[Senate Hearing 109-1125]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1125
 
   THE PROPOSED REORGANIZATION OF THE DEPARTMENT OF HOMELAND SECURITY

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 19, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation


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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 19, 2005....................................     1
Statement of Senator Burns.......................................     5
Statement of Senator DeMint......................................    19
Statement of Senator Inouye......................................     2
    Prepared statement...........................................     2
Statement of Senator Kerry.......................................     6
Statement of Senator Lautenberg..................................     7
Statement of Senator McCain......................................     3
Statement of Senator Snowe.......................................    29
Statement of Senator Stevens.....................................     1
    Prepared statement...........................................     2
Statement of Senator Vitter......................................     4
    Prepared statement...........................................     4

                               Witnesses

Chertoff, Hon. Michael, Secretary, Department of Homeland 
  Security.......................................................     8
    Prepared statement...........................................     8


   THE PROPOSED REORGANIZATION OF THE DEPARTMENT OF HOMELAND SECURITY

                              ----------                              


                         TUESDAY, JULY 19, 2005

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 11:15 a.m. in 
room SR-253, Russell Senate Building, Hon. Ted Stevens, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. I apologize for the delay in this hearing 
caused by the appearance of India's Prime Minister before the 
joint session of Congress.
    We do welcome you, and we thank you for coming to the 
Committee to discuss your recently announced plan to streamline 
the operations, policies, and structures within your 
department.
    Congress responded quickly to the September 11 attacks by 
first creating the Transportation Security Administration and 
soon after that the Department of Homeland Security.
    At that time, it was apparent to the U.S. economy that the 
public trust and commercial aviation be restored, and a 
coordination from the Federal bureaucracies and, as well as, 
with State and local governments be achieved to defend against 
terrorism.
    Being mindful of the speed with which the Department of 
Homeland Security was created, Congress authorized the 
Secretary in the ``Homeland Security Act'' to reassess the 
Department's operation and structures and make modifications 
where necessary.
    We do commend you, Mr. Secretary, for taking advantage of 
that authority and for your proactive efforts and dedication to 
make this Nation safer.
    The purpose of this hearing is to understand in greater 
detail the processes by which you have conducted your review, 
and the organizational modifications you propose in this effort 
to make the Department of Homeland Security operate more 
efficiently and effectively.
    We have reviewed your plan, and I believe your proposals do 
make sense, but I think you have to approach one critical 
component of the security concept. That is the enlistment of 
more volunteers to help defend our homeland.
    Hiring people to do every security job in this country will 
bankrupt this country. I firmly believe Americans have been 
waiting for instructions from their government since the 
attacks of September 11 so they, too, could play a role, and 
serve the security of our Nation.
    And I will put the rest of my comments in the record, if I 
may.
    [The prepared statement of Senator Stevens follows:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska

    I welcome Secretary Chertoff, and thank him for appearing before 
the Committee today to discuss his recently announced plan to 
streamline the operations, policies, and structures within the 
Department of Homeland Security.
    Congress responded quickly to the September 11 attacks, by first, 
creating the Transportation Security Administration, and soon after 
that, the Department of Homeland Security. At the time, it was 
imperative to the U.S. economy that the public trust in commercial 
aviation be restored, and that coordination between Federal 
bureaucracies, as well as with State and local governments, be achieved 
to defend against terrorism.
    Being mindful of the speed by which the Department of Homeland 
Security was created, Congress authorized the Secretary in the Homeland 
Security Act to reassess the Department's operations and structure, and 
make modifications where necessary. I commend Secretary Chertoff for 
taking advantage of this authority, and for his proactive efforts and 
dedication to making this Nation safer.
    The purpose of today's hearing is to understand in greater detail 
the processes by which Secretary Chertoff conducted his review, and the 
organizational modifications that he has proposed in his effort to make 
DHS operate more efficiently and effectively.
    I have reviewed the Secretary's plan and while I believe many of 
his proposals make sense, I think the Secretary's review fails to 
highlight one critical component of an effective homeland security 
approach. That is, the enlistment of volunteers to defend the homeland. 
Hiring people to do every security job will bankrupt this country. I 
firmly believe that Americans have been awaiting instructions from 
their government since the attacks of September 11, so that they can 
play a role in defending this Nation. I can remember riding a train 
from Texas to Los Angeles when I was an Air Force Lieutenant and a 
local volunteer walked up and down the aisle of the train to check each 
passenger's identification to ensure that we were supposed to be riding 
the train.
    As DHS moves toward implementing the Secretary's plan in October, I 
hope the Secretary further studies ways by which he can involve our 
citizenry.

    The Chairman. And, Senator Inouye.

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Thank you very much, Mr. Chairman. I ask 
that my statement be made part of the record.
    I also request that the statement of Senator Rockefeller be 
made part of the record. Because of an unavoidable family 
matter, he cannot be with us this morning.
    [The prepared statement of Senator Inouye follows:]

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii

    Today, we will examine Homeland Security Secretary Chertoff's 
comprehensive review of the Department's organization and policy 
direction. Specifically, we hope to learn more about the role of the 
Transportation Security Administration (TSA) in this latest 
reorganization.
    Chairman Stevens, Senator Rockefeller, and I, along with Senators 
Snowe, Dorgan, Lautenberg, Cantwell, and Pryor, introduced the 
Transportation Security Improvement Act of 2005, S. 1052, to better 
equip the TSA for its transportation security mission. I look forward 
to hearing the Secretary's perspectives on our bill in light of his 
comprehensive review.
    We are anxious to improve our legislation and make certain that the 
Department has what it needs to keep our transportation infrastructure 
secure.
    Transportation security is economic and national security, and the 
most prudent step we can take to improve it is to strengthen and 
empower the TSA.
    While I was encouraged to learn that the TSA will continue to be 
the ``lead agency'' for transportation security, I remain concerned 
about the proposed realignment's potential effects on port, rail, and 
transit security. The reorganization also appears to have altered the 
DHS's areas of concentration, particularly regarding policy, 
intelligence, operations, and preparedness.
    While I commend the Secretary for this substantive undertaking, I 
would not be doing my job if I did not raise for further discussion 
three principal areas of concern I have with his announcement:

        1. The transfer of port security functions away from the TSA;

        2. The Department's poorly defined commitment to rail and 
        transit security; and

        3. The future of the TSA's vetting and credentialing programs, 
        such as the Registered Traveler program and hazmat background 
        checks.

    Given the recent terrorist bombing of London's commuter rail and 
buses, the bombings in Madrid last year, as well as similar transit 
attacks in Moscow, Tel Aviv, and Tokyo, we need greater detail and 
attention to rail and transit security, not less.
    However, just one day after the reorganization announcement, in an 
interview with the Associated Press, Secretary Chertoff suggested that 
rail and transit security would not be a top priority during his 
tenure. I hope that he will address those comments today, particularly 
since our legislation directs greater attention and more resources 
toward these transportation modes.
    It is a gross miscalculation to de-emphasize rail and transit 
security. As we have witnessed repeatedly, transit systems are a 
primary target for international terrorists. Such attacks are highly 
visible, produce mass casualties, cause broad economic disruption, and 
generate widespread fear.
    In fact, a recent Associated Press poll indicated that 57 percent 
of Americans now believe a transit-related attack in the U.S. is 
inevitable. The same poll also demonstrated that Americans are not 
shying away from their daily routines. We must show similar resolve and 
work together to prove that an attack is far from certain.
    It is our job to do everything possible to ensure that while the 
threat risk will likely continue, the actual vulnerability will 
diminish.
    S. 1052 redoubles our efforts to secure our rail lines, motor 
carriers, and ports, and provides the Department with the tools needed 
to accomplish the goals articulated in the Secretary's review.
    We look forward to working with the Secretary, in the weeks and 
months ahead, to ensure that our transportation systems are as safe and 
secure as possible.

    The Chairman. Senator McCain.

                STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    Senator McCain. Thank you, Mr. Chairman.
    I would just like to say, Secretary Chertoff, I was pleased 
to hear your philosophies concerning the need for the 
Department to be risk-oriented in its decisionmaking processes 
and act as an effective steward of public resources. It is one 
of the most diverse and largest government agencies.
    And I was also pleased to read in your testimony your 
strong commitment for improving our Nation's immigration 
policies, as well as, securing our borders.
    And I hope that your visit to the Arizona-Mexico border may 
help shape your policy views. It was not the coldest day we 
have had. And we appreciate the fact that you were willing to 
come to the border and see the situation on the ground. And I 
hope you will come back as we continue to try to improve our 
border security.
    And, Mr. Chairman, I have a lot of things to say, but I 
really want to hear from the witness. I thank Mr. Chertoff, 
Secretary Chertoff, and I congratulate him on the job that he 
is doing.
    The Chairman. Senator Vitter, your comments.

                STATEMENT OF HON. DAVID VITTER, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Vitter. Thank you, Mr. Chairman. Thank you for this 
hearing.
    And I, too, want to thank the Secretary for your work, Mr. 
Secretary. You clearly have one of the toughest jobs in 
Washington. Thank you for taking it on.
    I will be very brief and I will submit the rest of my 
comments for the record.
    I, too, have studied your proposals. I do have an overall 
concern which is--and we have talked about this briefly on the 
phone--which is a lot of centralization in the front office in 
Washington and lack of a regional structure around the country. 
And I just wanted to briefly highlight that concern.
    I continue to believe that to best coordinate emergency 
preparedness and response, there should be some regional 
structure in the department rather than all sorts of different 
agency structures, all with communication only to Washington.
    I think regional headquarters and directors would enable 
the department to better coordinate with local officials and 
better facilitate preparation and response.
    I think this is particularly true since different regions 
have very different threats. For instance, my home, Louisiana, 
has ports, maritime issues. But, Texas, right next door, has a 
very different major threat which is the threat from the 
border. And I think regions could effectively help focus on 
those different threats in different parts of the country.
    Now, I want to be clear. I am not proposing some nationwide 
building program of plush headquarters in regions around the 
country. What I am describing does not have to be a lot of 
overhead, a lot of sort of headquarters that are devoid of 
direct responsibility in terms of the actual work of the 
departments.
    But I would liken it to combatant commanders in the field 
and different theaters in the military, strategically placed 
around the Nation, in the case of homeland security, to enhance 
security and focus on the different threats that different 
regions of the country face.
    So that would be my general comment and concern. Again, we 
have talked about this briefly on the telephone. And I will 
look forward to following up as you develop the structure to 
see if that concern can be addressed in other ways.
    And, Mr. Chairman, I will submit the rest of my comments 
for the record.
    The Chairman. Thank you, Senator.
    [The prepared statement of Senator Vitter follows:]

