
                (1) to the head of such component is deemed to refer to the
            Director of the Office of Refugee Resettlement; or
                (2) to such component is deemed to refer to the Office of
            Refugee Resettlement of the Department of Health and Human
            Services.
        (f) Other Transition Issues.--
                (1) Exercise of authorities.--Except as otherwise provided
            by law, a Federal official to whom a function is transferred by
            this section may, for purposes of performing the function,
            exercise all authorities under any other provision of law that
            were available with respect to the performance of that function
            to the official responsible for the performance of the function
            immediately before the effective date specified in subsection
            (d).
                (2) Savings provisions.--Subsections (a), (b), and (c) of
            section 804 shall apply to a transfer of functions under this
            section in the same manner as such provisions apply to a
            transfer of functions under this Act to the Department of
            Homeland Security.
                (3) Transfer and allocation of appropriations and
            personnel.--The personnel of the Department of Justice employed
            in connection with the functions transferred by this section,
            and the assets, liabilities, contracts, property, records, and
            unexpended balance of appropriations, authorizations,
            allocations, and other funds employed, held, used, arising
            from, available to, or to be made available to, the Immigration
            and Naturalization Service in connection with the functions
            transferred by this section, subject to section 202 of the
            Budget and Accounting Procedures Act of 1950, shall be
            transferred to the Director of the Office of Refugee
            Resettlement for allocation to the appropriate component of the
            Department of Health and Human Services. Unexpended funds
            transferred pursuant to this paragraph shall be used only for
            the purposes for which the funds were originally authorized and
            appropriated.
        (g) Definitions.--As used in this section--
                (1) the term ``placement'' means the placement of an
            unaccompanied alien child in either a detention facility or an
            alternative to such a facility; and
                (2) the term ``unaccompanied alien child'' means a child
            who--
                        (A) has no lawful immigration status in the United
                    States;
                        (B) has not attained 18 years of age; and
                        (C) with respect to whom--
                                (i) there is no parent or legal guardian in
                            the United States; or
                                (ii) no parent or legal guardian in the
                            United States is available to provide care and
                            physical custody.

                         CHAPTER 3--GENERAL PROVISIONS

    SEC. 441. ABOLISHMENT OF INS.

        The Immigration and Naturalization Service of the Department of
    Justice is abolished.

    SEC. 442. VOLUNTARY SEPARATION INCENTIVE PAYMENTS.

        (a) Definitions.--For purposes of this section--
                (1) the term ``employee'' means an employee (as defined by
            section 2105 of title 5, United States Code) who--
                        (A) has completed at least 3 years of current
                    continuous service with 1 or more covered entities; and
                        (B) is serving under an appointment without time
                    limitation;
            but does not include any person under subparagraphs (A)-(G) of
            section 663(a)(2) of Public Law 104-208 (5 U.S.C. 5597 note);
                (2) the term ``covered entity'' means--
                        (A) the Immigration and Naturalization Service;
                        (B) the Bureau of Immigration Enforcement of the
                    Department of Homeland Security; and
                        (C) the Bureau of Citizenship and Immigration
                    Services of the Department of Justice; and
                (3) the term ``transfer date'' means the date on which the
            transfer of functions specified under section 411 takes effect.
        (b) Strategic Restructuring Plan.--Before the Attorney General or
    the Secretary obligates any resources for voluntary separation
    incentive payments under this section, such official shall submit to
    the appropriate committees of Congress a strategic restructuring plan,
    which shall include--
                (1) an organizational chart depicting the covered entities
            after their restructuring pursuant to this Act;
                (2) a summary description of how the authority under this
            section will be used to help carry out that restructuring; and
                (3) the information specified in section 663(b)(2) of
            Public Law 104-208 (5 U.S.C. 5597 note).
    As used in the preceding sentence, the ``appropriate committees of
    Congress'' are the Committees on Appropriations, Government Reform, and
    the Judiciary of the House of Representatives, and the Committees on
    Appropriations, Governmental Affairs, and the Judiciary of the Senate.
        (c) Authority.--The Attorney General and the Secretary may, to the
    extent necessary to help carry out their respective strategic
    restructuring plan described in subsection (b), make voluntary
    separation incentive payments to employees. Any such payment--
                (1) shall be paid to the employee, in a lump sum, after the
            employee has separated from service;
                (2) shall be paid from appropriations or funds available
            for the payment of basic pay of the employee;
                (3) shall be equal to the lesser of--
                        (A) the amount the employee would be entitled to
                    receive under section 5595(c) of title 5, United States
                    Code; or
                        (B) an amount not to exceed $25,000, as determined
                    by the Attorney General or the Secretary;
                (4) may not be made except in the case of any qualifying
            employee who voluntarily separates (whether by retirement or
            resignation) before the end of--
                        (A) the 3-month period beginning on the date on
                    which such payment is offered or made available to such
                    employee; or
                        (B) the 3-year period beginning on the date of the
                    enactment of this Act,
            whichever occurs first;
                (5) shall not be a basis for payment, and shall not be
            included in the computation, of any other type of Government
            benefit; and
                (6) shall not be taken into account in determining the
            amount of any severance pay to which the employee may be
            entitled under section 5595 of title 5, United States Code,
            based on any other separation.
        (d) Additional Agency Contributions to the Retirement Fund.--
                (1) In general.--In addition to any payments which it is
            otherwise required to make, the Department of Justice and the
            Department of Homeland Security shall, for each fiscal year
            with respect to which it makes any voluntary separation
            incentive payments under this section, remit to the Office of
            Personnel Management for deposit in the Treasury of the United
            States to the credit of the Civil Service Retirement and
            Disability Fund the amount required under paragraph (2).
                (2) Amount required.--The amount required under this
            paragraph shall, for any fiscal year, be the amount under
            subparagraph (A) or (B), whichever is greater.
                        (A) First method.--The amount under this
                    subparagraph shall, for any fiscal year, be equal to
                    the minimum amount necessary to offset the additional
                    costs to the retirement systems under title 5, United
                    States Code (payable out of the Civil Service
                    Retirement and Disability Fund) resulting from the
                    voluntary separation of the employees described in
                    paragraph (3), as determined under regulations of the
                    Office of Personnel Management.
                        (B) Second method.--The amount under this
                    subparagraph shall, for any fiscal year, be equal to 45
                    percent of the sum total of the final basic pay of the
                    employees described in paragraph (3).
                (3) Computations to be based on separations occurring in
            the fiscal year involved.--The employees described in this
            paragraph are those employees who receive a voluntary
            separation incentive payment under this section based on their
            separating from service during the fiscal year with respect to
            which the payment under this subsection relates.
                (4) Final basic pay defined.--In this subsection, the term
            ``final basic pay'' means, with respect to an employee, the
            total amount of basic pay which would be payable for a year of
            service by such employee, computed using the employee's final
            rate of basic pay, and, if last serving on other than a full-
            time basis, with appropriate adjustment therefor.
        (e) Effect of Subsequent Employment with the Government.--An
    individual who receives a voluntary separation incentive payment under
    this section and who, within 5 years after the date of the separation
    on which the payment is based, accepts any compensated employment with
    the Government or works for any agency of the Government through a
    personal services contract, shall be required to pay, prior to the
    individual's first day of employment, the entire amount of the
    incentive payment. Such payment shall be made to the covered entity
    from which the individual separated or, if made on or after the
    transfer date, to the Deputy Attorney General (for transfer to the
    appropriate component of the Department of Justice, if necessary) or
    the Under Secretary for Enforcement and Security (for transfer to the
    appropriate component of the Department of Homeland Security, if
    necessary).
        (f) Effect on Employment Levels.--
                (1) Intended effect.--Voluntary separations under this
            section are not intended to necessarily reduce the total number
            of full-time equivalent positions in any covered entity.
                (2) Use of voluntary separations.--A covered entity may
            redeploy or use the full-time equivalent positions vacated by
            voluntary separations under this section to make other
            positions available to more critical locations or more critical
            occupations.

    SEC. 443. AUTHORITY TO CONDUCT A DEMONSTRATION PROJECT RELATING TO
                        DISCIPLINARY ACTION.

        (a) In General.--The Attorney General and the Secretary may each,
    during a period ending not later than 5 years after the date of the
    enactment of this Act, conduct a demonstration project for the purpose
    of determining whether one or more changes in the policies or
    procedures relating to methods for disciplining employees would result
    in improved personnel management.
        (b) Scope.--A demonstration project under this section--
                (1) may not cover any employees apart from those employed
            in or under a covered entity; and
                (2) shall not be limited by any provision of chapter 43,
            75, or 77 of title 5, United States Code.
        (c) Procedures.--Under the demonstration project--
                (1) the use of alternative means of dispute resolution (as
            defined in section 571 of title 5, United States Code) shall be
            encouraged, whenever appropriate; and
                (2) each covered entity under the jurisdiction of the
            official conducting the project shall be required to provide
            for the expeditious, fair, and independent review of any action
            to which section 4303 or subchapter II of chapter 75 of such
            title 5 would otherwise apply (except an action described in
            section 7512(5) thereof).
        (d) Actions Involving Discrimination.--Notwithstanding any other
    provision of this section, if, in the case of any matter described in
    section 7702(a)(1)(B) of title 5, United States Code, there is no
    judicially reviewable action under the demonstration project within 120
    days after the filing of an appeal or other formal request for review
    (referred to in subsection (c)(2)), an employee shall be entitled to
    file a civil action to the same extent and in the same manner as
    provided in section 7702(e)(1) of such title 5 (in the matter following
    subparagraph (C) thereof).
        (e) Certain Employees.--Employees shall not be included within any
    project under this section if such employees are--
                (1) neither managers nor supervisors; and
                (2) within a unit with respect to which a labor
            organization is accorded exclusive recognition under chapter 71
            of title 5, United States Code.
    Notwithstanding the preceding sentence, an aggrieved employee within a
    unit (referred to in paragraph (2)) may elect to participate in a
    complaint procedure developed under the demonstration project in lieu
    of any negotiated grievance procedure and any statutory procedure (as
    such term is used in section 7121 of such title 5).
        (f) Reports.--The General Accounting Office shall prepare and
    submit to the Committees on Government Reform and the Judiciary of the
    House of Representatives and the Committees on Governmental Affairs and
    the Judiciary of the Senate periodic reports on any demonstration
    project conducted under this section, such reports to be submitted
    after the second and fourth years of its operation. Upon request, the
    Attorney General or the Secretary shall furnish such information as the
    General Accounting Office may require to carry out this subsection.
        (g) Definition.--In this section, the term ``covered entity'' has
    the meaning given such term in section 442(a)(2).

    SEC. 444. SENSE OF CONGRESS.

        It is the sense of the Congress that--
                (1) the missions of the Bureau of Immigration Enforcement
            of the Department of Homeland Security and the Bureau of
            Citizenship and Immigration Services of the Department of
            Justice are equally important and, accordingly, they each
            should be adequately funded; and
                (2) the functions transferred under this subtitle should
            not, after such transfers take effect, operate at levels below
            those in effect prior to the enactment of this Act.

    SEC. 445. REPORTS AND IMPLEMENTATION PLANS.

        (a) Division of Funds.--The Attorney General and the Secretary, not
    later than 120 days after the effective date of this Act, shall each
    submit to the Committees on Appropriations and the Judiciary of the
    United States House of Representatives and of the Senate a report on
    the proposed division and transfer of funds, including unexpended
    funds, appropriations, and fees, between the Bureau of Citizenship and
    Immigration Services and the Bureau of Immigration Enforcement.
        (b) Division of Personnel.--The Attorney General and the Secretary,
    not later than 120 days after the effective date of this Act, shall
    each submit to the Committees on Appropriations and the Judiciary of
    the United States House of Representatives and of the Senate a report
    on the proposed division of personnel between the Bureau of Citizenship
    and Immigration Services and the Bureau of Immigration Enforcement.
        (c) Implementation Plan.--
                (1) In general.--The Attorney General and the Secretary,
            not later than 120 days after the effective date of this Act,
            and every 6 months thereafter until the termination of fiscal
            year 2005, shall each submit to the Committees on
            Appropriations and the Judiciary of the United States House of
            Representatives and of the Senate an implementation plan to
            carry out this Act.
                (2) Contents.--The implementation plan should include
            details concerning the separation of the Bureau of Citizenship
            and Immigration Services and the Bureau of Immigration
            Enforcement, including the following:
                        (A) Organizational structure, including the field
                    structure.
                        (B) Chain of command.
                        (C) Procedures for interaction among such bureaus.
                        (D) Fraud detection and investigation.
                        (E) The processing and handling of removal
                    proceedings, including expedited removal and
                    applications for relief from removal.
                        (F) Recommendations for conforming amendments to
                    the Immigration and Nationality Act (8 U.S.C. 1101 et
                    seq.).
                        (G) Establishment of a transition team.
                        (H) Methods to phase in the costs of separating the
                    administrative support systems of the Immigration and
                    Naturalization Service in order to provide for separate
                    administrative support systems for the Bureau of
                    Citizenship and Immigration Services and the Bureau of
                    Immigration Enforcement.
        (d) Comptroller General Studies and Reports.--
                (1) Status reports on transition.--Not later than 18 months
            after the date on which the transfer of functions specified
            under section 411 takes effect, and every 6 months thereafter,
            until full implementation of this subtitle has been completed,
            the Comptroller General of the United States shall submit to
            the Committees on Appropriations and on the Judiciary of the
            United States House of Representatives and the Senate a report
            containing the following:
                        (A) A determination of whether the transfers of
                    functions made by chapters 1 and 2 have been completed,
                    and if a transfer of functions has not taken place,
                    identifying the reasons why the transfer has not taken
                    place.
                        (B) If the transfers of functions made by chapters
                    1 and 2 have been completed, an identification of any
                    issues that have arisen due to the completed transfers.
                        (C) An identification of any issues that may arise
                    due to any future transfer of functions.
                (2) Report on management.--Not later than 4 years after the
            date on which the transfer of functions specified under section
            411 takes effect, the Comptroller General of the United States
            shall submit to the Committees on Appropriations and on the
            Judiciary of the United States House of Representatives and the
            Senate a report, following a study, containing the following:
                        (A) Determinations of whether the transfer of
                    functions from the Immigration and Naturalization
                    Service to the Bureau of Citizenship and Immigration
                    Services and the Bureau of Immigration Enforcement have
                    improved, with respect to each function transferred,
                    the following:
                                (i) Operations.
                                (ii) Management, including accountability
                            and communication.
                                (iii) Financial administration.
                                (iv) Recordkeeping, including information
                            management and technology.
                        (B) A statement of the reasons for the
                    determinations under subparagraph (A).
                        (C) Any recommendations for further improvements to
                    the Bureau of Citizenship and Immigration Services and
                    the Bureau of Immigration Enforcement.
                (3) Report on fees.--Not later than 1 year after the date
            of the enactment of this Act, the Comptroller General of the
            United States shall submit to the Committees on the Judiciary
            of the House of Representatives and of the Senate a report
            examining whether the Bureau of Citizenship and Immigration
            Services is likely to derive sufficient funds from fees to
            carry out its functions in the absence of appropriated funds.

        Page 24, strike line 7 and all that follows through page 27, line
    15.

        Page 27, line 16, strike ``503'' and insert ``404''.

        Page 28, line 10, strike ``504''; and insert ``405''.

        Page 29, line 1, strike ``505'' and insert ``406''.

        Page 30, line 12, before ``In'' insert ``(a) In General.--

        Page 31, after line 6, insert the following:

        (b) Immigration Enforcement.--
                (1) In general.--In addition to the responsibilities
            described in subsection (a), the Under Secretary for Management
            shall be responsible for the following:
                        (A) Maintenance of all immigration statistical
                    information of the Bureau of Immigration Enforcement.
                    Such statistical information shall include information
                    and statistics of the type contained in the publication
                    entitled ``Statistical Yearbook of the Immigration and
                    Naturalization Service'' prepared by the Immigration
                    and Naturalization Service (as in effect immediately
                    before the date on which the transfer of functions
                    specified under section 411 takes effect), including
                    region-by-region statistics on the aggregate number of
                    applications and petitions filed by an alien (or filed
                    on behalf of an alien) and denied by such bureau, and
                    the reasons for such denials, disaggregated by category
                    of denial and application or petition type.
                        (B) Establishment of standards of reliability and
                    validity for immigration statistics collected by the
                    Bureau of Immigration Enforcement.
        (2) Transfer of functions.--In accordance with title VIII, there
    shall be transferred to the Under Secretary for Management all
    functions performed immediately before such transfer occurs by the
    Statistics Branch of the Office of Policy and Planning of the
    Immigration and Naturalization Service with respect to the following
    programs:
                        (A) The Border Patrol program.
                        (B) The detention and removal program.
                        (C) The intelligence program.
                        (D) The investigations program.
                        (E) The inspections program.

        Page 31, strike lines 15 through 19 and insert the following:

                TITLE VII--INSPECTOR GENERAL; GENERAL PROVISIONS

        Page 31, strike line 20 and all that follows through page 32, line
    19.

        Page 32, line 20, strike ``Subtitle B'' and insert ``Subtitle A''.

        Page 33, line 2, insert ``sensitive'' before ``information''.

        Page 34, strike lines 7 through 10 and insert the following:

        (c) Notification Required.--If the Secretary exercises any power
    under subsection (a) or (b), the Secretary shall notify the Inspector
    General of the Department in writing stating the reasons for such
    exercise. Within 30 days after receipt of any such notice, the
    Inspector General shall transmit a copy of such notice and a written
    response thereto that includes (1) a statement as to whether the
    Inspector General agrees or disagrees with such exercise and (2) the
    reasons for any disagreement, to the President of the Senate and the
    Speaker of the House of Representatives and to appropriate committees
    and subcommittees of the Congress.
        (d) Appointment of Deputy Inspector General for Civil Rights and
    Civil Liberties.--The Inspector General of the Department of Homeland
    Security shall appoint a Deputy Inspector General for Civil Rights and
    Civil Liberties (hereinafter in this subsection referred to as the
    ``Deputy'').
        (e) Civil Rights and Civil Liberties Review.--The Deputy shall--
                (1) review information alleging abuses of civil rights,
            civil liberties, and racial and ethnic profiling by employees
            and officials of the Department of Homeland Security;
                (2) make public through the Internet, radio, television, or
            newspaper advertisements information on the responsibilities
            and functions of, and how to contact, the Deputy; and
                (3) submit to the President of the Senate, the Speaker of
            the House of Representatives, and the appropriate committees
            and subcommittees of the Congress on a semiannual basis a
            report on the implementation of this subsection and detailing
            any abuses described in paragraph (1), including the use of
            funds appropriated to carry out this subsection.

        Page 34, beginning at line 11, strike subtitle C of title VII (and
    redesignate provisions accordingly)

        Page 34, line 20, strike ``Subtitle D'' and insert ``Subtitle B''.

        Page 35, line 5, insert ``(a)'' before ``Notwithstanding''.

        Page 35, line 13, strike ``; and'', and after line 13 insert the
    following:

        ``(b) Notwithstanding any other provision of this title, the
    Secretary shall, in consultation with the Director of the Office of
    Personnel Management, review the pay and benefit plans of each agency
    whose functions are transferred under this title to the Department and,
    within 90 days after the date of enactment, submit a plan to the
    President of the Senate and the Speaker of the House of Representatives
    and the appropriate committees and subcommittees of the Congress, for
    ensuring, to the maximum extent practicable, the elimination of
    disparities in pay and benefits throughout the Department, especially
    among law enforcement personnel, that are inconsistent with merit
    system principles set forth in section 2301 of title 5, United States
    Code.''; and

        Page 41, after line 6, insert the following (and redesignate
    provisions and amend the table of contents accordingly):

    SEC. 735. CONTINUING PROTECTION OF WHISTLEBLOWER PROTECTION ACT.

        It is the sense of the Committee on the Judiciary of the House of
    Representatives that employees transferred to the Department who, on
    the date of the enactment of this Act, are covered by section
    2302(b)(8) of title 5, United States Code (popularly known as the
    Whistleblower Protection Act), should continue to receive that
    protection. However, recognizing that personnel in the Department will
    have access to substantial law enforcement information and
    intelligence, the Committee believes that such whistleblower
    protections should not compromise information or intelligence that
    would be protected if it remained in other agencies.

    SEC. 736. ESTABLISHMENT OF INTERNET SITE FOR REPORTING SUSPICIOUS
                        ACTIVITIES.

        It is the sense of the Committee on the Judiciary of the House of
    Representatives that the Secretary of Homeland Security shall establish
    a site on the Internet, the purpose of which shall be to provide a
    single location at which may be found a direct connection to all other
    Internet sites established by Federal agencies for reporting suspicious
    activities. The Committee recommends that the Secretary take such
    action as is necessary to ensure that the domain name for the site is
    www.911.gov, or an equally identifiable domain name.
        Page 44, after line 10 insert the following:

        (f) Task Force on Administrative Procedure.--The Secretary shall
    appoint a task force to resolve conflicts among and harmonize the
    various administrative procedures of the agencies transferred to the
    Department. The task force should be composed of legal officers (or
    similarly qualified persons) made available for this purpose by the
    head of the executive agency from which the transferred agency came.
        (g) Administrative Law Judges.--The Office of Personnel Management
    shall ensure that there are sufficient qualified administrative law
    judge resources available to the Department to conduct matters required
    to be conducted by administrative law judges in agencies transferred to
    the Department.

        Page 45, line 1, strike ``Subject'' and insert ``(1) Subject''.

        Page 45, line 3, strike ``(1)'' and insert ``(A)''.

        Page 45, line 12, strike ``(2)'' and insert ``(B)''.

        Page 45, after line 20, insert the following:

        (2)(A) The Secretary's authority under paragraph (1) does not
    extend to a pending proceeding in or an order issued by an agency that
    has not yet been transferred to the Department.
        (B) Unless the Secretary makes a determination in writing stating
    the reason it should not do so--
                (i) a pending proceeding before an agency transferred to
            the Department shall continue to be pending;
                (ii) an order issued by an agency transferred to the
            Department shall continue in force; and
                (iii) the procedure applicable before the transfer shall
            continue to apply to such proceeding or order.

        Page 47, after line 19, insert the following:

    SEC. 807. AUTHORIZATIONS.

        Nothing in this Act shall be construed to authorize the development
    of a national identification system or card.

        Page 48, line 8, before ``Title'' insert ``(a) In General.--''.
        Page 48, line 24, strike the period at the end and insert ``;
    and''.

        Page 48, after line 24, insert the following:

                (5) in section 5315, by striking ``Commissioner of
            Immigration and Naturalization, Department of Justice.''.
        (b) Special Effective Date.--Notwithstanding section 4, the
    amendment made by subsection (a)(5) shall take effect on the date on
    which the transfer of functions specified under section 411 takes
    effect.

        Page 49, line 4, strike ``of the Treasury'' and insert ``Secretary
    of the Treasury''.

        Page 49, line 5, strike ``of Homeland Security'' and insert
    ``Attorney General''.

        At the end of the bill add the following:

               TITLE    --TRANSFERS TO THE DEPARTMENT OF JUSTICE

    SEC. __01. TRANSFER OF THE FEDERAL LAW ENFORCEMENT TRAINING CENTER.

        There shall be transferred to the Attorney General the functions,
    personnel, assets, and liabilities of the Federal Law Enforcement
    Training Center, including any functions of the Secretary of the
    Treasury relating thereto.

    SEC. __02. TRANSFER OF THE UNITED STATES SECRET SERVICE.

        There shall be transferred to the Attorney General the functions,
    personnel, assets, and liabilities of the United States Secret Service,
    including any functions of the Secretary of the Treasury relating
    thereto.

    SEC. __03. STUDY.

        Not later than 90 days after the effective date of this Act, the
    Attorney General shall submit a plan to the Committee on the Judiciary
    of the House of Representatives and the Committee on the Judiciary of
    the Senate regarding the integration of the United States Secret
    Service and the Federal Law Enforcement Training Center into the
    Department of Justice.

    9/12/2002 10:04:24 AM - F:\V7\091202\091202.026 Created by:
                     VLCirks deg.Committee on the Judiciary

                         U.S. House of Representatives

                     Views and Recommendations on H.R. 5005

                     ``The Homeland Security Act of 2002''

                                 July 12, 2002

      Principal Provisions of Judiciary Committee Amendments to H.R. 5005

        The Committee amendments to H.R. 5005 are fully consistent
    with the articulated mission of the proposed Department of
    Homeland Security (DHS). Reported amendments merely streamline
    the structure and focus the mission of the Department to help
    ensure its success. The Committee recommends modifying the
    mission statement of the Department to stress that its core
    mission should be the prevention, detection, disruption, and
    effective response to terrorist threats and activities. The
    Manager's Amendment to H.R. 5005 would enhance the
    effectiveness of the new Department and reduce bureaucracy by:
    (1) limiting the number of Under Secretaries to four; (2)
    transferring only a small component of the Federal Emergency
    Management Agency to the new Department; (3) transferring the
    Secret Service to the Department of Justice; and (4) ensuring
    that immigration services remain at the Department of Justice.
    The amendments also make important recommendations to reduce
    potential abuses by the new Department, including the addition
    of a privacy officer, the creation of deputy Inspector General
    for civil rights and civil liberties, and the inclusion of
    strengthened whistleblower protection provisions. The following
    chart reflects the revised organizational structure the
    Committee recommends for the proposed Department.

               Law Enforcement and Emergency Response Amendments

                           clarification of key terms

        The Committee recommends the statutory definition of terms
    which are critical to the effective functioning of the proposed
    Department. Accordingly, ``critical infrastructure'' and
    ``terrorism'' are clearly defined. The definition of critical
    infrastructures is based up Presidential Decision Directive 63.
    The definition of terrorism is derived from 18 U.S.C. Sec.
    2331 as amended by the PATRIOT Act of 2001. The Committee
    recommends clarification of these terms in order to provide
    definitional guidance and consistency to the Department. It
    also important to define these terms because the new Department
    will have authority to share and analyze intelligence
    information relating to terrorist threats. Providing a clear
    definition of terrorism will ensure that DHS will not obtain or
    misuse unrelated personal information.

                  crisis management and consequence management

        As introduced, H.R. 5005 would make consequence management,
    not crisis management, the primary mission of the new
    Department. The Committee amendments clarify that crisis
    management is a central function of the proposed Department.
    The Committee amendment defines crisis management and
    consequence management to better delineate the functions of the
    new Department. ``Crisis management'' includes measures to
    identify, acquire and plan the use of resources needed to
    anticipate, prevent, or resolve a threat or act of terrorism.
    In contrast, ``consequence management'' is primarily concerned
    with the response and coordination of relief activities after
    an attack occurs. There is a clear and vital distinction
    between crisis and consequence management and this distinction
    must not be lost in the creation of the new Department.

                 preservation of fema as an independent agency

        The amendments reported by the Committee recommend
    modifying the provisions of H.R. 5005 that would transfer all
    of functions of the Federal Emergency Management Agency (FEMA)
    to the new Department. This is because FEMA's main mission as a
    consequence management agency is to respond to natural
    disasters. In most fiscal years, 75 to 95 percent of FEMA's
    budget is directed towards disaster relief assistance.
    Transferring FEMA in its entirety to DHS would detract from the
    agency's core mission. A terrorist attack is a federal crime
    and a crisis event, which requires a response different from
    that of a natural disaster. In addition, transferring all of
    FEMA to the new Department would divert FEMA from its vital and
    highly effective disaster relief role.
        The Judiciary Committee's recommendation to maintain FEMA
    as a separate federal agency obviates the need for an Under
    Secretary for Emergency Preparedness and Response. Thus, the
    Committee's amendment eliminates the Under Secretary for
    Emergency Preparedness and Response, and transfers remaining
    functions to the Undersecretary for Border and Transportation
    Security. To reflect the centrality of law enforcement to this
    component, the Judiciary Committee amendment also changes the
    title of the Undersecretary for Border and Transportation
    Security to the Under Secretary for Enforcement and Security.
    This change properly reflects the comprehensive enforcement and
    security functions of this division, while acknowledging the
    primacy of other law enforcement functions and responsibilities
    which would be transferred. For example, the Coast Guard,
    Customs Service, and Border Patrol are charged with enforcing
    federal laws pertaining to drug interdiction, child
    pornography, intellectual property, and illegal immigration.
        In addition, FEMA does not belong at DHS because directors
    of this agency have explicitly refused to provide first
    responders with training and assistance in crisis management
    functions. For example, in a March 13, 2002, letter to Chairman
    Sensenbrenner, the Director of FEMA stated that FEMA would not
    handle crisis management or law enforcement training, technical
    assistance, exercises, and equipment. The Director asserted
    that: ``While FEMA will coordinate grants and assistance to
    first responders, it will not assume any law enforcement
    functions, nor will FEMA provide law enforcement training--
    training or investigative techniques, evidence collection
    techniques * * *''. State and local emergency responders must
    receive crisis management training as it is an essential
    component of an effective, coordinated homeland security
    strategy.
        DHS must serve all first responders through training and
    assistance in both consequence and crisis management to be
    adequately prepared for today's terrorist threat. As reported
    by the Judiciary Committee, H.R. 5005 would make the Under
    Secretary for Enforcement and Security responsible for training
    and coordinating state and local emergency responders in both
    crisis and consequence management. It must be stressed that
    investing the Under Secretary for Enforcement and Security with
    these responsibilities in no way detracts from the Federal
    Bureau of Investigation's lead role in investigating terrorist
    threats or events; nor does it undermine the role of FEMA,
    which would remain an independent agency charged with
    consequence management in the event of a natural disaster.

           transfer of fema's office of national preparedness to dhs

        The Committee's amendment recommends the transfer of a
    small component of FEMA, the Office of National Preparedness
    (ONP), to the new Department. ONP's primary focus is to provide
    training and technical assistance for first responders in
    consequence management following a terrorist attack.
    Transferring ONP from FEMA would augment other training and
    emergency assistance functions transferred to DHS from other
    agencies. These include the Office for Domestic Preparedness
    (ODP) within the Department of Justice as well as offices
    within the Department of Health and Human Services which
    provide grants, technical assistance and equipment to first
    responders. The selective transfer of ONP from FEMA to DHS
    would strengthen the Department's ability to respond to
    terrorist events while averting the imposition of extraneous
    and burdensome responsibilities which would detract from the
    Department's central homeland security mission. This would help
    guarantee a centralized crisis and consequence management
    function at the new Department.

          transfer of the secret service to the department of justice

        As introduced, H.R. 5005 would transfer the Secret Service
    to DHS while preserving the Service as a ``distinct entity.''
    The Committee recommends streamlining and focusing the proposed
    Department by transferring Secret Service to the Department of
    Justice rather than DHS. The Judiciary Committee is the
    authorizing Committee for the Secret Service and has concluded
    that the Service does not properly belong at DHS. Crime
    prevention and law enforcement are central to the mission of
    the Secret Service. The Secret Service is charged with
    enforcing several federal statutes relating to counterfeiting,
    threats against governments officials such as the President and
    Vice President, credit card fraud, computer crimes, and fraud
    against financial institutions. Furthermore, unlike nearly all
    of the law enforcement agencies H.R. 5005 would transfer to
    DHS, the Service is not a border or transportation security
    agency. Finally, while the Service coordinates with federal and
    state agencies when providing security for national events,
    these activities comprise a fraction of its overall
    responsibilities.

        transfer of the federal law enforcement training center to the
                             department of justice

        The Committee further recommends transferring the Federal
    Law Enforcement Training Center (FLETC) from the Treasury
    Department to the Justice Department. FLETC was established in
    1970 to provide an interagency law enforcement training program
    to train federal, state, local, and foreign law enforcement
    entities. FLETC's training curriculum closely resembles that
    provided by the Federal Bureau of Investigation. Its basic
    training course provides instruction in criminal investigation
    to uniformed law enforcement officers who possess authority to
    carry firearms and effect arrests. FLETC's transfer to the
    Department of Justice assures a greater level of consistency
    and coordination of federal law enforcement training procedures
    under the direction of the nation's chief law enforcement
    officer, the Attorney General. The rationale for shifting FLETC
    to the Department of Justice is even more pronounced given the
    fact that H.R. 5005's transfer of the Customs Service from the
    Treasury Department to DHS would leave Treasury with a greatly
    diminished law enforcement mission.

                Immigration Enforcement and Services Amendments

      steps to ensure the effective operation and integration of certain
                        immigration functions within dhs

        The Committee recommends the incorporation of many of the
    immigration-related structural reform provisions contained in
    H.R. 3231, the ``Barbara Jordan Immigration Reform and
    Accountability Act,'' which passed the House by a vote of 405-
    9. Like H.R. 3231, the Committee recommends the abolition of
    the Immigration and Naturalization Service (INS). In addition,
    the amendment retains H.R. 3231's requirements concerning: the
    Ombudsman; the Citizenship Office; the requirement to utilize
    Internet-based technology to promote administrative efficiency;
    pilot initiatives for reduce administrative backlogs; voluntary
    separation incentive payments; the authority to conduct a
    demonstration project relating to disciplinary action of
    immigration officers; the managerial rotation program; a
    reporting requirement on interior checkpoints; and an
    assessment of shifting demands presented by fluctuating
    immigration needs.

        separation of immigration enforcement from immigration services

        The Committee recommends establishing the Bureau of
    Immigration Enforcement within the Department of Homeland
    Security's office of Border and Transportation Security
    (renamed the division of Enforcement and Security), while
    establishing the Bureau of Citizenship and Immigration Services
    in the Department of Justice. The Bureau of Immigration
    Enforcement recommended by the amendment would be nearly
    identical to the enforcement bureau created by H.R. 3231. The
    Bureau of Citizenship and Immigration Services, is also very
    similar to the services bureau contained H.R. 3231. Finally,
    the Committee amendment would create an Assistant Attorney
    General for Citizenship and Immigration Services who would
    report to the Deputy Attorney General.
        These organizational reforms will help address widely-
    recognized, systemic ``mission overload'' problems within the
    INS, while helping to ensure that immigration services will
    receive the resources necessary to professionally respond to
    the needs of legal immigrants. By separating immigration
    enforcement from immigration services and elevating the status
    of immigration services within the Justice Department, the
    amendment gives legal immigration services the focus and
    attention they deserve. Maintaining immigration services in the
    Justice Department would also promote a closer examination of
    the financial needs of the service bureau to improve
    immigration services than if the component resided in the
    Department of Homeland Security. If the services bureau were
    transferred to DHS, appropriating funds for these services
    would be an afterthought.
        Retaining responsibility for immigration services at the
    Department of Justice, which is responsible for administering
    immigration benefits, would also ensure the legitimate needs of
    legal immigrants are not subsumed by the massive size and scope
    of a Department which would be primarily dedicated to homeland
    security. It would affirm America's commitment to welcome legal
    immigrants to the United States in a timely and professional
    manner by personnel who will not assume that all legal
    immigrants present a security threat.
        With respect to immigration enforcement, the Committee
    recognizes that several enforcement functions of the INS, such
    as inspections and the Border Patrol, naturally fit together
    with Customs and other border components. These units should be
    consolidated as a border security unit, which is an integral
    part of the Department of Homeland Security. Therefore, the
    Committee recommends that the immigration enforcement be
    transferred to DHS and established as the Bureau of Immigration
    Enforcement within the Border and Transportation Security
    division (renamed the division of Enforcement and Security).
        With the proposed transfer of immigration enforcement and
    services functions to two separate Departments, it is essential
    that the enforcement and service bureaus communicate
    effectively with one another. Many aliens must interact with
    both immigration services and enforcement officers; this
    overlap is unavoidable. Accordingly, the Committee Amendment
    would create a liaison in each bureau to communicate with the
    other bureau. To ensure that the two bureaus share information
    and coordinate their efforts, each liaison would be required to
    create a common access system to information technology,
    databases, records, files, and other administrative resources.
    Currently, the INS has systemic administrative and
    organizational problems, often misplacing or losing
    applications and other paperwork. Sending and receiving paper
    files between the two Departments would only compound the
    problem. The Committee Amendment, like H.R. 3231, would thus
    require the Attorney General to establish an Internet-based
    system so that aliens may apply for benefits and check the
    status of their applications online. The INS must move away
    from its antiquated paper filing system. Dividing the INS
    between DHS and the Justice Department would facilitate
    movement toward an electronic filing system so that both the
    service and enforcement bureaus can easily access and maintain
    the integrity of alien files. Most importantly, these changes
    would ensure that fewer files are lost.

                          office of children's affairs

        With respect to the Office of Children's Affairs, the
    Committee amendment would transfer the same functions created
    in H.R. 3231 to the Director of the Office of Refugee
    Resettlement within the Department of Health and Human
    Services. These functions include ``unaccompanied alien
    childrens'' care and placement that were exercised by the INS
    Commissioner prior to the effective date of the bill;
    coordinating and implementing the law and policy for
    unaccompanied alien children who come into federal custody;
    making placement determinations for all unaccompanied alien
    children in federal custody; identifying and overseeing the
    infrastructure and personnel of facilities that house
    unaccompanied alien children; annually publishing a state-by-
    state list of professionals or other entities qualified to
    provide guardian and attorney services; maintaining statistics
    on unaccompanied alien children; and reuniting unaccompanied
    alien children with a parent abroad, where appropriate.
        The Committee amendment also gives the Director of the
    Bureau of Immigration Enforcement the responsibility for
    collecting information relating to nonimmigrant foreign
    students and other exchange program participants, including the
    Student and Exchange Visitor Information System, and using such
    information to carry out the enforcement functions of the
    bureau.

             Protections Against Potential Abuses by the Department

                    safeguards to protect individual privacy

        The amendments to H.R. 5005 add important provisions to
    protect against the unauthorized use or disclosure of private
    information. The amendment requires the appointment of a
    privacy officer to ensure the Department's compliance with the
    Privacy Act of 1974, and permits congressional oversight of
    such compliance. In addition to information technologies, the
    privacy officer would be responsible for assuring that all
    forms of technologies, are not employed by DHS to erode
    citizens' privacy protections.
        The privacy officer will report to Congress on privacy
    violations and conduct privacy impact assessments of proposed
    rules when deemed appropriate by the Secretary. The Committee
    recommends that the DHS Secretary establish procedures ensuring
    the confidentiality and accuracy of personally identifiable
    information. These procedures would require the DHS Secretary
    to: (1) limit the redissemination of personally identifiable
    information (such as Social Security numbers) to ensure that it
    is not used for an unauthorized purpose; (2) ensure the
    security and confidentiality of such information; (3) protect
    the constitutional and statutory rights of any individuals who
    are subjects of such information; and (4) provide data
    integrity through the timely removal and destruction of
    obsolete or erroneous names and information. The text of this
    provision is substantively identical to H.R. 4598, the
    ``Homeland Security Information Sharing Act.'' In addition, the
    amendment contains a clear mandate that nothing in H.R. 5005 be
    construed to authorize the development of a national
    identification card or system. Finally, the amendment would
    require the Secretary of DHS to appoint a task force to
    harmonize the administrative procedures and adjudicative
    processes of the new Department.

                   inspector general amendments to h.r. 5005

        As introduced, section 710(a) and (b) of H.R. 5005 would
    allow the Secretary to restrict the activities of the Inspector
    General (IG) when those activities involve certain information,
    generally related to national security. Specifically, H.R. 5005
    would permit the Secretary to exercise control over the
    Inspector General's authority to conduct audits or
    investigations or to issue subpoenas if these activities would
    require access to information concerning: (1) intelligence,
    counterintelligence, or counterterrorism matters; (2) ongoing
    criminal investigations or proceedings; (3) undercover
    operations; (4) the identity of confidential sources, including
    protected witnesses; (5) other matters the disclosure of which
    would, in the Secretary's judgment, constitute a serious threat
    to the protection of certain persons or property; and (5) other
    matters that, in the Secretary's judgment, would constitute a
    serious threat to national security. Section 710(c) requires
    the Secretary to notify the President of the Senate and the
    Speaker of the House within 30 days of the exercise of that
    authority.
        The proposed amendment conforms the Secretary's authority
    and responsibilities more closely to the corresponding
    provisions relating to the authority and responsibilities of
    other department heads at the Departments of Defense, Justice,
    and Treasury and the Central Intelligence Agency. First, the
    language would amend subsection 710(a) to allow the Secretary
    to restrict the IG's authority when access to ``sensitive''
    information--not just any information-- concerning the
    specified matters is involved. Provisions governing other
    inspectors general specifically refer to ``sensitive''
    information, not just any information. Second, the amendment
    alters and expands the reporting requirement in subsection
    701(c) to require: (1) the Secretary to notify the IG and
    provide reasons for the exercise of the authority; (2) the IG
    to forward the Secretary's notification and reasons to the
    President of the Senate, the Speaker of the House, and
    appropriate committees and subcommittees of Congress; and (3)
    the IG to report to Congress whether he or she disagrees with
    the Secretary. If there is a disagreement, the amendment
    requires the IG to explain the reason for the disagreement in
    his report to Congress.

       establishment of a deputy ig for civil rights and civil liberties

        The amendment would also require the Inspector General to
    appoint a Deputy Inspector General to examine allegations of
    civil rights abuses, including allegations of racial or ethnic
    profiling, by employees of the Department of Homeland Security.
    The Deputy Inspector General must advertise his or her
    responsibilities and report to Congress on a semi-annual basis
    regarding his responsibilities.

                       enhanced whistleblower protections

        The Manager's Amendment contains a sense of the Committee
    that employees transferred to DHS continue to receive existing
    whistleblower protections provided that sensitive intelligence
    or law enforcement information is not compromised. The general
    whistleblower statute broadly applies to federal employees.
    However, federal personnel are not protected by this statute if
    they work in an ``excepted service'' or are excluded from
    coverage by the President ``based on a determination that [it]
    is necessary and warranted by conditions of good administration
    * * *''. This statute specifically does not apply to the
    Federal Bureau of Investigation, Central Intelligence Agency,
    and other foreign intelligence or counterintelligence agencies.
    Federal employees who handle sensitive and classified law
    enforcement and counter-intelligence information have been
    extended whistleblower protections, but are subject to special
    treatment because of the sensitive nature of the information
    that may be involved in any investigation or complaint brought
    forward by an employee.
        The Committee's language seeks to ensure that when
    regulations are implemented by the Department they should
    reflect the procedures that have been adopted in other agencies
    to protect such information. Section 730 of the bill as
    introduced appeared to permit the Secretary to eliminate those
    protections. In response to Members questions, Governor Ridge
    testified that the bill was not intended to strip whistleblower
    protections from employees by moving them to the Department of
    Homeland Security. The amendment expresses the sense of the
    Committee that the protections should be continued in the new
    Department, but that sensitive law enforcement information and
    intelligence need to continue to be protected as they are under
    current law in other agencies.

                             Additional Amendments

          harmonization and rationalization of department compensation

        DHS would incorporate law enforcement personnel from a
    number of existing agencies. Disparate pay scales and
    retirement policies among similarly situated law enforcement
    personnel threatens to erode employee morale and jeopardize the
    success of the new Department's law enforcement mission. The
    Committee expresses concern that pay and benefit disparities
    among law enforcement agencies have resulted in substantial
    defections from agencies where the pay and benefit package
    appears to be low to agencies where the pay and benefit
    packages are perceived to The amendment requires the Secretary
    of Homeland Security, in consultation with the Director of the
    Office of Personnel Management, to submit a plan (within 90
    days of the establishment of the Department) to the President
    and Congress to ensure, to the maximum extent practicable, the
    elimination of disparities in pay and benefits among employees
    (especially among law enforcement personnel) of the new
    Department. The Committee is particularly concerned that
    increased compensation provided to employees of the
    Transportation Security Administration (TSA) is causing
    qualified law enforcement personnel from the Secret Service,
    Capitol Hill Police, and Park Service to migrate to the TSA.

                              Additional Concerns

                    executive office for immigration review

        The Executive Office for Immigration Review (EOIR), located
    in the Justice Department, houses the immigration courts and
    the Board of Immigration Appeals. These units adjudicate the
    deportability of aliens and aliens' applications for relief
    from deportation in immigration proceedings. Although the
    Committee Amendment did not address EOIR, the Committee
    believes that it should remain in the Justice Department.

                       impact on civil service employees

        The Committee is also concerned about the impact the bill
    has on civil service protections which currently exist for
    federal employees that would be transferred to DHS. Section
    804(e)(2) notes only that current employment terms (pay, civil
    service protections) would remain in place until a new human
    resources management system is established by DHS. The
    Committee recommends that the Select Committee and other
    committees of jurisdiction address concerns regarding the
    potential loss of civil service protections by employees
    affected by the bill.

     the federal advisory committee act and the freedom of information act

        The Committee recognizes that the new Department will have
    a significant need to establish and use the services of
    advisory committees with respect to highly confidential and
    sensitive national security matters. In its current form, H.R.
    5005 would exempt from the requirements of the Federal Advisory
    Committee Act (FACA) any advisory committees established by the
    Secretary of DHS. Although FACA currently exempts the Central
    Intelligence Agency and the Federal Reserve Board from its
    requirements, the Committee is concerned that such an exemption
    may substantially diminish the openness and public-access goals
    of the FACA. The bill also creates an exemption to the Freedom
    of Information Act (FOIA) for information that companies and
    individuals voluntarily provide that ``relates to''
    infrastructure vulnerabilities and related matters. Because the
    FOIA is so important to preserving openness and accountability
    in government, the breadth of this new exemption also raises
    serious concerns.
        The Committee recognizes, however, that public access to
    this information may have two unintended effects: (1) companies
    will be deterred from providing that information to the new
    Department; and (2) potential terrorists will have access to
    that information. It is worth noting that FOIA currently
    contains exemptions restricting the disclosure of national
    security information (see 5 U.S.C. 552(b)(1)), sensitive law
    enforcement information (see 5 U.S.C. 552(b)(7)) or
    confidential business information (see 5 U.S.C. 552 (b)(4)).
    That being the case, any additional exemption from FOIA must be
    demonstrably necessary and should be extremely narrow. The
    Committee recommends that the possibility of narrowing the
    scope of this provision be considered to make clear that
    material that would be exempt from disclosure may be
    segregated, to the extent feasible, from non-exempt, releasable
    material. Any exception to current FACA and FOIA requirements
    should be carefully considered with a view toward maintaining
    the sunshine safeguards needed to preserve an open and
    accountable governmental, while providing the Department with
    the needed flexibility to carry out its mission. The Committee
    recommends that the Select Committee and the other committees
    of jurisdiction address these concerns.

            Additional Views of Chairman F. James Sensenbrenner, Jr.

        I strongly believe that all visa granting functions of the
    Department of State should be transferred to the new Department
    of Homeland Security. The State Department has repeatedly
    demonstrated that it cannot perform this function with due
    regard for national security. In fact, its core mission as a
    diplomatic agency is incompatible with the responsibility to
    make grant and denial decisions on the millions of visa
    requests it receives each year.
        While lapses at the Immigration and Naturalization Service
    and other federal agencies that increased America's
    vulnerability to the World Trade Center and Pentagon terrorists
    attacks have received attention, only recently has attention
    been given to equally if not more serious failures at the State
    Department.
        Fifteen of the Saudi terrorists who launched the 9-11
    attacks had been granted visas by State Department consular
    officers in Saudi Arabia. Twelve of the terrorists were
    personally interviewed by the consular officers. A large scale
    investigation has just come to light into the sale of 70 visas
    at the U.S. embassy in Qatar, including one to the roommate of
    two of the 9-11 terrorists. The State Department has come under
    intense criticism for the ``Visa Express'' program in Saudi
    Arabia, which raises disturbing questions about the role of
    Saudi travel agencies in pre-screening visa applicants and
    which continues in operation today. Just last month, Deputy
    Secretary of State Richard Armitage sent a letter to the
    Justice Department rejecting the Foreign Terrorist Tracking
    Task Force's (FTTTF) recommendations to deny visas to specific
    aliens because ``the information we have received states only
    that the FTTTF believes the applicants may pose a threat to
    national security * * *'' It seems as if the events of
    September 11 have gone unnoticed by the State Department.
        At the State Department, visas are considered first and
    foremost a device to curry favor with foreign governments. The
    more visas issued, the happier the foreign government.
    Consequently, State Department consular officers are under
    intense pressure from the Secretary of State and their
    ambassador and superiors to approve as many visas as possible.
    Employee evaluations are often tied to the number of visas
    issued without regard to adequate screening. In other words,
    the quantity of visas issued is valued more highly than the
    quality of interviews given.
        Besides being under pressure to approve visas, consular
    officers are sent out into the field with wholly inadequate
    training. They receive no more than a few hours training in
    interviewing techniques, probably the single most important
    skill they will need in their jobs. On the other hand, FBI
    agents are given 51 hours of training in interviewing
    techniques and many follow-up mock interviews at the academy.
    Compounding these problems is the crisis in motivation. Now,
    the talent and educational credentials of foreign service
    officers are not open to question. However, men and women are
    attracted to the foreign service because of their desire to be
    diplomats. They consider consular duty as ``grunt work'' to
    ``pay their dues.'' They generally dislike their jobs and leave
    for political and economic posts as soon as they are allowed.
        There is unanimity among former consular officers that the
    State Department's Visa Office should be transferred in its
    entirety to the Department of Homeland Security. What would be
    the benefits of such a move? First, the institutional pressures
    on consular officers to bias their visa decisions in favor of
    grants would evaporate. Consular officers would know that their
    job performance would in large part be graded based on their
    abilities to withhold visas from those aliens who would violate
    our immigration laws or do American harm. Second, consular
    staffs would be filled by law enforcement professionals who
    choose to perform this vital function, would take pride in and
    feel challenged by their jobs, and would want to make careers
    out of consular work.
        The consular reforms contained in the Committee-approved
    bill unfortunately create an unwieldy hybrid consular office
    that will do nothing to remedy the office's current ills.
    Giving the Department of Homeland Security only oversight
    authority over the consular service and the ability to issue
    regulations does nothing to change the fact that it will still
    be State Department foreign service officers who will have the
    responsibility of interviewing visa applicants and have the
    decision making power to grant visas. They will still be
    subject to inappropriate pressure to issue visas in order to
    comply with the diplomatic goals of their employer, the
    Secretary of State. Their career advancement will still be
    dependent on the good will of the ambassador. And, they will
    still be junior officers going through a rite of passage rather
    than seasoned law enforcement professionals with a zeal for
    uncovering fraud and deceit by aliens seeking visas. Thus, the
    Committee approved bill fails the fundamental test of true
    reform.
        Now, there is one possible way in which the Committee-
    approved Visa Office can perform with appropriate regard for
    national security. A Department of Homeland Security law
    enforcement officer would have to review in-depth the file of
    every visa grant and also have to sit in on every interview and
    be able to ask questions. For, without doing so, how could he
    or she be able to personally observe the demeanor of the alien
    applicant, critical in determining the alien's true intent, and
    be able to ensure that all pertinent questions were asked?
    While this is theoretically allowed for by the Committee bill,
    it is clear that it will never happen. For in order to have it
    happen, we would need a massive and costly increase in the
    federal bureaucracy. We would have to add to the federal
    workforce a large force of Department of Homeland Security
    personnel, without at the same time decreasing the number of
    State Department consular officers. It is not even clear
    whether our embassies and consulates would be physically big
    enough to house all these new employees. And it would be hugely
    inefficient. We would have in essence two individuals
    performing the work of one. In each and every case, the State
    Department employee would be superfluous.
        For the above stated reasons, I believe it is crucial that
    visa granting responsibilities be transferred to the Department
    of Homeland Security.
        Let me answer one obvious question. How could the transfer
    of the consular function take place in a smooth manner without
    disruption to the process of issuing millions of visas a year?
    Those State Department foreign service officers who would
    prefer to remain as consular officers would certainly be given
    the opportunity. However, it is to be expected that most would
    decline because of their lack of interest in the task. We would
    clearly need a transition period in order to give the
    Department of Homeland Security time to train a new corps of
    consular officers in language skills, interviewing techniques,
    and other skills. Many would likely come with a background in
    law enforcement. INS inspectors and investigators would
    certainly find a foreign posting attractive. I have therefore
    proposed that for a two-year period, current consular officers
    would be detailed from the State Department to the Department
    of Homeland Security. Gradually, these officers would be
    replaced and returned to the State Department as new employees
    come on board.

                            F. James Sensenbrenner, Jr.

                           Separate Views of Mr. Hyde

        I write separately to discuss two amendments that were
    adopted by the Committee at its markup of H.R. 5005.

                               i. visa processing

        The President's homeland security plan, as reflected in the
    introduced version of H.R. 5005, would transfer to the
    Secretary of Homeland Security all responsibility for enforcing
    and administering the laws relating to processing of visa
    petitions at United States diplomatic and consular posts
    abroad. Section 403 of H.R. 5005 provides that the authority
    vested in the Secretary of Homeland Security shall be exercised
    through the Secretary of State.
        A proposal was offered at the markup that would have
    dramatically altered the President's plan. This provision would
    have required Homeland Security personnel to do the actual
    adjudication of all visa applications at all our Embassies and
    consulates--over 10 million applications per year. It would
    have all but eliminated the role of the Secretary of State in
    granting and denying visa applications, which is among the most
    important responsibilities of our Embassies and consulates.
        In my view, this provision was well-intentioned but
    ultimately self-defeating. It would ultimately have required
    the creation of a whole new bureaucracy, and it would have
    caused enormous practical difficulties in our Embassies and
    consulates abroad. Even more important, it would have risked
    overwhelming Homeland Security personnel with non-homeland
    security functions and thereby make it difficult or impossible
    for them to perform their central mission.
        I therefore offerend an amendment with Mr. Berman to
    provide for a compromise on the issue of visa adjudication by
    Homeland Security employees. This amendment, which was adopted
    by the Committee, explicitly authorizes the assignment of
    Homeland Security employees in U.S. diplomatic and consular
    posts abroad. Rather than assume all visa processing functions,
    however, these employees will concentrate on identifying and
    reviewing cases that present homeland security issues.
        Under the Hyde-Berman amendment, Homeland Security officers
    at U.S. Embassies and other overseas posts will investigate
    threats to the security of the United States and advise
    consular officers on these threats. They will ensure that these
    officers have access to information that would identify visa
    applications presenting possible homeland security questions,
    and Homeland Security employees would review these applications
    individually. This arrangement will preserve the essence of the
    Administration's proposal--the sensible division of labor under
    which homeland security officers will be allowed to concentrate
    on homeland security functions--while helping to ensure that
    security concerns are central to key decisions made abroad.
        The Hyde-Berman amendment retains the requirement of the
    underlying Chairman's amendment for a study of the role of
    foreign nationals in visa processing and a report to Congress
    on this issue.
        Finally, the Hyde-Berman amendment addresses a possible
    unintended consequence of turning over visa decisions to the
    Department of Homeland Security: the subjection of such
    decisions to various types of administrative and judicial
    review which do not apply to such decisions under current law.
    With over 3 million visa applications denied each year, this
    change would have enormous implications for our judicial system
    as well as for the security of our borders. The Hyde-Berman
    provision will ensure that denials of visa petitions in our
    overseas posts will continue to be non-reviewable.
        By retaining a role for consular officers in adjudicating
    the millions of applications presenting no security-related
    issues, the President's plan will allow Homeland Security
    officers to perform their homeland security mission. By
    authorizing the presence of Homeland Security officers in our
    overseas posts to identify and deal with homeland security
    issues, the Hyde-Berman amendment will ensure that the
    President's plan works as intended.

                    ii. law enforcement information sharing.

        The Committee also adopted an important amendment to
    section 203 of H.R. 2005, which gives the Secretary of Homeland
    Security access to information in the possession of other
    government agencies that is relevant to homeland security. The
    amendment adopted by the Committee takes the logical next step,
    by requiring the Secretary to promulgate regulations to ensure
    that this important information is shared with other federal,
    state, and local law enforcement agencies as necessary to guard
    against threats to homeland security.
        The failure or inability of law enforcement and
    intelligence agencies to share information with one another
    prior to the September 11 attacks has been widely noted. Other
    legislation currently under consideration by Congress would
    take some tentative steps toward wider information sharing, but
    the problem is still very much with us. I am informed, for
    instance, that there are at least 41 federal and local law
    enforcement agencies with at least some jurisdiction in the
    District of Columbia, and that only a handful of these agencies
    are under any legal obligation to share information with any of
    the others.
        The Committee amendment is simple and straightforward. It
    applies only to information to which the Secretary will have
    access under section 203, and it gives him the authority and
    the mandate to ensure that the information gets to the proper
    authorities so that it can be used to anticipate and counter
    threats to homeland security.

                                         Henry J. Hyde.

                   Additional Views of the Honorable Bob Barr

                      privacy and administrative procedure

        The Subcommittee on Commercial and Administrative Law,
    which I chair, held an oversight hearing on July 9, 2002, with
    respect to H.R. 5005, the Homeland Security Act of 2002. The
    hearing focused on administrative law, adjudicatory issues, and
    privacy ramifications of the proposed legislation. Three
    witnesses testified, including a representative on behalf of
    the Administration and two experts from academia.
        The testimony received at the hearing, as well as the
    comments of the Subcommittee Members who attended the hearing,
    clearly highlighted the need for a privacy officer in the new
    Department of Homeland Security; the inclusion of procedural
    guidelines regarding the sharing of information; restrictions
    with respect to national identification card(s); and
    whistleblower protections, among other concerns. For example,
    the Administration's witness assured the Subcommittee that
    employees of the new Department of Homeland Security, ``will
    retain whistleblower protection and other basic rights like
    equal pay for equal work and fair and equitable treatment.''\1\
    Likewise, there was general support for implementing procedural
    safeguards with respect to personally identifiable information
    shared among governmental agencies, and to having a privacy
    officer appointed to ensure compliance with the Privacy Act and
    congressional oversight of such compliance.\2\
    ---------------------------------------------------------------------------
        \1\ Adminstrative Law, Adjudicatory Issues, and Privacy
    Ramifications of Creating a Department of Homeland Security: Hearing on
    H.R. 5005 Before the Subcommittee on Commercial and Administrative Law
    of the House Comm. on Judiciary, 107th Cong. (2002) (statement of Mark
    Everson, Controller of the Office of Federal Financial Management,
    Office of Management and Budget).
        \2\ Id. (Statements of Jefferey S. Lubbers, Professor of Law at the
    American University Washington College of Law, and Peter P. Swire,
    Professor of Law at Ohio State University).
    ---------------------------------------------------------------------------
        H.R. 5005, as reported by the House Judiciary Committee on
    July 10, 2002, includes provisions that adequately address
    these concerns, and I would urge their inclusion in the bill
    reported by the Select Committee. Specifically with respect to
    privacy concerns, the bill ensures the privacy officer will, in
    addition to information technologies, be responsible for
    assuring that all forms of technologies, including Carnivore-
    like surveillance systems, do not erode citizens' privacy
    protections. In addition, this officer will be charged with the
    responsibility to conduct privacy impact assessments of
    proposed rules when deemed appropriate by the Secretary.
        The bill, as amended, contains a clear mandate that it not
    be construed to authorize the development of a national
    identification system or card. In light of the fact that the
    Administration witness would not issue a clear, definitive
    statement the Administration was not interested in, and would
    not pursue, a national identification card, I believe it is
    essential this Committee insist the final legislation include
    an unequivocal prohibition on a national identification card
    within the context or jurisdiction of the new Department of
    Homeland Security to be established by H.R. 5005.
        Finally, the bill as reported by our Committee also
    includes important provisions intended to better effectuate the
    administrative procedures and adjudicative processes of the new
    Department.

                                              Bob Barr.

                      Additional Views of Rep. Zoe Lofgren

        I very much appreciate Chairman Sensenbrenner's acceptance
    of my amendment transferring to the Office of Refugee
    Resettlement in the Department of Health and Human Services
    oversight responsibility for care, placement and custody of
    unaccompanied alien children. I believe that the Chairman's
    bill has evolved significantly to take into consideration many
    of my concerns and I appreciate his cooperation and dedication
    to this immense undertaking.
        I am pleased that this amendment has strong bipartisan
    support in the Judiciary Committee. Given the level of support
    from the Judiciary Committee, I fully expect any Homeland
    Security legislation emerging from further committee action to
    contain language on unaccompanied alien children that was
    accepted by the Judiciary Committee Chairman and the majority
    of the Members of the Committee. In accepting the amendment,
    the Judiciary Committee Members have expressed their belief
    that unaccompanied alien children would be better served in the
    Department of Health and Human Services than in the Department
    of Homeland Security. It is my sincere hope that as the members
    of further committees review the entirety of the Homeland
    Security legislative package that they consider the strong
    interests of the Members of the committee of jurisdiction.

                                           Zoe Lofgren.

         Additional Minority Views of the Honorable Sheila Jackson Lee

      treatment of minors detained by the department of homeland security

        Minors may for unjustified reasons, come within the custody
    of the Department of Homeland Security. This Amendment would
    simply ensure that minors in custody of the DHS are provided
    access to independent counsel within 24 hours and the DHS
    endeavors to make contact with a parent or guardian as soon as
    possible. The Department of Homeland Security must take
    affirmative action towards assisting the minor in contacting
    the minor's parent or guardian.
        Minors come to the U.S. for many reasons. Many are trying
    to establish some type of legal residency in order to be an
    anchor for other family members. Many children are coming to
    work and help support poverty stricken family members in the
    country of origin. Others are fleeing some type of oppression
    and are ultimately granted asylum and others are looking for an
    education and a future. Minors, both immigrant and
    nonimmigrant,, may come into the custody of the Department of
    Homeland Security--for example, through an unannounced raid.
    These minors should have these minimal procedural protections.
        The INS houses approximately 450 to 600 juveniles at any
    one given time. An average daily population could be projected
    as 475 to 500. In FY 97, 3,149 unaccompanied juveniles were
    taken into custody; in FY 98, there were 5,323 custody events
    representing 4,457 different juveniles; and in FY 99, there
    were 5,644 custody events representing 4,607 different
    juveniles. Of May 25, 2000, there were 523 juveniles in INS
    custody nationwide. Of these, 87 were held in facilities in
    California. creasing numbers of children are trafficked by
    international criminal organizations for various types of
    exploitation. Most frequently, they are used as a cheap source
    of labor.
        Congress should ensure that these minors are provided
    adequate representation and ensure that the Department of
    Homeland Security does all that it can to facilitate contact
    with parents or guardians. I would ask members to support
    similar provisions in legislation creating the Department of
    Homeland Security.

                 creating a 5th division of immigration affairs

        Splitting the enforcement and service functions of the
    Immigration and Naturalization Service (INS) between two
    agencies raises concerns about coordination between the two
    separate functions that dictate that it be kept together in a
    single department. Splitting the services and enforcement
    functions raises serious concerns that the INS' service
    function will be left to wither on the vine in another agency
    without the attention and resources it deserves. An alternative
    proposal could have the entire INS (a) pulled from the Border
    and Transportation Security division; (b) placed in its own
    division headed by an Undersecretary for Immigration Security
    and Services; and (c) restructured as envisioned by H.R. 3231.
        I offered ana amendment that would create a fifth division
    to the Department of Homeland Security. I presented the
    amendment to the committee but withdrew it in order to allow
    the Committee to move forward. The proposal would be consistent
    wit the INS in that it would incorporate the INS in whole into
    the Department of Homeland Security. It would It would
    accomplish this, however, in a manner different from the
    Administration's Proposal. The Jackson Lee Proposal would
    create a fifth division within the Department of Homeland
    Security titled the Division of Immigration Services and
    Security. This division would house three subdivisions titled;
    (1) Border Security; (2) Immigration Services and (3) Visa
    processing. This Division will separate the function of the INS
    allowing greater focus on the services component of this
    agency. This proposed Division would, however, preserve the
    unity of the Enforcement and Service function, as opposed to
    removing the service function out of the Homeland Security
    Department. Under this approach, the services and enforcement
    functions would be given equal priority within the new
    division. By raising this issue to the undersecretary level,
    the service function will have an advocate focused on the clear
    and defined mission of running the Immigration affairs of the
    nation. Additionally, the important coordination and
    communication that occurs between the enforcement and service
    functions of the INS will be maintained. The agency will be
    able to better share information and coordinate with other
    homeland security agencies and ensure a strong services
    function. This approach is also consistent with the President's
    goal of placing the entire INS in the DHS.
        Also troubling is the prospect of placing the entire visa
    issuance function currently the responsibility of the State
    Department, within the exclusive authority of the Secretary of
    Homeland Security. Everyday, in consular posts around the
    world, issues arise as to how a policy or regulation should
    apply in a specific case. Cases often turn on questions that
    have a significant impact on U.S. foreign policy interests,
    U.S. business interests, or American values of family unity and
    humanitarian protection. These issues all lie within the
    expertise of the state Department and therefore should be
    resolved in consultation with it.
        Furthermore, there are functions of the current INS that
    require a presence outside the United States. Primarily, these
    are refugee processing, orphan/adoption processing and the
    adjudication of waivers. These functions need to be preserved
    as much as possible as functions of the State Department, which
    already possesses related expertise and has the needed
    infrastructure in the countries where these activities take
    place.
        Placing the entire visa issuance function within the
    exclusive authority of the Secretary for Homeland Security will
    diminish the effectiveness of the this important function. The
    Hyde-Berman Amendment, which passed during full committee
    markup, is the preferred alternative which can be reconciled
    with the administration's proposal. I spoke in favor of this
    amendment during the markup, which allows the administration of
    visa issuance function by State Department employees with the
    oversight and regulatory guidance of the Department of Homeland
    Security. I am willing to comport my amendment with the Hyde-
    Berman Amendment.
        I am also willing to comport my amendment with the Lofgren-
    Jackson Lee Amendment which will allow the Administration for
    Children and Families (ACF) within the Department of Health and
    Human Services to be the lead agency with responsibility for
    unaccompanied alien children. These children, pose no threat to
    the interests of the United States and the expertise ACF has
    demonstrated in dealing with similar issues will serve the
    needs of the children better than the Department of Homeland
    Security .
        The creation of the Department of Homeland Security is a
    chief priority of the Administration and Congress to achieve in
    a very short time. This is a difficult task integrating
    functions between the Justice Department and the Department of
    Homeland Security and the Judiciary Committee's expertise is
    crucial to providing proper guidance.