  Prepared Statement of Hon. David Vitter, U.S. Senator from Louisiana

    Mr. Chairman, thank you for having this timely hearing. I 
appreciate the work the Secretary is doing, and I look forward to 
hearing more about the plans to reorganize the Department.
    Mr. Secretary, you have one of the toughest jobs in Washington, and 
I applaud you for your efforts. I do have one issue, however, with 
where I see the Department heading.
    I believe that to better coordinate emergency preparedness and 
response, regional authorities should be established in the Department. 
Regional directors would enable the Department to coordinate better 
with local officials and facilitate better cooperation with all the DHS 
agencies, so that everyone can work together most efficiently.
    Different regions have different threats. For example, Louisiana 
has ports and maritime issues, but Texas has a threat from the border. 
Every region has a different focus and needs a different regional 
strategy for homeland security. The Coast Guard has a regional system 
that is a good example. The Coast Guard districts were not thrown 
together randomly, but they were designed with mission in mind.
    We need regional staff with authority over the many Department 
components in an area to command the response needed effectively.
    I am not proposing a nationwide building program with new plush 
headquarters around the Nation. Instead, we need to have regional 
authorities--like commanders in the field for the military--
strategically placed around the Nation, to provide efficiency to 
enhance security.
    If history teaches us anything, it is that change is often not 
received well, even if it is for the common good. Let's use the 
Department of Defense as an example.
    It took years to integrate the services, to take advantage of 
efficient operations and coordinated efforts. Finally, the Goldwater-
Nichols Act of 1986, made DOD a functional department. It set up a 
system to use all the services in a combined way to accomplish their 
tasks, and be able to function effectively and respond to events in a 
coordinated way. Some functions--the Title X functions like training, 
equipping, and managing resources--were separated out from the war-
fighter activities, thereby, allowing the Combatant Commanders to 
concentrate their efforts at the operational and tactical level.
    As in the Department of Defense, we should have the leadership at 
the top setting policy, but at the same time, we should empower 
regional directors of the Department of Homeland Security--the 
equivalent of commanders in the field for DOD--to perform day-to-day 
operations, and make decisions to accomplish their mission of securing 
our Nation and responding to threats. I think this may be the idea in 
the reorganization plan with the creation of an operations office, but 
I think it is missing a regional component.
    If you look at Miami, New Orleans, Houston, or any other area where 
DHS has many component organizations, there is no organization or 
command structure that allows for joint training, resources, 
operations, or intelligence that will produce a collective result and 
stop terrorism.
    Should an incident happen in any of these locations, who would be 
the point-of-contact in charge? TSA, ICE, USCG? Surely we should not 
have all the agencies acting independently, and a command structure 
solely based in Washington will not be effective. In order to solve 
this problem, a system with regional directors is needed to ensure 
efficient operations and the best, quickest, most effective response to 
incidents and preparing for potential incidents. These regional 
directors should be empowered to respond and coordinate preparedness 
and response, under guidelines established by the Secretary and his 
leadership team.
    I would like for the Secretary to explain why he chose against a 
regional structure.

    The Chairman. Senator Burns.

                STATEMENT OF HON. CONRAD BURNS, 
                   U.S. SENATOR FROM MONTANA

    Senator Burns. Thank you, Mr. Chairman.
    And welcome, Mr. Chertoff. We appreciate you.
    There are just a couple of areas, and most of the areas are 
which you have already taken a position and thinking about 
changing. So I will look forward to your testimony.
    I did want to talk to you a little bit about EAS airports. 
I think there are a couple of states where we may address a 
problem, but that is in question. But I just look forward to 
hearing your comments this morning.
    And thank you, Mr. Chairman, for this hearing.
    The Chairman. Thank you.
    The Chairman. Senator Kerry.

               STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you. Just a brief 
statement, if I may. First of all, thank you for holding this 
hearing.
    Mr. Chertoff, thank you for coming in and sharing some time 
with us. I was pleased to support your nomination. I know you 
are working hard to protect the country.
    There are a lot of areas to focus on. Obviously, you have 
heard some of them expressed in the concerns of my colleagues.
    I would just like to focus on one quickly in my opening 
comments, if I can, and that is the issue of port security, 
specifically management of the grant program, and the status of 
national prevention and contingency plans.
    In January, the DHS Inspector General issued a report you 
are well familiar with, saying that the current design of the 
grants program compromises DHS's ability to direct resources to 
the Nation's highest priorities.
    And assessing the administration of the program, the IG 
found that only one staff person at TSA managed the 
distribution of 811 grants in 2003, found that 82 of 86 grant 
applications transferred from TSA to the Office of Domestic 
Preparedness lacked merit but still received funding, and most 
importantly, found that of the $564 million that was awarded 
through 2004, only $106 million was actually spent to improve 
port security.
    This is a fairly amazing statistic, as well as reality, 
when you measure what experts have told us about ports and the 
potential threat which you are well familiar with.
    I know that you and DHS concurred with most of the 
recommendations, but it has never been set forth, sort of, 
precisely how that is going to ultimately be implemented.
    Last week, on the Homeland Security Appropriations bill, I 
submitted an amendment to require the Inspector General and 
others to report within 90 days detailing how that 
implementation is taking place, and will take place.
    So obviously I hope you will cooperate in that effort. But 
more importantly, I am really concerned, and I think others 
are, that we remain unprepared.
    Now, I heard your comments the other day, and I respect the 
distinction you are trying to draw. I would concur that we 
cannot prevent everything. And there are certain limits, and 
there are certain realities we have to live with.
    But the department still has not finished a national 
maritime security plan mandated by the ``Maritime 
Transportation Security Act.'' The country still has no plan to 
reroute commerce should a port be attacked. And that lack of 
planning could prove destructive to our economy if there were a 
major port being closed, especially if oil or natural gas 
deliveries were stopped.
    So I would urge you to tackle this. Obviously I have some 
questions on it when the question period comes. I hope we never 
need it, but there is no doubt in my mind that railroads, 
highways, and cities are all impacted by what does or does not 
happen with respect to port security itself, because they are 
so interconnected.
    And I will look forward to having a chance to explore this 
with you a little bit.
    The Chairman. Senator Lautenberg, you have a comment?

               STATEMENT OF FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Thanks, Mr. Chairman. Thanks for asking 
Secretary Chertoff here. I am pleased to see him.
    Last week, we saw the beginning of the plan for 
reorganizing the Department of Homeland Security and make it 
more effective. And I congratulate Secretary Chertoff for 
moving on that front.
    It is a very complicated department or organization, 
180,000 people, and a merging of lots of different departments 
of government. So it will not be easy and it has not happened 
yet, but we are on the right track with this.
    Unfortunately last week, I think the Senate in some form 
undermined what the secretary is offering as his view of how we 
ought to distribute funds from the Department of Homeland 
Security and that is based on risk. And instead we had a vote 
that suggested that no significant portion of the funds ought 
to be distributed based merely on population.
    But if you had an epidemic in California, you would not 
send the vaccine or the antidote to Illinois, and we ought not 
to be doing that here. And I hope that we will be able to 
confirm that the most effective way to protect our society is 
to distribute funds on risk assessments.
    And we congratulate the secretary for standing firm on 
that. He said that we should have at least 90 percent going, 
based on risk assessment to those communities, those places at 
risk, and last week we voted to reduce it to 60 percent. It is 
not a particularly good idea.
    In terms of the transportation systems, I disagreed with 
the secretary on the fact that he suggested states ought to 
take over the security for their own transit systems. But many 
of these are interstate and they are part of an integral 
transportation system that affects the entire country.
    And I do not think that the states are in a position--I 
look particularly at my state where 860,000 people, each and 
every day, take buses and trains and rely on mass transit, 
public transit systems to move them around.
    And we saw what happened in London, too, recently when the 
attack took place there and at the transportation, focused on 
transportation network knowing that that would have a 
devastating effect, not only on the functioning of the society, 
but the psychology of the society.
    And I think it is really important, Mr. Secretary, that we 
continue to focus all assistance possible on our transportation 
systems. I look forward to an opportunity to ask some 
questions.
    And I thank you again, Mr. Chairman, for doing this.
    The Chairman. Thank you very much.
    Mr. Secretary, we are pleased to have your statement.

        STATEMENT OF HON. MICHAEL CHERTOFF, SECRETARY, 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Chertoff. Thank you, Mr. Chairman, and Ranking Member 
Inouye. I request that my full statement be made part of the 
record.
    And I thought I would take the opportunity just very 
briefly to outline the highlights and to respond to a couple 
of, I think, salient issues.
    It is a pleasure for me to be before the Committee. I think 
it is my first time since I have become secretary. And I look 
forward to continuing to work with the Committee as we go 
forward, not only with respect to the reorganization, but with 
respect to implementing policies which I know concern all of us 
very deeply as part of the effort to enhance our homeland 
security.
    The Chairman. We will put your statement in the record in 
full and all opening statements in the record in full without 
objection.
    [The prepared statement of Secretary Chertoff follows:]

        Prepared Statement of Hon. Michael Chertoff, Secretary, 
                    Department of Homeland Security

    Chairman Stevens, Senator Inouye, and Members of the Committee:
    Thank you for the opportunity to address you today, and for your 
ongoing support of the Department of Homeland Security's efforts to 
keep America secure and free.
    I am honored, and pleased, to appear before the Senate Committee on 
Commerce, Science, and Transportation today to discuss the outcomes and 
results of our Second-Stage review. Shortly after my confirmation as 
Secretary of the Department of Homeland Security, I announced my 
intention to conduct a systematic evaluation of the Department's 
operations, policies, and structures to ensure that our form and 
function are most effectively aligned to maximize our ability to 
achieve the security outcomes associated with our overriding mission of 
protecting the homeland. Today, I am able to report more fully on the 
results of that process.
    All Americans owe a tremendous debt of gratitude to the patriots 
and pioneers who built this Department in record time. Because of their 
dedication, security at our ports, airports, critical infrastructure, 
and borders has been significantly strengthened. Our nation has 
thwarted plots and captured terrorists. As a result, in the period 
since 9/11, the American people have begun to live under an umbrella of 
greater security, with greater peace of mind than we imagined on that 
terrible day.
    My job--and the job of the leadership team at the Department--is to 
provide the strategic direction, tools, and aggressive support needed 
by our colleagues to build upon that foundation and continue to advance 
the effectiveness, agility, and capacity of this Department every day.
2SR Philosophy
    Our review was conducted with several core principles in mind.
    First, as I have said before, DHS must base its work on priorities 
driven by risk. Our goal is to maximize our security, but not security 
``at any price.'' Our security strategy must promote Americans' 
freedom, prosperity, mobility, and individual privacy.
    Second, our Department must drive improvement with a sense of 
urgency. Our enemy constantly changes and adapts, so we, as a 
Department, must be nimble and decisive.
    Third, DHS must be an effective steward of public resources. Our 
stewardship will demand many attributes--the willingness to set 
priorities; disciplined execution of those priorities; sound financial 
management; and a commitment to measure performance and share results. 
Perhaps most of all, DHS must foster innovation.
    Finally, our work must be guided by the understanding that 
effective security is built upon a network of systems that span all 
levels of government and the private sector. DHS does not own or 
control all these systems. But we must set a clear national strategy, 
and design an architecture in which separate roles and responsibilities 
for security are fully integrated among public and private 
stakeholders.
    We must draw on the strength of our considerable network of assets, 
functioning as seamlessly as possible with state and local leadership, 
law enforcement, emergency management personnel, firefighters, the 
private sector, our international partners, and certainly the general 
public. Building effective partnerships must be core to every mission 
of DHS.
2SR Process
    From across the Department and elsewhere in the Federal Government, 
we pulled subject matter experts and talented individuals away from 
their day jobs to focus on how well we tackle our tough fundamental 
challenges: prevention, protection, and all-hazards response and 
recovery.
    This Second Stage Review utilized 18 action teams--involving more 
than 250 DHS staff--to evaluate specific operational and policy issues. 
We asked each team to answer a couple of simple questions. First, freed 
from the constraints of existing policies and structures--writing on a 
clean slate--how would you solve a particular problem? And then, how 
would you take the best solutions and implement them aggressively?
    We actively sought opinions from hundreds of public and private 
partners at the Federal, State, local, tribal, and international 
levels. Finally, we examined the DHS organizational structure, to make 
sure that our organization is best aligned to support our mission.
    This work, along with the experience of the last two years in the 
Department's existence, will now play a critical role in setting our 
agenda moving forward.
Six Imperatives
    In the weeks and months to come, the Department will launch 
specific policy initiatives in a number of key areas. Here, then, are 
six of the key imperatives that will drive the near-term agenda for 
DHS. We must:

        1. Increase preparedness, with particular focus on catastrophic 
        events.

        2. Strengthen border security and interior enforcement, and 
        reform immigration processes.

        3. Harden transportation security without sacrificing mobility.

        4. Enhance information sharing with our partners, particularly 
        with State, local, and tribal governments, and the private 
        sector.

        5. Improve DHS stewardship, particularly with stronger 
        financial, human resource, procurement, and information 
        technology management.

        6. Re-align the DHS organization to maximize mission 
        performance.

    We will put more muscle on the bones of these six areas and others 
with additional actions and policy proposals in the weeks and months 
ahead. But, for now, let me give you a broad overview of our agenda for 
the future of the Department.
1. Preparedness
    First, preparedness. In the broadest sense, preparedness addresses 
the full range of our capabilities to prevent, protect against, and 
respond to acts of terror or other disasters. Preparedness is about 
securing America's critical infrastructure, which is not a government 
asset; roughly 85 percent is privately owned or operated.
    At the outset, we must acknowledge that although we have 
substantial resources to provide security, these resources are not 
unlimited. Therefore, we as a nation must make tough choices about how 
to invest finite human and financial capital to attain the optimal 
state of preparedness. To do this we will focus preparedness on 
objective measures of risk and performance.
    Our risk analysis is based on these three variables: (1) threat; 
(2) vulnerability; and (3) consequences. These variables are not 
equal--for example, some infrastructure is quite vulnerable, but the 
consequences of attack are relatively small; other infrastructure may 
be much less vulnerable, but the consequences of a successful attack 
are very high, even catastrophic. DHS will concentrate first, and most 
relentlessly, on addressing threats that pose catastrophic 
consequences. Some of the tools needed to prevent, respond, and recover 
from such awful scenarios are already in place; but others need 
significant improvement.
    The first step in enhancing national preparedness, is establishing 
a preparedness baseline that measures the effectiveness of our planning 
for preventing, protecting against, and responding to terrorist acts or 
disasters. A second stage review team has, therefore, constructed the 
model for an analytic matrix that will set that baseline. The matrix 
will allow us to analyze possible threats and will map the current 
state of prevention, protection, and response planning with regard to 
each. This matrix will be a critical tool enabling us to identify and 
remedy current gaps in preparedness.
    Bringing greater planning discipline to each of these risk 
scenarios is another dimension of our preparedness mission. And simple 
common sense counsels that we begin by concentrating on events with the 
greatest potential consequences. That is why the Department's National 
Preparedness Goal--and additional, risk-based planning--will form our 
standard in allocating future DHS grants to our State and local 
partners, so, that we build the right capabilities in the right places 
at the right level. Federal money should be distributed using the risk-
based approach that we will apply to all preparedness activities. And 
DHS needs the discretion to award infrastructure protection grants in a 
more flexible manner, as provided by the Administration's proposed 
Targeted Infrastructure Protection Plan.
    Of course, Federal funds are not the only resources available to 
strengthen the protection of our valued infrastructure. Three years 
ago, Congress passed the SAFETY Act to enable our private sector 
partners to develop innovative technology to protect the homeland, 
without the fear of unduly high transaction costs imposed by the 
possibility of frivolous lawsuits. There is more opportunity to take 
advantage of this important law, and we will do so.
    Finally, of all the catastrophic threats we face, a nuclear attack 
on our soil would be uniquely threatening to our society. The 
President's budget asks Congress to establish and fund a Domestic 
Nuclear Detection Office (DNDO), to develop and deploy the next 
generation of systems that will allow us to dramatically improve our 
ability to detect and intercept a nuclear threat. We have begun to take 
the steps to make this office a reality. The DNDO will report directly 
to me under our new structure--and I ask that Congress support this 
essential and critical resource.
2. Borders and Immigration
    Our second imperative is the need to strengthen border security and 
interior enforcement, as well as improve our immigration system. We 
cannot have one approach without the other.
    As to the first, we must gain full control of our borders to 
prevent illegal immigration and security breaches. Flagrant violation 
of our borders undercuts respect for the rule of law and undermines our 
security. It also poses a particular burden on our border communities. 
We are developing a new approach to controlling the border that 
includes an integrated mix of additional staffing, new technology and 
enhanced infrastructure investment. But control of the border will also 
require reducing the demand for illegal border migration by channeling 
migrants seeking work into regulated legal channels. I look forward to 
working with Congress this year to improve border security 
significantly through the President's Temporary Worker Program (TWP).
    Immigration policy is about more than keeping illegal migrants out. 
Our heritage and our national character inspire us to create a more 
welcoming process for those who lawfully come to our shores to work, 
learn, and visit. Secretary Rice and I will, in the near term, announce 
a detailed agenda of work and innovation that the Department of State 
and DHS have begun together, to ease the path for those who wish to 
legitimately visit, study, and conduct business in this country, while 
at the same time ensuring that our national security interests are 
protected.
    Of course, most people come to our shores to seek a better life for 
themselves and their children. Ours is a nation of immigrants, but, for 
legal immigrants trying to become American citizens, the process can be 
confusing, frustrating, and seemingly endless. Part of the problem is 
that the current business model fosters a long delay between 
application and final adjudication of applicants for residence and 
citizenship, during which many applicants stay here as temporary 
residents. But this system puts some of the most important security 
screening at the end of a lengthy process rather than the beginning, 
and leads to an unnecessarily high rate of rejection late in the 
process.
    As a result, too often, this system leaves a negative first 
impression of our nation with our new fellow countrymen. Worse yet, it 
causes unnecessary security risks because people enjoy temporary 
residence while we are completing the screening process. Restructuring 
this process to enhance security and improve customer service will be 
an important part of our agenda.
3. Transportation Security
    Creating better systems to move people and goods more securely and 
efficiently was a core objective in founding DHS. It remains so today.
    (a) Enhancing Transit Safety. The recent tragic events in London 
served as a reminder of the terrorist threat against innocent civilians 
in our mass transit systems. We believe mass transit security is a 
shared responsibility between Federal, State, and local partners, and 
the Federal Government has provided significant support for security 
efforts over the past three years. Following last year's Madrid train 
bombings, DHS took important action not only by increasing funding for 
rail security, but also by conducting over 2,600 individual consequence 
assessments. Since 9/11, the Transportation Security Administration and 
the Department of Transportation's Federal Transit Administration have 
worked extensively with the transit industry and first responders to 
strengthen the overall security capabilities of transit systems, with a 
special emphasis on the largest systems. Together, we have developed a 
significant tool-kit of protective measures, which include the 
coordination and training needed to recover from possible attacks. 
Multiple funding streams within DHS will be available to support such 
projects, including roughly $8.6 billion enacted and requested, since 
2003, for our State Homeland Security and Urban Area Security 
Initiative grant programs.
    We are also working to develop next-generation explosive detection 
equipment specifically for use in mass transit systems. We will 
continue to apply resources to this groundbreaking work. At the same 
time, we must also prepare for terror attacks of even greater 
consequence--attacking transit systems with biological, radiological or 
chemical agents. We plan to expand the deployment of the PROTECT 
chemical detection and emergency management system. This capability has 
been successfully prototyped in the Washington, D.C. Metropolitan Area 
transit system, and will provide a significant and important chemical 
detection capability for other transit systems across the Nation.
    We also now have a network of bio-sensors, but we will accelerate 
the development and deployment of next generation technologies that 
more quickly detect biological, radiological and chemical attacks.
    (b) Strengthening Aviation Security. After 9/11, TSA was created to 
deny terrorists the opportunity to use aircraft as weapons and to 
defend our vital national infrastructure. Extraordinary progress has 
been made, but more remains to do. In aviation, our security and 
efficiency can be strengthened by better use of technology, both 
existing and next-generation technologies.
    Congress intended TSA to be almost entirely supported by user fees, 
but it is not. The Administration has proposed a modest increase in 
user fees to fund the infrastructure needed for this job. I believe 
travelers are willing to pay a few dollars more per trip to improve 
aviation security and enhance efficiency. I look forward to working 
with both Congress and the aviation industry to find a formula that 
will work. By collecting user fees for aviation, we can free up 
precious DHS resources for other important security priorities.
    (c) Passenger Identity Screening. Too often, security screening for 
passengers at airports is frustrating. We are still dependent upon a 
pre-9/11 technology system to conduct the most elementary form of 
terrorist screening--matching names against watch lists. Our job is to 
identify people at airports whom we already know and believe to pose a 
risk to aviation. Our existing watch list does identify threatening 
people, but it is not fully automated for aviation screening, and it 
yields an unacceptably high number of false positives, which drains our 
security resources.
    Getting this right is urgent. The short-term solution lies in 
enhancing our ability to screen individuals more precisely against 
named terror suspects, by utilizing more precise, identifying 
information, such as date of birth. That kind of system--being 
developed through our Secure Flight program--will limit cases where 
low-risk travelers are selected for additional screening. It will 
dramatically reduce the number of cases where travelers are delayed for 
questioning, simply because they may have the same name as someone on 
the watch list. But even this approach may not be complete, because it 
remains focused on only identifying already known high-risk travelers.
    Putting aside known risks, the more comprehensive and efficient 
passenger screening system that DHS must develop, will give us the 
ability to automatically clear low-risk travelers. By clearing these 
low-risk travelers, TSA can reasonably focus on a smaller and more 
distinct pool of passengers that might pose a threat to aviation. The 
result: less frustration; faster service; better security. Better forms 
of screening will also promote privacy, because they will reduce the 
number of mistakes or unnecessary interventions that annoy travelers.
    TSA's Registered Traveler and Secure Flight programs are keys to 
increasing the precision, reliability, and speed of identity screening 
for domestic air travelers. Equally important are improved protocols to 
screen inbound international airline passengers and expanded deployment 
of US-VISIT for overseas visitors. All these screening programs should 
be integrated so that screening is consistent and interoperable.
    (d) (Supply Chain) Security Management. After 9/11, this country 
put in place vital measures intended to protect the global movement of 
marine cargo that touches our shores as it moves from origin to 
destination. U.S. Customs and Border Protection is screening all 
inbound containers, and inspecting those that merit further scrutiny. 
Increasingly, screening and inspection are taking place at the port of 
departure overseas--before cargo arrives here.
    But we should not rest where we stand. I believe that we can 
gather, fuse, and assess more complete data from the global supply 
chain to develop a more accurate profile of the history of cargo in a 
given container. Data about what cargo is moving from the initial point 
of shipping to the final destination, will allow us to target risk 
better. With more informed targeting, we can more efficiently conduct 
inspections of cargo that is either high-risk or unverified. This 