                                    Shelia Jackson Lee.

                         Additional Views of Ms. Waters

        I am writing to request that the Members of the Select
    Committee consider a serious oversight in H.R. 5005.
    Specifically, I am concerned that the legislation does not
    explicitly refer to the Small Business Act and the protections
    it provides to minority- and female-owned small businesses.
        As originally drafted, H.R. 5005 contains two procurement
    provisions. The first is in Section 301, ``Under Secretary for
    Chemical, Biological, Radiological, and Nuclear
    Countermeasures.'' One of the responsibilities of the new Under
    Secretary for Chemical, Biological, Radiological, and Nuclear
    Countermeasures is ``establishing priorities for, directing,
    funding, and conducting national research, development, and
    procurement of technology and systems'' (emphasis added). The
    second place that refers to procurement is in Section 601 of
    H.R. 5005 as introduced. Section 601 sets out the primary
    responsibilities of the Under Secretary for Management. Among
    those responsibilities is procurement. However, there is no
    language in the proposed legislation to ensure that procurement
    complies with the provisions of the Small Business Act.
        The Small Business Act, first enacted in 1953, was created
    to protect small businesses and assist them in becoming viable
    contributors to our economy. Language from the Act itself
    confirm this, as where it says: ``The essence of the American
    economic system of private enterprise is free competition. Only
    through full and free competition can free markets, free entry
    into business, and opportunities for the expression and growth
    of personal initiative and individual judgment be assured. The
    preservation and expansion of such competition is basic not
    only to the economic well-being but to the security of this
    Nation. Such security and well-being cannot be realized unless
    the actual and potential capacity of small business is
    encouraged and developed.''
        The language goes on to say, ``It is the declared policy of
    the Congress that the Government should aid, counsel, assist,
    and protect, insofar as is possible, the interests of small-
    business concerns in order to preserve free competitive
    enterprise, to insure that a fair proportion of the total
    purchases and contracts or subcontracts for property and
    services for the Government (including but not limited to
    contracts or subcontracts for maintenance, repair, and
    construction) be placed with small-business enterprises, to
    insure that a fair proportion of the total sales of Government
    property be made to such enterprises, and to maintain and
    strengthen the overall economy of the Nation.''
        The need for protecting small businesses hasn't changed. If
    anything, we need to protect small businesses even more in our
    current market situation, where the technology firms have gone
    bust and more and more large companies-like Enron and WorldCom-
    are cooking the books. We all have small businesses in our
    districts, businesses that provide good jobs and help maintain
    our economy. As we're developing the Department of Homeland
    Security, we must be sure to remember those businesses.
        Therefore, I urge the Members of the Select Committee to
    make an amendment that would affect the two aforementioned
    sections of H.R. 5005. The suggested amendment language is as
    follows:
        Page 17, after line 14, insert the following:
              ``(5) Nothing in this Act shall reduce the effect of Section
            637 of Title 15 of the United States Code.''
        Page 30, line 12, insert at the beginning the following:
        ``(a)''
        Page 31, after line 6, insert the following:
        ``(b) Nothing in this Act shall reduce the effect of Section 637 of
    Title 15 of the United States Code.''
        The goal of this amendment is simply to ensure that the
    provisions of the Small Business Act relating to procurement
    opportunities for minority- and female-owned small businesses
    apply to government contracts of the new Department of Homeland
    Security.

                                         Maxine Waters.

    Additional Views of Messrs. Flake, Green, Barr, Ms. Hart, and Mr. Pence

        Simultaneous termination of visas and drivers licenses.--As
    cosponsors of a proposal to require states to issue driver's
    licenses that expire when a temporary visitor's legal stay
    concludes, we urge the Select Committee on Homeland Security to
    adopt this policy into the Homeland Security Act of 2002. We
    note that the administration's Director for Homeland Security
    has publicly advocated such a policy change. In order to
    encourage compliance by states, driver's licenses or other
    comparable identification documents issued by a state would not
    be accepted by a federal agency for identification purposes
    unless the state issuing the license were in compliance with
    the law.
        Simply having a valid state driver's license, which has
    become the de facto identification card in the U.S., has made
    it easy for non-citizen visa holders to remain in the U.S. past
    the expiration date on their visas. A driver's license
    facilitates many legal interactions in the United States, from
    boarding an airplane to entering a government building to
    opening a bank account.

                                             Jeff Flake
                                             Mark Green
                                               Bob Barr
                                           Melissa Hart
                                             Mike Pence

                     Addtional Views of Mr. Smith of Texas

        As Chairman of the Subcommittee on Crime, Terrorism and
    Homeland Security, I fully support the actions taken by the
    Committee on Judiciary with regard to the transfer of only the
    Office of National Preparedness from the Federal Emergency
    Management Agency (FEMA). It is important that neither FEMA nor
    the new Department of Homeland Security are distracted from its
    core mission. FEMA has an important role to play when a natural
    disaster occurs. Its core mission is to provide assistance to
    states and local officials to address needs after a flood or
    hurricane. Moving the entire agency over to the Department of
    Homeland Security will also distract FEMA from this core
    mission.
        FEMA is well-equipped to perform the duties and functions
    that it has traditionally performed, training first responders
    to address the aftermath of a disaster. However, it is not
    well-equipped to provide training for law enforcement and other
    first responders in how to recognize and disrupt possible
    terrorist threats.
        Several first responders groups have expressed concerns
    about FEMA being the agency responsible for such training. The
    National Sheriff's Association testified before this
    Committee's Subcommittee on Crime, Terrorism and Homeland
    Security, ``[t]he prevention, detection and apprehension of
    terrorists are law enforcement functions, and it is not
    appropriate for training and coordination to be assigned to the
    FEMA regime, where there are no such responsibilities. In the
    tragic event that there is a terrorist attack, that crisis is
    also a law enforcement responsibility. Sheriffs and Chiefs of
    Police are shocked that OMB would propose that FEMA should
    assume responsibility in these areas, where there is neither
    experience nor legal authority to act.''\1\
    ---------------------------------------------------------------------------
        \1\ This is a test of the footnote.
    ---------------------------------------------------------------------------
        These same views have been reiterated by the International
    Brotherhood of Police Officers (IBPO). In a March 8, 2002
    letter to the Subcommittee on Crime, Terrorism and Homeland
    Security the IBPO stated that it ``is concerned that FEMA does
    not have the experience or understanding that a law enforcement
    agency has when investigating terrorism.''
        Additionally, the Police Executive Research Forum (PERF), a
    national organization of police executive professionals, that
    serves more than 50 percent of the country's population,
    explained that while it respects and values FEMA's role in
    disaster mitigation, it was troubled about FEMA assuming a new
    role in training in antiterrorism efforts by state and local
    law enforcement. PERF explained:
            [t]he mission of FEMA and its area of expertise are
            based on disaster response and mitigation. While law
            enforcement, firefighting, emergency medical services,
            and HAZMAT agencies could all be first responders to a
            critical incident, the role of law enforcement is
            unique in its crisis prevention, detection activities,
            and apprehension of suspects. Police agencies have
            primary responsibility for local intelligence
            gathering, public safety and maintaining public order
            before and during a crisis. They do this through
            combinations of community policing, criminal
            investigation, and emergency response. All of this must
            be done while meeting the day-to-day demands of a local
            police department. These efforts require [F]ederal
            support that is based on extensive experience and
            knowledge of local police operations and challenges* *
            * . The knowledge that comes from this experience
            cannot be easily transferred to an agency that is
            relatively new to law enforcement issues.
        FEMA's experience and expertise have traditionally been in
    other areas of public safety and welfare than law enforcement.
    They have little history of effective partnership with local
    law enforcement on proactive efforts. Additionally, FEMA has
    indicated that regardless of where it is transferred in the
    Federal government, it will not provide training in crisis
    management for first responders; it will continue to provide
    training in consequence management only.
        Last week, an article in the New York Times outlined in
    detail how the lack of a coordinated response, or coordinated
    communication systems, between state and local law enforcement
    and firefighters could have caused additional avoidable
    tragedies on September 11. We must make sure that any future
    terrorist threats are addressed with a coordinated response.
    The Department of Homeland Security can ensure this type of
    response by allowing the transferred Office of Domestic
    Preparedness to continue to provide the coordinated training
    for all state and local first responders in both crisis and
    consequence management.
        I support the decision by the Committee on Judiciary to
    allow FEMA to continue to perform its mission as a separate
    agency. This will ensure that the creation of the new
    Department of Homeland Security will not detract from the
    important services the Federal government has traditionally
    provided for the American people after a natural disaster.

                                           Lamar Smith.
                              COMMITTEE ON SCIENCE

                              House of Representatives,
                                          Committee on Science,
                                         Washington, DC, July 12, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Mr . Chairman: The Committee on Science was referred
    the bill, H.R. 5005, the Homeland Security Act of 2002, and
    reports its recommendations and views thereon.
        The Committee reported its recommendations by voice vote on
    July 10, 2002. The Committee is looking forward to working with
    you and your staff to bring the bill to a successful markup in
    the Select Committee and passage on the floor of the House.
        Thank you for your consideration.
            Sincerely,
                                  Sherwood L. Boehlert,
                                                      Chairman,
                                         Ralph M. Hall,
                                       Ranking Minority Member.
                                    ------

    Amendments to H.R. 5005 as Adopted by the Committee on Science on July
                                    10, 2002

                            Amendments to H.R. 5005

                     as Adopted by the Committee on Science

                                on July 10, 2002

        Page 4, after line 10, insert the following and renumber subsequent
    paragraphs accordingly:

                (3) The term ``critical infrastructure'' means physical and
            cyber-based public and private systems essential to the minimum
            operations of the economy and government, including information
            and telecommunications, energy, banking and finance,
            transportation, and water systems and emergency services.

        Page 5, after line 2, insert the following and renumber subsequent
    paragraphs accordingly:

                (8) The term ``key resources'' means publicly or privately
            controlled resources essential to the minimal operations of the
            economy and government.

        Page 7, line 12, strike ``; and'' and insert a semicolon.

        Page 7, line 17, strike the period and insert ``; and''.

        Page 7, after line 17, insert the following new subparagraph:

                (F) research, development, demonstration, testing,
            evaluation, and deployment in support of subparagraphs (A)
            through (E).

        Page 8, after line 16, insert the following new subsection:

        (c) Standards Policy.--All standards activities of the Department
    shall be conducted in accordance with section 12(d) of the National
    Technology Transfer Advancement Act of 1995 (15 U.S.C. 272 note) and
    OMB Circular A-119.

        Page 9, after line 11, insert the following new paragraph and
    redesignate the subsequent paragraphs accordingly:

                (7) An Under Secretary for Science and Technology.

        Page 12, line 14, strike ``title VIII'' and insert ``title IX''.

        Page 13, lines 4 through 7, strike paragraph (4) and redesignate
    the subsequent paragraphs accordingly.

        Page 13, strike ``and'' at the end of line 11.

        Page 13, strike the period at the end of line 15 and insert ``;
    and''.

        Page 13, after line 15, insert the following new paragraph:

                (6) the Energy Security and Assurance Program and
            activities of the Department of Energy, including the functions
            of the Secretary of Energy relating thereto.

        Page 15, after line 24, insert the following new sections:

    SEC. 205. INFORMATION SECURITY.

        (a) Responsibilities.--In carrying out his duties under section
    201, the Under Secretary for Information Analysis and Infrastructure
    Protection shall--
                (1) as appropriate, provide to Federal, State, and local
            government entities, and, upon request, to private entities
            that own or operate critical information systems and
            communications networks--
                        (A) analysis and warnings related to threats to,
                    and vulnerabilities of, information systems and
                    communications networks; and
                        (B) in coordination with the Under Secretary for
                    Emergency Preparedness and Response, crisis management
                    support in response to threats to, or attacks on
                    information systems and communications networks;
                (2) develop, in concert with the private sector and with
            other government entities and in coordination with the Under
            Secretary for Emergency Preparedness and Response, emergency
            recovery plans to respond to major failures of critical
            information systems and communications networks; and
                (3) promulgate information security standards for Federal
            information systems, except for national security and national
            intelligence information systems, developed by the National
            Institute of Standards and Technology under subsection (b).
        (b) Federal Computer Security.--In developing the standards for
    promulgation under subsection (a)(3), the Director of the National
    Institute of Standards and Technology shall--
                (1) emphasize the development of technology-neutral policy
            guidelines and standards for computer security and electronic
            authentication practices by Federal agencies;
                (2) develop qualitative and quantitative measures
            appropriate for assessing the quality and effectiveness of
            information security and privacy programs at Federal agencies;
                (3) promote the development of accreditation procedures for
            Federal agencies based on the measures developed under
            paragraph (2);
                (4) consult with, and provide assistance to, Federal
            agencies regarding the selection by agencies of security
            technologies and products and the implementation of security
            practices;
                (5) develop uniform testing procedures suitable for
            determining the conformance of commercially available security
            products to the guidelines and standards developed under
            paragraph (1);
                (6) establish procedures for the certification of private
            sector laboratories to perform the tests of commercially
            available security products developed in accordance with
            paragraph (5);
                (7) promote the testing of commercially available security
            products for their conformance with guidelines developed under
            paragraph (1); and
                (8) develop technology-neutral guidelines and standards, or
            adopt existing technology-neutral industry guidelines and
            standards, for electronic authentication infrastructures to be
            made available to Federal agencies so that such agencies may
            effectively select and utilize electronic authentication
            technologies in a manner that is adequately secure to meet the
            needs of those agencies and their transaction partners and
            interoperable to the maximum extent possible, and ensure that
            those guidelines and standards include--
                        (A) protection profiles for cryptographic and
                    noncryptographic methods of authenticating identity for
                    electronic authentication products and services;
                        (B) a core set of interoperability specifications
                    for the use of electronic authentication products and
                    services in electronic transactions between Federal
                    agencies and their transaction partners; and
                        (C) validation criteria to enable Federal agencies
                    to select cryptographic electronic authentication
                    products and services appropriate to their needs.
        (c) Definitions.--As used in this section--
                (1) the term ``information system'' means any equipment or
            interconnected system or subsystems of equipment that is used
            in the automatic acquisition, storage, manipulation,
            management, movement, control, display, switching, interchange,
            transmission, or reception of data or information, and
            includes--
                        (A) computers and computer networks;
                        (B) ancillary equipment;
                        (C) software, firmware, and related procedures;
                        (D) services, including support services; and
                        (E) related resources;
                (2) the term ``Federal information system'' means an
            information system operated by a Federal agency or by a
            contractor of a Federal agency or other organization that
            processes information (using an information system) on behalf
            of the Federal Government to accomplish a Federal function;
                (3) the term ``electronic authentication'' means
            cryptographic or noncryptographic methods of authenticating
            identity in an electronic communication; and
                (4) the term ``electronic authentication infrastructure''
            means the software, hardware, and personnel resources, and the
            procedures, required to effectively utilize electronic
            authentication technologies.

    SEC. 206. NET GUARD.

        (a) In General.--The Under Secretary for Information Analysis and
    Infrastructure Protection, in coordination with the Under Secretary for
    Emergency Preparedness and Response, shall establish a national
    technology guard, known as NET Guard, comprising teams of volunteers
    with expertise in relevant areas of science and technology, to assist
    local communities to respond and recover from attacks on information
    systems and communications networks (if requested by a local community
    and approved by the Under Secretary for Information Analysis and
    Infrastructure Protection). In carrying out this responsibility, the
    Under Secretary for Information Analysis and Infrastructure Protection
    shall--
                (1) establish procedures for the deployment of NET Guard
            teams;
                (2) establish criteria for the certification of such teams,
            including--
                        (A) the types of expertise, capabilities, and
                    equipment required; and
                        (B) minimum training and practice requirements;
                (3) issue credentials and forms of identification, as
            appropriate, identifying each such team and its members and may
            suspend or terminate certification of, and recover credentials
            and forms of identification from, any NET Guard team, or any
            member thereof, when the Under Secretary deems it appropriate;
            and
                (4) disseminate to local communities information about the
            capabilities of NET Guard.
        (b) Deployment.--The Under Secretary for Information Analysis and
    Infrastructure Protection, in coordination with the Under Secretary for
    Emergency Preparedness and Response, may--
                (1) activate NET Guard teams in an emergency (as defined in
            section 102(1) of the Robert T. Stafford Disaster Relief and
            Emergency Assistance Act), or a major disaster;
                (2) authorize the payment to a member of a NET Guard team
            for the period that member is engaged in performing duties as
            such at the request of the United States by--
                        (A) compensating them as employees for temporary or
                    intermittent services as experts or consultants under
                    section 3109 or title 5, United States Code; and
                        (B) providing travel or transportation expenses,
                    including per diem in lieu of subsistence, as provided
                    by section 5703 of title 5, United States Code;
                (3) assign, on a voluntary basis, NET Guard teams to work,
            on a temporary basis, on such other technology-related projects
            that the Under Secretary for Information Analysis and
            Infrastructure Protection deems appropriate; and
                (4) conduct such additional activities as the Under
            Secretary for Information Analysis and Infrastructure
            Protection deems necessary to fulfill the purpose of this
            section.

        Page 16, line 15, through page 17, line 3, strike ``threats'' and
    all that follows through ``technology and systems'' and insert
    ``threats, including establishing priorities''.

        Page 17, line 10, redesignate paragraph (4) as paragraph (2).

        Page 17, line 16, strike ``title VIII'' and insert ``title IX''.

        Page 18, lines 4 though 7, strike subparagraph (A).

        Page 18, lines 8 and 18, redesignate subparagraphs (B) and (C) as
    subparagraphs (A) and (B), respectively.

        Page 18, line 17, insert ``and'' after ``Secretary of Energy;''.

        Page 18, line 21, insert ``and'' after ``and cooperation
    program;''.

        Strike page 18, line 22, through page 19, line 9.

        Page 19, line 13, strike ``; and'' and insert a period.

        Page 19, strike lines 14 through 17.

        Page 19, line 18, through page 20, line 21, strike section 303, and
    renumber the subsequent section accordingly.

        Page 22, line 2, strike ``and''.

        Page 22, line 5, strike the period and insert ``; and''.

        Page 22, after line 5, insert the following new paragraph:

                (6) promulgating identification and security standards and
            measures for use by the Department in carrying out paragraphs
            (1), (2), and (5).

        Page 22, line 7, strike ``title VIII'' and insert ``title IX''.

        Page 23, line 2, insert ``(except its research and development
    activities)'' after ``of the Department of Transportation''.

        Page 24, after line 6, insert the following new subsection:

        (c) Report.--Not later than December 31, 2002, or 30 days after the
    date of the enactment of this Act, whichever is later, the Director of
    the Office of Science and Technology Policy shall submit to the
    Congress a report on how the provisions of this section will affect
    procedures for the issuance of student visas.

        Page 25, line 22, insert ``, including interventions to treat the
    psychological consequences of terrorist attacks or major disasters and
    provision for training for mental health workers to allow them to
    respond effectively to such attacks or disasters'' after ``major
    disasters''.

        Page 26, line 11, strike ``title VIII'' and insert ``title IX''.

        Page 26, line 17, insert ``, and the Integrated Hazard Information
    System of the National Oceanic and Atmospheric Administration'' after
    ``relating thereto''.

        Page 30, after line 9, insert the following new section:

    SEC. 506. UNITED STATES FIRE ADMINISTRATION.

        (a) Statutory Authority.--The United States Fire Administration
    shall continue to exist as a distinct entity within the Department, and
    shall continue to carry out the activities specified in the Federal
    Fire Prevention and Control Act of 1974.
        (b) Assistance to Firefighters Grants Program.--
                (1) In general.--The Under Secretary for Emergency
            Preparedness and Response, through the United States Fire
            Administration, shall administer the grant program under
            section 33 of the Federal Fire Prevention and Control Act of
            1974 (15 U.S.C. 2229).
                (2) Amendments.--Section 33 of the Federal Fire Prevention
            and Control Act of 1974 (15 U.S.C. 2229) is amended--
                        (A) in subsection (b)(2)(B)(i), by inserting ``,
                    including a requirement for peer review of the
                    selection process'' after ``under this section'';
                        (B) in subsection (b)(3)(N), by inserting
                    ``including funding to enable training described in
                    subparagraph (B)'' after ``that utilize volunteers'';
                        (C) in subsection (b)(5)(B)(i), by inserting ``In
                    allocating funds under this section, the Administrator
                    shall not discriminate against an applicant whose
                    funding jurisdiction places a high budget priority on
                    fire department needs.'' after ``for which applied.'';
                    and
                        (D) in subsection (b)(11), by striking
                    ``professional'' and inserting ``career''.
        (c) Consultation.--The Under Secretary for Emergency Preparedness
    and Response shall consult with the Administrator of the United States
    Fire Administration on the implementation of programs that involve
    firefighters or emergency medical personnel, including the First
    Responder Grant Initiative.

        Page 31, after line 14, insert the following new title and renumber
    the subsequent titles and sections accordingly:

                       TITLE VII--SCIENCE AND TECHNOLOGY

    SEC. 701. UNDER SECRETARY FOR SCIENCE AND TECHNOLOGY.

        In assisting the Secretary with the responsibilities specified in
    section 101(b)(2)(F), the primary responsibilities of the Under
    Secretary for Science and Technology shall include--
                (1) establishing and administering the primary research and
            development activities of the Department;
                (2) conducting basic and applied research, development,
            demonstration, testing, and evaluation activities that are
            relevant to any or all units of the Department, through both
            intramural and extramural programs;
                (3) serving as the chief scientist and chief technology
            officer of the Department, providing advice to the Secretary on
            all matters relating to science and technology;
                (4) coordinating all research, development, demonstration,
            testing, and evaluation activities of the Department;
                (5) facilitating the deployment of technology that will
            serve to enhance homeland security;
                (6) developing and overseeing the administration of
            guidelines for merit review of research and development
            projects throughout the Department;
                (7) developing guidelines for the dissemination of research
            conducted or sponsored by the Department; and
                (8) coordinating with the Office of Science and Technology
            Policy and the White House Office of Homeland Security and
            other appropriate Federal agencies in developing and carrying
            out the science and technology agenda of the Department.

    SEC. 702. FUNCTIONS TRANSFERRED.

        (a) In general.--In accordance with title IX, there shall be
    transferred to the Secretary the functions, personnel, assets, and
    liabilities of the following entities--
                (1) the following programs and activities of the Department
            of Energy, including the functions of the Secretary of Energy
            relating thereto (but not including programs and activities
            relating to the strategic nuclear defense posture of the United
            States)--
                        (A) the chemical and biological national security
                    and supporting programs and activities of the
                    nonproliferation and verification research and
                    development program;
                        (B) such life sciences activities of the biological
                    and environmental research program related to microbial
                    pathogens as may be designated by the President for
                    transfer to the Department;
                        (C) the Environmental Measurements Laboratory; and
                        (D) the advanced scientific computing research
                    program and activities, and the intelligence program
                    and activities, at Lawrence Livermore National
                    Laboratory;
                (2) the Plum Island Animal Disease Center of the Department
            of Agriculture, including the functions of the Secretary of
            Agriculture relating thereto; and
                (3) the research and development activities of the
            Transportation Security Administration.
        (b) Notification.--(1) At least 60 days before effecting any
    transfer pursuant to subsection (a)(1)(A), the President shall transmit
    to the Congress a report describing--
                (A) which national laboratories will be affected by the
            transfer, and the estimated number of employees and amount of
            expenditures that would be transferred at each affected
            national laboratory;
                (B) any changes to the contracts between the Department of
            Energy and the operators of national laboratories necessary for
            the Department to carry out activities at the national
            laboratories, and any other agreements necessary to carry out
            such activities;
                (C) any changes to the physical plant of any national
            laboratory and any transfer of workers to a different location
            that will result from the transfer under subsection (a)(1)(A);
                (D) how the transfer under subsection (a)(1)(A) will affect
            the duties of workers at affected national laboratories who
            work on both homeland security issues and other matters; and
                (E) what impact the transfer under subsection (a)(1)(A)
            will have on the ability of the national laboratories to carry
            out their other duties.
        (2) At least 60 days before effecting any transfer pursuant to
    subsection (a)(1)(B), the President shall notify the Congress of the
    proposed transfer and shall include the reasons for the transfer and a
    description of the impact of the transfer on the activities of the
    Department of Energy.
        (3) At least 60 days before effecting any transfer pursuant to
    subsection (a)(1)(D), the President shall submit a report to the
    Congress describing--
                (A) any changes to the contract between the Department of
            Energy and the operator of Lawrence Livermore National
            Laboratory necessary for the Department to carry out activities
            at Lawrence Livermore National Laboratory, and any other
            agreements necessary to carry out such activities;
                (B) any changes to the physical plant or transfers of
            workers to different sites at Lawrence Livermore National
            Laboratory being made to enable the Department to carry out
            activities at the Laboratory;
                (C) how the transfer under subsection (a)(1)(D) will affect
            the duties of workers at Lawrence Livermore National Laboratory
            who work on both homeland security issues and other matters;
            and
                (D) any relationships the Department intends to develop
            with other national laboratories of the Department of Energy.
        (4) At least 180 days before any change in the biosafety level at
    the facility described in subsection (a)(2), the President shall notify
    the Congress of the change and describe the reasons therefor. No such
    change may be made until at least 180 days after the completion of the
    transition period defined in section 901(2).

    SEC. 703. CONDUCT OF CERTAIN PUBLIC HEALTH-RELATED ACTIVITIES.

        (a) Certain Activities Carried Out Through HHS.--(1) Except as the
    President may otherwise direct, the Secretary shall carry out his
    civilian human health-related biological, biomedical, and infectious
    disease defense research and development (including vaccine research
    and development) responsibilities through the Department of Health and
    Human Services (including the Public Health Service), under agreements
    with the Secretary of Health and Human Services, and may transfer funds
    to him in connection with such agreements.
        (2) With respect to any responsibilities carried out through the
    Department of Health and Human Services under this subsection, the
    Secretary, in consultation with the Secretary of Health and Human
    Services, shall have the authority to establish the research and
    development program, including the setting of priorities.
        (b) Transfer of Funds.--With respect to such other research and
    development responsibilities under this title, including health-related
    chemical, radiological, and nuclear defense research and development
    responsibilities, as he may elect to carry out through the Department
    of Health and Human Services (including the Public Health Service)
    (under agreements with the Secretary of Health and Human Services) or
    through other Federal agencies (under agreements with their respective
    heads), the Secretary may transfer funds to the Secretary of Health and
    Human Services, or to such heads, as the case may be.
        (c) Report.--Not later than 30 days after the end of each fiscal
    year, beginning with the first fiscal year in which the Department is
    in operation, the Under Secretary for Science and Technology shall
    submit to the Congress a report describing the responsibilities of the
    Department that have been carried out in accordance with this section
    and listing all transfers of funds carried out under subsection (b)
    along with the specific purpose of each transfer.

    SEC. 704. HOMELAND SECURITY INSTITUTE.

        (a) Establishment.--The Secretary shall establish a federally
    funded research and development center to be known as the ``Homeland
    Security Institute'' (in this section referred to as the
    ``Institute'').
        (b) Administration.--The Institute shall be administered as a
    separate entity by the Secretary.
        (c) Duties.--The duties of the Institute shall be determined by the
    Secretary, and may include the following:
                (1) Systems analysis, risk analysis, and simulation and
            modeling to determine the vulnerabilities of the Nation's
            critical infrastructures and the effectiveness of the systems
            deployed to reduce those vulnerabilities.
                (2) Economic and policy analysis to assess the distributed
            costs and benefits of alternative approaches to enhancing
            security.
                (3) Evaluation of the effectiveness of measures deployed to
            enhance the security of institutions, facilities, and
            infrastructure that may be terrorist targets.
                (4) Identification of instances when common standards and
            protocols could improve the interoperability and effective
            utilization of tools developed for field operators and first
            responders.
                (5) Assistance for Federal agencies and departments in
            establishing testbeds to evaluate the effectiveness of
            technologies under development and to assess the
            appropriateness of such technologies for deployment.
                (6) Assistance for disaster decisionmaking to enhance skill
            in making decisions by public safety and other crisis
            management personnel, in order to keep Americans safe before,
            during, and after terrorist incidents and natural disasters.
                (7) Design of metrics and use of those metrics to evaluate
            the effectiveness of homeland security programs throughout the
            Federal Government, including all national laboratories.
                (8) Design of and support for the conduct of homeland
            security-related exercises and simulations.
                (9) Creation of strategic technology development plans to
            reduce vulnerabilities in the Nation's critical infrastructure
            and key resources.
        (d) Consultation on Institute Activities.--In carrying out the
    duties described in subsection (c), the Institute shall consult widely
    with representatives from private industry, institutions of higher
    education, and nonprofit institutions.
        (e) Annual Reports.--The Institute shall transmit to the Secretary
    and the Congress an annual report on the activities of the Institute
    under this section.

    SEC. 705. INQUIRIES.