``Secure Freight'' initiative will allow us to expedite large portions 
of the inbound that sustains our Nation's economy, and focus with more 
precision on the unknown.
    That brings us to inspections. We must enhance and speed 
inspections that we need to perform, so that we minimize freight 
delays, and increase total inspection capacity. To this end, we must 
complete our deployment of radiation portal detectors at ports, while 
advancing research on more sophisticated non-intrusive detection 
protocols and equipment.
4. Information Sharing
    The ability to share information with our international, State, and 
local partners, the private sector, law enforcement, and first 
responders is absolutely critical to our success. Otherwise, we are 
effectively tying the hands of those who are on the ground and charged 
with the responsibility of protecting their community, their neighbors, 
and their families.
    We recognize the need for better and more inclusive information 
sharing. Information sharing is a two-way street. Therefore, we will 
work with the White House Homeland Security Council and our Federal 
colleagues, not only to help forge common Federal tools for information 
sharing, but also work with state and local officials--and private 
sector infrastructure owners--to fuse and share a richer intelligence 
base. In short, we will promote greater situational awareness.
5. DHS Stewardship
    DHS must be a responsible steward of the public trust. Congress is 
justifiably making significant investments in homeland security, and 
that entails significant procurements at DHS. We must ensure that we 
carry out these procurements responsibly.
    One of my very first acts as the new Secretary, was to contact the 
Department's Inspector General and my Chief Procurement Officer and 
instruct them to evaluate DHS procurements and our contracting 
practices. I asked for suggestions regarding any needed changes--and 
I've received just that. We will rely on these recommendations to make 
procurement integrity and efficiency a management focus throughout the 
Department's work.
    We will also emphasize improving financial controls and financial 
systems, seeking operating efficiencies, strengthening human capital 
policies, and delivering core information technology systems. Last 
week's attack in London re-emphasized for me the need to act on another 
Second Stage Review recommendation: better integration and 
consolidation among the Department's multiple crisis management 
centers. We will do that.
    DHS employees also deserve an organization that provides top-notch 
professional career training, an organization that actually enables 
individuals to broaden these experiences by working in other components 
of the Department without impeding their career paths. DHS should 
reward the strongest performers and team players. Our review has given 
us some specific recommendations for building this type of 
organization, and we will look forward to sharing more details with 
employees in the weeks and months to come.
6. DHS Structural Re-Alignment
    I have concluded that some structural changes are needed at DHS to 
improve mission performance. Modest but essential course corrections 
regarding organization will yield big dividends. Most can be 
accomplished administratively--a few require legislation.
    These organizational changes include four important areas of focus 
which include: (1) formation of a new, department-wide policy office; 
(2) significant improvements in how DHS manages its intelligence and 
information sharing responsibilities; (3) formation of a new operations 
coordination office and other measures to increase operational 
accountability; and (4) an important consolidation effort that 
integrates the Department's preparedness mission.
    (a) Policy. We propose the creation of a central policy office led 
by an Under Secretary for Policy. This office also will bring together 
our international affairs staff, a significant and new strategic 
planning capability, DHS-wide policy development assets, a senior 
policy advisor focused on refugee asylum policies, and enhanced private 
sector liaison resources. Collectively, the Policy Directorate will 
strengthen the Department's ability to develop and plan vital policies. 
This office is not a new idea--it builds in part upon the foundational 
work of the Border and Transportation Security policy staff, which is 
to be folded into the new policy directorate. Creation of a DHS policy 
shop has been suggested by Members of Congress, Secretary Ridge, and 
numerous outside experts. Now is the time to make this a reality.
    (b) Intelligence. Systematic intelligence analysis lies at the 
heart of everything we do. Understanding the enemy's intent and 
capabilities affects how we operate at our borders; how we assess risk 
in protecting infrastructure; how we discern the kind of threats for 
which we must prepare to respond.
    More than 10 components or offices of the Department of Homeland 
Security are intelligence generators, and all of us in the Department 
are consumers and appliers of intelligence. We need to have a common 
picture--across the Department--of the intelligence that we generate 
and the intelligence we require. We need to fuse that information, and 
combine it with information from other members of the intelligence 
community, as well as, information from our State, local, and 
international partners.
    DHS can also do a better job of sharing the intelligence we are 
gathering, and the intelligence we are analyzing with our customers 
inside the Department, within the intelligence community, and with our 
frontline first responders at the State and local level.
    Therefore, we will designate the Assistant Secretary for 
Information Analysis as the Chief Intelligence Officer. The Chief 
Intelligence Officer will head a strengthened Information Analysis 
division that will report directly to me. This office will ensure that 
intelligence is coordinated, fused, and analyzed within the Department 
so that we have a common operational picture. It will also provide a 
primary connection between DHS and others within the intelligence 
community--and a primary source of information for our State, local, 
and private sector partners.
    (c) Operations. Intelligence and policy mean little if not 
translated into action. Under our plan, all seven primary operational 
components will have a direct line to the Secretary, but--to improve 
our ability to coordinate and carry out operations--we will establish a 
new Director of Operations Coordination. The Director of Operations 
Coordination will work with component leadership and other federal 
partners to translate intelligence and policy into actions--and to 
ensure that those actions are joint, well-coordinated, and executed in 
a timely fashion. The Operations Coordination Director will manage 
DHS's hub for crisis management.
    This integrating office will not disrupt our operators in the 
field, nor will it interfere with component chains-of-command. We do 
not aim to fix what already works.
    (d) Preparedness. Finally, let me turn to the critical area of 
preparedness. The Department of Homeland Security has primarily been 
viewed as a terrorist-fighting entity. But, in fact, we are an ``all 
hazards'' Department. Our responsibilities certainly include not only 
fighting the forces of terrorism, but also fighting the forces of 
natural disasters.
    To ensure that our preparedness efforts have focused direction, we 
intend to consolidate the Department's existing preparedness efforts--
including grants, exercises, and most training--into a single 
directorate led by an Under Secretary for Preparedness. Going forward, 
FEMA will be a direct report to the Secretary--but it will now focus on 
its historic and vital mission of response and recovery, the importance 
of which was illustrated powerfully as Hurricane Dennis made landfall 
this week.
    The Preparedness Directorate will continue to rely on FEMA's 
subject matter expertise and the expertise of our other components in 
promoting preparedness. It will also include our Infrastructure 
Protection division, as well as the U.S. Fire Administration, currently 
in FEMA, which will strengthen our linkages with the fire service.
    Further, as part of our consolidated preparedness team, I was 
pleased to announce last Thursday that Dr. Jeffrey W. Runge will serve 
as the Department's Chief Medical Officer. Working within the 
Preparedness Directorate, Dr. Runge will be my principal advisor on 
medical preparedness, and will serve as a high-level DHS representative 
to coordinate with our partners at the Department of Health and Human 
Services, the Department of Agriculture and State governments. The 
Chief Medical Officer and his team will have primary responsibility for 
working with HHS and other Departments in completing comprehensive 
plans for executing our responsibilities to prevent and mitigate 
biologically-based attacks on human health and on our food supply.
    We also appreciate both the efficiencies and the vulnerabilities of 
the modern technology on which so much of our society depends. To 
centralize the coordination of the efforts to protect technological 
infrastructure, we will create the new position of Assistant Secretary 
for Cyber and Telecommunications Security within the Preparedness 
Directorate.
Constantly Improving Our Efforts
    The six areas of focus just described are all areas that will be 
priorities for the Department moving forward in the near term. They 
offer, at least, an initial roadmap of large categories of our activity 
for the months ahead.
    We look forward to working with this Committee, other Members of 
Congress, our colleagues in the Administration, and our partners to 
ensure that this agenda for DHS can be implemented. And we will 
continue to roll out new thinking and specific solutions to the issues 
that directly affect our security and daily lives.
    Of course, we have not been idle while waiting for this moment. To 
the contrary, we have taken immediate steps to promote security in a 
commonsense and balanced way. Since my confirmation, for example, we 
have resolved a long-simmering dispute by supporting the placement of 
hazardous material warning placards on rail cars. We have also 
announced a plan to open Ronald Reagan National Airport to general 
aviation. And, we affirmed a strong and achievable implementation plan 
for the Visa Waiver Program that requires biometric technology 
standards for passports issued by program participant nations.
    What is notable about these decisions is that they did not simply 
pile on security restrictions. Instead, we have modified or even 
relaxed security measures that were no longer necessary, where risk 
analysis warranted. After all, a balanced approach means that the 
balance moves down as well as up.
    Moving forward, we will evaluate our decisionmaking, strengthening 
security where needed, and eliminating unnecessary burden when 
possible. Last week, I announced two decisions that illustrate this 
approach.
    In the former category, after extensive consultation with the 
Department of State and the Department of Justice, DHS has decided to 
strengthen our US-VISIT program. In the future, first-time visitors to 
the United States will be enrolled in the program by submitting ten 
fingerprints. Subsequent entries will continue to require a 2-print 
scan for verification. This will dramatically improve our ability to 
detect and thwart terrorists trying to enter the United States, with no 
significant increase in inconvenience.
    In the latter category, TSA will suspend the post-9/11 requirement 
that commercial airline passengers using Reagan National Airport in 
Washington must remain seated for 30 minutes after departure and before 
arrival. This 30-minute seating rule was a sensible measure when first 
applied. Now, almost four years later, significantly enhanced layers of 
security ranging from hardened cockpit doors to air marshals, make it 
reasonable to eliminate this requirement.
    Our work in protecting the homeland will always seek reasonable 
balance. Over time, as intelligence warrants and as progress allows, 
DHS will be open to change. We will be straightforward. If something 
goes wrong, we will not only acknowledge it, we will be the first to 
fix the error. But, we also will stand up and let people know when 
we've done things the right way, or see a better way ahead.
Conclusion
    This is an exciting time for our organization. Change brings 
opportunity--and after an historic first two years--our young 
Department continues to hold one of the most important roles in 
government--the safety and security of our Nation.
    We set these priorities for ourselves, and make these adjustments 
to the Department in order to serve our mission, to protect our 
families, our fellow citizens, our visitors, and our homeland.
    So, moving forward together, let us answer this call by building 
upon that which has been honorably founded these past two years at DHS. 
We will proceed with unyielding focus and quiet determination.
    Once again, I thank this Committee for their constant support and 
valuable input, and I look forward to working with you as we move to 
put these changes into effect.
    Thank you.

    Mr. Chertoff. Thank you.
    Obviously, the events of July 7 are still very much in our 
mind. They are a forceful reminder of the fact that there are 
enemies out there who seek to hurt us, and seek to damage our 
infrastructure, our economy, to kill our people.
    They are sophisticated. If they can do it in a way that 
maximizes the negative effect on our way of life, they want to 
do that. And as painful as that attack is, and as much of a 
reminder as it is, I think it also needs to inspire us to 
continue to be disciplined and strategic in the way we think 
about protecting homeland security.
    I should also underscore what I think all of us feel which 
is our tremendous sense of solidarity with the British people, 
and with all those who lost loved ones in that terrible 
incident of July 7.
    Let me talk briefly about the general outline of our 
Second-Stage Review and where we are headed. But let me pause 
just for a minute, in light of London, to just emphasize 
something that I think perhaps got drowned out a little bit 
last week in terms of discussion about the issue of mass 
transit security.
    The whole issue of transportation, the whole issue of 
infrastructure in this country is very much on the mind of 
those who work in the Department of Homeland Security. And, 
again, we want to be strategic about it. We want to be risk-
based, which means we want to measure consequence, 
vulnerability, and threat in assessing how to go about doing 
what we need to do to protect America.
    We want to be balanced, and that means we want to always 
consider the costs involved, the fact that we want to not only 
protect our lives but our way of life, the fact that we want to 
work as partners with other government agencies, State and 
local government, and with the private sector.
    We do not want to own the responsibility. We cannot own the 
responsibility for homeland security alone. We must share that 
responsibility.
    And as you said, Mr. Chairman, that sharing has to go down, 
even to individuals who have to play a role in protecting our 
country. And we are now advising people and have advised 
people, when they get on public transportation, or are in 
public places, that they be mindful and be aware of what is 
around them, and not hesitate if they see something suspicious, 
such as an unattended package, to make that fact known to the 
authorities.
    So this is very much a shared issue. But, of course, we 
have to tailor our approach to the particular sector of the 
economy and infrastructure.
    And so, for example, in the area of mass transit where the 
boots on-the-ground are largely owned by State and local 
police, no one has suggested, and I do not think anyone would 
suggest, that the Federal Government blunder in and execute a 
mass takeover of transit police.
    What we want to do is work with the transit authorities, 
with the transit police to give them the benefit of our 
technology, biological detectors, chemical detectors, and 
sophisticated detection technology which includes the use of 
video cameras. And we have done that and we are continuing to 
do that. And I look forward to talking about that as we proceed 
with the hearing.
    The purpose of the Second-Stage Review was to take stock of 
where we are, recognizing the tremendous challenge and 
accomplishment of my predecessor, and his leadership team in 
this department, but understanding that there is room for 
improvement and recognizing that we face a dynamic enemy; we 
need to be adaptable and nimble in the way we address the 
challenge of terrorism.
    I wanted to lay out a number of agenda items for policy in 
my remarks last week. They were not meant to be comprehensive. 
There are many things we have to attend to.
    But among the things I think that are very important are 
the issue of preparedness, particularly with respect to 
potentially catastrophic threats such as nuclear threats, 
biological threats, chemical threats, threats that would, if 
they materialized, number casualties not in the hundreds or 
thousands but in the hundreds of thousands or millions perhaps, 
and threats that would have devastating effects on our cities, 
our countryside, and our economy.
    Transportation. Part of the strength of the country is the 
fluid and convenient movement of people and goods, in and out 
of the country and throughout the country. We need to make sure 
we protect the security of that movement, but that we do it in 
a way that does not compromise the efficiency and the 
convenience which are the hallmarks of our system.
    Borders and immigration. Senator McCain, I was pleased and 
I did find it very, very informative to go down, and actually 
see, with my own eyes, the challenge that is faced by our 
border patrol down in Arizona, and really across the southern 
and the northern borders.
    And we are working very aggressively now to come up with an 
integrated, strategic approach to the issue of controlling the 
borders. There are some people who say, well, you know, it has 
not been done up to now, so it cannot be done. I disagree with 
that. I think we can do it. It takes some strategic thinking. 
It takes the application of will.
    I know the public and the Congress are demanding that we 
take action, and we are very focused on executing a strategy 
that will get us to where we need to be as quickly as possible.
    Information sharing. The key to working with partners is to 
share information both ways. Some of the elements in the 
proposal I have put forth involve some structural changes.
    One part of what I want to do is invite, and I have, in 
fact, invited State homeland security advisors to come meet 
with me and the top leadership team to see how we can move 
forward on fusion centers.
    Management. We are stewards of the public trust. That means 
when we get resources from Congress, we owe it to the public 
and Congress to spend the money wisely and efficiently. We need 
to do some retooling of our own structures and our processes to 
do this.
    One thing I would observe in response to Senator Kerry's 
opening statement is, within a very short time after I arrived 
on the job, I called up the Inspector General and I said, 
``Look, I want to get your best learning on best practices, 
what we are doing right, what we are not doing right, to make 
sure that our procurement and our management is working as best 
as it could, as it can.''
    Finally, let me touch briefly on the structural changes 
that we are proposing.
    A centralized policy and planning office that will give us 
the capability to do the kind of strategic policymaking and 
planning, from a department-wide perspective, that will allow 
us to get our arms around such big issues as control of the 
border, and management of our transportation security 
preparedness.
    A chief intelligence officer who fuses all of the 
information collected by the eleven components in our 
department that currently deal with intelligence and making us 
better consumers, better analysts, and better purveyors of 
intelligence to our partners.
    Operations, giving us, for the first time, an operational 
capability that spans a department.
    And, finally, preparedness, recognizing the unusual 
challenge that is placed upon us in guiding the preparedness 
across the country which requires us not only to work with our 
sister departments here at the Federal level, but with our 
State and local partners, and with the private sector which, in 
fact, owns about 85 percent of the infrastructure.
    And that includes particular emphasis on an Assistant 
Secretary to focus on cyber and telecommunications and a Chief 
Medical Officer who will look to bring together, and manage the 
architecture for our response to biological hazards, whether 
they deal with human health, or animal health, and agriculture.
    Finally, we are trying to make sure we never lose sight of 
common sense, and that we recognize that balancing means 
sometimes you bring the balance down as well as up. We do not 
want to only enhance burdens on the public, we want to relieve 
burdens where prudence and sound judgment suggest we can do 
that.
    And two initiatives I announced last week, which I think 
embody that, are the decision to go forward with a ten 
fingerprint scan for new visitors to the United States that 
will build upon US-VISIT and make it even more effective.
    And, finally, our relaxation of the 30-minute rule with 
respect to Reagan Airport, which was done not only to alleviate 
the burden on passengers, but really, as a recognition that as 
we scale up what we do to protect aircraft, we should be open 
to scaling down burdens that are no longer necessary, in order 
to make sure we have security.
    So that is our agenda. We have got much more work to do. I 
look forward to working with the Committee in pursuing these 
goals. And I am delighted to answer questions.
    The Chairman. Thank you very much, Mr. Secretary.
    Senator McCain.
    Senator McCain. Mr. Secretary, I was impressed by your 
statement that we need to secure the borders and also 
discussions we have had. We need to use better technology.
    I think the temperature on the border today across Arizona, 
Texas, New Mexico, and California is probably in the 120 
degrees. And it is very hard on people.
    It seems to me that UAVs, lasers, and technology is 
probably a better approach than just hiring more people, 
although I certainly think we need more people.
    I am curious about your views about our relationship with 
the Mexican government as to the need for cooperation there, 
and also your views on what kind of immigration reform. I think 
you were talking about a guest worker program to relieve some 
of the pressures on the border.
    And are you concerned about the increasing numbers of 
people from, ``countries of interest'' that are coming across 
our border and we do not have the ability to detain them, so, 
therefore, they get a permission slip and move on?
    I know that is a number of questions, but I am very--I 
think they are sort of connected.
    Mr. Chertoff. Well, I will try to address each of them in 
turn. I begin by saying, I agree. This is a solution that 
requires smartness of technology, not merely additional agents, 
although additional agents are part of it. It requires looking 
at the whole system and integrating the technology and the 
people.
    And that I think also applies to the question of what do we 
do with people after we catch them. Simply catching them and 
releasing them into the general public is not a solution. It is 
simply moving the problem around into a different arena. So, I 
think a systems approach makes a lot of sense.
    The issue of crossing the border, particularly at this time 
of year when it becomes a true humanitarian issue, I think is 
one that ought to concern not only this country, but the 
Mexican government as well.
    I have spoken with my counterpart, both the current 
Ministry of Government over there and his predecessor, Senior 
Creole. We have made it very clear that we think this is a 
humanitarian issue, as well as an issue that affects us as a 
country.
    And we are anxious to cooperate with them, and we have 
cooperated with them in helping them do what they ought to do, 
which is to focus on the smuggling organizations that cause an 
enormous amount of damage to people who are victimized, 
including encouraging people to cross the desert, and putting 
them in a situation where many of them lose their lives.
    We are encouraging them to do things like focus on the 
organizations. We are exchanging information with them. There 
is no question that part of our strategy has to include 
disabling those groups that profit off the smuggling of people 
into this country.
    Another element has to be trying to remove some of the 
incentive which, of course, is the demand that pulls people 
into the labor market here. And that means trying to create a 
structured, regulated channel to bring people in to do work for 
which there is obviously a substantial market, thereby reducing 
some of the pressure to move illegal people into the country.
    And I think if we do that, we allow ourselves to target our 
resources more effectively on keeping out those people who are 
not coming in to work, but are potentially coming in to commit 
crimes, or to commit acts of violence, or even terror.
    Finally, on the issue of other than Mexicans, I think it is 
unacceptable to have a situation where we release a large 
number of people on their recognizance, or on bond because we 
cannot simply send them back to Mexico, and because it takes a 
certain number of days to get them removed to their home 
countries.
    Part of this idea of putting together a program, a 
strategic view, is to look at that entire system. And that 
means we not only have to get access to more beds, so we can 
detain people, which would in turn allow us to do expedited 
removals, we have to then look at what are the obstacles that 
are preventing us from sending people back quickly.
    Sometimes that means other countries that are dragging 
their feet, frankly, in terms of accepting their own citizens 
back. And we have got to push them to make sure that does not 
happen, and we may have to push them pretty hard.
    Part of it may be use of technology, for example, to speed 
up consular conferences, which now we wait for a consular 
officer to come visit a detention facility. That has to happen 
before we can move somebody back. Maybe we ought to do video 
conferencing and cut the wait from days to hours. Maybe we need 
to put some additional resources into flying people back.
    We are looking at the whole system, and it is very much our 
objective to move briskly to eliminating the release of these, 
other than Mexicans on bond, and also to speed up the cycle in 
which we move them back. And I think if we do that, we will be 
taking a big step forward in doing what we need to do to get 
control of our borders.
    Senator McCain. Well, I thank you very much for that 
comprehensive answer. And obviously we need to get the 
attention of the Administration, and our colleagues, to the 
compelling need for overall campaign finance reform. And I 
think your comments both here, and publicly, can be very 
helpful.
    I would be remiss without asking you what the lessons of 
what happened in London, how they apply to us, that maybe you 
could just provide us with what you have learned so far. And 
thank you.
    Mr. Chertoff. I think it--we do not have all the lessons 
yet because we do not--obviously we are working with the 
British to get a full picture of the plot.
    I think there is a recognition that although we do tend, 
and I think properly tend to focus on people coming in from 
outside, we also have to focus on so-called sleeper cells 
inside the country. And that is--you know, one of the reasons 
that getting--making sure we have good intelligence, real-time 
intelligence about what is going on with potential sleeper 
cells in the United States, is an important component of our 
preventing these acts.
    And I will take the opportunity to say, you know, the 
``Patriot Act,'' which gave us some of the tools to do this, in 
my prior experience as Head of the Criminal Division was a 
very, very important tool in giving us the kind of awareness of 
what is going on in this country that we need in order to 
protect ourselves.
    Senator McCain. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Vitter. He's gone.
    Senator DeMint.