        (a) Office.--The Secretary, acting through the Under Secretary for
    Science and Technology, shall establish an office to serve as a point
    of entry for individuals or companies seeking guidance on how to pursue
    proposals to develop or deploy products that would contribute to
    homeland security. Such office shall refer those seeking guidance on
    Federal funding, regulation, acquisition, or other matters to the
    appropriate unit of the Department or to other appropriate Federal
    agencies.
        (b) Functions.--The Under Secretary for Science and Technology
    shall work in conjunction with the Technical Support Working Group
    (organized under the April, 1982, National Security Decision Directive
    Numbered 30) to--
                (1) screen proposals described in subsection (a), as
            appropriate;
                (2) assess the feasibility, scientific and technical
            merits, and estimated cost of proposals screened under
            paragraph (1), as appropriate;
                (3) identify areas where existing technologies may be
            easily adapted and deployed to meet the homeland security
            agenda of the Federal Government; and
                (4) develop and oversee the implementation of homeland
            security technology demonstration events, held at least
            annually, for the purpose of improving contact among technology
            developers, vendors, and acquisition personnel.

    SEC. 706. MISCELLANEOUS PROVISIONS.

        (a) Authority To Reorganize.--
                (1) In general.--Notwithstanding any other provision of
            this Act, the responsibilities of the Under Secretary for
            Science and Technology under section 701 may not be reassigned
            to any other Under Secretary, or to any person under the
            authority of any other Under Secretary.
                (2) Notice to congress.--(A) As soon as practicable after
            the date of enactment of this Act, but not later than December
            31, 2002, the President shall submit to the Congress a plan
            regarding how the science and technology functions of the
            Department, including those functions transferred to the
            Department from other departments and agencies, are to be
            organized. Such plan shall not take effect until 90 days after
            the President has submitted the plan to the Congress.
                (B) The President shall notify the Congress of any
            subsequent changes to the plan, and no proposed changes shall
            take effect until 90 days after the notification has been
            submitted to the Congress.
        (b) Classification.--(1) To the greatest extent practicable,
    research conducted or supported by the Department shall be
    unclassified.
        (2) The Under Secretary for Science and Technology shall--
                (A) decide whether classification is appropriate prior to
            the award of a research grant, contract, or cooperative
            agreement by the Department and, if so, shall control the
            research results through standard classification procedures;
            and
                (B) periodically review all classified research grants,
            contracts, or cooperative agreements issued by the Department
            to determine whether classification is still necessary.
    No restrictions shall be placed upon the conduct or reporting of
    federally-funded fundamental research that has not received national
    security classification, except as provided in applicable provisions of
    law.
        (c) Construction.--Nothing in this title shall be construed to
    preclude any Under Secretary of the Department from carrying out
    research, development, demonstration, or deployment activities, as long
    as such activities are coordinated through the Under Secretary for
    Science and Technology.
        (d) Regulations.--The Secretary, acting through the Under Secretary
    for Science and Technology, may issue necessary regulations with
    respect to research, development, demonstration, testing, and
    evaluation activities of the Department, including the conducting,
    funding, and reviewing of such activities.
        (e) Sense of Congress.--It is the sense of Congress that the
    Secretary should consult with the National Aeronautics and Space
    Administration in developing computer security systems and processes,
    capitalizing on their expertise developed through International Space
    Station and satellite technology research.

    SEC. 707. COORDINATION COUNCIL.

        (a) Establishment and Composition.--There is established within the
    Department a Homeland Security Science and Technology Coordination
    Council (in this section referred to as the ``Coordination Council'').
    The Coordination Council shall be composed of all the Under Secretaries
    of the Department and any other Department officials designated by the
    Secretary, and shall be chaired by the Undersecretary for Science and
    Technology. The Coordination Council shall meet at the call of the
    chair.
        (b) Responsibilities.--The Coordination Council shall--
                (1) establish priorities for research, development,
            demonstration, testing, and evaluation activities conducted or
            supported by the Department;
                (2) ensure that the priorities established under paragraph
            (1) reflect the acquisition needs of the Department; and
                (3) assist the Under Secretary for Science and Technology
            in carrying out his responsibilities under section 701(4).

    SEC. 708. HOMELAND SECURITY SCIENCE AND TECHNOLOGY ADVISORY COMMITTEE.

        (a) Establishment.--There is established within the Department a
    Homeland Security Science and Technology Advisory Committee (in this
    section referred to as the ``Advisory Committee''). The Advisory
    Committee shall make recommendations with respect to the activities of
    the Under Secretary for Science and Technology, including identifying
    research areas of potential importance to the security of the Nation.
        (b) Membership.--
                (1) Appointment.--The Advisory Committee shall consist of
            20 members appointed by the Under Secretary for Science and
            Technology, which shall include emergency first-responders or
            representatives of organizations or associations of emergency
            first-responders. The Advisory Committee shall also include
            representatives of citizen groups, including economically
            disadvantaged communities. The individuals appointed as members
            of the Advisory Committee--
                        (A) shall be eminent in fields such as emergency
                    response, research, engineering, new product
                    development, business, and management consulting;
                        (B) shall be selected solely on the basis of
                    established records of distinguished service;
                        (C) shall not be employees of the Federal
                    Government; and
                        (D) shall be so selected as to provide
                    representation of a cross-section of the research,
                    development, demonstration, and deployment activities
                    supported by the Under Secretary for Science and
                    Technology.
                (2) National research council.--The Under Secretary for
            Science and Technology may enter into an arrangement for the
            National Research Council to select members of the Advisory
            Committee, but only if the panel used by the National Research
            Council reflects the representation described in paragraph (1).
        (c) Terms of Office.--
                (1) In general.--Except as otherwise provided in this
            subsection, the term of office of each member of the Advisory
            Committee shall be 3 years.
                (2) Original appointments.--The original members of the
            Advisory Committee shall be appointed to three classes of three
            members each. One class shall have a term of one year, one a
            term of two years, and the other a term of three years.
                (3) Vacancies.--A member appointed to fill a vacancy
            occurring before the expiration of the term for which the
            member's predecessor was appointed shall be appointed for the
            remainder of such term.
        (d) Eligibility.--A person who has completed two consecutive full
    terms of service on the Advisory Committee shall thereafter be
    ineligible for appointment during the one-year period following the
    expiration of the second such term.
        (e) Meetings.--The Advisory Committee shall meet at least quarterly
    at the call of the Chair or whenever one-third of the members so
    request in writing. Each member shall be given appropriate notice of
    the call of each meeting, whenever possible not less than 15 days
    before the meeting.
        (f) Quorum.--A majority of the members of the Advisory Committee
    not having a conflict of interest in the matter being considered by the
    Advisory Committee shall constitute a quorum.
        (g) Conflict of Interest Rules.--The Advisory Committee shall
    establish rules for determining when one of its members has a conflict
    of interest in a matter being considered by the Advisory Committee.
        (h) Reports.--
                (1) Annual report.--The Advisory Committee shall render an
            annual report to the Under Secretary for Science and Technology
            for transmittal to the Congress on or before January 31 of each
            year. Such report shall describe the activities and
            recommendations of the Advisory Committee during the previous
            year.
                (2) Additional reports.--The Advisory Committee may render
            to the Under Secretary for transmittal to the Congress such
            additional reports on specific policy matters as it considers
            appropriate.
        (i) FACA Exemption.--Section 14 of the Federal Advisory Committee
    Act shall not apply to the Advisory Committee.

    SEC. 709. UNIVERSITY-BASED CENTERS FOR HOMELAND SECURITY.

        (a) Establishment.--The Secretary, acting through the Under
    Secretary for Science and Technology, shall establish up to 4
    university-based centers for homeland security to provide a
    coordinated, university-based approach to enhance the Nation's homeland
    security.
        (b) Selection.--In selecting colleges or universities as centers
    for homeland security, the Secretary shall consider the following
    criteria:
                (1) Demonstrated expertise in the training of first
            responders.
                (2) Demonstrated expertise in responding to incidents
            involving weapons of mass destruction.
                (3) Demonstrated expertise in health sciences.
                (4) Demonstrated expertise in emergency medical services.
                (5) Demonstrated expertise in the area of biological and
            life sciences.
                (6) Strong affiliations with animal and plant diagnostic
            laboratories.
                (7) Demonstrated expertise in food safety.
                (8) Affiliation with Department of Agriculture laboratories
            or training centers.
                (9) Demonstrated expertise in water and wastewater
            operations.
                (10) Nationally recognized programs dealing with
            environment and public health in both urban and rural areas.
                (11) Demonstrated expertise in port and waterway security.
                (12) Demonstrated expertise in multi-modal transportation.
                (13) Nationally recognized programs in information
            security.
                (14) Nationally recognized programs in engineering.
                (15) Demonstrated expertise in educational outreach and
            technical assistance.
                (16) Demonstrated expertise in border transportation and
            security.
                (17) Demonstrated expertise in interdisciplinary public
            policy research and communication outreach regarding science,
            technology and public policy.
        (c) Authorization of Appropriations.--There are authorized to be
    appropriated such sums as may be necessary to carry out this section.

        Page 36, strike lines 12 through 25.

        Page 37, strike lines 1 through 10 and renumber the subsequent
    subsections accordingly.

        Page 52, after line 11, add the following new sections:

    SEC. 1008. OFFICE OF SCIENCE AND TECHNOLOGY POLICY.

        The National Science and Technology Policy, Organization, and
    Priorities Act is amended--
                (1) in section 204(b)(1) (42 U.S.C. 6613(b)(1)), by
            inserting ``homeland security,'' after ``national security,'';
            and
                (2) in section 208(a)(1) (42 U.S.C. 6617(a)(1)), by
            inserting ``the Office of Homeland Security,'' after ``National
            Security Council,''.

    SEC. 1009. NATIONAL OCEANOGRAPHIC PARTNERSHIP PROGRAM.

        Section 7902 (b) of title 10, United States Code, is amended by
    adding at the end the following new paragraphs:
                ``(13) The Under Secretary of Homeland Security for Science
            and Technology.
                ``(14) Other Federal officials the Council considers
            appropriate.''.

    SEC. 1010. CONDUCT OF CERTAIN MEASUREMENT AND STANDARDS DEVELOPMENT
                        ACTIVITIES.

        The National Institute of Standards and Technology Act (15 U.S.C.
    271 et seq.) is amended--
                (1) by redesignating section 32 as section 34; and
                (2) by inserting after section 31 the following new
            section:
     ``conduct of certain measurement and standards development activities
        ``Sec. 32. (a) Activities by Institute.--Except as the President
    may otherwise direct, the Institute, in accordance with cooperative
    agreements entered into with the Secretary of Homeland Security, shall
    carry out--
                ``(1) a program of measurement and standards development
            activities related to the detection of chemical, biological,
            radiological, nuclear, and explosive threats; and
                ``(2) a program to develop standards and guidelines with
            respect to border and transportation security technologies,
            which shall include conformity assessment and related
            activities.
    The Secretary of Homeland Security shall transfer funds to the Director
    in connection with such programs.
        ``(b) Report.--Not later than 30 days after the end of each fiscal
    year, beginning with the first fiscal year in which the Department of
    Homeland Security is in operation, the Director shall transmit to the
    Congress a report describing the activities carried out under this
    section, and listing all transfers of funds carried out under
    subsection (a), along with the specific purpose of each transfer.''.

    SEC. 1011. STANDARDS REVIEW.

        The National Institute of Standards and Technology Act (15 U.S.C.
    271 et seq.), as amended by section 1010 of this Act, is further
    amended by adding after section 32 the following new section:
                               ``standards review
        ``Sec. 33. The Director, in accordance with an agreement entered
    into with the Secretary of Homeland Security, and in consultation with
    standards development organizations as appropriate, shall prepare a
    list of United States homeland security-related voluntary consensus
    standards needs. Within one year after the date of the enactment of the
    Homeland Security Act of 2002--
                ``(1) the Director shall transmit to the Congress a 3-year
            plan outlining research priorities to assist in the development
            of the listed standards; and
                ``(2) the Secretary of Homeland Security shall transmit to
            the Congress a Government-wide plan for expediting the
            development, revision, and promulgation of these standards,
            including specific steps that Federal agencies should take to
            provide the resources to voluntary standards development
            organizations needed to have the standards in place as soon as
            is practicable.''.9/12/2002 10:00:12 AM -
            F:\V7\091202\091202.024 Created by: VLCirks deg.

    Section-by-Section Description of Science Committee Amendments to H.R.
                                      5005

    Amendments to Section 2. definitions.
        Provision: defines ``critical infrastructure'' as physical
    and cyber-based public and private systems essential to the
    minimum operations of the economy and government, including
    information and telecommunications, energy, banking and
    finance, transportation, and water systems and emergency
    services.
        Rationale: the term ``critical infrastructure'' is used
    throughout the bill but is not defined.
        Provision: defines ``key resources'' as publicly or
    privately controlled resources essential to the minimal
    operations of the economy and government, including reservoirs.
        Rationale: the term ``key resources'' is used in Title II
    but is not defined.
    Amendment to Section 101. executive department; mission.
        Provision: adds ``research, development, demonstration, and
    testing and evaluation'' related to homeland security to the
    responsibilities of the Department of Homeland Security.
        Rationale: science and technology are widely recognized as
    among the principal tools with which the mission of the
    department will be realized. Accordingly, research and
    development should be included explicitly in the department's
    responsibilities.
        Provision: requires that all standards activities of the
    Department shall be conducted in accordance with the National
    Technology Transfer Advancement Act of 1995 and OMB Circular A-
    119.
        Rationale: the Science Committee wants to assure that any
    standards-setting functions transferred to the Department of
    Homeland Security continue to conform to the voluntary,
    consensus-based standards development process that is the norm
    for most standards activities in the U.S.
    Amendment to Section 103. other officers.
        Provision: adds an Under Secretary for Science and
    Technology to the roster of departmental officers.
        Rationale: science and technology for homeland security
    will require both high-level attention and management. The
    cross-cutting nature of homeland security technical challenges
    suggest that the department will need a central research and
    development organization (led by the Under Secretary for S&T).
    Amendment to Section 202. functions transferred. (to the Secretary of
            Homeland Security within Title II--Information Security and
            Infrastructure Protection)
        Provision: transfers the Energy Security and Assurance
    Program and activities of the Department of Energy to Title II
    (Information Analysis and Infrastructure Protection), rather
    than to Title III (Chemical, Biological, Radiological, and
    Nuclear Countermeasures).
        Rationale: this program is related to infrastructure
    protection, particularly protection of power generation and
    distribution systems.

        Amendments to Title II--information analysis and infrastructure
                                   protection

        Provision: strikes the paragraph in H.R. 5005 that
    transfers the Computer Security Division of the Information
    Technology Laboratory at the National Institute of Standards
    and Technology (NIST) to the Department of Homeland Security.
        Rationale: The NIST Computer Security Division develops
    information security standards, and testing and evaluation
    tools for use in federal agencies and in the private sector.
    The effectiveness of the division is directly related to its
    tight integration with other NIST laboratories, including the
    other divisions of the Information Technology Laboratory, the
    Physics Laboratory, and the Electronics and Electrical
    Engineering Laboratory. The effectiveness of the Computer
    Security Division is further enhanced by its close relationship
    with NIST's industrial customers. For example, the Advanced
    Encryption Standard, recently certified by NIST and widely used
    in both government and industry, was developed largely through
    the coordinated efforts of private sector and academic computer
    security experts with the NIST Computer Security Division
    acting as an honest broker that also provided technical support
    and test and evaluation services. It is the view of the
    Committee that the expertise of the Computer Security Division
    could best be harnessed in the service of homeland security if
    the division remains within NIST.
        Provision: adds a new section (Section 205) on information
    security that gives the Under Secretary for Information
    Analysis and Infrastructure Protection responsibility for
        (1) providing analysis and warnings related to information
    and communications threats and vulnerabilities;
        (2) providing crisis management support in response to
    threats to, or attacks on information systems and
    communications networks;
        (3) promulgating information security standards for Federal
    information systems, except for national security and national
    intelligence information systems (the National Security Agency
    is responsible for information security standards for these
    systems). The information security standards will be developed
    by the National Institute of Standards and Technology (NIST).
        In elaborating NIST's responsibilities for developing
    technology-neutral information security standards, the new
    section includes most of the relevant provisions of the
    Computer Security Enhancement Act, H.R. 1259, passed by the
    House of Representatives on November 27, 2001.
        Rationale: the vulnerability of critical information and
    communication systems has been identified as one of the most
    serious security threats facing the United States, yet
    cybersecurity is not specifically addressed in H.R. 5005 as
    introduced. The amendment lays out explicit responsibility and
    authority for addressing information threats directed at non-
    military systems.
        Provision: adds a new section (Section 206) establishing a
    volunteer corps of technical experts, known as NET Guard, to
    assist local communities to respond and recover from attacks on
    information systems and communications networks. The section
    requires the Under Secretary to establish procedures for
    deploying NET Guard teams and criteria for certifying teams,
    including expertise, training, and practice requirements. The
    Under Secretary for Information Analysis and Infrastructure
    Protection, in coordination with the Under Secretary for
    Emergency Preparedness and Response, is authorized to deploy
    NET Guard teams in the event of an emergency (as defined by the
    Stafford Disaster Relief and Emergency Assistance Act) or major
    disaster. The Under Secretary is also authorized to temporarily
    assign volunteer NET Guard teams to technology-related projects
    deemed appropriate by the Under Secretary.
        Rationale: most of the nation's expertise in information
    security and information infrastructure protection resides
    outside of the public sector. This section establishes a
    mechanism whereby technical experts in academia and the private
    sector can offer their services to a national ``volunteer fire
    department'' organized by the Department of Homeland Security
    and dedicated to responding to information and communications
    attacks (putting out cyber ``fires'').
    Amendment to Section 301. under secretary for chemical, biological,
            radiological, and nuclear countermeasures.
        Provision: strikes the paragraphs that give the Under
    Secretary responsibility for research, development, and
    procurement of science and technology for homeland security.
        Rationale: as mentioned above, the Science Committee would
    give these responsibilities to a new Under Secretary for
    Science and Technology. In the Committee's view, science and
    technology should be organized within a dedicated secretariat
    that serves the needs of the entire department. The research
    and development requirements cut across the four functional
    areas established by the bill-information and infrastructure,
    chem-bio-nuclear, border and transportation, and emergency
    preparedness and response. The Committee believes it would be
    unwise to house responsibility for research and development
    within just one of these functional areas. In addition, the
    research and development language in section 301 of H.R. 5005
    is too vague and general to give the Department clear
    responsibility for homeland security research and development.
    Amendments to Section 302. functions transferred. (to the Secretary of
            Homeland Security within Title III-Chemical, Biological,
            Radiological, and Nuclear Countermeasures)
        Provision: strikes the paragraphs that transfer a number of
    research and development programs in the Department of Energy,
    including:
        (1) the chemical and biological national security and
    supporting programs and activities of the non-proliferation and
    verification research and development program,
        (2) life science activities of the biological and
    environmental research program related to microbial pathogens,
        (3) the Environmental Measurements Laboratory,
        (4) and the advanced scientific computing research program
    and activities, and the intelligence program and activities, at
    Lawrence Livermore National Laboratory.
        Rationale: these are research and development programs and
    facilities that properly should be housed within the under-
    secretariat for science and technology created in a
    subsequently listed Science Committee amendment.
        Provision: strikes the paragraph that transfers the energy
    security and assurance program in the Department of Energy.
        Rationale: this is a critical infrastructure assurance
    program that properly belongs in the under-secretariat for
    information analysis and infrastructure protection (transferred
    there by a previously-listed Science Committee amendment).
        Provision: strikes the paragraph that transfers the Plum
    Island Animal Disease Center of the Department of Agriculture.
        Rationale: this is a scientific research facility that
    properly belongs in the under-secretariat for science and
    technology (transferred there by a subsequently-listed Science
    Committee amendment).
    Amendment to Section 303. conduct of certain public health-related
            activities.
        Provision: strikes the paragraphs directing the Secretary
    of Homeland Security to carry out civilian human health-related
    biological, biomedical, and infectious disease defense research
    and development through the Department of Health and Human
    Services.
        Rationale: these paragraphs relate to research and
    development. They are transferred in their entirety into the
    new Title VII establishing an under-secretariat for science and
    technology by a subsequently listed Science Committee
    amendment.
    Amendment to Section 401. under secretary for border and transportation
            security.
        Provision: adds ``promulgating identification and security
    standards and measures'' for border and transportation security
    to the responsibilities of the Under Secretary for Border and
    Transportation Security.
        Rationale: standards and measures will be required for the
    development and deployment of border and transportation
    security technologies such as biometric identification
    technology, explosives detection technology, etc. The Science
    Committee wants to assure that this is an explicit
    responsibility of the Under Secretary.
    Amendment to Section 402. functions transferred. (to the Secretary of
            Homeland Security within Title IV-Border and Transportation
            Security).
        Provision: qualifies the transfer of the Transportation
    Security Administration by excluding transfer of its research
    and development activities. Those activities are transferred
    within Title VII the under-secretariat for science and
    technology by a subsequently listed Science Committee
    amendment.
        Rationale: the Science Committee's view is that research
    and development functions should be housed under the Under
    Secretary for Science and Technology.
    Amendment to Section 403. visa issuance.
        Provision: adds a requirement that the Director of the
    Office of Science and Technology Policy submit a report to
    Congress on how the transfer of administrative and regulatory
    responsibility for visa issuance to the Secretary of Homeland
    Security will affect the issuance of student visas.
        Rationale: early draft plans for implementing new security
    rules for student visas caused some justified consternation in
    academic circles at the time those plans were made public.
    Subsequently, the Director of the Office of Science and
    Technology Policy created the Interagency Panel on Advanced
    Science Security (IPASS) to review the implementation plans and
    propose revisions. A new implementation plan for improving the
    security of the student visa process, developed by IPASS, has
    relieved most of the previously expressed concerns of the
    academic institutions that would be responsible for enforcing
    student visa regulations. The Science Committee wants to assure
    that a robust and workable security regime for student visas
    survives intact in the transfer of the visa function to
    Homeland Security.
    Amendments to Title V--emergency preparedness and response
        Provision: adds ``interventions to treat the psychological
    consequences of terrorist attacks or major disasters'' to the
    responsibilities of the Under Secretary for Emergency
    Preparedness and Response in aiding in the recovery from
    terrorist attacks and major disasters.
        Rationale: the primary goal of terrorist attacks is to
    cause widespread psychological distress in order to demoralize
    the civilian population of the United States. With that in
    mind, the Science Committee deems it appropriate to address
    psychological consequences in any response to incidences of
    terrorism or other major disasters.
        Provision: transfers the Integrated Hazard Information
    System of the National Oceanic and Atmospheric Administration
    to the Department of Homeland Security.
        Rationale: the Science Committee views the system as an
    emergency preparedness asset that can contribute to the
    effectiveness of the other functions transferred to the
    Department within the under-secretariat for emergency
    preparedness and response.
        Provision: adds a new section (Section 506) on the U.S.
    Fire Research Administration specifying that the Fire
    Administration shall continue to exist as a distinct entity
    within the Department of Homeland Security (H.R. 5005 transfers
    the Fire Administration to the Dept. of Homeland Security) and
    shall continue to carry out the activities specified in the
    Federal Fire Prevention and Control Act of 1974. The amendment
    also requires the Under Secretary for Emergency Preparedness
    and Response to administer the Assistance to Firefighters
    Grants Program.
        Rationale: in the view of the Science Committee, the U.S.
    Fire Research Administration and the associated Assistance to
    Firefighters Grants Program are important national resources
    that aid in the prevention and control of fire. They should be
    preserved as distinct entities within their new home in the
    Homeland Security Department.
    Amendment establishing a new Title VII--science and technology
        Provision: adds a title to the bill (Title VII, the
    existing Title VII and subsequent titles are renumbered)
    establishing an Under Secretary for Science and Technology and
    transferring within that title most of the research and
    development functions transferred to the Department of Homeland
    Security by H.R. 5005. The Under Secretary for Science and
    Technology would be responsible for conducting basic and
    applied research, development, demonstration, and testing and
    evaluation relevant to any or all units of the Department. The
    Under Secretary would also serve as the chief scientist and
    chief technology officer of the Department. Individual elements
    of this new title are discussed below.
        Rationale: just as it was in the Cold War, scientific and
    technological research and development will confer differential
    advantage to the United States in its war against terrorism.
    Carrying out a research and development agenda focused on
    countering terrorism will be one of the most important
    responsibilities of the new department. The scientific and
    technical challenges posed by the threat of terrorism cut
    across science and engineering disciplines and cut across the
    functional units established by H.R. 5005. The Science
    Committee believes, therefore, that scientific and
    technological research and development must be centrally
    organized at a high level within the department.
        Provision: transfers research and development functions
    within the under-secretariat for science and technology.
    Functions already transferred by H.R. 5005-and identified as
    research and development activities-are moved into the science
    and technology division.
        Rationale: in order to maximize the effectiveness of the
    department's homeland security science and technology
    development efforts, the Science Committee believes that
    research and development functions should be consolidated
    within the under-secretariat for science and technology.
        Provision: requires Congressional notification prior to
    effecting the transfer of Department of Energy's chemical and
    biological national security and supporting programs and
    activities of the nonproliferation and verification research
    and development program. The report to Congress must describe
    which national laboratories will be affected and how, how the
    contract between the Department of Energy and the relevant
    laboratory operator will be changed, and whether any change to
    the physical plant or transfer of personnel to a different
    location will be involved.
        Rationale: the Science Committee has received contradictory
    information regarding the precise identity of these programs,
    their location within the national laboratory system, their
    budgets, and the number of personnel involved. In the exercise
    of its normal oversight responsibilities, the Committee wants
    to assure that any transfer or reorganization of civilian
    research programs conducted at the Department of Energy's
    national laboratories are both orderly and well justified.
        Provision: requires Congressional notification prior to
    effecting the transfer of ``such life sciences activities of
    the biological and environmental research program [at the
    Department of Energy] related to microbial pathogens as may be
    designated by the President for transfer to the Department.''
        Rationale: both H.R. 5005 and the Science Committee's
    amendments thereto authorize, at the President's discretion,
    the transfer of research related to microbial pathogens from
    the Department of Energy to the Department of Homeland
    Security. The Science Committee believes that, prior to any
    transfer, the Administration notify Congress and provide
    reasons for the transfer and an assessment of its impact on the
    Department of Energy.
        Provision: requires Congressional notification prior to
    effecting the transfer of any programs, personnel, or
    facilities of the Lawrence Livermore National Laboratory to the
    Department of Homeland Security. The provision also requires
    Congressional notification prior to any changes to the contract
    between the Department of Energy and the operator of Lawrence
    Livermore National Laboratory.
        Rationale: several programs at Lawrence Livermore National
    Laboratory are transferred to the Department of Homeland
    Security by H.R. 5005, but the programs listed in the bill are
    not specified in such a way as they may be easily identified
    with actual programs at the laboratory. Moreover, the Science
    Committee has received contradictory testimony, as well as
    contradictory information in private briefings, regarding the
    nature of the programs slated for transfer and the plans for
    reorganizing the laboratory. In the exercise of its normal
    oversight responsibilities, the Committee wants to assure that
    any transfer or reorganization at Livermore both orderly and
    well justified.
        Provision: requires Congressional notification prior to
    changing the maximum biosafety level of the biological
    containment facilities of the Plum Island Animal Disease
    Center.
        Rationale: the Science Committee wishes to assure proper
    Congressional oversight of biological containment at the Plum
    Island Center.
        Provision: moves text directing the Secretary of Homeland
    Security to carry out civilian human health-related biological,
    biomedical, and infectious disease defense research and
    development through the Department of Health and Human
    Services. The text is moved in its entirety from Title III to
    Title VII.
        Rationale: these provisions relate to research and
    development and should appear within Title VII where all of the
    department's research and development functions are
    consolidated.
        Provision: requires the Under Secretary for Science and
    Technology to submit an annual report to Congress on how the
    Department's responsibilities with regard to human health-
    related biomedical research have been carried out. The
    provision requires a listing all funds transferred from the
    Department to any other federal agency for the purposes of
    conducting human health-related biomedical research. The
    provision also requires an explanation of the specific purpose
    of each inter-agency transfer.
        Rationale: assures Congressional oversight of inter-agency
    (inter-departmental) transfers of funds.
        Provision: establishes a Homeland Security Institute, a
    federally funded research and development center to provide
    independent analysis to the Secretary of Homeland Security.
        Rationale: the top-level recommendation of the National
    Academy of Sciences with regard to homeland security was to
    establish a Homeland Security Institute, a federally funded
    research and development center that would provide independent
    technical advice and analysis.
        Provision: establishes an office that would act as a single
    point of entry for individuals or companies seeking guidance on
    how to pursue proposals to develop or deploy products that
    would contribute to homeland security.
        Rationale: both Congress and the Executive Branch have been
    overwhelmed with unsolicited proposals related to homeland
    security products and technologies. Currently, there is no
    central clearinghouse where proposals can be received and
    evaluated. In the view of the Science Committee, the creation
    and operation of such a clearinghouse is an appropriate role
    for the Department of Homeland Security.
        Provision: prevents the reassignment, under any future
    departmental reorganization, of the responsibilities of the
    Under Secretary for Science and Technology to any other Under
    Secretary or any person under the authority of any other Under
    Secretary.
        Rationale: given that scientific and technological research
    and development for homeland security will be among the most
    important activities of the new department, the Science
    Committee want to assure that this function remains undiluted
    in any future reorganization.
        Provision: requires the Administration to submit a plan to
    Congress on how the science and technology functions of the
    Department of Homeland Security are to be organized-and
    stipulates that the plan shall not take effect until 90 days
    after the plan has been submitted to Congress. The
    Administration is required to notify Congress of any subsequent
    changes to the plan and any proposed changes cannot take effect
    until 90 days after Congress has been notified.
        Rationale: assures Congressional oversight of the
    organization and possible reorganization of the department's
    scientific and technological research and development.
        Provision: requires that, to the greatest extent
    practicable, homeland security research should remain
    unclassified.
        Rationale: clearly some homeland security research must be
    classified, but experience suggests that classified research
    may not always be subject to the same level of scientific
    scrutiny that unclassified published research is subject to. It
    is the Science Committee's observation that unclassified
    research has a greater number of quality checks associated with
    it because a broader community of scientists and engineers has
    access to the results and, through the normal scientific
    process, has the opportunity to comment or offer criticism.
        Provision: makes it clear that other Under Secretaries in
    the Department my carry out research, development,
    demonstration, and deployment activities as long as those
    activities are coordinated through the Under Secretary for
    Science and Technology.
        Rationale: the Science Committee doesn't want to preclude
    the conduct of research and development within other under-
    secretariats of the Department, as appropriate.
        Provision: grants the Secretary of Homeland Security
    authority to issue regulations, as necessary, with respect to
    the conduct of research, development, demonstration, and
    testing and evaluation carried out by the Department.
        Rationale: in order to carry out his responsibilities, the
    Secretary will need authority to issue regulations concerning
    the conduct, funding, and review of intramural and extramural
    research, development, demonstration, and testing and
    evaluation related to homeland security science and technology.
        Provision: declares that it is the sense of Congress that
    the Secretary of Homeland Security should consult with the
    National Aeronautics and Space Administration (NASA) in
    developing computer security systems and processes and
    utilizing NASA's expertise developed through space station and
    satellite technology research.
        Rationale: the new Department should draw upon the relevant
    expertise and experience of other technology-intensive federal
    agencies whenever it is feasible to do so.
        Provision: establishes a Homeland Security Science and
    Technology Coordinating Council, composed of the all of the
    Under Secretaries of the Department and chaired by the Under
    Secretary for Science and Technology, to establish priorities
    for research and development and to assure that those
    priorities reflect the acquisition needs of the Department.
        Rationale: provides a mechanism to coordinate research and
    development throughout the department.
        Provision: establishes a Homeland Security Science and
    Technology Advisory Committee to help identify research areas
    of potential importance to the nation's security.
        Rationale: the Science Committee believes that an advisory
    committee of outside experts can help assure a comprehensive,
    high-quality research agenda for the Department.
        Provision: requires the Secretary of Homeland Security to
    establish up to 4 university-based centers for extramural
    homeland security research.
        Rationale: to explicitly recognize the importance of
    university-based research in developing security-related
    science and technology.
        Provision: strikes the ``other transactions authority''
    granted to the Secretary of Homeland Security in H.R. 5005.
        Rationale: other transactions authority enables the
    authorized party to bypass federal procurement regulations. The
    General Accounting Office has indicated that use of this
    authority has been problematic in the Department of Defense,
    the only federal agency that currently has such authority.
        Provision: amends the National Science and Technology
    Policy, Organization, and Priorities Act to add homeland
    security to the list of issues that the Director of the Office
    of Science and Technology Policy (OSTP) should advise the
    President on and adds the Office of Homeland Security to list
    of offices OSTP is required to coordinate with.
        Rationale: OSTP has responsibility for overall coordination
    of federal science and technology programs and homeland
    security will have a substantial science and technology
    component.
        Provision: amends Section 7902(b) of Title 10, USC, to add
    the Under Secretary of Homeland Security for Science and
    Technology to the National Ocean Research Leadership Council of
    the National Oceanic Partnership Program.
        Rationale: the Council coordinates ocean research, a
    significant portion of which is related to coastal and port
    security.
        Provision: amends the National Institute of Standards and
    Technology Act (NIST Act) to authorize NIST to develop
    measurements and standards related to the detection of
    chemical, biological, radiological, nuclear, and explosive
    threats, and to support border and transportation security.
        Rationale: credible technical standards and measurement
    tools will facilitate the rapid deployment of new detection,
    and border and transportation security technologies.
        Provision: amends the National Institute of Standards and
    Technology Act (NIST Act) to require the Director of NIST to
    assess the nation's needs with regard to voluntary consensus
    standards that could promote greater security. The amendment
    also requires the Director to deliver to Congress a 3-year
    research plan to develop those standards, and requires the
    Secretary of Homeland Security to deliver to Congress a plan to
    disseminate those standards throughout the government.
        Rationale: the development and promulgation of security-
    related voluntary consensus standards can improve our domestic
    security posture.