                 STATEMENT OF HON. JIM DeMINT, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator DeMint. Thank you, Mr. Chairman.
    Thank you, Mr. Chertoff. I appreciate your being here. I am 
encouraged by your comments today and over the previous week, 
your ideas for reform. Obviously we cannot protect every public 
forum in this country.
    It is frustrating to recognize that, but we clearly cannot 
have protection on everything that is in public here. So I 
continue to believe that the President's strategy to pursue 
terrorists wherever we can find them, before they get here, is 
the right approach.
    I am encouraged, as is Senator McCain, your emphasis on the 
border. There is no way we can protect anything inside this 
country if we are not able to control who is coming and going. 
So if we are coming down this funnel, in effect, it seems like 
we have got to work on the big targets like our border.
    I also appreciate internally, your emphasis on major 
priorities and weapons of mass destruction. While politically 
that's going to be very difficult, and we have already seen the 
fallout of you attempting to use our resources in a way that 
could prevent a large-scale attack that could, you know, just 
cripple our economy in addition to killing and hurting 
thousands of people, it is going to be difficult not to 
continue, for political reasons, to spread our resources over 
every area that might be attacked.
    I guess my question to you is, I guess as you wade into 
this and start to set priorities, knowing there is going to be 
a lot of political pressure to divide resources of every bus, 
train, football game, or whatever, can we as an Agency, the way 
you are structured and with, I guess, the way we are organized 
and democracy in this country, can you stand the political 
pressure and move ahead with what clearly I think you are on 
the right track to do?
    I know it is a hard question to answer in this forum, but I 
guess my encouragement would come from knowing that there is a 
determination in your Agency and the White House, and hopefully 
to a large degree in Congress, to let you do your job to 
protect us. Can you do that? What signals do you see so far 
politically?
    Mr. Chertoff. Well, Senator, let me say when I--in the 5 
months, little over 5 months I have been on the job, there has 
been a complete consistency in approach not only in my 
department but, you know, in the White House, all over the 
Administration.
    And we need to be risk-focused in the way we deal with 
homeland security. I think when you live every day with looking 
at the threats that are out there, and there are a wide variety 
of different kinds of threats--some of them are more imminent 
than others--I think you become acutely aware of the need to 
make sure that we are applying our resources, not only in ways 
that will avoid short-term threats, but long-term threats. Some 
of the long-term threats as you observed are really potentially 
catastrophic.
    When you envision some of the types of things that are out 
there with weapons of mass effect and the consequences, you 
realize that even if there is no imminent threat, we have to 
start to think about building protections that will take us out 
maybe a year, 2 years, 5 years, even 10 years, because the 
consequences would be so serious.
    I think, you know, my basic principles in trying to move 
forward on this are these. I will, and I think everyone in my 
department will be forthright about how we see it. You are 
going to hear the same answer whether we get asked the question 
here, or get asked the question somewhere else. We are going to 
be consistent about it.
    We want to make sure we always work within the system, and 
not break the system, in order to protect, meaning that as we 
devise an approach to protecting our rail, or protecting our 
aviation, or protecting something else, we do not want to 
become so focused on security that we destroy that which we are 
trying to protect.
    We need to be balanced. And we need to make sure that we do 
not give the terrorists the victory that would come by turning 
us into a fortress state. We do not want to be a fortress 
state. We want to be secure, but we do not want to be a 
security state.
    Finally, partnership is really important. I think the way 
to move forward on this is to work with our partners in State 
and local government, and in the private sector, so we all 
bring our advantages to the table. There are some things that 
local government does very well. They do better than we do.
    The transit police, the local police who are the eyes and 
ears, who know the community are a critical resource in terms 
of prevention and intelligence. I do not want to supplant them 
or push them aside. I want to work with them.
    On the other hand, we have the ability in the Federal 
Government to focus on cutting-edge technology, detection 
equipment that, for example, allows us to rapidly detect 
biological or chemical hazards. We ought to be bringing that to 
the table, whether it be in the rail system or in other public 
settings.
    So if we think, if we are smart, we are cooperative, we are 
partnership oriented and we are balanced, I think there is a 
good prospect in giving the American people what they have a 
right to expect which is security that allows them to continue 
to live in a way that we all cherish, but protects our lives 
and the lives of our loved ones, and our country.
    Senator DeMint. Thank you.
    The Chairman. Senator Burns.
    Senator Burns. Mr. Secretary, there are a couple of areas I 
want to pursue. I noticed in the press that you are pursuing 
another security fee for the aviation industry and its 
passengers. And I think both Houses of Congress have spoken to 
that very loudly in the last couple of years. And I see no 
reason why you should pursue that because I do not perceive it 
to become a reality.
    But I mentioned to you about which I am very much 
interested, and I Chair the Aviation Committee here, and the 
Subcommittee, and we are looking at the FAA and an overhaul 
there on reauthorization next year.
    I like your idea on Registered Traveler. I think that 
program should be accelerated. We note that most of the--all of 
the travelers that were pre-9/11, are back with us. We have a 
growing problem now that they are flying in regional jets.
    There are more airplanes in the air now than there ever has 
been to carry those people. And so it is causing some 
congestion problems, not only in our skies, but, also, whenever 
we start talking about our facilities to secure our airports 
and to tighten them up.
    So I am very much interested in your Registered Traveler 
program, also the new technologies to be used at airports, and 
I also liked your idea on risk-based management approach. In 
that area, we have a situation, as far as airlines are 
concerned.
    I have a feeling that as we increase our security around 
our more populated areas, we tend to forget that we have got 
about 580 miles of border with Canada, which is very porous. We 
have farmers that farm both sides of that border, as you well 
know. They own land in Canada, and they also own land in 
Montana. So we have been spoiled up there because of our 
freedom to move back and forth on that border.
    But we also have a situation with our smaller EAS 
communities, essential air service communities, where they have 
no screeners, which poses a problem that if you get on an 
airplane in Wolf Point, Montana, which is only 40 miles from 
the Canadian border, and you check your luggage, they bring it 
to--say your mini-hub is Billings, they have to reclaim that 
luggage if they are transferring to another flight and reclaim 
it and then recheck in again and back through security.
    This is--and I think only Montana and New Mexico has this 
problem. And I would caution; I think New Mexico poses more of 
a problem than does Montana. But what it does, you have to have 
a lot more connection time in order to facilitate the 
traveling.
    I would just--we can get together on that. We can talk 
about that and maybe we can come up with ways to take care of 
that in those areas.
    But as far as your new technology concern and this 
situation, risk-based management, I applaud you because we have 
to use some common sense.
    I think Senator DeMint is exactly right. There is not 
enough money in this government to protect every nook and 
cranny of this country, because people are mobile. We have a 
mobile society. They do not want to lose that freedom.
    And so as the Chairman had mentioned the other day, we are 
going to have to, I think, probably most of our security in 
some of these areas is going to have to be home-grown, 
volunteers, and people who notice things and have the 
capability of heading off some things.
    But Intel is very important. And you mentioned it a while 
ago. If you have an intelligence office within, how will that 
fit in with what we have done with the rest of the intelligence 
community in bringing together a czar, so to speak, for 
intelligence in this country?
    Mr. Chertoff. Senator, let me try to respond to----
    Senator Burns. I know it is a whole load of stuff, but I 
give you the whole load of hay in one wagon.
    Mr. Chertoff. I will try to take the pitch fork and go 
through, you know. Let me start with the last question which 
may be the shortest answer.
    I think what we are going to do by getting someone in our 
Department who will be the coordinator of all intelligence that 
we generate, and we generate a lot because we have interactions 
at the border that actually have some very interesting--yield 
some very interesting insights, we have one point of contact 
with the DNI, the new intelligence Czar, which I think will 
make his job easier.
    But, frankly, I think it will give us a better seat at the 
table, and make sure that we have a better ability, as we 
provide more to our partners in the community, to also ask that 
we have more elbow room and better visibility into what they 
are generating, which is important for our mission.
    Let me talk more generally about the issue of aviation 
security. It is true that I have pursued a very modest, I 
think, a $2 or $3 additional passenger fee for aviation 
security. Evidently I have not pursued it too successfully.
    But I think my theory is this: obviously we need to do 
something to move our general aviation security posture into 
the next generation meaning we need to get better technology, 
we need to have Registered Traveler programs that allow us to 
focus more on people that we have reason to wonder about, and 
we also need machines that will allow us to do a quicker and 
less cumbersome process of screening. I think that is going to 
benefit everybody.
    And if to do that, in order to move that online, we can ask 
the public to give us a couple of dollars, what I call the 
price of a soda and a newspaper at the airport, and use some 
other techniques to accelerate the ability to acquire and 
deploy this kind of machinery.
    I think that additional money will be money well spent. 
And, frankly, I think it will be money that benefits the 
airline industry, because it will make it more convenient for 
travelers, which means you will get more people using the 
airports.
    And, of course, ultimately the aviation industry shares the 
same interest in security we all do. We know that the business 
of aviation depends upon people having confidence in security. 
And I think it would be more devastating to the industry to 
have that confidence shaken.
    So I would like to continue to work with Congress to see a 
way to get adequate resources, to let us really move forward on 
next-generation technology. And I think at the end of the day, 
that will make people happier travelers and happier travelers, 
I think, make for frankly better business for the aviation 
industry and for a safer airline system.
    Senator Burns. Well, the airlines will tell you that it is 
pretty hard to pass along any fees back to the passenger now, 
because it takes away their ability to adjust for their cost. 
And from what I have seen, they are right about that.
    And as far as your traveler is concerned, you know, we had 
to take off our shoes. It cost me a couple of--well, about a 
dozen pair of socks, I suppose. And I wear awfully good socks. 
And that happened.
    But I also found out they get very nervous when you have a 
set of spurs in your bag, if you are traveling between here and 
Montana too. I never got those spurs back. But, anyway, we 
would work with you.
    And as far as the EAS, I think we would work with you and 
come up with some plan. When we reauthorize the aviation part 
of that, we want you to be involved in that a little bit, 
because we feel like that it is part and parcel of what we are 
trying to do with the new technologies that we are going to 
employ.
    We are going to change the FAA just a little. And, of 
course, that is a very slow process, as you well know, 
understanding the bureaucracy. And I thank you for your 
willingness to cooperate and to communicate on that issue.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Kerry.
    Senator Kerry. Thank you very much, Mr. Chairman.
    I was kind of curious what the Senator uses the spurs for 
in Washington, but I will not go there.
    [Laughter.]
    Senator Kerry. Mr. Secretary, as I mentioned in my opening, 
the ``Maritime Transportation Security Act'' requires the 
maritime security plan. This is prior to your coming in. It was 
passed in 2002. It did not have a deadline in it.
    But because the deadline was not met by DHS again prior to 
your coming there, the Congress put a December 31, 2004, 
deadline into the Intelligence Reform Bill. That was missed by 
DHS, who then said it would be completed by April 1, 2005. That 
was missed. It was not completed.
    It was then expressed to this Committee's staff that it 
would be expected on June 1. That deadline has passed. And, 
again, there is still no plan.
    So the question looms large, particularly in light of what 
you have said about catastrophic possibilities, why no plan, 
where is the plan, when can we expect the plan?
    Mr. Chertoff. Well, Senator, I know we are working on this 
issue both in terms of the maritime security plan, and what we 
called, ``maritime domain awareness.'' And it is in the 
interagency process; meaning that we are coordinating this, 
obviously, not only with agencies within DHS like Customs and 
Border Protection and Coast Guard, but also with Department of 
Defense and Department of Transportation.
    I guess the lesson I have drawn from the recitation of 
missed deadlines is, I ought to hesitate to give you a deadline 
here if I am not comfortable that I can back it up. But I will 
get back to you with what the deadline is.
    But on the other hand, I would not want to leave the 
impression that we are not working on it, or we are not doing 
additional things in the area of port security, because one of 
the things which we focused on, as part of this review is, the 
whole issue of how do we deal with the problem of cargo and 
people coming into our ports through the maritime domain, and 
to start to think about more comprehensive policies to deal 
with the major threats.
    And as I know you know, when you look at the ports, there 
are threats that both come from the land side and from people 
mounting a direct attack on the port itself.
    And then there is the somewhat distinct question of cargo 
coming in, which is the whole container issue, which we are 
dealing with partly through targeting and screening, partly 
through detection equipment, but which also, I think, 
ultimately requires us to look more comprehensively at the 
whole way in which the cargo system and the container system 
operates.
    Senator Kerry. Well, can I interrupt you----
    Mr. Chertoff. Sure.
    Senator Kerry.--there for a minute just to kind of use the 
time as effectively as we can? I appreciate what you are 
saying. But you said, and I accept what you said, that the 
catastrophic threat with devastating impact is the most 
significant thing we need to be thinking about.
    We have discovered containers with human beings in them who 
have been smuggled in, and they died. And there are others who 
have gotten in obviously.
    Containers, according to most experts, are one of the prime 
targets because there are millions of them. And we are 
currently inspecting what percentage now, are we up to two, 
three percent?
    Mr. Chertoff. I think it is a little more than that, but we 
screen a hundred percent. We inspect some small portion of 
those.
    Senator Kerry. And the question is, when you look at the 
potential of either dirty bombs, or biological, or other kinds 
of threats, why some of the proposals with respect to security 
and tracking have not been put in place over the course of a 4-
year period? Why a more robust inspection process when law 
enforcement itself suggests that unless you get up around 20 
percent, you are not reaching a sufficient deterrent level?
    So the question is, how do we get there and particularly in 
view of the fact that out of $564 million, only $106 million 
has been spent as of several months ago?
    Mr. Chertoff. Let me tell you where we have been, what we 
have done so far, and where we are going. We screen a hundred 
percent of the cargo that comes, and we inspect a percentage of 
it based upon how we score the risk of the cargo, depending on, 
among other things, what we know about the shipper, what we 
know about the underlying cargo, whether the shipper is 
involved in essentially a Registered Traveler program.
    And then with respect to inspection, we are in the process 
of deploying detectors that can detect radiation as well as 
nonintrusive screening devices. For example, something that 
allows you to essentially look into a container----
    Senator Kerry. I am familiar with it.
    Mr. Chertoff.--and determine whether there is something 
there that is a danger. So----
    Senator Kerry. The point is that technology has existed 
now----
    Mr. Chertoff. Correct.
    Senator Kerry.--for some period of time. If we are on a, 
quote, ``war footing'' and we have this available funding--
obviously we do not have all the money in the world, but we do 
have money that is unspent--why has that not been put on a sort 
of ``war footing'' deployment schedule?
    Mr. Chertoff. Well, I think some of the money that is--when 
you deal with money that is unspent, I think some of that 
involves grants, and I think one of the issues with grants is--
of course, sometimes the grantee does not spend the money that 
quickly. Sometimes, of course, they have to obligate the money 
first, as you know, and then they only draw down the money once 
they get the delivery of the goods.
    I guess for the public, the way I would explain it is, you 
know, when I get a contractor in the house, first I get him to 
sign up with a contract, but I do not pay him the money until 
he does the work. Sometimes that takes a month. Sometimes it 
takes more than a month. And that is just kind of common sense. 
You do not want to pay until you get the stuff. And that is 
sometimes why there appears to be a delay in drawing down the 
funds.
    Senator Kerry. A lot of Americans would ask the very 
practical question of how many years does it take, how many 
months does it take when your security is at risk.
    Mr. Chertoff. It should not take years. And one of the 
things we want to do is work with our grantees to make sure 
they are more prompt about obligating, and getting contractors 
who deliver more quickly so we can pay the money out.
    But I will say we have deployed dozens and dozens of--I do 
not have the exact figure--but many radiological detectors in 
ports. We have got them, a number of ports now completely 
covered by radiological detectors.
    But again, we also want to move to the next level of 
technological ability which is one of the reasons we have 
pushed so hard for this Domestic Nuclear Detection office, 
because in the end, we really need to get a better quality of 
detector. We have a good quality now, but a better quality, and 
that means we have got to jump start some research and really 
move forward on it.
    So I share your urgency. And one of the things I am very 
eager in doing is continuing to push our initiative overseas. 
We now have a number of foreign ports where we do the 
inspection overseas. We need to continue to do that and work 
with our allies overseas to really get a global network of 
these inspections.
    Senator Kerry. Well, I could not agree more. The only 
frustration that I have, and a lot of people have, is that we 
have been talking about this for several years. This priority 
of getting the ports abroad involved in the full inspection, as 
well as the tracking security devices to make sure there has 
been no tampering during transit, has all been part of the 
discussion for a long period of time now. And it seems to me, 
we have been frustrated.
    The last question just quickly. The light is on. Do you 
feel as if you--I know there has been a struggle. You testified 
in the House about the risk-based judgment of where the grants 
should go. Senator Lautenberg raised part of the risk question.
    But Congress has frustrated you, to some degree, by 
insisting this be a competitive program. And my question to you 
is, do you have--do you believe the power now to be able to 
assert the risk, awarding of those grants sufficiently, or is 
Congress still standing in the way of that?
    Mr. Chertoff. You know, I think as the President's budget 
proposal indicated, our fondest desire would be to have a 
situation in which as much of the money as possible is not 
driven by a geographically-based formula, but driven by risk 
altogether.
    I think under that kind of a system, we--I do not know that 
you can call them winners or losers because it would not be 
driven by political jurisdiction. It would be driven by where 
the consequences would be, where the vulnerabilities are, and 
where the threats would be across the country.
    So obviously as we move toward that, the closer we move to 
that, the more ability we will have to apply some of the tools. 
And they are, you know, pretty sophisticated tools that we are 
now developing that will allow us to identify where the 
consequences are the greatest, and use some of our intelligence 
to see where the threats and the vulnerabilities are.
    So the more we can encourage that move, I think the happier 
we are going to be.
    Senator Kerry. Well, I think it is important.
    Thank you, Mr. Chairman.
    The Chairman. Senator Lautenberg.
    Senator Lautenberg. Thanks, Mr. Chairman.
    Mr. Secretary, the obvious lesson that came out of the 
London bombings was to use technology effectively, wherever it 
is available and the pictures that were taken.
    And I assume that as you look to streamline the functioning 
of the DHS operation that, not only will it be reassignment of 
personnel, or the redefinition of their responsibilities, but 
also the greatest employment of technology that we can get.
    And I ask you this. Is DHS totally kept up-to-date on 
developments within the military because there are weapons, 
detection systems that we know at Fort Mammoth that they have 
developed a technique for interrupting a signal from a remote 
to a detonator, and things of that nature, also to deter the 
course of a heat-seeking missile with radar.
    And all of those things help to make us safer. But I 
wonder, does your department get constantly kept up-to-date on 
these developments, even if they are not finished products to 
help you in your planning?
    Mr. Chertoff. We do work with the Department of Defense on 
a whole range of issues including detection equipment, various 
kinds of countermeasure equipment to see what, in fact, 
technology that is developed and can be applicable here at 
home.
    And, in fact, that is something we want to do more of, not 
only with respect to technology, but with respect to planning 
capabilities.
    I have asked the Defense Department, and Secretary Rumsfeld 
has agreed to give us some assistance, in terms of people who 
can bring to our planning department the kind of capabilities 
the Defense Department has in integrating a large plan to 
react, need to be prepared to react to a potential emergency.
    Senator Lautenberg. Do we have a fairly easy swap of 
intelligence information with our friends around the world? 
What kind of channels do we use in terms of advanced knowledge 
of what they are seeing in their own countries, because I 
wonder whether--would it make sense, or is it effectively being 
done now that there is a central anti-terrorist intelligence 
program, and whether or not it is possible to form an alliance, 
a functioning alliance that says, look, we are all worried 
about the same problems? I do not think there is any country 
that feels exempt from the threat.
    And I wonder whether it would not be a good idea, if unless 
the information flow is as we would like to see it, to have a 
central agency composed of all of the democratic societies who 
are concerned about this, so that there is easy access for all 
countries on anything related to terrorist activity that they 
see.
    Mr. Chertoff. Well, you know, we do work very closely with 
our allies, and we work both through intelligence channels and 
law enforcement channels.
    And just drawing back on my experience when I was at the 
Department of Justice, we had very close working relationships 
with a lot of countries in terms of some of what they were 
doing with counter-terrorism, and I think we are continuing to 
build on those.
    Among the things we are talking to our friends about, are 
ways to better exchange data--fingerprint data--information 
about people that are turned away at one border that might 
present themselves at another border.
    And, in fact, we are talking to some of our allies right 
now about ways to enhance that--well, I guess the jargon term 
is connectivity, giving people an ability to get some 
connection into our databases, obviously not unrestricted, but 
to look for, for example, people that have been turned away, 
because there are risks, from the United States. And if they 
want to go to England, or they want to go to another country 
overseas to make sure that that person's, let us say, 
fingerprints or name can be run against some of our databases.
    I think you are quite right. I mean, the terrorists are 
constantly probing for seams between the democratic and 
freedom-loving societies, and we want to make sure we do not 
let them exploit that.
    Senator Lautenberg. Mr. Secretary, since we passed 
legislation in the Senate that reduces the amount of grant 
money to the areas of highest risk to 60 percent, if that 
becomes law, will those restrictions harm your efficiency or 
your capacity to attack the problems that we are so concerned 
about?
    Mr. Chertoff. Well, of course, Senator, we do not yet know 
what the final formula for the appropriations will be or the 
precise final language.
    As I have said, we believe that a formula that is risk-
based in terms of all of our activities, including grant 
funding, gives us the highest ability to use our analytical 
tools to make sure that we are spending our resources wisely.
    Obviously, we will work within whatever constraints 
Congress ultimately sets in terms of the appropriations, and 
within those constraints, we will continue to drive as much as 
possible toward a risk-based approach to what we do.
    Senator Lautenberg. Because there was a letter that you 
sent out, I think it was last week sometime, asking that we 
commit the funds, as up to 90 percent, directed to areas of 
highest risk. And that makes sense, I think, to everybody. And, 
yet, we are fighting a battle here.
    And I am looking for your help on this, because we need to 
be sure that it is clearly understood that the place that we 
ought to apply our resources is to the areas of highest risk. 
And it is very hard to do something like that through here, as 
you know.
    But we encourage you to continue sounding that message, and 
also, Mr. Secretary, to continue the assignment that you have 
taken on to refine the functioning of the Department of 
Homeland Security.
    The question was asked, Mr. Chairman, about why it has 
taken so long. My gosh. This is probably the biggest change in 
government structure in the United States in the last 50 or 
more years. And we are grateful that you have taken on the 
assignment, and we encourage you to keep working on it. Thanks, 
Mr. Chairman.
    The Chairman. Thank you.
    Senator Snowe.