                                Committee Views

                   (In order of Appearance in the Amendment)

                                   standards

        The Amendment requires that all standards activities of the
    Department of Homeland Security be conducted in accordance with
    the National Technology Transfer Advancement Act of 1995 and
    OMB Circular A-119. The Committee wants to assure that any
    standards-setting functions transferred to the Department
    continue to conform to the voluntary, consensus-based standards
    development process that is the norm for most standards
    activities in the U.S. By requiring conformity with the Act and
    with the OMB Circular, the Committee is assuring that the
    private sector will maintain its leading role in developing
    standards.
        By law and under OMB Circular A-119, the Federal government
    is required to use voluntary consensus standards in its
    regulations and in its procurement activities and is encouraged
    to lend expertise to, but not to dominate, the standards
    development process. Our private sector-led standards
    development process has given the U.S. the world's most robust
    standards.

             national institute of standards and technology (nist)

        The Amendment strikes section 202(4) transferring the
    Computer Security Division of NIST to the Department of
    Homeland Security. The NIST Computer Security Division develops
    information security standards, testing and evaluation tools
    for use in federal agencies and the private sector. The
    effectiveness of the Division is directly related to its tight
    integration with other NIST laboratories, including the other
    divisions of the Information Technology Laboratory, the Physics
    Laboratory, and the Electronics and Electrical Engineering
    Laboratory. The effectiveness of the Computer Security Division
    is further enhanced by its close relationship with NIST's
    industrial customers. For example, the Advanced Encryption
    Standard, recently certified by NIST and widely used in both
    government and industry, was developed largely through the
    coordinated efforts of private sector and academic computer
    security experts with the NIST Computer Security Division
    acting as an honest broker that also provided technical support
    and test and evaluation services. The Committee has received
    extensive comments from the information technology community
    expressing concern that the Computer Security Division's close
    working relationship with industry likely would not survive if
    the division were transferred out of NIST. In addition, a
    bipartisan group of 16 Members of Congress, led by
    Representatives Goodlatte and Boucher, wrote to the Committee
    to express their opposition to the transfer. It is the view of
    the Committee that the expertise of the Computer Security
    Division could best be harnessed in the service of homeland
    security if the division remains within NIST.

                     energy security and assurance program

        The Amendment transfers the Energy Security and Assurance
    (ESA) program of the Department of Energy (DOE) to the
    Department of Homeland Security under the management of the
    Undersecretary for Information Analysis and Infrastructure
    Protection (Title II), rather than to the Undersecretary for
    Chemical, Biological, Radiological, and Nuclear Countermeasures
    (Title III), as proposed by the Administration, or the new
    Undersecretary for Science and Technology (Title VII),
    established by the Amendment. Both ESA and the National
    Infrastructure Simulation and Analysis Center (NISAC) are
    components of the DOE's Energy Security program. H.R. 5005
    proposes to transfer NISAC into Title II but would transfer the
    ESA program into Title III. Keeping the ESA and NISAC programs
    together will maintain program coherence, since ESA provides
    analysis and support for NISAC. Furthermore, ESA's mission of
    providing threat and vulnerability assessment, response
    planning, emergency support, and multi-sector coordination for
    the nation's critical energy infrastructure is an operational
    role that fits more closely with the Information Analysis and
    Infrastructure Protection mission outlined in Title II.

                              information security

        The Science Committee views the vulnerability of critical
    information and communication systems as being one of the most
    serious security threats facing the United States, yet
    cybersecurity is not specifically addressed in H.R. 5005. The
    Amendment adds a new section 205 on information security that
    gives the Under Secretary for Information Analysis and
    Infrastructure Protection explicit responsibility and authority
    to address information threats directed at non-military
    information and communications systems in federal agencies. The
    Committee believes that the Under Secretary should establish an
    Office of Cyber Security to fulfill these responsibilities
    (although the Amendment does not set up such an office).
        Section 205 also requires NIST to develop information
    security standards that would be promulgated to civilian
    federal agencies by the Department. In elaborating NIST's
    responsibilities for developing technology-neutral information
    security standards, the new section includes most of the
    relevant provisions of H.R. 1259, the Computer Security
    Enhancement Act, that was approved by the House of
    Representatives on November 27, 2001.

                                   net guard

        The Committee recognizes that most of the nation's
    expertise in information security and information
    infrastructure protection resides within the private sector.
    The Amendment establishes a mechanism whereby technical experts
    in academia and the private sector can volunteer their services
    to state and local governments to assist them in responding to
    natural disasters or terrorist attacks that disrupt information
    and communications systems. The Amendment emphasizes that this
    is a volunteer program and that participating experts may not
    be compelled to participate in any given response effort. In
    addition, the Department need not pay any of the volunteers for
    their services.

                               behavioral science

        The Under Secretary for Emergency Preparedness and Response
    will aid the recovery from terrorist attacks and major
    disasters. The Committee adopted an amendment that explicitly
    authorizes the Under Secretary to provide interventions to
    treat the psychological consequences of these events and
    provide for appropriate training for mental health workers who
    must deal with the aftermath of these events.

                            u.s. fire administration

        The Committee expects that the U.S. Fire Administration
    (USFA) will play an important role in the homeland security
    effort. However, many of USFA's most important activities are
    not directly related to homeland security. These activities
    include: 1) educating the public on fire and fire prevention
    issues; 2) supporting technological advancement through the
    development and testing of new tools that result in improved
    fire suppression technology and equipment; 3) compiling and
    maintaining a comprehensive database for publication, analysis,
    and dissemination of information related to fire prevention and
    control; and 4) conducting research on all aspects of fire with
    the aim of reducing the loss of life and property from fires.
        The Committee believes it is important that these
    activities, as well as the Assistance to Firefighters Grants
    Program currently administered by USFA, continue to be
    performed by USFA. The Amendment requires that USFA be
    preserved as a distinct entity in the Homeland Security
    Department, retaining its responsibilities as outlined in the
    Federal Fire Prevention and Control Act of 1974 as amended.

                 national earthquake hazards reduction program

        The National Earthquake Hazards Reduction Program, an
    interagency research effort led by the Federal Emergency
    Management Agency (FEMA) and established under P.L. 95-124,
    plays an important role in the effort to better understand
    earthquakes and thus reduce the damage to life and property
    caused by them. The Committee expects that FEMA will continue
    to fulfill this responsibility after it is transferred to the
    Department of Homeland Security. The Committee will carefully
    review this situation next year when the program is
    reauthorized.

                    organization of research and development

        The Committee believes strongly that securing the homeland
    will depend upon science and technology. As in past wars,
    maintaining a technological edge against the enemy will be
    critical. Recognizing the important role that will be played by
    science and technology in detecting and countering chemical,
    biological, nuclear, or radiological weapons, H.R. 5005
    included significant research and development activities within
    the Under Secretariat for Chemical, Biological, Radiological,
    and Nuclear Countermeasures.
        The Committee believes, however, that science and
    technology will have an important role to play in virtually
    every aspect of homeland security-not just in countering tools
    of mass destruction such as chemical or biological weapons. For
    example, borders will be made more secure when biometric
    technologies can be reliably used to identify bad actors from
    good. New technologies for detecting explosives and other
    weapons will make travel safer. 'Data mining' technologies that
    enable the rapid identification of important data from among
    the vast quantities collected will help law enforcement
    identify terrorist activities. Advances in cyber security will
    help protect the nation's critical infrastructures, as they are
    intrinsically intertwined with, and dependent on, networks such
    as the Internet. Technologies that enable first responders to
    communicate more effectively during a crisis will improve
    disaster response.
        To ensure that science and technology are effectively
    mobilized in all aspects of the war against terrorism, the
    Committee believes that the Department must have, at its core,
    a robust research and development enterprise headed up by an
    Under Secretary whose expertise and primary responsibilities
    will be science and technology. As such, the Committee believes
    that research and development should be centrally organized and
    placed at a high level within the Department. The Amendment
    places primary responsibility for research and development in a
    distinct unit, overseen by an Under Secretary for Science and
    Technology who is responsible for basic and applied research,
    development, demonstration, testing and evaluation relevant to
    any and all of the missions of the Department.
        The Amendment moves most of the research and development
    functions transferred from existing agencies to the new
    Department in the Under Secretariat for Science and Technology.
    At the same time, however, the Committee believes that certain
    functions, such as the Department of Energy's nuclear
    assessment program and the Department of Defense's National
    Bio-Weapons Defense Analysis Center, should be retained within
    Title III, given their clear links to the operations of that
    unit.
        The organizational changes recommended by the Committee
    will maximize the effectiveness of the Department's overall
    science and technology development efforts while still allowing
    each unit to conduct some research and development efforts on
    activities closely related to the unit's specific function.

                      department of energy (doe) programs

        The Amendment accepts the President's proposed transfers of
    DOE research programs to the Department even though the
    Administration has been unable to answer several fundamental
    questions about the impact and mechanics of these transfers.
        The Committee has accepted the proposed transfers because
    the Department will clearly need some laboratory facilities and
    related research programs from which to build the research and
    development programs it will need to carry out its mission.
    However, the Committee was unwilling to see those transfers
    proceed before basic questions about them can be answered.
        Therefore, the Amendment requires reports before the
    transfers can occur that must address such fundamental issues
    as how the transfer will affect the contractual relationships
    between the national labs and DOE; how scientists who work on
    both homeland security matters and other issues will be
    affected by the transfer; and how the transfer will affect the
    physical plant of the labs. In the report, DOE should describe
    the effect of the transfer not only on the laboratories from
    which programs are being transferred, but also on any other DOE
    labs whose mission and work may be affected because of the
    transfer.
        The Committee retained language in H.R. 5005 that leaves
    some of the transfers up to the President, but the Amendment
    requires the President to notify Congress of his decision.
    Also, because the programs described in H.R. 5005 do not
    correspond exactly to program names used in DOE budgets or
    other documents, the Amendment requires notification of all DOE
    transfers so Congress can know precisely what is being
    transferred. The Committee believes that the President should
    not transfer programs that primarily support destruction of
    foreign weapons of mass destruction or intelligence analysis of
    weapons of mass destruction because such programs are not
    directly related to homeland security.
        The Committee expects, however, that the Department will
    continue to interact with many national labs on a wide variety
    of research matters, regardless of whether their programs are
    transferred to the Department.

                          homeland security institute

        The Committee adopted an amendment that establishes a
    Homeland Security Institute, as recommended in the National
    Research Council's June 2002 report entitled Making the Nation
    Safer: The Role of Science and Technology in Countering
    Terrorism. The Secretary should create the Institute as a
    federally funded research and development center administered
    separately from the Department. The Institute would provide
    technical analysis and support for the Secretary including in
    areas such as bioterrorism agents.
        The Committee intends for the Institute to be a dedicated,
    contract, not-for-profit organization funded by the Department.
    This type of structure is necessary because the depth and
    breadth of technical expertise needed cannot be supplied by the
    new Department or other existing federal agencies. The primary
    advantage to this type of quasi-governmental organization is a
    structure and management that can quickly provide deep
    understanding of technical issues for decision-making by
    government officials. Another advantage is its ability to hire
    highly specialized talent required to perform its duties.

                               Fields of Research

        The Committee intends that the research activities
    supported by the Department not be limited to the physical and
    biological sciences and engineering, but also include the
    behavioral and social sciences. Relevant topics of inquiry
    would include research on psychological stresses on victims of,
    and responders to terrorist acts, human factors associated with
    the interface between technology and human behavior, the root
    causes of terrorism, and decision-making and management under
    extreme conditions.

                                   inquiries

        The Amendment provides for establishment of an office to
    serve as a point of entry for those seeking guidance on how to
    pursue proposals to develop or deploy products that would
    contribute to homeland security. The Committee adopted an
    amendment that further refined this idea and directs the
    Department, in conjunction with the existing inter-agency group
    known as the Technical Support Working Group (TSWG), to screen
    promising unsolicited ideas or white papers; assess their
    feasibility, technical merits, and costs; pursue proposals that
    adapt and deploy existing technologies; and match promising
    technologies with appropriate acquisition personnel. The
    provision will help eliminate bottlenecks that thwart the
    development and deployment of new homeland security
    technologies.

                                 classification

        The Committee believes that research conducted or supported
    by the Department should, ``to the maximum extent possible,''
    be unclassified. This policy was implemented by President
    Ronald Reagan in National Security Decision Directive 189 in
    1985, and it has mediated the tension between the need for
    openness as a fundamental principle of scientific research and
    the need to keep secret certain information that can be
    employed to support attacks on the U.S.
        Consistent with this Directive, the Committee adopted an
    amendment that requires the Under Secretary, before issuing
    research and development grants, contracts or other agreements,
    to determine whether the research should be classified. The
    Under Secretary must also use existing statutes when deciding
    whether to reclassify an existing research program. Finally,
    the Under Secretary must review the Department's classified
    research programs at regular intervals to determine whether
    classification continues to be necessary. These additional
    provisions are intended give researchers some certainty as to
    whether their research will be classified before the grant is
    awarded.

                              student visas/ipass

        The U.S. depends on foreign graduate students in many
    science and technology fields. The Committee believes it is
    important that procedures for granting student visas balance
    the need to improve homeland security with the benefits that
    are gained when talented students from other countries study in
    the U.S.
        Earlier this year, draft plans for new security rules for
    student visas caused concern among academic institutions.
    However, an implementation plan for improving the security of
    the student visa process by establishing an Interagency Panel
    on Advanced Science Security (IPASS), relieved most of these
    concerns. Recognizing the role that the Director of the Office
    of Science and Technology Policy (OSTP) played in creating
    IPASS, the Amendment requires the OSTP Director to report to
    Congress regarding how the provisions of section 403 will
    affect procedures for the issuance of student visas.

              national aeronautics and space administration (nasa)

        The Committee adopted an amendment expressing the Sense of
    Congress that the Secretary should consult NASA on matters
    related to computer security systems and processes. The
    Committee recognizes that NASA has developed significant
    expertise in this area that could be of value in the fight
    against terrorism. In addition, NASA has recently partnered
    with computer companies and Carnegie Mellon University in an
    initiative to develop software that will meet the higher
    standards of reliability and security that the Nation will need
    in the future. The Committee believes that the new Department
    could benefit from the computer security expertise resident in
    NASA and encourages the Secretary to seek it out as
    appropriate.

          homeland security science and technology advisory committee

        The Committee adopted an amendment establishing an advisory
    committee to review and make recommendations with respect to
    general policy issues (including budget priorities) within the
    purview of the Undersecretary for Science and Technology. The
    20-member Advisory Committee will consist of experts in science
    and technology. One or more of those members must be a
    representative of the users of the Department's research
    activities such as emergency responders. In addition, one or
    more members must be representative of citizen groups,
    including groups from economically disadvantaged communities.
        The Committee feels that it is important to include the
    end-user community on the Advisory Committee. Inclusion of the
    emergency response and citizen group communities will help
    ensure that research agendas are firmly tied to the actual
    needs of those who will be on the front lines if the nation is
    subjected to a terrorist attack.
        The Committee believes that the Advisory Committee can play
    a significant role in strengthening the Department of Homeland
    Security's research agenda and focus. The Advisory Committee
    will provide an independent and unbiased review by which the
    Department and Congress can assess the efficacy and utility of
    its science and technology activities.

                                      ostp

        The Amendment changes the National Science and Technology
    Policy, Organization, and Priorities Act to add homeland
    security to the list of issues on which the Director of the
    Office of Science and Technology Policy (OSTP) should advise
    the President and adds the Office of Homeland Security to the
    list of offices with which OSTP is required to coordinate.
        OSTP has responsibility for overall coordination of Federal
    science and technology programs. When coordinating science and
    technology activities that may benefit homeland security, the
    Committee believes OSTP should consult with the Office of
    Homeland Security and the Under Secretary for Science and
    Technology in the Department of Homeland Security.

                      national oceanic partnership program

        National Ocean Research Leadership Council of the National
    Oceanic Partnership Program coordinates ocean research, a
    significant portion of which is relevant to coastal and port
    security. The Science Committee believes the Under Secretary
    for Science and Technology should be a statutory member of the
    Council.

                                nist organic act

        The Committee adopted an amendment that changes the NIST
    Organic Act to allow that agency to use its expertise to assist
    the Department. Section 1010 requires NIST, working through a
    cooperative agreement with the Secretary of Homeland Security
    to (1) carry out measurement and standards activities related
    to chemical, biological, radiological, nuclear, and explosive
    threats and (2) support the development of standards and
    guidelines with respect to border and transportation security
    technologies. This section requires an annual report to
    Congress of the activities carried out under this section.
        Section 1011 requires the new Department and NIST to engage
    in a systematic review and upgrading of voluntary consensus
    standards related to homeland security. In consultation with
    standards development organizations (SDO), NIST and the
    Department shall prepare a list of homeland security-related
    voluntary consensus standards. It further requires NIST to
    develop a research plan to aid in the development of the
    necessary standards while requiring the Secretary to develop a
    Government-wide plan to help SDOs accelerate the development,
    revision, and promulgation of these standards.

                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                              House of Representatives,
                Committee on Transportation and Infrastructure,
                                         Washington, DC, July 11, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C. 20515
        Dear Mr. Chairman: On June 24, 2002, H.R. 5005, that
    proposes to establish a department of homeland security, was
    referred to the Committee on Transportation and Infrastructure.
    On July 11, 2002, the Committee met and, in open session,
    unanimously approved, by voice vote, amendments to the bill.
    Pursuant to H. Res. 449, the Committee herewith transmits its
    recommendations on H.R.5005 to the Select Committee on Homeland
    Security for consideration.
            Sincerely,
                                             Don Young,
                                                       Chairman

    Legislative Recommendations Submitted to the House Select Committee on
                             Homeland Security For

                   H.R. 5005 - HOMELAND SECURITY ACT OF 2002

                                 JULY 12, 2002

        The Transportation and Infrastructure Committee met on July
    11, 2002, to consider H.R. 5005. The Committee adopted two
    amendments to the bill. Chairman Don Young and Ranking Member
    Jim Oberstar offered an en bloc manager's amendment which was
    adopted by voice vote by the Committee and Congresswoman Eddie
    Bernice Johnson offered an amendment to the amendment, which
    was also adopted by voice vote. The amendments contained the
    following legislative recommendations.
    Issuance of Regulations (Section 102(c) )\1\
    ---------------------------------------------------------------------------
        \1\ Refers to Section in H.R. 5005 as included in the Committee
    Print showing the Amendment Adopted by the Committee on Transportation
    and Infrastructure.
    ---------------------------------------------------------------------------
        The amendment clarifies that any regulation adopted by the
    Secretary must be subject to the Administrative Procedure Act
    (APA), except as specifically provided in H.R. 5005, if enacted
    or some other law granting regulatory authority transferred to
    the Department of Homeland Security.
        The Committee is concerned that H.R. 5005 is not clear as
    to the applicability of other existing laws to the rule making
    authority of the Secretary of Homeland Security. Unless
    Congress has specifically provided otherwise, the Committee
    believes that the public notice and comment requirements of the
    APA are essential components of governing.
    Transfer of Transportation Security Programs (Section 404)
        The amendment recognizes that transportation security is
    undergoing a transition. A new agency, the Transportation
    Security Administration (TSA), was created only last November.
    It is still in the process of getting organized at the same
    time that it is being pressed to meet some very tight deadlines
    for overhauling the aviation security system.
        The underlying goal of this amendment is to ensure that the
    transfer to a new Department does not interfere with that
    overhaul.
    Therefore, the amendment would--
        a. Require that the transportation security functions
    transferred by this Act be maintained within a distinct unit
    under the Under Secretary of Border and Transportation
    Security. An Assistant Secretary for Transportation Security
    would head this separate unit.
        b. Require that notwithstanding Title 8 of this Act, the
    transfer of the transportation security functions shall not
    occur until --
              i. the Secretary of Homeland Security, the Under
            Secretary of Border and Transportation Security, and
            the Assistant Secretary of Transportation Security have
            taken office.
              ii. the Secretary of Transportation certifies that
            explosive detection systems are deployed at all U.S.
            airports where they are required and that these systems
            are screening all checked baggage, as required under
            the Aviation and Transportation Security Act. This Act
            mandates that such systems must be deployed by the end
            of 2002.
              iii. the Secretary certifies that a sufficient number
            of federal screeners, security managers, security
            personnel, and law enforcement officers have been
            deployed by November 19, 2002 at all airports in the
            United States where screening is required, except the
            five airports participating in the pilot program.
        c. Establish a liaison office within the Department of
    Homeland Security to provide a mechanism for consulting with
    the FAA on any action that might affect aviation safety, air
    carrier operations, aircraft airworthiness or the use of
    airspace. There is a close nexus between aviation security and
    other aspects of the aviation system. The Committee wants to
    make sure that when aviation security is moved to a separate
    Department, it does not result in a degradation of aviation
    safety due to a lack of coordination between the aviation
    security regulator and the aviation safety regulator.
        d. Make clear that nothing in this Act gives the Secretary
    of Homeland Security any additional authority over
    transportation security beyond that previously exercised by the
    DOT Secretary under Chapter 449 of Title 49 or by the TSA Under
    Secretary.
        e. Prohibit the new Department from spending any Airport
    Improvement Program (AIP) funds. Only the FAA can make AIP
    grants.
    With the Transportation Security Administration (TSA) impending
    transfer to the Department of Homeland Defense, the Committee
    is concerned that TSA may lose sight of its responsibility to
    ensure both effective security and an efficient transportation
    system. In light of this, it is important that in any final
    legislative product, Congress make clear that the
    Transportation Security Administration should use all
    reasonable measures to ensure efficiency and a viable
    transportation system in all modes as it fulfills its security
    responsibilities.
    Clarification of transfer authority (Section 404(e))
        H.R. 5005 as introduced authorizes the transfer of the TSA
    from the DOT to the Department of Homeland Security.
        The Aviation and Transportation Security Act that was
    enacted in November 2001 (P.L. 107-71) created the TSA and gave
    it responsibility for civil aviation security as well as
    security for other modes of transportation. To date, the TSA
    has focused on aviation security, so it is not yet known what
    other security-related programs may eventually be transferred
    to the TSA from other areas of the DOT.
        The amendment would only authorize the transfer of those
    programs in the TSA that are included in the Administration's
    FY 2003 budget request for the Transportation Security
    Administration (TSA). However, the amendment also requires the
    Administration to notify Congress before transferring any other
    security-related programs from the Department of Transportation
    (DOT) to the Department of Homeland Security.
        The proposed amendment would provide Congress with an
    opportunity to review any proposal to transfer additional
    programs from the DOT to the Department of Homeland Security.
    Under the proposed amendment, such additional programs may not
    be transferred before the last day of a 30-day period of
    continuous session of Congress following the date of
    transmittal by the President to Congress of a notice of the
    President's intent to make such a transfer. This language
    should not be misinterpreted to authorize the transfer of
    existing functions, agencies, personnel, authorities, or
    programs in the Department of Transportation that are not
    specifically authorized for transfer.
        It is essential that Congress exercise its oversight role
    and approve any additional transfers of existing programs
    within the DOT and that such transfers are not encouraged.
    Report to Congress on checked baggage deadline (Section 404(f))
        The amendment also directs the DOT to report to Congress
    within 60 days on how it plans to meet the deadline in current
    law that all checked baggage be screened by the end of the
    year. The report is desirable because concerns have been
    expressed about whether TSA will meet the deadlines and we must
    make every effort to oversee it's progress and prevent
    unnecessary delays.
    Functions of the Administrator of GSA (Section 405)
        The amendment provides limited authority to the
    Administrator of GSA and gives him the flexibility to meet the
    security needs of federal agencies under special circumstances
    and permits the Administrator to respond to routine building
    maintenance situations (for example if someone is stuck in an
    elevator) without having to call in the DHS. In addition, the
    amendment allows GSA to retain the ability to collect fees for
    protection services under its current rent billing structure
    and to reimburse DHS for FPS protection, which eliminates the
    need for DHS to establish its own billing structure for
    building security.
    Interagency Security Committee (Section 407)
        The amendment codifies Executive Order 12977 which
    established an Interagency Security Committee. The Committee
    establishes policies for building security, develops security
    standards, ensures compliance with the standards, and takes
    actions as necessary to enhance the quality and effectiveness
    of security and protection of federal facilities. The executive
    order establishes GSA as the Chair of the Committee. The
    amendment allows GSA to remain as Chair or Co-Chair of the
    Committee.
    Federal Emergency Management Agency (FEMA) (Section 506)
        The amendment strikes those portions of the homeland
    security bill that transfer FEMA to the DHS, keeping FEMA as an
    independent agency. The amendment would also strike those
    portions of the bill that would transfer preparedness and
    response functions presently handled by FEMA, but unrelated to
    homeland security.
        The Federal Emergency Management Agency (FEMA), is an
    independent agency reporting to the President that has as its
    mission ``. . .to reduce the loss of life and property and
    protect the nation from all hazards by leading and supporting
    the nation in a comprehensive, risk-based emergency management
    program of mitigation, preparedness, response, and recovery.''
    At its inception, FEMA was created to consolidate and
    coordinate the efforts of over 15 different agencies and
    departments that were responsible for responding to and
    preparing for disasters. Created by President Carter with an
    Executive Order in 1979, FEMA is tasked with carrying out the
    authorities contained in the Robert T. Stafford Disaster Relief
    and Emergency Assistance Act (42 U.S.C. Sec. 5121 et. seq., as
    amended), which is an amalgamation of previous disaster relief
    acts, including the National Flood Insurance Act of 1968, the
    Disaster Relief Acts of 1970 and 1974, the Flood Disaster
    Protection Act of 1973, and the Federal Fire Prevention and
    Control Act of 1974.
        Through his executive order, President Carter also merged
    many separate federal government disaster-related
    responsibilities and agencies into one agency. Among others,
    FEMA absorbed the Federal Insurance Administration, the
    National Fire Prevention and Control Administration, the
    National Weather Service Community Preparedness Program, the
    Federal Preparedness Agency of the General Services
    Administration and the Federal Disaster Assistance
    Administration activities from HUD. Civil defense
    responsibilities were also transferred to the new agency from
    the Defense Department's Defense Civil Preparedness Agency.
        While recognizing the important role that FEMA would play
    in responding to any terrorist attack regardless of where it is
    administratively situated, the Transportation and
    Infrastructure Committee believes that this role would best be
    served if FEMA retains its independent status, with an
    increased emphasis on coordination with the newly created
    Department of Homeland Security (DHS). Retaining this
    independence will allow FEMA to continue to effectively carry
    out its mission of reducing "the loss of life and property and
    protecting the nation from all hazards by leading and
    supporting the nation in a comprehensive, risk-based emergency
    management program of mitigation, preparedness, response and
    recovery", unencumbered by a new bureaucracy which will be
    focused on security activities. Only by allowing FEMA to retain
    its independent coordinating role can we ensure that the
    government will be able to effectively respond to and help the
    nation recover from all disasters.
        FEMA's role in responding to the attacks of September 11th
    has become the most high profile of its activities. However,
    preparing for and responding to terrorist acts is a small part
    of FEMA's preparedness and response activities. Since 1976,
    there have been only four federally declared disasters for
    terrorism\2\, yet during the same time frame, there have been
    927 federally declared disasters and 77 emergency declarations
    resulting from such natural hazards as fires, earthquakes,
    floods, hurricanes, and tornados. In none of the federally
    declared disasters resulting from terrorism was the ability of
    FEMA to respond ever diminished by its independent status. For
    example, in responding to the attacks on New York, FEMA
    effectively coordinated the efforts of Federal, State and local
    first responders, non-profit social service groups, and
    individual providers.
    ---------------------------------------------------------------------------
        \2\ Declaration 1391 for the attack in New York City on September
    11, 2001; declaration 1392 for the attack at the Pentagon on September
    11, 2001; Declaration 1048 for the attack at the Murrah Federal
    Building in Oklahoma City on April 26, 1995; and Declaration 984 for
    the attack at the World Trade Center in New York City on April 2, 1993.
    ---------------------------------------------------------------------------
        Through the existing Federal Response Plan and cooperative
    agreements with many state and local agencies, FEMA's
    independence has allowed it to effectively marshal all
    necessary assets from across the government to respond
    effectively and efficiently to each of these disasters. During
    the development of the Federal Response Plan, developed in
    1992, and signed by the heads of 27 agencies and organizations,
    FEMA was vital in coordinating and organizing the myriad roles
    and responsibilities of each signatory agency. Since its
    inception, it has been vital in the Federal response effort,
    yet it is a flexible document, and from time to time has been
    updated. Each time this has occurred, FEMA has led the way and
    effectively updated the plan to reflect changing conditions and
    laws. By retaining FEMA as the lead agency in the Federal
    Response Plan, we are ensuring a continuity of knowledge and
    using an existing framework to shape future efforts to ensure
    seamless provision of federal assistance.
        Under this amendment, FEMA retains its role as the lead
    agency under the Federal Response Plan in responding to
    disasters caused by natural hazards, such as fires,
    earthquakes, floods, hurricanes, and tornados and DHS would be
    the lead agency for disasters caused by terrorist attacks. The
    amendment directs DHS, in consultation with FEMA, to develop a
    coordinated preparedness and response program to terrorist
    attacks that will become a part of the Federal Response Plan.
    In order to effectuate this plan, FEMA and DHS will sign a
    memorandum of understanding to clarify the circumstances under
    which each agency would respond, similar to agreements that
    FEMA already has in place relating to other agencies for
    disasters. To ensure that there is no legislative overlap,
    references to "Major Disaster," as defined by the Stafford Act,
    were stricken. The Committee would like to work with the Select
    Committee to develop a definition of "terrorist attack" that
    does not overlap or conflict with the "Major Disaster"
    definition in the Stafford Act.
        Besides coordinating the response activities of as many as
    27 Federal Agencies and numerous non-governmental groups such
    as the American Red Cross, FEMA is also responsible for the
    delivery of a myriad of disaster assistance programs, including
    Disaster Unemployment Assistance, Temporary Housing Assistance,
    the Individual and Family Grant Program, Disaster Legal
    Assistance, Home Repair Assistance, and its Debris Removal
    Program. Following the provision of assistance in the aftermath
    of a disaster to individuals, FEMA is also responsible for the
    provision of prospective mitigation assistance to communities
    through its Hazard Mitigation Grant Program, which helps to
    make these communities more disaster resistant.
        In addition to these response and recovery roles, FEMA is
    also responsible for such diverse preparedness activities as
    the Emergency Food and Shelter program, maintenance of
    floodplain maps, provision and maintenance of the National
    Flood Insurance Program, and the U.S. Fire Administration,
    which teaches basic firefighting skills under a "train the
    trainer" model and also works to develop new methodologies and
    equipment. Under the Administration's proposal, each of these
    non-homeland security activities would become a part of the
    DHS. The Committee believes that it is essential to preserve
    these non-security related functions by keeping FEMA
    independent from the DHS.
        In addition to its preparedness, response, and recovery
    responsibilities, FEMA will retain all of its responsibilities
    covered by the Floodplain Management Program, National Flood
    Insurance Program, Dam Safety Program, Hazard Mitigation Grant
    Program, Emergency Management Institute, Urban Search and
    Rescue, and U.S. Fire Administration. Each of these programs is
    geared towards mitigating the effects of traditional disasters,
    yet they also serve a role in homeland security. The amendment
    makes clear that increased coordination will allow DHS to
    benefit from FEMA's vast experience, while at the same time,
    preserving these programs and their founding missions. The
    amendment also makes clear that H.R. 5005 will have no effect
    on FEMA's authority to independently administer, make policy
    relating to, or promulgate regulations for its many grant
    programs. In those grant programs where some overlap may occur
    (i.e., provision of assistance to fire fighters) FEMA will be
    required to coordinate its activities with the Secretary of
    Homeland Security to ensure that no efforts are duplicated.
        The Transportation and Infrastructure Committee believes
    that the best way to improve the delivery of federal disaster
    assistance is to allow FEMA to remain the independent
    coordinating agency that it has always been. It is the position
    of the Committee that the best way to accomplish both
    consolidation and coordination is to preserve FEMA's core
    mission and to keep FEMA as a distinct entity.
        Considering the important role that FEMA serves in the
    nation's ability to prepare for and effectively deal with
    disasters, it is vital that it not be given secondary status or
    absorbed within a large bureaucracy which has little or no
    experience addressing these issues. Prior to the creation of
    FEMA in 1979, the federal government had no centralized,
    coordinated or effective response to disasters. Breaking FEMA
    up and separating its employees throughout DHS, an agency whose
    primary role will be security, would have the effect of
    diluting its ability to effectively carry out its mandate of
    preparing the nation to mitigate the effects of a disaster,
    preparing first responders, ensuring the adequacy of the
    federal response, and assisting in the recovery from disasters.
    By keeping FEMA as an independent agency and as a "distinct
    entity", FEMA's core mission will be protected and the nation
    will be a safer place.
    Homeland Security Department Headquarters (Section 732(c))
        The amendment strikes the authority of the Secretary to
    undertake real property arrangements not consistent with
    existing law and requires the Administrator of GSA to construct
    a new headquarters facility for the Department of Homeland
    Security consistent with the Public Buildings Act of 1959. The
    Committee is concerned about the broad reach of several real
    property provisions in H.R. 5005 that could be undertaken
    without Congressional oversight. Included in these provisions
    is authority to acquire real property by transfer or exchange,
    or by sale to or exchange with non-Federal parties. Further,
    the Committee is gravely concerned these real estate activities
    will necessitate the creation of a bureaucracy within the new
    Department solely for the purpose of conducting real estate
    transactions, thus draining much needed resources away from the
    legitimate activities of homeland security.
        Under the amendment, the Secretary will be responsible for
    homeland security, while the government's landlord, GSA, is
    responsible for acquiring the appropriate space for the agency
    to properly carry out its intended mission. The Public Building
    Service (PBS) of GSA operates and maintains 1,993 Federal
    buildings with more than 184 million square feet of office,
    storage and special space in the United States for use by
    civilian employees of the Federal government. PBS also acts as
    the leasing agent for the Federal government, and currently has
    in place over 7,400 leases in 6,300 buildings with over 150
    million square feet of space.
        The Committee on Transportation and Infrastructure
    recognizes the importance of establishing a new headquarters
    facility for the Department of Homeland Security by direct
    federal construction, lease-purchase, or other arrangements
    using the Federal Financing Bank. However, the Committee does
    not recommend providing the Secretary of the Department of
    Homeland Security authority beyond the Public Buildings Act of
    1959 to undertake real property functions. The Secretary should
    be responsible for homeland security, while the government's
    landlord, GSA, should be responsible for acquiring the
    appropriate space for the agency to properly carry out its
    intended mission.
        The amendment authorizes the Administrator to construct
    through direct appropriation, or through lease-purchase, or
    through a loan by the Federal Financing Bank appropriate
    headquarters space. The amendment further exempts any of these
    activities from current scoring rules so the cost of the
    headquarters will be amortized over a set period of time and
    scored on an annual basis. It also allows for appropriate
    Congressional oversight through the prospectus process
    established under section 7 of the Public Buildings Act of
    1959.
    Congressional Oversight of Organizational Plan (Section 802(b))
        The amendment would require the Secretary, before any
    agency can be transferred, to submit an organizational plan to
    Congress for oversight review for a continuous 60-day period.
        The purpose of this amendment is to insure that Congress
    has an adequate opportunity to insure that the transfer of
    agencies and functions is being carried out consistent with the
    intent of the Act.
    Prohibition on Use of Transportation Trust Funds (Section 803(f))
        The amendment would prohibit funds derived from the
    transportation trust funds from being transferred to or
    otherwise made available to the new Department of Homeland
    Security. The amendment would not apply to certain security
    related funds made available to the Federal Aviation
    Administration for fiscal years preceding 2003.
        H.R. 5005 as proposed by the Administration provides broad
    authority to transfer the assets "held by or available in
    connection with" each agency that is transferred to the new
    Department of Homeland Security. The term "assets" is broadly
    defined to include "unexpended balances of appropriations, and
    other funds or resources".
        The Committee is concerned that this broad authority could
    be used to transfer funds derived from the transportation trust
    funds to the new Department of Homeland Security. The
    Department of Homeland Security is being established in
    response to national security concerns; therefore, the costs of
    its activities are inherently national security costs. National
    security costs should be funded by the general fund, not the
    transportation trust funds. The balances in the transportation
    trust funds are barely sufficient to maintain our
    transportation systems, and cannot be relied upon to meet the
    extraordinary security costs of the post 9/11 era as well.
    Revision of Transportation Security Oversight Board (Section 907)
        The amendment revises the Transportation Security Oversight
    Board by moving the Board into the Department of Homeland
    Security, making the Secretary of Homeland Security a Member of
    the Board and the Chairperson of the Board.
        The Transportation Security Oversight Board plays an
    important role in reviewing orders issued by the Undersecretary
    of the Transportation Security Administration (TSA). Congress
    gave the Undersecretary very strong and broad authority to
    issue security directives and regulations relative to all
    Transportation security matters without providing notice or
    opportunity for comment. The Board has authority to review and
    disapprove any regulations or security directives issued by the
    Undersecretary within 30 days of issuance. Therefore, the Board
    plays an important appellate role.
        It is important that the Board operate effectively and
    promptly to review the orders and regulations of the
    Undersecretary and that it vigorously exercise its review
    function, as well as the other statutory functions given to it
    by Congress. This amendment, while somewhat technical in
    nature, will insure the continued smooth functioning of the
    Board.
    FAA Consultation Requirements (Section 907(b))
        The amendment revises Chapter 471 of Title 49 to require
    the Federal Aviation Administration to consult with the new
    Department before it makes an AIP grant for security equipment
    or terminal modification to accommodate that equipment. It is
    important that after the TSA is transferred out of DOT, the
    close working relationship that it currently has with the FAA
    and vice versa, continue.
    Transfer of Federal Protective Service (Sec. 908)
        The amendment retains the transfer of the Federal
    Protective Service (FPS) and enhances the authority,
    responsibility, pay, and benefits of FPS officers by granting
    them Law Enforcement Officer (LEO) status. The amendment gives
    the Secretary special pay authority to compensate FPS officers
    equal to other federal law enforcement officers. The amendment
    clarifies that the Act does not impact the current functions
    and authority of the Administrator of GSA with regard to the
    protection of federal buildings or limit the Administrator's
    authority to collect fees for protective services. The
    amendment also sustains limited authority for the Administrator
    of GSA with regard to the protection of federal buildings and
    facilitates the continuation of GSA's billing structure and
    authority to collect fees for related building expenses. The
    amendment also establishes an Interagency Security Committee
    with GSA as the chair or co-chair, which was previously
    authorized by Executive Order 12977, signed October 19, 1995.
        While recognizing the important role the FPS plays in
    protecting federal buildings, the Transportation and
    Infrastructure Committee believes that this role is best served
    if FPS officers are given similar authorities as other police
    organizations that are being transferred to the Department of
    Homeland Security (DHS). Recently, the FPS has shifted its
    emphasis from a fixed guard post concept to a mobile police
    patrol and response concept. FPS officers perform all duties
    attendant to the normal interpretation of a police officer
    function, including maintaining law and order, preventing or
    deterring disturbances, and investigating both felonies and
    misdemeanors. The increased authorities and responsibilities
    provided under the amendment will allow current FPS officers to
    participate as an equal partner on task forces and commissions
    related to homeland security activities or be incorporated into
    any newly created police force.
        At present, FPS officers can only make arrests (including
    arrests during the commission of a crime), serve warrants, and
    detain suspects on federal property. This puts FPS officers in
    the awkward position of having to call 911 and stand idly by as
    crimes are committed off federal property, even though they may
    be in a position to apprehend a suspect or stop a crime.
    Additionally, there are inconsistent jurisdictional policies
    with regard to state and local law enforcement authorities
    entering Federal facilities to serve warrants and make arrests.
    Under provisions of the amendment, the Secretary will have the
    authority to clarify and resolve these inconsistent and
    sometimes conflicting policies by entering into cooperative
    agreements with state and local entities.
        The current FPS force is composed of both uniformed and
    non-uniformed officers, including criminal investigators and
    physical security specialists. All officers receive eight weeks
    of instruction at the Federal Law Enforcement Training Center
    in Glynco, Georgia, with additional periodic in-service and
    refresher training courses. Physical security specialists
    receive further training to conduct security surveys and
    provide recommendations pertaining to federal facilities.
        The FPS has been a part of the Public Buildings Service
    (PBS) since 1949. Originally known as the Public Buildings
    Administration, PBS is the real property arm of GSA. PBS
    operates and maintains 1,993 Federal buildings with more than
    184 million square feet of office, storage and special space in
    the United States for use by civilian employees of the Federal
    government. PBS also acts as the leasing agent for the Federal
    government, and currently has in place over 7,400 leases in
    6,300 buildings with over 150 million square feet of space. The
    amendment maintains that the Administrator will retain current
    authorities for the protection of federal buildings and the
    ability to collect fees for protection services and prohibits
    DHS from using the Federal Building Fund for anything other
    than building security.
        The amendment is similar to H.R. 4770 approved by the
    Committee on May 22, 2002. The amendment enhances the FPS,
    provides for the continued protection of federal buildings, and
    requires that payments to the Federal Building Fund by agencies
    for building security be limited to reimbursements for building
    protection services.
    Preservation of the Coast Guard within the Department of Transportation
            (Title X and Section 406)
        The amendment includes provisions that strike all
    references to the transfer of the U.S. Coast Guard and ensures
    that Coast Guard core missions are performed at adequate
    levels.
        The amendment establishes a new Under Secretary of
    Transportation for the Coast Guard. The provision creates a
    hierarchy within the Department of Transportation that is
    similar to the civilian leadership structure in the Department
    of Defense. Under this amendment, the Coast Guard will have the
    advice and support of a civilian leader, to the same extent as
    the military services within the Department of Defense. The
    Coast Guard Under Secretary will also be the same level as the
    five Under Secretaries in the new Department of Homeland
    Security, which will enable the head of the Coast Guard to work
    and coordinate effectively with the new Department. The Under
    Secretary will be responsible for coordinating with Homeland
    Security on security matters affecting the Coast Guard.
        Finally, the amendment requires the Coast Guard to continue
    to devote an adequate amount of resources to core Coast Guard
    missions of search and rescue, fisheries law enforcement, drug
    interdiction, migrant interdiction, marine environmental
    protection, and marine safety. This will ensure that the Coast
    Guard has the flexibility to address all homeland security and
    port security threats, and also perform other important
    maritime missions.
        The amendment specifies the levels of funding for each
    mission by a minimum percentage that must be obligated. This is
    intended to be a minimum level of commitment of resources to
    those missions and should be adjusted for inflation to allow
    those levels of resources to rise.
        After thorough consideration of the proposal to move the
    Coast Guard from the U.S. Department of Transportation to the
    new Department of Homeland Security, the Transportation and
    Infrastructure Committee has concluded that it would be in the
    best interest of the citizens of the United States for the
    Coast Guard to remain a part of the Department of
    Transportation. The Committee is very concerned that moving the
    Coast Guard to the new Department of Homeland Security will
    force the Coast Guard to place less emphasis on its vital
    traditional missions.
        The U.S. Coast Guard currently has primary responsibility
    for the promotion of safety of life and property at sea, the
    enforcement of all applicable Federal laws on, under, and over
    the high 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 related
    facilities.
        As a military service and a branch of the Armed Forces, the
    Coast Guard also maintains a readiness to operate as a
    specialized service in the Navy upon the declaration of war or
    when the President directs. The Coast Guard has defended our
    Nation in every war since 1790, including the 1990-1991
    conflict in the Persian Gulf.
        The Coast Guard's highest priority mission is search and
    rescue. The Coast Guard's search and rescue activities save the
    lives of approximately ten Americans each day and is unrelated
    to the primary mission of the new Department of Homeland
    Security. The Coast Guard provides around the clock readiness
    to conduct search and rescue missions in all areas of the
    maritime environment. Annually, the Coast Guard responds to
    approximately 40,000 calls for assistance. This year the Coast
    Guard saved 84 percent of all mariners in distress.
        The Coast Guard is in process of upgrading and improving
    its search planning tools to conduct more efficient and
    effective maritime searches. In addition, the Coast Guard is
    developing the new National Distress Response System
    Modernization Project. This vital multi-million dollar project
    will modernize the Coast Guard's outdated distress
    communications system allowing the Coast Guard to better
    respond to mariners in distress and thereby preventing the
    tragic loss of hundreds of American lives.
        As the only military service with law enforcement
    authority, the Coast Guard apprehends smugglers attempting to
    import illegal drugs into the United States through the six
    million square mile transit zone. Drug trafficking must be
    obstructed to halt the destructive influence of drug
    consumption on Americans. The Coast Guard seized a record
    138,000 pounds of cocaine in 2001. An untold number of American
    children were kept from the ravages of drug addiction due to
    the efforts of the Coast Guard. While the Coast Guard seized a
    record amount of cocaine, it will not meet its 2001 performance
    target due to the great increase in the northward flow of
    cocaine toward the United States and the Coast Guard's greatly
    increased post September 11th homeland security efforts.
        Another important mission of the Coast Guard involves the
    protection of American fisheries resources. Commercial and
    recreational fisheries contribute about $50 billion annually to
    the U.S. economy. Responsible management of ocean resources is
    critical as the world's population continues to grow, demanding
    increasing food sources. The Coast Guard works to prevent
    foreign fishing vessels from entering the U.S. Exclusive
    Economic Zone. The agency also partners closely with other
    Federal and state agencies to improve the health of fish
    stocks.
        The Coast Guard's prevention, enforcement and response
    operations in marine environmental protection help to protect
    our natural resources and reduce the amount of pollution
    entering U.S. and international waterways. Due to the Coast
    Guard's continued enforcement of the Oil Pollution Act of 1990,
    few major oil spills occurred during 2001.
        The Coast Guard focuses marine environmental protection
    activities on oil spill prevention programs. When oil accidents
    do happen, the Coast Guard responds with its partners in other
    Federal agencies, state governments, and the maritime industry
    to ensure that the impacts of a spill are minimized. These and
    other prevention efforts have been effective in reducing oil
    spills in all parts of the country.
        The Coast Guard also works to prevent undocumented migrants
    from illegally entering the United States. The Coast Guard
    patrols throughout the Caribbean and Florida Straits and
    responds to intelligence about suspicious voyages along the
    East and West Coasts and throughout U.S. territories in the
    Pacific in its efforts to curtail illegal immigration.
        Each year millions of passengers are carried aboard cruise
    ships, ferries, charter boats, sightseeing boats, gaming
    vessels and other commercial passenger vessels in the U.S.
    However, only seven fatalities occurred in fiscal year 2001.
    This low death rate is a marked decrease in the actual number
    of passenger deaths as well as a decline in the death rate. The
    Coast Guard aims to ensure the safety of passengers on board
    vessels by preventing accidents, responding promptly to
    accidents when they occur, and investigating accidents to
    prevent them from happening again in the future. The Coast
    Guard is also responsible for recreational boating safety. The
    Coast Guard estimates that 742 recreational boating fatalities
    occurred during 2001. The ratio of fatalities to the registered
    number of boaters is decreasing despite an increasing number of
    registered boaters. The Coast Guard coordinates national
    outreach campaigns targeting life jacket wear, boating safety
    education, vessel safety checks, carbon monoxide poisoning, and
    the danger of boating while under the influence of drugs and
    alcohol.
        The Coast Guard's legal responsibilities have expanded over
    the past twenty years. Many of the laws the Coast Guard
    administers are codified in subtitle II of title 46, United
    States Code. The Coast Guard enforces the following laws:
         The Western Hemisphere Drug Elimination Act, which
    provides a three-year increase of Coast Guard drug interdiction
    resources to respond to the illegal drug threat facing our
    country.
         The Anti-Drug Abuse Acts of 1986 and 1988, which
    expand the Coast Guard's role in waterborne and airborne marine
    drug interdiction.
         The Maritime Drug Law Enforcement Act, which
    authorizes the Coast Guard to search and seize any vessel that
    is manufacturing, distributing, or possessing with the intent
    to manufacture or distribute a controlled substance in the
    United States.
         The Deepwater Port Act of 1974, which directs the
    Coast Guard to oversee offshore oil port operation and
    construction.
         The Port and Waterways Safety Act of 1974, which
    directs the Coast Guard to ensure port and merchant vessel
    safety.
         The Port and Tanker Safety Act of 1978, which
    authorizes the Coast Guard to inspect foreign tankers, evaluate
    crew standards, and monitor offshore lightering activities in
    U.S. waters.
         The Omnibus Diplomatic Security and Antiterrorism
    Act of 1986, which requires the Coast Guard to maintain and
    improve port, harbor, and coastal facilities security.
         The Federal Boating Safety Act of 1971, which
    authorized the Coast Guard to prescribe standards for the
    manufacture of pleasure boats and associated equipment.
         The Recreational Boating Safety Improvement Act of
    1998 which promotes recreational boating safety and access
    through a state grant program.
         The Federal Water Pollution Control Act of 1972
    (popularly known as the Clean Water Act), which requires the
    Coast Guard to regulate discharges of oil and sewage from
    vessels.
         The Oil Pollution Act of 1990 (OPA 90), which
    expands the Coast Guard's authority over oil spills, and
    establishes a comprehensive regime for oil spill compensation,
    liability, response, and research and development.
         The Marine Protection, Research and Sanctuaries
    Act of 1972, which gives the Coast Guard enforcement authority
    over ocean dumping and marine sanctuaries.
         The Act to Prevent Pollution from Ships, which
    requires the Coast Guard to administer and enforce
    international environmental pollution agreements through vessel
    and port certification and inspections.
         The Marine Plastic Pollution Research and Control
    Act of 1987, which requires the Coast Guard to enforce
    prohibitions on the disposal of plastic materials and other
    garbage at sea.
         The Hazardous Materials Transportation Act, which
    requires the Coast Guard to enforce safety standards for the
    waterborne transportation of hazardous materials.
         The Intervention on the High Seas Act, which
    authorizes the Coast Guard to intervene in situations involving
    pollution discharges on the high seas that pose a threat to the
    United States and its territorial waters.
         The Fishery Conservation and Management Act of
    1976, which assigns joint responsibility to the Coast Guard and
    the National Marine Fisheries Services to enforce U.S.
    fisheries laws within the 200-mile Exclusive Economic Zone of
    the United States.
         The Outer Continental Shelf Lands Act Amendments
    of 1978, which authorizes the Coast Guard to enforce
    environmental and safety regulations governing oil and gas
    development activities on the outer Continental Shelf.
         The National Invasive Species Act of 1996, which
    amended the Nonindigenous Aquatic Nuisance Prevention and
    Control Act of 1990 to strengthen and improve the nation's
    response to threats posed by aquatic nuisance species.
                                    ------

                             Amendment to H.R. 5005

                         Offered by Mr. Young of Alaska

        Page 6, line 21, insert ``and'' after the semicolon.

        Page 6, line 23, strike ``; and'' and insert a period.

        Page 7, strike lines 1 through 3.

        Page 7, line 10, insert ``and'' after the semicolon.

        Page 7, line 11, strike the semicolon and insert a period.

        Page 7, strike lines 12 through 17.

        Page 8, after line 16, insert the following:

        (c) Issuance of Regulations.--The issuance of regulations by the
    Secretary shall be governed by the provisions of chapter 5 of title 5,
    United States Code, except as specifically provided in this Act, in
    laws granting regulatory authorities that are transferred by this Act,
    and in laws enacted after the date of enactment of this Act.

        Page 9, strike lines 17 through 21.

        Page 22, strike lines 20 through 24 (and redesignate subsequent
    paragraphs accordingly).

        Page 23, line 1, insert ``subject to section 404,'' after ``(4)''.

        Page 23, line 3, strike ``of the Secretary of Transportation, and''

        Page 23, line 4, strike the comma at the end.

        Page 23, line 6, insert ``subject to section 405,'' after ``(5)''.

        Page 24, after line 6, insert the following (and conform the table
    of contents of the bill accordingly):

    SEC. 404. FUNCTIONS OF TRANSPORTATION SECURITY ADMINISTRATION.

        (a) In General.--The functions of the Transportation Security
    Administration of the Department of Transportation transferred under
    section 402(5) shall be carried out by an Assistant Secretary of the
    Department appointed by the President under section 103(a)(7). The
    Assistant Secretary shall be known as the Assistant Secretary for
    Transportation Security (in this section referred to as the ``Assistant
    Secretary'').
        (b) Reporting.--The Assistant Secretary shall report to the Under
    Secretary for Border and Transportation Security.
        (c) Consultation With Federal Aviation Administration.--The
    Secretary and other officials in the Department shall consult with the
    Administrator of the Federal Aviation Administration before taking any
    action that might affect aviation safety, air carrier operations,
    aircraft airworthiness, or the use of airspace. The Secretary shall
    establish a liaison office within the Department for the purpose of
    consulting with the Administrator of the Federal Aviation
    Administration.
        (d) Date of Transfer of Functions.--Notwithstanding section 802 or
    any other provision of this Act, the transfer relating to the
    Transportation Security Administration under section 402(5) shall not
    occur until after--
                (1) the Secretary, Assistant Secretary, and the Under
            Secretary for Border and Transportation Security have each
            taken office;
                (2) the Secretary of Transportation certifies that
            explosive detection systems are deployed at all United States
            airports described in section 44903(c) of title 49, United
            States Code, and that these systems are screening all checked
            baggage; and
                (3) the Secretary of Transportation certifies that a
            sufficient number of Federal screeners, Federal Security
            Managers, Federal security personnel, and Federal law
            enforcement officers have been deployed at all airports in the
            United States at which screening is required under section
            44901 of title 49, United States Code, other than airports
            participating in the pilot program under section 44919 of such
            title.
        (e) TSA and Other Security-Related Programs.--
                (1) TSA programs.--For purposes of the transfer under
            section 402(5), the Transportation Security Administration
            shall be considered to consist of those programs for which
            funds are specifically requested for the Transportation
            Security Administration in the President's budget submission to
            Congress for fiscal year 2003.
                (2) Other security-related programs.--Other security-
            related programs within the Department of Transportation may
            not be transferred to the Department of Homeland Security
            before the last day of a 30-day period of continuous session of
            Congress following the date of transmittal by the President to
            Congress of a notice of the President's intent to make such a
            transfer. For purposes of the preceding sentence, continuity of
            a session of Congress is broken only by an adjournment sine
            die, and there shall be excluded from the computation of such
            30-day period any day during which either House of Congress is
            not in session during an adjournment of more than 3 days to a
            day certain.
        (f) Report to Congress.--Not later than 60 days after the date of
    enactment of this Act, the Secretary of Transportation shall transmit
    to Congress a report containing a plan for complying with the
    requirements of section 44901(d) of title 49, United States Code.
        (g) Limitations on Statutory Construction.--
                (1) Grant of authority.--Nothing in this Act may be
            construed to vest in the Secretary or any other official in the
            Department any authority over transportation security that is
            not vested in the Under Secretary of Transportation for
            Security, or in the Secretary of Transportation under chapter
            449 of title 49, United States Code, on the day before the date
            of enactment of this Act.
                (2) Obligation of aip funds.--Nothing in this Act may be
            construed to authorize the Secretary or any other official in
            the Department to obligate amounts made available under section
            48103 of title 49, United States Code.
        (h) References.--References relating to the Under Secretary of
    Transportation for Security and the Transportation Security
    Administration of the Department of Transportation in statutes,
    Executive orders, rules, regulations, directives, or delegations of
    authority that precede the effective date of the transfer under section
    402(5) shall be deemed to refer, as appropriate, to the Assistant
    Secretary and the Department, respectively.

    SEC. 405. FUNCTIONS OF ADMINISTRATOR OF GENERAL SERVICES.

        (a) Operation, Maintenance, and Protection of Federal Buildings and
    Grounds.--Nothing in this Act may be construed to affect the functions
    or authorities of the Administrator of General Services with respect to
    the operation, maintenance, and protection of buildings and grounds
    owned or occupied by the Federal Government and under the jurisdiction,
    custody, or control of the Administrator. Except for the law
    enforcement and related security functions transferred under section
    402(6), the Administrator shall retain all powers, functions, and
    authorities vested in the Administrator under the Federal Property and
    Administrative Services Act of 1949 (40 U.S.C. 471 et seq.) and other
    provisions of law that are necessary for the operation, maintenance,
    and protection of such buildings and grounds.
        (b) Collection of Rents and Fees; Federal Buildings Fund.--
                (1) Statutory construction.--Nothing in this Act may be
            construed--
                        (A) to direct the transfer of, or affect, the
                    authority of the Administrator of General Services to
                    collect, rents and fees, including fees collected for
                    protective services; or
                        (B) to authorize the Secretary or any other
                    official in the Department to obligate amounts in the
                    Federal Buildings Fund established by section 210(f) of
                    the Federal Property and Administrative Services Act of
                    1949 (40 U.S.C. 490(f)).
                (2) Use of transferred amounts.--Any amounts transferred by
            the Administrator of General Services to the Secretary out of
            rents and fees collected by the Administrator shall be used by
            the Secretary solely for the protection of buildings or grounds
            owned or occupied by the Federal Government.

    SEC. 406. RETENTION OF COAST GUARD FUNCTIONS.

        (a) Limitation on Functions of Under Secretary.--Notwithstanding
    any other provision of this title, the functions of the Under Secretary
    for Border and Transportation Security do not include any function that
    immediately before this Act takes effect is a function of the Coast
    Guard.
        (b) Preservation of Coast Guard Functions.--The functions of the
    Coast Guard (and of the Secretary of the Department in which the Coast
    Guard is operating with respect to such functions) are not affected by
    this title.

    SEC. 407. INTERAGENCY SECURITY COMMITTEE.

        (a) Purpose.--It is the purposes of this section to enhance the
    quality and effectiveness of security in and protection of buildings
    and facilities in the United States occupied by Federal employees for
    nonmilitary activities (in this section referred to as ``Federal
    facilities'') and to provide a permanent body to address continuing
    Government-wide security for Federal facilities.
        (b) Establishment.--There is established within the executive
    branch the Interagency Security Committee (in this section referred to
    as the ``Committee''). The Committee shall consist of the following
    members:
                (1) The Administrator of General Services.
                (2) Representatives from the following agencies, appointed
            by the agency heads:
                        (A) Department of State.
                        (B) Department of the Treasury.
                        (C) Department of Defense.
                        (D) Department of Justice.
                        (E) Department of Homeland Security.
                        (F) Department of the Interior.
                        (G) Department of Agriculture.
                        (H) Department of Commerce.
                        (I) Department of Labor.
                        (J) Department of Health and Human Services.
                        (K) Department of Housing and Urban Development.
                        (L) Department of Transportation.
                        (M) Department of Energy.
                        (N) Department of Education.
                        (O) Department of Veterans Affairs.
                        (P) Environmental Protection Agency.
                        (Q) Central Intelligence Agency.
                        (R) Office of Management and Budget.
                (3) The following individuals or their designees:
                        (A) The Director, United States Marshals Service.
                        (B) The head of the Federal Protective Service.
                        (C) The Assistant to the President for National
                    Security Affairs.
                        (D) The Director, Security Policy Board.
                (4) Such other Federal employees as the President shall
            appoint.
        (c) Chair.--The Committee shall be chaired or co-chaired by the
    Administrator of General Services, or the designee of the
    Administrator.
        (d) Working Groups.--The Committee is authorized to establish
    interagency working groups to perform such tasks as may be directed by
    the Committee.
        (e) Consultation.--The Committee may consult with other parties,
    including the Administrative Office of the United States Courts, to
    perform its responsibilities under this section and, at the discretion
    of the Committee, such other parties may participate in the working
    groups.
        (f) Duties and Responsibilities.--The Committee shall--
                (1) establish policies for security in and protection of
            Federal facilities;
                (2) develop and evaluate security standards for Federal
            facilities, develop a strategy for ensuring compliance with
            such standards, and oversee the implementation of appropriate
            security measures in Federal facilities; and
                (3) take such actions as may be necessary to enhance the
            quality and effectiveness of security and protection of Federal
            facilities, including--
                        (A) encouraging agencies with security
                    responsibilities to share security-related intelligence
                    in a timely and cooperative manner;
                        (B) assessing technology and information systems as
                    a means of providing cost-effective improvements to
                    security in Federal facilities;
                        (C) developing long-term construction standards for
                    those locations with threat levels or missions that
                    require blast resistant structures or other specialized
                    security requirements;
                        (D) evaluating standards for the location of, and
                    special security related to, day care centers in
                    Federal facilities; and
                        (E) assisting the Administrator of General Services
                    in developing and maintaining a centralized security
                    data base of all Federal facilities.
        (g) Agency Support and Cooperation.--
                (1) Administrative support.--To the extent permitted by law
            and subject to the availability of appropriations, the
            Administrator of General Services shall provide the Committee
            such administrative services, funds, facilities, staff, and
            other support services as may be necessary for the performance
            of its functions under this section.
                (2) Cooperation.--Each executive agency and department
            shall cooperate and comply with the policies and
            recommendations of the Committee issued pursuant to this
            section, except to the extent that the Director of Central
            Intelligence determines that compliance would jeopardize
            intelligence sources and methods. To the extent permitted by
            law and subject to the availability of appropriations,
            executive agencies and departments shall provide such support
            as may be necessary to enable the Committee to perform its
            duties and responsibilities under this section.
                (3) Compliance.--The Administrator of General Services
            shall be responsible for monitoring Federal agency compliance
            with the policies and recommendations of the Committee.

    SEC. 408. ANNUAL ASSESSMENT OF TERRORIST-RELATED THREATS TO PUBLIC
                        TRANSPORTATION.

        On an annual basis, the Secretary, in consultation with the heads
    of other appropriate Federal departments and agencies, shall conduct an
    assessment of terrorist-related threats to all forms of public
    transportation, including public gathering areas related to public
    transportation.

        Page 24, lines 16 and 17, strike ``, major disasters, and other
    emergencies''.

        Page 25, line 7, strike ``and major disasters''.

        Page 25, lines 19 and 20, strike ``or major disaster''.

        Page 25, line 22, strike ``and major disasters''.

        Page 26, strike lines 3 through 5 and insert the following:

                (6) in consultation with the Director of the Federal
            Emergency Management Agency, consolidating existing Federal
            Government emergency response plans for terrorist attacks into
            the Federal Response Plan referred to in section 506(b); and

        Page 26, strike lines 14 through 17 (and redesignate subsequent
    paragraphs accordingly).

        Page 30, after line 9, insert the following:

    SEC. 506. ROLE OF FEDERAL EMERGENCY MANAGEMENT AGENCY.

        (a) In General.--The functions of the Federal Emergency Management
    Agency include, but are not limited to, the following:
                (1) All functions and authorities prescribed by the Robert
            T. Stafford Disaster Relief and Emergency Assistance Act (42
            U.S.C. 5121 et seq.).
                (2) Carrying out its mission to reduce the loss of life and
            property and protect the Nation from all hazards by leading and
            supporting the Nation in a comprehensive, risk-based emergency
            management program--
                        (A) of mitigation, by taking sustained actions to
                    reduce or eliminate long-term risk to people and
                    property from hazards and their effects;
                        (B) of preparedness, by building the emergency
                    management profession to prepare effectively for,
                    mitigate against, respond to, and recover from any
                    hazard by planning, training, and exercising;
                        (C) of response, by conducting emergency operations
                    to save lives and property through positioning
                    emergency equipment and supplies, through evacuating
                    potential victims, through providing food, water,
                    shelter, and medical care to those in need, and through
                    restoring critical public services;
                        (D) of recovery, by rebuilding communities so
                    individuals, businesses, and governments can function
                    on their own, return to normal life, and protect
                    against future hazards; and
                        (E) of increased efficiencies, by coordinating
                    efforts relating to preparedness and response
                    activities to maximize efficiencies.
        (b) Federal Response Plan.--
                (1) Role of fema.--Notwithstanding any other provision of
            this Act, the Federal Emergency Management Agency shall remain
            the lead agency for the Federal Response Plan established under
            Executive Order 12148 (44 Fed. Reg. 43239) and Executive Order
            12656 (53 Fed. Reg. 47491).
                (2) Revision of response plan.--Not later than 60 days
            after the date of enactment of this Act, the Director of the
            Federal Emergency Management Agency shall revise the Federal
            Response Plan to reflect the establishment of and incorporate
            the Department.
                (3) Memorandum of understanding.--Not later than 60 days
            after the date of enactment of this Act, the Secretary and the
            Director of the Federal Emergency Management Agency shall adopt
            a memorandum of understanding to address the roles and
            responsibilities of their respective agencies under this title.

        Page 31, at the beginning of line 23, insert ``(a) In General.--''.

        Page 32, strike lines 3 through 6 (and redesignate subsequent
    paragraphs accordingly).

        Page 32, strike lines 13 through 15 and insert the following:

                (2) subject to subsection (b), directing and supervising
            grant programs of the Federal Government for State, local, and
            tribal government emergency response providers; and

        Page 32, after line 19, insert the following:

        (b) Limitation.--Subsection (a)(2) shall not be construed to affect
    any grant program carried out by the Director of the Federal Emergency
    Management Agency; except that the Director shall coordinate with the
    Secretary in making grants relating to emergency response providers.

        Page 37, strike line 16 and all that follows through line 14 on
    page 39 and insert the following:

        (c) Department Headquarters.--
                (1) In general.--Subject to the requirements of the Public
            Buildings Act of 1959 (40 U.S.C. 601 et seq.), the
            Administrator of General Services shall construct a public
            building to serve as the headquarters for the Department.
                (2) Location and construction standards.--The headquarters
            facility shall be constructed to such standards and
            specifications and at such a location as the Administrator of
            General Services decides. In selecting a site for the
            headquarters facility, the Administrator shall give preference
            to parcels of land that are federally owned.
                (3) Scoring of expenditures, obligations, and
            appropriations.--Notwithstanding any provision of the
            Congressional Budget Act of 1974 (2 U.S.C. 621 et seq.), the
            Balanced Budget and Emergency Deficit Control Act of 1985 (2
            U.S.C. 900 et seq.), or chapter 13 or 15 of title 31, United
            States Code, or any other provision of law, any expenditures,
            obligations, and appropriations made for the headquarters
            facility shall be scored on an annual basis.
                (4) Alternate financing methods.--In the absence of
            appropriations in fiscal year 2003 for Federal construction of
            the headquarters facility--
                        (A) the Administrator of General Services may
                    construct the facility by lease-purchase or installment
                    purchase and may use any lease or installment purchase
                    instrument as a means of financing the acquisition of a
                    site, if necessary, and the construction of the
                    facility, either through commercial financial
                    establishments or through the Federal Financing Bank;
                        (B) any lease or installment purchase obligation of
                    the Administrator used in financing the construction of
                    the facility shall be scored, for borrowing authority
                    or budget authority purposes, only to the extent
                    outlays are made from the Federal Buildings Fund
                    annually to amortize such obligations; and
                        (C) if the financing is placed with the Federal
                    Financing Bank, any loans, promissory notes, draws, or
                    other disbursements made by the Bank and secured by the
                    lease rental or installment contract payments by the
                    Administrator of General Services shall for budgetary
                    purposes be treated as a means of financing the
                    Department or the General Services Administration, but
                    only to the extent outlays are made from the Federal
                    Buildings Fund annually to amortize such obligations.
                (5) Use of headquarters facility.--The Administrator of
            General Services shall make the headquarter facility, as well
            as other Government-owned or leased facilities, available to
            the Secretary pursuant to the Administrator's authorities under
            section 210 of the Federal Property and Administrative Services
            Act of 1949 (40 U.S.C. 490 et seq.) and there is authorized to
            be appropriated to the Secretary such amounts as may be
            necessary to pay the annual charges for General Services
            Administration furnished space and services.

        Page 41, lines 17 and 18, strike ``the effective date of this Act''
    and insert ``the date of transmittal of a plan to Congress under
    section 802(b)''.

        Page 41, line 20, strike ``The transfer'' and insert the following:

        (a) In General.--Subject to subsection (b), the transfer

        Page 41, after line 25, insert the following:

        (b) Organization Plan.--
                (1) Plan to be completed before transfers occur.--The
            transfer of an agency, or any of its functions, to the
            Department under this Act shall not occur before the last day
            of a 60-day period of continuous session of Congress following
            the date of transmittal by the Secretary to Congress of a plan
            for the organization of the Department.
                (2) Contents of plan.--The plan submitted under paragraph
            (1) shall include--
                        (A) a designation of which agency in the Department
                    will be carrying out each of the functions assigned to
                    the Department;
                        (B) a proposal for funding the Department;
                        (C) a designation of the number of employees that
                    will be employed by the Department;
                        (D) a description of the manner in which the
                    Department will carry out each function or service
                    transferred to the Department from another agency; and
                        (E) a designation of the number of employees who
                    will be performing each function or service transferred
                    to the Department from another agency.
                (3) Congressional review period.--For purposes of paragraph
            (1), continuity of a session of Congress is broken only by an
            adjournment sine die, and there shall be excluded from the
            computation of the 60-day period any day during which either
            House of Congress is not in session during an adjournment of
            more than 3 days to a day certain.

        Page 44, after line 10, insert the following:

        (f) Prohibition on Use of Transportation Trust Funds.--
                (1) In general.--Notwithstanding any other provision of
            this Act, no funds derived from the Highway Trust Fund, Airport
            and Airway Trust Fund, Inland Waterway Trust Fund, Harbor
            Maintenance Trust Fund, or Oil Spill Liability Trust Fund may
            be transferred to, made available to, or obligated by the
            Secretary or any other official in the Department.
                (2) Limitation.--This subsection shall not apply to
            security-related funds provided to the Federal Aviation
            Administration for fiscal years preceding fiscal year 2003 for
            (A) operations, (B) facilities and equipment, or (C) research,
            engineering, and development.

        Page 49, strike line 9 and all that follows through page 50, line 3
    (and redesignate subsequent sections of the bill accordingly).

        At the end of the bill, add the following (and conform the table of
    contents of the bill accordingly):

    SEC. 907. TRANSPORTATION SECURITY.

        (a) Transportation Security Oversight Board.--
                (1) Establishment.--Section 115(a) of title 49, United
            States Code, is amended by striking ``Department of
            Transportation'' and inserting ``Department of Homeland
            Security''.
                (2) Membership.--Section 115(b)(1) of title 49, United
            States Code, is amended--
                        (A) by striking subparagraph (G);
                        (B) by redesignating subparagraphs (A) through (F)
                    as subparagraphs (B) through (G), respectively; and
                        (C) by inserting before subparagraph (B) (as so
                    redesignated) the following:
                        ``(A) The Secretary of Homeland Security, or the
                    Secretary's designee.''.
                (3) Chairperson.--Section 115(b)(2) of title 49, United
            States Code, is amended by striking ``Secretary of
            Transportation'' and inserting ``Secretary of Homeland
            Security''.
        (b) Approval of AIP Grant Applications for Security Activities.--
    Section 47106 of title 49, United States Code, is amended by adding at
    the end the following:
        ``(g) Consultation With Secretary of Homeland Security.--The
    Secretary shall consult with the Secretary of Homeland Security before
    approving an application under this subchapter for an airport
    development project grant for activities described in section
    47102(3)(B)(ii) (relating to security equipment) or section
    47102(3)(B)(x) (relating to installation of bulk explosive detection
    systems).''.

    SEC. 908. TRANSFER OF CERTAIN SECURITY AND LAW ENFORCEMENT FUNCTIONS
                        AND AUTHORITIES.

        (a) Amendment to Property Act.--Section 210(a)(2) of the Federal
    Property and Administrative Services Act of 1949 (40 U.S.C. 490(a)(2))
    is repealed.
        (b) Law Enforcement Authority.--The Act of June 1, 1948 (40 U.S.C.
    318-318d; chapter 359; 62 Stat. 281) is amended to read as follows:

    ``SECTION 1. SHORT TITLE.

        ``This Act may be cited as the `Protection of Public Property Act'.

    ``SEC. 2. LAW ENFORCEMENT AUTHORITY OF SECRETARY OF HOMELAND SECURITY
                        FOR PROTECTION OF PUBLIC PROPERTY.

        ``(a) In General.--The Secretary of Homeland Security (in this Act
    referred to as the ``Secretary'') shall protect the buildings, grounds,
    and property that are owned, occupied, or secured by the Federal
    Government (including any agency, instrumentality, or wholly owned or
    mixed-ownership corporation thereof) and the persons on the property.
        ``(b) Officers and Agents.--
                ``(1) Designation.--The Secretary may designate employees
            of the Department of Homeland Security, including employees
            transferred to the Department from the Office of the Federal
            Protective Service of the General Services Administration
            pursuant to the Homeland Security Act of 2002, as officers and
            agents for duty in connection with the protection of property
            owned or occupied by the Federal Government and persons on the
            property, including duty in areas outside the property to the
            extent necessary to protect the property and persons on the
            property.
                ``(2) Powers.--While engaged in the performance of official
            duties, an officer or agent designated under this subsection
            may--
                        ``(A) enforce Federal laws and regulations for the
                    protection of persons and property;
                        ``(B) carry firearms;
                        ``(C) make arrests without a warrant for any
                    offense against the United States committed in the
                    presence of the officer or agent or for any felony
                    cognizable under the laws of the United States if the
                    officer or agent has reasonable grounds to believe that
                    the person to be arrested has committed or is
                    committing a felony;
                        ``(D) serve warrants and subpoenas issued under the
                    authority of the United States; and
                        ``(E) conduct investigations, on and off the
                    property in question, of offenses that may have been
                    committed against property owned or occupied by the
                    Federal Government or persons on the property.
                        ``(F) carry out such other activities for the
                    promotion of homeland security as the Secretary may
                    prescribe.
        ``(c) Regulations.--
                ``(1) In general.--The Secretary, in consultation with the
            Administrator of General Services, may prescribe regulations
            necessary for the protection and administration of property
            owned or occupied by the Federal Government and persons on the
            property. The regulations may include reasonable penalties,
            within the limits prescribed in paragraph (2), for violations
            of the regulations. The regulations shall be posted and remain
            posted in a conspicuous place on the property.
                ``(2) Penalties.--A person violating a regulation
            prescribed under this subsection shall be fined under title 18,
            United States Code, imprisoned for not more than 30 days, or
            both.
        ``(d) Details.--
                ``(1) Requests of agencies.--On the request of the head of
            a Federal agency having charge or control of property owned or
            occupied by the Federal Government, the Secretary may detail
            officers and agents designated under this section for the
            protection of the property and persons on the property.
                ``(2) Applicability of regulations.--The Secretary may--
                        ``(A) extend to property referred to in paragraph
                    (1) the applicability of regulations prescribed under
                    this section and enforce the regulations as provided in
                    this section; or
                        ``(B) utilize the authority and regulations of the
                    requesting agency if agreed to in writing by the
                    agencies.
                ``(3) Facilities and services of other agencies.--When the
            Secretary determines it to be economical and in the public
            interest, the Secretary may utilize the facilities and services
            of Federal, State, and local law enforcement agencies, with the
            consent of the agencies.
        ``(e) Authority Outside Federal Property.--For the protection of
    property owned or occupied by the Federal Government and persons on the
    property, the Secretary may enter into agreements with Federal agencies
    and with State and local governments to obtain authority for officers
    and agents designated under this section to enforce Federal laws and
    State and local laws concurrently with other Federal law enforcement
    officers and with State and local law enforcement officers.
        ``(f) Secretary and Attorney General Approval.--The powers granted
    to officers and agents designated under this section shall be exercised
    in accordance with guidelines approved by the Secretary and the
    Attorney General.
        ``(g) Limitation on Statutory Construction.--Nothing in this
    section shall be construed to--
                ``(1) preclude or limit the authority of any Federal law
            enforcement agency; or
                ``(2) restrict the authority of the Administrator of
            General Services to promulgate regulations affecting property
            under the Administrator's custody and control.

    ``SEC. 3. SPECIAL PAY.

        ``Without regard to the pay provisions of chapter 51 of title 5,
    United States Code, and subchapter III of chapter 53 of such title, the
    Secretary may, in the Secretary's sole discretion, fix the rates of
    basic pay for the positions occupied by officers and agents designated
    under this Act so as to enable the officers and agents to be
    appropriately compensated in comparison to personnel performing
    comparable duties in other law enforcement organizations in the local
    labor market.''.
        (c) Maximum Age for Entry Into the Position of Federal Protective
    Service Officer.--Section 3307 of title 5, United States Code, is
    amended--
                (1) in subsection (a) by striking ``and (f)'' and inserting
            ``(f), and (g)''; and
                (2) by adding at the end the following:
        ``(g) The Secretary of Homeland Security may determine and fix the
    maximum age limit for an original appointment to a position as a
    Federal Protective Service Officer, as defined by section 8331(29) or
    8401(35).''.
        (d) Amendments Relating to the Civil Service Retirement System.--
                (1) Definition.--Section 8331 of title 5, United States
            Code, is amended--
                        (A) by striking ``and'' at the end of paragraph
                    (27);
                        (B) by striking the period at the end of paragraph
                    (28) and inserting ``; and''; and
                        (C) by adding at the end the following:
                ``(29) `Federal Protective Service Officer' means--
                        ``(A) an employee occupying a position in the
                    Department of Homeland Security and designated as an
                    officer or agency under section 2(b)(1) of the
                    Protection of Public Property Act, the duties of which
                    position are primarily--
                                ``(i) to detect, investigate, apprehend,
                            arrest, or detain individuals suspected or
                            convicted of offenses against the criminal laws
                            of the United States;
                                ``(ii) to protect and secure the personal
                            safety of officials and other employees of the
                            United States, as well as occupants and
                            visitors on federally controlled property; and
                                ``(iii) to gather, assess, and analyze
                            information relating to threats, and to respond
                            to threats and attacks, against persons and
                            property of the United States; and
                        ``(B) an employee who is transferred directly to a
                    supervisory or administrative position in the
                    Department of Homeland Security from a position of
                    Federal Protective Service Officer (as defined by
                    subparagraph (A)) or law enforcement officer;
            any determination as to whether or not an employee satisfies
            subparagraph (B) shall, in the case of an employee occupying a
            position in the Office of the Federal Protective Service of the
            General Services Administration on the date of the enactment of
            this paragraph, be made without regard to any requirement that
            the employee have completed a minimum period of one or more
            types of service before the date of transfer.''.
                (2) Deductions, contributions, and deposits.--Section 8334
            of title 5, United States Code, is amended--
                        (A) in subsection (a)(1), by striking ``or nuclear
                    materials courier,'' and inserting ``nuclear materials
                    courier, or Federal Protective Service Officer,''; and
                        (B) in subsection (c), by adding after the item
                    relating to a nuclear materials courier the following:

    ``Federal Protective Service Officer....  7.5....................  After the date of the enactment of the
                                                                        Homeland Security Act of 2002.''.

                (3) Computation of annuity for certain officers mandatorily
            separated.--Section 8339 of title 5, United States Code, is
            amended by adding at the end the following:
        ``(v) The annuity of a Federal Protective Service Officer retiring
    under section 8335(e) is--
                ``(1) 2\1/2\ percent of the officer's average pay
            multiplied by so much of his total service, performed as a
            Federal Protective Service Officer or law enforcement officer,
            as does not exceed 20 years; plus
                ``(2) 2 percent of the officer's average pay multiplied by
            so much of his total service as exceeds the number of years of
            service taken into account under paragraph (1).''.
                (4) Immediate retirement.--Section 8336(c)(1) of title 5,
            United States Code, is amended by striking ``or nuclear
            materials courier'' and inserting ``nuclear materials courier,
            or Federal Protective Service Officer''.
                (5) Mandatory separation.--
                        (A) In general.--Section 8335(b) of title 5, United
                    States Code, is amended--
                                (i) by striking ``or nuclear materials
                            courier'' and inserting ``nuclear materials
                            courier, or Federal Protective Service Officer
                            (other than one described in subsection (e))'';
                            and
                                (ii) by striking ``or courier'' and
                            inserting ``courier, or Federal Protective
                            Service Officer (other than one described in
                            subsection (e))''.
                        (B) Provisions relating to certain incumbents.--
                    Section 8335 of title 5, United States Code, is amended
                    by inserting after subsection (d) the following:
        ``(e) A Federal Protective Service Officer who is employed by the
    Office of the Federal Protective Service of the General Services
    Administration on the date of the enactment of the Homeland Security
    Act of 2002, and who is otherwise eligible for immediate retirement
    under section 8336, shall be separated from the service on the last day
    of the month in which such officer becomes 57 years of age or completes
    10 years of service as a Federal Protective Service Officer if then
    over that age. The Secretary of Homeland Security, under such
    regulations as the Secretary may prescribe, may exempt a Federal
    Protective Service Officer having exceptional skills and experience as
    a Federal Protective Service Officer from the automatic separation
    provisions of this subsection until the officer becomes 60 years of
    age. The Secretary shall notify the officer in writing of the date of
    separation at least 60 days before that date. Action to separate the
    officer is not effective, without the consent of the officer, until the
    last day of the month in which the 60-day notice expires.''.
        (e) Amendments Relating to the Federal Employees' Retirement
    System.--
                (1) Definition.--Section 8401 of title 5, United States
            Code, is amended--
                        (A) by striking ``and'' at the end of paragraph
                    (33);
                        (B) by striking the period at the end of paragraph
                    (34) and inserting ``; and''; and
                        (C) by adding at the end the following:
                ``(35) `Federal Protective Service Officer' has the meaning
            given that term in section 8331(29).''.
                (2) Deductions and contributions.--
                        (A) Employee deductions and contributions.--Section
                    8422(a)(3) of title 5, United States Code, is amended
                    by adding after the item relating to a nuclear
                    materials courier the following:

    ``Federal Protective Service Officer....  7.5....................  After the date of the enactment of the
                                                                        Homeland Security Act of 2002.''.

                        (B) Agency contributions.--Paragraphs (1)(B)(i) and
                    (3)(A) of section 8423(a) of title 5, United States
                    Code, are amended by inserting ``Federal Protective
                    Service Officers,'' after ``firefighters,'' each place
                    it appears.
                (3) Provisions relating to computation of basic annuity.--
                        (A) Annuity for certain officers mandatorily
                    separated.--Section 8415 of title 5, United States
                    Code, is amended by adding at the end the following:
        ``(l) The annuity of a Federal Protective Service Officer retiring
    under section 8425(e) is--
                ``(1) 2\1/2\ percent of the officer's average pay
            multiplied by so much of his total service, performed as a
            Federal Protective Service Officer or law enforcement officer,
            as does not exceed 20 years; plus
                ``(2) 2 percent of the officer's average pay multiplied by
            so much of his total service as exceeds the number of years of
            service taken into account under paragraph (1).''.
                        (B) Technical and conforming amendments.--
                                (i) Inapplicability of 1.1 percent accrual
                            rate.--Section 8415(g)(2) of title 5, United
                            States Code, is amended by inserting ``Federal
                            Protective Service Officer,'' after ``nuclear
                            materials courier,''.
                                (ii) Annuities on reemployment.--Section
                            8468(b)(1)(A) of title 5, United States Code,
                            is amended by inserting ``and (l)'' after
                            ``through (g)''.
                (4) Immediate retirement.--Section 8412(d) of title 5,
            United States Code, is amended by striking ``or nuclear
            materials courier'' each place it appears and inserting
            ``nuclear materials courier, or Federal Protective Service
            Officer''.
                (5) Mandatory separation.--
                        (A) In general.--Section 8425(b) of title 5, United
                    States Code, is amended by inserting ``Federal
                    Protective Service Officer (other than one described in
                    subsection (e)),'' after ``law enforcement officer,''
                    each place it appears.
                        (B) Provisions relating to certain incumbents.--
                    Section 8425 of title 5, United States Code, is amended
                    by redesignating subsection (e) as subsection (f), and
                    by inserting after subsection (d) the following:
        ``(e) A Federal Protective Service Officer who is employed by the
    Office of the Federal Protective Service of the General Services
    Administration on the date of the enactment of the Homeland Security
    Act of 2002, and who is otherwise eligible for immediate retirement
    under section 8412, shall be separated from the service on the last day
    of the month in which such officer becomes 57 years of age or completes
    10 years of service as a Federal Protective Service Officer if then
    over that age. The Secretary of Homeland Security, under such
    regulations as the Secretary may prescribe, may exempt a Federal
    Protective Service Officer having exceptional skills and experience as
    a Federal Protective Service Officer from the automatic separation
    provisions of this subsection until the officer becomes 60 years of
    age. The Secretary shall notify the officer in writing of the date of
    separation at least 60 days before that date. Action to separate the
    officer is not effective, without the consent of the officer, until the
    last day of the month in which the 60-day notice expires.''.
        (f) Payments.--
                (1) In general.--The Secretary shall pay into the Civil
            Service Retirement and Disability Fund an amount determined by
            the Director of the Office of Personnel Management to be
            necessary to reimburse the Fund for any estimated increase in
            the unfunded liability of the Fund resulting from the
            amendments made by subsection (e).
                (2) Timing.--The Secretary shall pay the amount so
            determined in 5 equal annual installments with interest
            computed at the rate used in the most recent valuation of the
            Civil Service Retirement System, with the first payment thereof
            due by the end of fiscal year 2003.
        (g) Law Enforcement Pay.--
                (1) Pay and benefits under provisions of fepca.--A Federal
            Protective Service Officer (within the meaning of section
            8331(29) or 8401(35) of title 5, United States Code) is
            entitled to the same pay and benefits as are provided by
            sections 403, 404, and 407 of the Federal Employees Pay
            Comparability Act of 1990 (5 U.S.C. 5305 note) to a law
            enforcement officer (as defined by section 402 of such Act).
                (2) Award for foreign language capabilities.--Section 4521
            of title 5, United States Code is amended--
                        (A) by striking ``and'' at the end of paragraph
                    (5);
                        (B) by striking the period at the end of paragraph
                    (6) and inserting ``; and''; and
                        (C) by adding at the end the following:
                ``(7) a Federal Protective Service Officer (within the
            meaning of section 8331(29) or 8401(35)).''.
                (3) Overtime pay.--Section 5542(a)(4) of title 5, United
            States Code, is amended by inserting ``or a Federal Protective
            Service Officer (within the meaning of section 8331(29) or
            8401(35))'' after ``law enforcement officer''.
        (h) Limitation.--Notwithstanding the authority of the Secretary to
    establish a human resources management system under section 10001 of
    title 5, United States Code (as added by this Act), or any other
    authority granted to the Secretary, the Secretary may not reduce the
    pay or benefits of a Federal Protective Service Officer, within the
    meaning of section 8331(29) or 8401(35) of such title (as added by this
    section), below the level provided by such title.

       TITLE X--COAST GUARD FUNCTIONS RELATING TO DEPARTMENT OF HOMELAND
                                    SECURITY

    SEC. 1001. UNDER SECRETARY OF THE COAST GUARD.

        (a) In General.--Title 14, United States Code, is amended by
    inserting before section 41 the following:

    ``Sec. 40. Under Secretary of the Coast Guard

        ``(a)(1) There is an Under Secretary of the Coast Guard appointed
    from civilian life by the President, by and with the advice and consent
    of the Senate. The Under Secretary of the Coast Guard is the head of
    the Coast Guard.
        ``(2) A person may not be appointed as Under Secretary of the Coast
    Guard within five years after relief from active duty as a commissioned
    officer of a regular component of an armed force.
        ``(b) Subject to the authority, direction, and control of the
    Secretary of the department in which the Coast Guard is operating, the
    Under Secretary of the Coast Guard is responsible for, and has the
    authority necessary to conduct, all affairs of the Coast Guard.
        ``(c) After first informing the Secretary of the department in
    which the Coast Guard is operating, the Under Secretary of the Coast
    Guard may make such recommendations to Congress relating to the Coast
    Guard as the Under Secretary considers appropriate.
        ``(d) The Under Secretary of the Coast Guard may assign such of
    Under Secretary's functions, powers, and duties as the Under Secretary
    considers appropriate to the Commandant. Officers of the Coast Guard
    shall, as directed by the Under Secretary of the Coast Guard, report on
    any matter to the Under Secretary of the Coast Guard or the Commandant.
        ``(e) In addition to the other duties of the Under Secretary of the
    Coast Guard, the Under Secretary shall be responsible for acting as the
    liaison to the Department of Homeland Security with respect to all
    Coast Guard functions.
        ``(f) The Under Secretary of the Coast Guard may--
                ``(1) assign, detail, and prescribe the duties of officers
            and members of the Coast Guard and civilian personnel of the
            Coast Guard; and
                ``(2) prescribe regulations to carry out his or her
            functions, powers, and duties under law.''.
        (b) Clerical Amendment.--The table of sections at the beginning of
    chapter 3 of title 14, United States Code, is amended by inserting
    before the item relating to section 41 the following:

    ``40.    Under Secretary of the Coast Guard.''.

        (c) Transfer of Functions.--
                (1) Transfer.--There are transferred to the Under Secretary
            of the Coast Guard all functions that are vested by law,
            regulation, or Executive order in the Commandant of the Coast
            Guard.
                (2) Reference.--Any reference in any law, regulation, or
            Executive order to the Commandant of the Coast Guard with
            respect to a function transferred under paragraph (1) is deemed
            to refer to the Under Secretary of the Coast Guard.

    SEC. 1002. MAINTENANCE OF ALLOCATIONS OF FUNDING FOR COAST GUARD
                        OPERATION AND MAINTENANCE.

        (a) In General.--Chapter 17 of title 14, United States Code, is
    amended by adding at the end the following:

    ``Sec. 676. Maintenance of allocations for operation and maintenance

        ``(a) In General.--Of the amount appropriated for operation and
    maintenance of the Coast Guard for each fiscal year, not less than the
    percentage specified in subsection (b) with respect to a purpose shall
    be obligated or expended for expenses related to that purpose.
        ``(b) Purposes and Percentages.--The purposes and percentages
    referred to in subsection (a) are, respectively, the following:
                ``(1) For search and rescue, 12 percent.
                ``(2) For drug interdiction, 13 percent.
                ``(3) For fisheries law enforcement, 11 percent.
                ``(4) For interdiction of migrants, 4 percent.
                ``(5) For environmental law enforcement, 8 percent.
                ``(6) For marine safety, 5 percent.''.
        (b) Technical Correction; Clerical Amendment.--Chapter 17 of title
    14, United States Code, is amended--
                (1) by redesignating the second section 673 (relating to
            ``Small boat station rescue capability'') and section 674 in
            order as sections 674 and 675; and
                (2) in the table of sections at the beginning of the
            chapter by striking the items relating to ``Small boat rescue
            capability'' and``Small boat station closures'' and inserting
            the following:

    ``674. Small boat rescue capability.
    ``675. Small boat station closures.
    ``676. Maintenance of allocations for operation and maintenance.''.
                          COMMITTEE ON WAYS AND MEANS

                              House of Representatives,
                                   Committee on Ways and Means,
                                         Washington, DC, July 12, 2002.
    Hon. Richard K. Armey
    Chairman, House Select Committee on Homeland Security, The
            Capitol, Washington, D.C.
        Dear Mr. Chairman: As specified in section 6 of H.Res. 449,
    this letter transmits the views and recommendations of the
    Committee on Ways and Means on those aspects within the
    jurisdiction of the Committee of the bill, H.R. 5005, to
    establish a Department of Homeland Security and transfer the
    United States Customs Service to the new department. The
    recommended legislative text is attached and was favorably
    reported from Committee on July 10, 2002.
        The Committee on Ways and Means looks forward to working
    with the Select Committee on Homeland Security as we promote
    security while maintaining the free flow of trade across
    American borders.
            Best regards,
                                            Bill Thomas
                                                      Chairman.
                                    ------

                        Proposed Amendments to H.R. 5005

                        Proposed Amendments to H.R. 5005

       (Recommended to the Select Committee on Homeland Security by the
                          Committee on Ways and Means)

        Page 21, after line 4, insert the following (and conform the table
    of contents accordingly):

                         Subtitle A--General Provisions

        Page 22, line 1, insert after ``(4)'' the following: ``except as
    provided in subtitle B,''.

        Page 22, strike lines 10 through 12 and insert the following:
                (1) the United States Customs Service, except as provided
            in subtitle B;''.

        Page 24, after line 6, add the following (and conform the table of
    contents accordingly):

                   Subtitle B--United States Customs Service

    SEC. 411. ESTABLISHMENT; COMMISSIONER OF CUSTOMS.

        (a) Establishment.--There is established in the Department the
    United States Customs Service, under the authority of the Under
    Secretary for Border and Transportation Security, which shall be vested
    with those functions set forth in section 420(7), and the personnel,
    assets, and liabilities attributable to those functions.
        (b) Commissioner of Customs.--
                (1) In General.--There shall be at the head of the Customs
            Service a Commissioner of Customs, who shall be appointed by
            the President, by and with the advice and consent of the
            Senate.
                (2) Compensation.--Section 5314 of title 5, United States
            Code, is amended by striking
                ``Commissioner of Customs, Department of the Treasury''
    and inserting
                ``Commissioner of Customs, Department of Homeland
            Security.''.
                (3) Continuation in office.--The individual serving as the
            Commissioner of Customs on the day before the effective date of
            this Act may serve as the Commissioner of Customs on and after
            such effective date until a Commissioner of Customs is
            appointed under paragraph (1).

    SEC. 412. RETENTION OF CUSTOMS REVENUE FUNCTIONS BY SECRETARY OF THE
                        TREASURY.

        (a) Retention by Secretary of the Treasury.--
                (1) Retention of authority.--Notwithstanding sections
            401(4), 402(1), and 803(e)(2), authority that was vested in the
            Secretary of the Treasury by law before the effective date of
            this Act under those provisions of law set forth in paragraph
            (2) shall not be transferred to the Secretary by reason of this
            Act, and on and after the effective date of this Act, the
            Secretary of the Treasury may delegate any such authority to
            the Secretary at the discretion of the Secretary of the
            Treasury. The Secretary of the Treasury shall consult with the
            Secretary regarding the exercise of any such authority not
            delegated to the Secretary.
                (2) Statutes.--The provisions of law referred to in
            paragraph (1) are the following: the Tariff Act of 1930;
            section 249 of the Revised Statutes of the United States (19
            U.S.C. 3); section 2 of the Act of March 4, 1923 (19 U.S.C. 6);
            section 13031 of the Consolidated Omnibus Budget Reconciliation
            Act of 1985 (19 U.S.C. 58c); section 251 of the Revised
            Statutes of the United States (19 U.S.C. 66); section 1 of the
            Act of June 26, 1930 (19 U.S.C. 68); the Foreign Trade Zones
            Act (19 U.S.C. 81a et seq.); section 1 of the Act of March 2,
            1911 (19 U.S.C. 198); the Trade Act of 1974; the Trade
            Agreements Act of 1979; the North American Free Trade Area
            Implementation Act; the Uruguay Round Agreements Act; the
            Caribbean Basin Economic Recovery Act; the Andean Trade
            Preference Act; the African Growth and Opportunity Act; and any
            other provision of law vesting customs revenue functions in the
            Secretary of the Treasury.
        (b) Maintenance of Customs Revenue Functions.--
                (1) Maintenance of functions.--Notwithstanding section 733,
            the Secretary may not consolidate, alter, discontinue, or
            diminish those functions described in paragraph (2) performed
            by the United States Customs Service (as established under
            section 411) on or after the effective date of this Act, reduce
            the staffing level, or the compensation or benefits under title
            5, United States Code, of personnel attributable to such
            functions, or reduce the resources attributable to such
            functions, and the Secretary shall ensure that an appropriate
            management structure is implemented to carry out such
            functions.
                (2) Functions.--The functions referred to in paragraph (1)
            are those functions performed by the following personnel, and
            associated support staff, of the United States Customs Service
            on the day before the effective date of this Act: Import
            Specialists, Entry Specialists, Drawback Specialists, National
            Import Specialist, Fines and Penalties Specialists, attorneys
            of the Office of Regulations and Rulings, Customs Auditors,
            International Trade Specialists, Financial Systems Specialists.
        (c) New Personnel.--The Secretary of the Treasury is authorized to
    appoint up to 20 new personnel to work with personnel of the Department
    in performing customs revenue functions.

    SEC. 413. ALLOCATION OF RESOURCES BY THE SECRETARY.

        (a) In General.--The Secretary shall ensure that adequate staffing
    is provided to assure that levels of customs revenue services provided
    on the day before the effective date of this Act shall continue to be
    provided.
        (b) Notification of Congress.--The Secretary shall notify the
    Committee on Ways and Means of the House of Representatives and the
    Committee on Finance of the Senate at least 180 days prior to taking
    any action which would--
                (1) result in any significant reduction in customs revenue
            services, including hours of operation, provided at any office
            within the Department or any port of entry;
                (2) eliminate or relocate any office of the Department
            which provides customs revenue services; or
                (3) eliminate any port of entry.
        (c) Definition.--In this section, the term ``customs revenue
    services'' means those customs revenue functions described in
    paragraphs (1) through (6) and (8) of section 420.

    SEC. 414. ESTABLISHMENT AND IMPLEMENTATION OF COST ACCOUNTING SYSTEM;
                        REPORTS.

        (a) Establishment and Implementation.--
                (1) In general.--Not later than September 30, 2003, the
            Commissioner of Customs shall, in accordance with the audit of
            the Customs Service's fiscal years 2000 and 1999 financial
            statements (as contained in the report of the Office of the
            Inspector General of the Department of the Treasury issued on
            February 23, 2001), establish and implement a cost accounting
            system for expenses incurred in the operation of the Customs
            Service.
                (2) Additional requirement.--The cost accounting system
            described in paragraph (1) shall provide for an identification
            of expenses based on the type of operation, the port at which
            the operation took place, the amount of time spent on the
            operation by personnel of the Customs Service, and an
            identification of expenses based on any other appropriate
            classification necessary to provide for an accurate and
            complete accounting of the expenses.
                (3) Use of merchandise processing fees.--The cost
            accounting system described in paragraph (1) shall provide for
            an identification of all amounts expended pursuant to section
            13031(f)(2) of the Consolidated Omnibus Reconciliation Act of
            1985.
        (b) Reports.--Beginning on the date of the enactment of this Act
    and ending on the date on which the cost accounting system described in
    subsection (a) is fully implemented, the Commissioner of Customs shall
    prepare and submit to the Committee on Ways and Means of the House of
    Representatives and the Committee on Finance of the Senate on a
    quarterly basis a report on the progress of implementing the cost
    accounting system pursuant to subsection (a).

    SEC. 415. PRESERVATION OF CUSTOMS FUNDS.

        Notwithstanding section 733(b), no funds available to the United
    States Customs Service or collected under paragraphs (1) through (8) of
    section 13031(a) of the Consolidated Omnibus Reconciliation Act of 1985
    may be transferred for use by any other agency or office in the
    Department.

    SEC. 416. REPORTS TO CONGRESS.

        The United States Customs Service shall, on and after the effective
    date of this Act, continue to submit to the Committee on Ways and Means
    of the House of Representatives and the Committee on Finance of the
    Senate any report required, on the day before such the effective date
    of this Act, to be so submitted under any provision of law.

    SEC. 417. CUSTOMS USER FEES.

        Section 13031(f) of the Consolidated Omnibus Budget Reconciliation
    Act of 1985 (19 U.S.C. 58c(f)) is amended--
                (1) in paragraph (1), by striking subparagraph (B) and
            inserting the following:
                ``(B) amounts deposited into the Customs Commercial
            Automation Account under paragraph (5).'';
                (2) in paragraph (4), by striking ``(other than the excess
            fees determined by the Secretary under paragraph (5))''; and
                (3) by striking paragraph (5) and inserting the following:
        ``(5)(A) There is created within the general fund of the Treasury a
    separate account that shall be known as the `Customs Commercial
    Automation Account'. In each of fiscal years 2003, 2004, and 2005 there
    shall be deposited into the Customs Commercial Automation Account from
    fees collected under subsection (a)(9)(A), $350,000,000.
        ``(B) There is authorized to be appropriated from the Customs
    Commercial Automation Account in fiscal years 2003 through 2005 such
    amounts as are available in that Account for the development,
    establishment, and implementation of the Automated Commercial
    Environment computer system for the processing of merchandise that is
    entered or released. Amounts appropriated pursuant to this subparagraph
    are authorized to remain available until expended.
        ``(C) In adjusting the fee imposed by subsection (a)(9)(A) for
    fiscal year 2006, the Secretary of the Treasury shall reduce the amount
    estimated to be collected in fiscal year 2006 by the amount by which
    total fees deposited to the Customs Commercial Automation Account
    during fiscal years 2003, 2004, and 2005 exceed total appropriations
    from that Account.''.

    SEC. 418. SEPARATE BUDGET REQUEST FOR CUSTOMS.

        The President shall include in each budget transmitted to the
    Congress under section 1105 of title 31, United States Code, a separate
    budget request for the United States Customs Service.

    SEC. 419. PAYMENT OF DUTIES AND FEES.

        Section 505(a) of the Tariff Act of 1930 (19 U.S.C. 1505(a)) is
    amended--
                (1) in the first sentence--
                        (A) by striking ``Unless the merchandise'' and
                    inserting ``Unless the entry of merchandise is covered
                    by an import activity summary statement, or the
                    merchandise''; and
                        (B) by inserting after ``by regulation'' the
                    following: ``(but not to exceed 10 working days after
                    entry or release, whichever occurs first)''; and
                (2) by striking the second and third sentences and
            inserting the following: ``If an import activity summary
            statement is filed, the importer or record shall deposit
            estimated duties and fees for entries of merchandise covered by
            the import activity summary statement no later than the 15th
            day of the month following the month in which the merchandise
            is entered or released, whichever occurs first.''.

    SEC. 420. DEFINITION.

        In this subtitle, the term ``customs revenue function'' means the
    following:
                (1) Assessing and collecting customs duties (including
            antidumping and countervailing duties and duties imposed under
            safeguard provisions), excise taxes, fees, and penalties due on
            imported merchandise, including classifying and valuing
            merchandise for purposes of such assessment.
                (2) Processing and denial of entry of persons, baggage,
            cargo, and mail, with respect to the assessment and collection
            of import duties.
                (3) Detecting and apprehending persons engaged in
            fraudulent practices designed to circumvent the customs laws of
            the United States.
                (4) Enforcing section 337 of the Tariff Act of 1930 and
            provisions relating to import quotas and the marking of
            imported merchandise, and providing Customs Recordations for
            copyrights, patents, and trademarks.
                (5) Collecting accurate import data for compilation of
            international trade statistics.
                (6) Enforcing reciprocal trade agreements.
                (7) Functions performed by the following personnel, and
            associated support staff, of the United States Customs Service
            on the day before the effective date of this Act: Import
            Specialists, Entry Specialists, Drawback Specialists, National
            Import Specialist, Fines and Penalties Specialists, attorneys
            of the Office of Regulations and Rulings, Customs Auditors,
            International Trade Specialists, Financial Systems Specialists.
                (8) Functions performed by the following offices, with
            respect to any function described in any of paragraphs (1)
            through (7), and associated support staff, of the United States
            Customs Service on the day before the effective date of this
            Act: the Office of Information and Technology, the Office of
            Laboratory Services, the Office of the Chief Counsel, the
            Office of Congressional Affairs, the Office of International
            Affairs, and the Office of Training and Development.

    SEC. 421. GAO REPORT TO CONGRESS.

        Not later than 3 months after the effective date of this Act, the
    Comptroller General of the United States shall submit to the Congress a
    report that sets forth all trade functions performed by the executive
    branch, specifying each agency that performs each such function.

    SEC. 422. CORPORATE EXPATRIATES.

        (a) Limitation.--The United States Customs Service shall not enter
    into any new contract with a subsidiary of a publicly traded
    corporation if the corporation is incorporated in a tax haven country
    but the United States is the principal market for the public trading of
    the corporation's stock.
        (b) Definition.--For purposes of subsection (a), the term ``tax
    haven country'' means each of the following: Barbados, Bermuda, British
    Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, Cyprus,
    Gibraltar, Isle of Man, the Principality of Liechtenstein, the
    Principality of Monaco, and the Republic of the Seychelles.
        (c) Waiver.--The President may waive subsection (a) with respect to
    any specific contract if the President certifies to the Committee on
    Ways and Means of the House of Representatives and the Committee on
    Finance of the Senate that the waiver is required in the interest of
    national security.

                       Explanation of Proposed Amendments

                                 i. introduction

    A. Background on the United States Customs Service
        Since 1789, the United States Customs Service has been a
    federal agency under the United States Treasury Department.
    Congress created the Customs Service as its fifth legislative
    act in order to implement the first Act of Congress, the Tariff
    Act of 1789. Virtually all federal government revenue was
    originally collected by the Customs Service through duties.
    Today, the Customs Service collects over $20 billion of
    revenue, ensures that all imports and exports comply with U.S.
    laws and regulations, guards against smuggling, and is
    responsible for the following:
        1. Assessing and collecting customs duties, excise taxes,
    fees and penalties due on imported merchandise;
        2. Interdicting and seizing contraband, including narcotics
    and illegal drugs;
        3. Processing persons, baggage, cargo and mail, and
    administering certain navigation laws;
        4. Detecting and apprehending persons engaged in fraudulent
    practices designed to circumvent customs and related laws;
        5. Protecting American business and labor and intellectual
    property rights by enforcing U.S. laws intended to prevent
    illegal trade practices, including provisions related to quotas
    and the marking of imported merchandise;
        6. Collecting anti-dumping and other duties under our trade
    remedies laws and by providing customs recordation for
    copyrights, patents and trademarks;
        7. Protecting the general welfare and security of the
    United States by enforcing import and export restrictions and
    prohibitions, including the export of critical technology used
    to develop weapons of mass destruction, and money laundering;
    and
        8. Collecting accurate import and export data for
    compilation of international trade statistics.
        Today, in addition to its own laws, the Customs Service
    enforces well over 400 other provisions of law for at least 40
    agencies. A number of these statutes relate to quality of life
    issues involving the environment, such as motor vehicle safety
    and emission controls, water pollution standards, pesticide
    controls, freon smuggling, and the protection of endangered
    wildlife. Other laws safeguard American agriculture, business
    and public health, and consumer safety.
    B. The President's Homeland Security Proposal and H.R. 5005
        On June 18, 2002, President Bush proposed to transfer all
    of the authority and assets of the Customs Service, as well as
    many other federal agencies, to a new Department of Homeland
    Security. This proposal was incorporated into H.R. 5005, which
    was introduced on June 24, 2002. Specifically, the Customs
    Service would be placed under an Under Secretariat for Border
    and Transportation Security along with the Immigration and
    Naturalization Service, the Animal and Plant Health Inspection
    Service, the Coast Guard, and the Transportation Security
    Administration. Unlike the Coast Guard, H.R. 5005 does not
    require that the Customs Service be maintained as a separate
    entity. Under Section 402 of H.R. 5005, the Secretary of
    Homeland Security would be vested in the functions, personnel,
    assets, and liabilities of the United States Customs Service of
    the Department of the Treasury, including the functions of the
    Secretary of the Treasury relating thereto. The President's
    proposal would give the Secretary significant authority to
    reorganize the Customs Service, reallocate reserves within
    Customs, and make changes to Customs employees' compensation.
    C. Rationale for the Committee's Recommendations to Amend H.R. 5005
        Unlike other agencies that are being transferred to the new
    Department of Homeland Security, the Customs Service has four
    unique characteristics:
        1. The Customs Service is a revenue-collecting agency with
    significant trade facilitation functions. The Customs Service
    collects over $20 billion a year in duties, second only to the
    Internal Revenue Service in collections. Economically critical
    trade laws are implemented by the Customs Service. Because of
    its border presence, the Customs Service has taken on other
    border-related missions such as preventing drug smuggling and
    stopping weapons of mass destruction.
        2. A significant portion of the Customs Service's budget is
    funded through over $1 1/2 billion worth of user fees paid by
    importers, and by law those fees must be used only for specific
    inspectional services or as budgetary offsets to general
    commercial operations.
        3. Most of the Customs Service's legal authority is held by
    the Treasury Department or other agencies of government and
    delegated to the Customs Service. For example, 19 U.S.C. 3
    states that the Secretary of the Treasury shall supervise the
    collection of duties. Historically, this responsibility has
    been delegated to the Customs Service.
        4. Substantial portions of the Customs Service's trade work
    is very technical and esoteric. The work requires professionals
    with legal and regulatory skills that are unlike border
    security skills.
        For these reasons, the Members of the Committee recommend
    that the Select Committee on Homeland Security recognize the
    unique mission of the Customs Service and adopt the attached
    bill language to amend H.R. 5005. In making these
    recommendations, the Committee adopts the fundamental basis for
    of the President's proposal and agrees to transfer Customs
    assets and personnel in their entirety to the new Department of
    Homeland Security. The Committee rejected the option of carving
    up the Customs Service into commercial and non-commercial
    elements. Instead, the Committee sought to identify and prevent
    further reorganization or reductions in a closely defined core
    group that perform revenue-collection functions.
        The Committee was guided by one over-riding goal: to ensure
    that the Department of Homeland Security would be successful
    and not hamstrung by any limits on its authority or ability to
    carry out the protection of Americans. It is also important to
    ensure that revenue continues to be collected and that goods
    keep moving across the border with little delay in order to
    maintain delicately balanced commercial schedules and
    operations. The Committee is confident that the proposed
    changes to H.R. 5005 do not interfere with the new Department's
    missions but will enhance its effectiveness.
        Four amendments were offered to the Chairman's mark. The
    first amendment, offered by Mr. Cardin, would have designated
    the existing Customs Service as a ``distinct entity'' within
    the Homeland Security Department. This amendment failed by
    voice vote. The second amendment, offered by Mr. Becerra, would
    have expanded the dedicated use provision for the merchandise
    processing fee (MPF) in the Chairman's mark to require use of
    MPF receipts (in excess) of the $350 million dedicated for ACE
    development) for commercial operations. This amendment failed
    by a roll call vote of 12 ayes to 24 noes. The third amendment,
    offered by Mr. McDermott, would have preserved existing and
    future Customs' employees pay, performance standards, etc. as
    provided under Title 19 and Title 5. This amendment failed by a
    voice vote. Mr. Doggett offered an amendment to prohibit the
    Customs Service from entering into contracts with companies
    that have reincorporated overseas in order to avoid U.S.
    taxation. This amendment was agreed to without objection.

             ii. explanation of recommendations to amend h.r. 5005

        Sec. 402 of base text: The recommendation would authorize
    the transfer of functions, personnel, assets, and liabilities
    of the existing Customs Service in their entirety to the
    Division for Border and Transportation Security of the
    Department of Homeland Security, subject to other provisions of
    the amendment. Unlike H.R. 5005, the Committee does not
    recommend transferring the functions of the Department of the
    Treasury related to the Customs Service for the reasons given
    below in Sections 411 and 412.
        Sec. 411: A core Customs Service is established within the
    Department of Homeland Security and vested, at a minimum, with
    certain revenue-related offices and functions as specifically
    identified. This core Customs entity will continue to have a
    Senate-confirmed Commissioner, and the incumbent Commissioner
    may continue to serve until a new Commissioner is named.
        The primary function of the Customs Service has always been
    revenue collection and trade facilitation, and it is imperative
    to maintain these activities. However, revenue and trade will
    be relatively minor activities within the very large, new
    Department of Homeland Security. Given the importance of trade
    and government revenue, an independent and separate
    Congressional mandate for trade and revenue collection is
    appropriate. Accordingly, Customs Service personnel and offices
    that handle these unique revenue and trade functions should
    continue to operate within their organization after the
    transfer to the new Department.
        This section refers to Section 420(7) of the amendment for
    the list of components within the current Customs Service that
    the Committee determines to be completely or primarily devoted
    to the performance of revenue collection: Import Specialists,
    Entry Specialists, Drawback Specialists, National Import
    Specialists, Fines and Penalties Specialists, attorneys of the
    Office of Regulations and Rulings, Customs Auditors,
    International Trade Specialists, and Financial Systems
    Specialists. The personnel who perform this work have
    specialized skills in the very technical field of trade law,
    which are unlike the skills related to border security. For
    this reason, the group identified in Section 420(7) would
    comprise the Customs Service core established under Section 411
    within the Department of Homeland Security and would have a
    distinct existence apart, though integrated with, the many
    border security elements of the new Department.
        Regarding the provision requiring a Senate confirmed
    Customs Commissioner, the Committee believes that the person
    who leads the Customs Service must be an extraordinary
    individual to handle the multiple functions of that office. The
    Commissioner should continue to answer to, and be endorsed by
    Congress to ensure that all of Customs' missions are
    recognized.
        Sec. 412(a): The recommendation would reserve revenue
    collecting statutory authority to Treasury, where it is
    currently vested, and transfer all other authority exercised by
    the existing Customs Service to the Department of Homeland
    Security. Treasury may delegate its reserved authority to
    Homeland Security, as it often does to Customs today. Treasury
    shall consult with Homeland Security on all matters and
    regulations affecting customs functions. The recommendation
    authorizes the Department of the Treasury to hire additional
    staff to exercise this authority.
        It is not unusual for the Customs Service to implement and
    enforce laws that by statute are intended to be implemented by
    entirely different departments; indeed, Customs Service
    currently enforces 400 laws on behalf of 40 different agencies.
    The proposed changes would continue to empower the Secretary of
    the Treasury to promulgate regulations on a myriad of highly
    technical trade matters, while leaving it to the new Department
    of Homeland Security to implement them. In this way, Treasury's
    trade expertise and macroeconomic outlook is retained to
    address technical trade matters.
        Sec. 412(b): With regard to the Customs Service core
    established under Section 411, reorganization or decrease in
    the funding or staff or reductions to Title 5 pay and benefits
    levels is prohibited in order to preserve these critical trade
    functions.
        The President and Governor Ridge have described their wish
    for flexibility in the Department structure created by
    Congress, and there are many ways that the Administration will
    be able to obtain the ``synergy'' it seeks for the new Homeland
    Security Department with the Committee's recommendations. As
    described earlier, however, the revenue-oriented group
    established under Section 411 has unique functions distinct
    from security functions. It is therefore appropriate to
    prohibit reductions to this core group and to preserve these
    critical trade functions.
        Sec. 413: The recommendation provides that the Secretary
    shall maintain adequate staffing to assure that existing levels
    of customs revenue services are maintained, and the Secretary
    shall notify Congress of actions that reduce such services.
        Although all offices of the Customs Service conduct
    revenue-collecting services, those components of Customs that
    are outside of the core revenue-collecting group described in
    Section 420(7) and required to be kept intact per Section
    412(b) perform mixed functions. The Committee is mindful of the
    flexibility needs and security goals of the President and
    therefore requires only that customs revenue services, not
    necessarily staffing, be maintained at the existing levels as
    the Customs Service is transferred to the new Department of
    Homeland Security. Any significant reduction in services must
    be reported to Congress in advance, which is consistent with
    current law at 19 U.S.C. 2075(g).
        Sec. 414: The Customs Service is required to implement a
    cost accounting system in order to determine and track the use
    of $1.5 billion of Customs user fees.
        The Committee is concerned that Customs Service is
    currently unable to answer fundamental questions about how it
    spends money. For example, Customs officials state that it
    spends a certain amount of money on commercial operations. The
    figure is not based upon the addition of various commercial
    costs from all operations within the Customs Service, such as
    the number of people who actually processed entries of
    merchandise at specific ports during a set period. Instead, the
    figure is based upon Customs officials' belief that a set
    percentage of its work is always related to commercial
    activities. That static percentage is based upon a no longer
    available, ad hoc survey conducted by Customs several years
    ago. A modern cost accounting system would allow the Customs
    Service to accurately identify the amount of money spent at
    specific locations and for specific revenue functions.
        Given that $1.5 billion of Customs' $2.6 billion budget
    comes from the collection of fees that are ostensibly for
    specified revenue services, the Committee adopted this
    provision to ensure that revenue collecting functions can be
    closely tracked within the overall Department of Homeland
    Security, with strict account for such fees. Therefore, this
    reform is appropriate for a bill to transfer the Customs
    Service to the new Department of Homeland Security.
        Such a system would also provide compliance with the core
    financial system requirements of the Joint Financial Management
    Improvement Program (JFMIP), which is a joint and cooperative
    undertaking of the U.S. Department of the Treasury, the General
    Accounting Office, the Office of Management and Budget, and the
    Office of Personnel Management working in cooperation with each
    other and other agencies to improve financial management
    practices in government. That Program has statutory
    authorization in the Budget and Accounting Procedures Act of
    1950 (31 U.S.C. 65).
        Sec. 415: The recommendation provides that Customs fees
    (with the exception of the merchandise processing fee) must
    continue to be used for currently authorized functions. Fee
    receipts may not be transferred to any other agency or office
    in the Department.
        Congress created import fees to help fund critical customs
    activities. Fees are paid by commercial interests in return for
    specific commercial services. There have long been concerns
    about whether Customs can adequately account for the cost of
    providing commercial services in return for the fees collected.
    See the discussion in Section 414 above. It would be
    inappropriate and potentially inconsistent with United States
    trade obligation for importers to pay fees that subsidize non-
    commercial functions of the new Department of Homeland
    Security. For these reasons, the Committee believes that fees
    should continue to be spent only on activities already defined
    in 19 U.S.C. 58c.
        Sec. 416: The recommendation would make further changes for
    the purpose of ensuring that certain commercial functions are
    carried out. The text would require that all reports now
    provided to Congress from the Customs Service shall continue to
    be provided to the House Ways and Means and Senate Finance
    Committees.
        Transferring the assets and functions of the Customs
    Service to the new Department of Homeland Security will not
    lessen the need of these committees for information about trade
    operations. Through the Customs Service, the Department will be
    implementing virtually all trade obligations of the United
    States. These trade obligations lie within the jurisdiction of
    these committees. Therefore, existing reports should continue
    to be provided to the Congressional committees of jurisdiction
    on trade to allow the committees to continue appropriate
    oversight and authorizations.
        Sec. 417: The recommendation provides that a portion of the
    Customs Merchandise Processing Fee must go to build the new
    Customs computer.
        The Customs Service's current import system, the Automated
    Commercial System (ACS), was designed in 1984 and will not be
    able to meet the increasingly complex, long-term requirements
    impacted by the growth in trade, responsibilities, and
    legislation. Consequently, replacing ACS with the Automated
    Commercial Environment (ACE) is a critical component in the
    modernization and development of the Customs Service. The new
    computer system has also taken center stage in the fight
    against terrorism since security data collection will be an
    important objective of the new Department. It is therefore
    entirely appropriate to mandate that the ACE system be built
    from the proceeds of the merchandise processing fee.
        This provision has strong support from the import business
    community that pays the merchandise processing fee. Moreover,
    Governor Ridge has stated that he anticipates ``the rapid
    development of the ACE system will continue as will the
    interagency community's development of an International Trade
    Data System that creates a harmonized system for import-related
    data. These systems will likely become a cornerstone of the
    Department of Homeland Security's enterprise architecture.''
        Sec. 418: The recommendation requires that the
    Administration provide a separate budget request on the customs
    revenue functions within the new Department.
        This recommendation is consistent with the overall approach
    of the Committee in assuring that the core revenue-collecting
    components of the Customs Service are maintained. Coupled with
    the cost accounting system that will record expenditures for
    customs revenue services, this requirement for a separate
    budget request will ensure that the Committee can continue to
    oversee that revenue is properly collected and trade is
    continuing appropriately.
        Sec. 419: The recommendation would change the merchandise
    entry process to authorize monthly billing with a prohibition
    against deferral of duty past a statutory deadline.
        This provision is a general reform of the import process.
    The purpose is to modernize the customs system from an
    antiquated entry-by-entry billing method to a modern monthly
    billing method that is more consistent with general business
    practice. Congress provided regulatory flexibility to the
    Executive Branch in the Customs Modernization Act to implement
    a modern billing system; however, there has been insufficient
    progress to date. In addition, the Administration has twice
    this year used the underlying statute (19 U.S.C. 1505(a)) in
    what the Committee believes is an inappropriate ad hoc manner
    to defer duties for extraordinary lengths of time. The
    provision creates a statutory deadline that may not be
    extended.
        This provision is appropriate for the Homeland Security
    bill because it supports the overall goal of a modern,
    automated import system that will be used for commercial and
    homeland security purposes. Moreover, there is a further
    benefit in that the process of collecting import data and
    determining admissibility (linked closely to a homeland
    security mission) becomes more clearly removed from the
    collection of revenue (the traditional customs revenue
    mission).
        Sec. 420: The recommendation defines customs revenue
    functions to include the assessing and collecting of all types
    of duties, fees, and taxes; the processing and denial of entry
    of persons and goods; enforcing quota, marking, and
    intellectual property laws; collecting trade data; enforcing
    trade agreements; functions of certain revenue collecting
    specialists; and functions of certain revenue collecting
    support offices.
        These definitions are used throughout the recommended
    amendment in order to 1) define the scope of the newly created
    Customs Service core within the Department of Homeland Security
    and its directions for the Department's future operations
    related to trade and revenue collection; 2) describe to the
    scope of the authorities retained by the Department of the
    Treasury for delegation to the Secretary of Homeland Security;
    and 3) describe the services that must be maintained by the
    Department of Homeland Security even outside the newly-created
    Customs Service core.
        Sec. 421: The recommendation provides that GAO will report
    on all trade functions performed by the executive branch.
        The creation of a new Department that will have significant
    trade responsibilities has led the Committee to recommend a
    comprehensive report to identify all agencies in the executive
    branch that have trade functions. This report will assist the
    Committee in continuing to conduct oversight of international
    trade functions.
        Sec. 422: The recommendation provides that Customs is
    prohibited from entering into new contracts with publicly
    traded corporations if the corporation is incorporated in a tax
    haven country as defined in the section, subject to the
    President's power to waive based upon national security
    reasons.

           DISSENTING VIEWS OF MESSRS. STARK, McDERMOTT, AND BECERRA

        On the Chairman's Proposed Amendment to H.R. 5005, July 11, 2002

        While the Administration's current focus is on the creation of the
    new Department of Homeland Security (DHS), the Ways & Means Committee
    is responsible for the Customs Service functions under the new
    Department. This includes the need to ensure that Customs employees'
    labor protections are maintained. And as Members of Congress, we are
    responsible for ensuring that the creation of this new department does
    not trample on existing laws and our democratic process. The absence of
    civil service and Freedom of Information Act protections in the
    Chairman's mark is ample reason to reject the amendment. But the hasty
    fashion in which this new agency is being developed is completely
    unacceptable under a democratic rule of law.
        We commend the Chairman for attempting to preserve the revenue-
    raising functions of the Customs Service as a distinct entity within
    Customs. However, the Chairman's amendment only includes a small
    subsection of existing Customs personnel and includes a limited
    mandate. Although the Administration continues to reiterate its promise
    that Customs employees' civil service, collective bargaining, and
    whistle-blower protections will be maintained under the reorganized
    agency, these protections were not specifically included in the
    Chairman's amendment. While the Chairman advised the Committee that
    these protections do not fall under the Ways & Means jurisdiction, our
    support cannot rest on a mere promise from the Administration. Twenty-
    two existing federal agencies are targets for inclusion under the new
    DHS umbrella. We would discourage our colleagues from taking a cavalier
    approach with the lives of tens of thousands of civil servants for the
    sake of meeting a September 11 deadline.
        Nothing in the Chairman's mark ensures that the Freedom of
    Information Act, the Federal Advisory Committee Act and the Government
    in Sunshine Act are maintained in the new Customs department under the
    DHS. As envisioned by the Administration, this leaves the option of
    closed-door meetings and secrecy up to the discretion of sixteen
    assistant secretaries for the new agencies--ten of whom would not need
    Senate confirmation to hold their posts.There is no reason that the new
    department needs to be hastily rushed through the Ways & Means
    Committee, nor any other Congressional committee. This Committee held a
    hearing two weeks ago in which the Department of Treasury
    representative provided very little detailed information on the
    structure and components of the new Customs agency under DHS. Two weeks
    later, the same representative could not provide any additional
    information on the new Customs agency. The checks and balances
    established by our country's founding fathers should not be ignored in
    pursuit of meeting a self-imposed September 11 deadline.
        We wish to make perfectly clear that our dissension must not be
    interpreted as opposition to securing our domestic territories under
    the new Department of Homeland Security, but rather as an exercise in
    maintaining the checks and balances so crucial to the democratic
    process. This is the largest overhaul of the executive branch in fifty
    years and will have ramifications long beyond our tenure as Members of
    Congress. Any new department should be fashioned correctly the first
    time with all the sunlight the democratic process can afford.
    Regretfully, perfecting amendments offered during the Committee markup
    were rejected along party lines. In conclusion, the Chairman's
    amendment to H.R. 5005 does not provide the necessary elements for a
    long-standing democratic Department.

                                             Pete Stark
                                          Jim McDermott
                                        Xavier Bercerra