              STATEMENT OF HON. OLYMPIA J. SNOWE, 
                    U.S. SENATOR FROM MAINE

    Senator Snowe. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary.
    The area I would like to probe today is maritime security. 
I Chair the Coast Guard Subcommittee on this committee. And I 
am deeply concerned about maritime security, and our ability to 
respond to those enormous challenges that represent a 
tremendous threat to our homeland security.
    I think it is important to ensure that the Coast Guard gets 
the tools that are necessary to respond to those challenges. I 
think it is important that we implement the ``Maritime 
Transportation Security Act'' with respect to providing the 
necessary funds to implement the port plan.
    I think it is also important that we expedite the 
Transportation Worker Identification Program so that we can 
identify the workers in the manifest and the cargo that is 
contained in ships coming into our ports.
    And, frankly, I think we have been woefully inadequate in 
implementing those programs and expediting the targeted goals 
currently in law.
    So, I would like to have you address some of those issues 
here this morning and what your views are.
    In addition, I was also deeply concerned about the fact 
that recently during the course of our hearing with respect to 
the Coast Guard, we received a revised implementation plan for 
the Deep Water, a recapitalization program for the Coast Guard 
assets and the ships and their planes.
    Frankly, the idea of requiring our men and women to serve 
on some of these ships, and to face the compelling challenges 
they do day-in and day-out, and now to have a revised plan that 
is suggesting that we need fewer assets than we were requesting 
in the pre-9/11 environment. There are fewer assets now being 
requested in this revised implementation plan in the post-9/11 
event. And also the tremendous challenges that we are now 
facing, it is hard to believe we need fewer assets.
    And, frankly, the idea of, you know, extending the 
recapitalization program of these planes and these ships for 20 
to 25 years, I have proposed accelerating the time table for 
buying new ships and planes into a ten to fifteen year time 
table. Frankly, we could do that and save money.
    But at the very least to target the cutters, whether it is 
the fast response, the national security cutters, and also the 
off-shore cutters in a more expeditious time table of ten to 
fifteen years.
    I mean, the Coast Guard, and the men and women who serve in 
the Coast Guard, desperately need to have new assets without 
question. I mean, we now rank 40th of 42nd world's oldest naval 
fleet. You know, we are next to the Philippines and Mexico. I 
mean, we are in dire straits.
    I cannot imagine why we would suggest extending this time 
table to 20 and 25 years. It simply does not make sense, 
certainly from national security, for putting our men and women 
in harm's way, and asking them to go out to sea, you know, in 
these, you know, rusting assets. It is more than we should ever 
expect.
    So I would like to have some of your views on this with 
respect to maritime security and some of the issues that I have 
raised.
    Mr. Chertoff. Well, Senator, I think I observed in my 
remarks last week, we view the whole issue of maritime security 
and marine cargo as a big priority for us. And that means 
looking at the entire maritime cargo system, including the 
security of the ports themselves, but also our ability to 
assure that the cargo that is coming in in containers, is cargo 
as to which we have either a reliable sense that we know what 
is in the cargo, or we have the inspection tools necessary to 
tell us what is in the cargo.
    That involves not only continuing to do what we are doing 
now, which means rolling out more inspection machines and 
radiological detection machines, it also means continuing to 
work with our partners overseas in making sure that we are 
pushing back inspections and screening at the port of 
embarkation, not when the cargo actually arrives.
    And ultimately what we really want to do is, again, break a 
little bit out of the box by going to the private sector, which 
really has a very capable and sophisticated machinery for 
keeping track of its cargo and its supply chain, and building 
upon that capability to give us an earlier look at the history 
of cargo before it comes into the final container.
    One of the things I wanted to do when we had the incident, 
for example, right after I arrived, about illegals hiding in a 
container, was to try to understand how that could happen if we 
were doing some inspection overseas. And the answer was that at 
some earlier point in the chain, that particular container had 
been loaded on the ship, so it had not come through that last 
port of embarkation.
    So we need to build a system that works better. But I think 
I take a back seat to nobody, in terms of my recognition that 
the danger to our ports is one of the highest consequence 
dangers we face, and we need to find a way to continue to 
elevate our defenses, but make sure we do not compromise the 
ability of our ports to operate.
    And that is why when people say, well, you should inspect a 
hundred percent of the cargo, we all know that that would be 
the death of the port, because you could not move anything 
through.
    As far as the port is concerned, the Coast Guard does 
superb service, did superb service before 9/11 and does even 
more superb service since 9/11. And I have sat down with the 
Commandant, and other top leaders of the Coast Guard and said 
to them, ``look, we need to make sure in putting our plan 
forward which includes, not only capitalization of new assets, 
but reengineering and refitting existing assets to fill the 
gaps that while we may be tightening the belt, we are not 
tightening the belt to the point that we are actually cutting 
off our circulation.''
    In other words, the plan that we put forward is one that 
they assure me, and I am confident, allows us to perform the 
enhanced mission that Coast Guard has, without putting our 
brave men and women at risk, or compromising our ability to 
even carry out the traditional legacy missions.
    Now, in a world with unlimited resources, which is not the 
world in which we live in, one might say let us accelerate 
this. But anyone, you know, sitting in this hearing understands 
we are also dealing with issues of border security which demand 
resources, potential weapons of mass effect which require a 
significant investment of technology, concerns we have about 
our mass transit and our aviation security.
    So we have to build plans that are adequate and do the job, 
but recognize that we have to make sure that we cover the 
entirety of the job and that we do not--in order to make sure 
that as we are enhancing resources in one area that we do not 
cripple ourselves in another.
    Senator Snowe. I just think I would like to work with you 
on this question, because I do believe that we have to come up 
with a much different response for the Coast Guard and in these 
reinvestments. They desperately need to have new ships.
    And, you know, OMB is obviously where this is coming from. 
And I know you do not have to comment on that. But I do believe 
we have to do something much differently.
    And I plan to look at, and hopefully working with the 
Chairman of this committee, to look at a revision, at least a 
more targeted recapitalization, you know, of ships so that at 
least we can get these ships online sooner, because the 
missions they are required to implement, I mean, talking about 
maritime domain awareness, they clearly need to have these 
ships sooner than later.
    And, frankly, it will be a much greater savings in all 
respects rather than now using our legacy assets as part of the 
Deep Water solution. It simply does not make sense in all 
areas. So I hope we can work together on that.
    Thank you, Mr. Chairman.
    Mr. Chertoff. I look forward to doing that, and also to see 
if there are ways we can make the building of these vessels 
cheaper and quicker.
    The Chairman. Mr. Secretary, it has been my policy as the 
Chairman to ask questions last, so I want to get down to, sort 
of, the guts of this thing. It is a reorganization, and I have 
been going over the organization chart.
    As I understand it, we end up with a secretary, a deputy 
secretary, four under secretaries, a chief of staff, executive 
secretary, military liaison, three assistant secretaries, 
fourteen directors, and several boards.
    [The information referred to follows:]

    
    
    
    
    
    
    Well, how does this change the employment level of the 
Department?
    Mr. Chertoff. Well, I think it is neutral with respect to 
the people who are on the line. It trims out a number of 
supervisors. It flattens the organization to some extent. We 
actually wind up eliminating the number of direct reports and 
the operating components which I think are where most of our 
people are. Actually, it flattens the distance between them and 
the top management of the department by eliminating a layer of 
appointees between the components and the top management.
    The Chairman. But I remember when the Department of Defense 
was organized, it was supposed to bring about efficiency and 
everything in terms of the new directorate capability. We had a 
whole series of secretaries, under secretaries and assistant 
secretaries. And then we still had the same organization for 
all the services below that.
    Have you not achieved the same thing? It seems to me you 
are sort of top heavy.
    Mr. Chertoff. Actually, we have actually reduced the amount 
of, I guess, what we would call above the water line. And what 
we have done is, we have flattened the management piece so that 
there are no additional layers of review, but we have built in, 
I think, greater accountability.
    What we have tried to do is say, look, when we have a 
particular mission to accomplish, we want to make sure there is 
one person and one office that has the span of control, and the 
accountability to make sure that mission gets performed.
    The Chairman. But you have transportation security, customs 
and border protection, Secret Service, director of citizenship 
and immigration, commissioner of immigration and custom 
enforcement, director at FEMA, and the commandant of the Coast 
Guard. Now, that is your operational level.
    Mr. Chertoff. That is right.
    The Chairman. No change in that by this reorganization. 
Those are entities that were folded into the department. But 
you have a new under secretary for management, a new under 
secretary for policy, a new under secretary for preparedness, 
and a new assistant secretary for Congressional and 
intergovernmental affairs, a new assistant secretary for public 
affairs, a new chief intelligence officer, and the assistant 
secretary for office of intelligence analysis, a new director 
of operations and coordination, and a new screening 
coordination office.
    Now, that is sort of a bundle of new people.
    Mr. Chertoff. Actually, I am happy to--maybe it will help a 
little bit if I indicate a lot of these actually existed and we 
have eliminated a lot of posts that existed. There has been 
currently and was in the beginning an under secretary for 
management. There was an under secretary for science and 
technology. That continues.
    The under secretary for preparedness essentially replaces 
or retitles what was an under secretary for infrastructure 
protection and information analysis. While we have had an 
assistant secretary for legislative affairs, we are simply 
putting a little bit more into that person's responsibility and 
we have had all these other positions, some of which have been, 
frankly, mandated by Congress.
    So, I think that we are actually reducing the number of 
under secretaries and people in that kind of upper-middle 
level.
    The Chairman. I am reminded of my old friend that was 
Chairman of this committee for many years, Senator Magness, and 
he used to say that the busiest man downtown is the sign 
painter.
    Mr. Chertoff. I think that is probably right.
    The Chairman. The second busiest is the one with the 
carpet, because if you go up high enough, you get a carpet on 
the floor. You remember?
    Now, what have you done here in terms of this? You have 
yourself and your deputy and chief of staff, executive 
secretary, and military liaison on your organization chart 
right up here. Those are the people you meet with, right?
    Mr. Chertoff. Well, actually, no. The people that I meet 
with--I mean, I meet with them--are the operating component 
heads. I mean, I am very much a believer that you, if you----
    Mr. Chertoff. That is the bottom line, right?
    Mr. Chertoff. Right, the bottom line there. Those are the 
folks who----
    The Chairman. Who coordinates all this middle group?
    Mr. Chertoff. Well, some of the middle group here is pretty 
thin and pretty small. I mean, the military liaison is really a 
few people and they essentially help us deal with the Defense 
Department. The Assistant Secretary of Congressional and 
Intergovernmental Affairs should be dealing with----
    The Chairman. Pardon me. But you do have four under 
secretaries----
    Mr. Chertoff. Right.
    The Chairman.--but only three assistant secretaries. That 
is sort of reverse of the normal government process.
    Mr. Chertoff. Actually, what happened is all these folks at 
the bottom are people who used to be assistant secretaries. And 
we have essentially retitled them. Again, to make it clear----
    The Chairman. But none of them on your chart, none of them 
show any interaction with this group in the middle, with the 
operational people. These are all advisors to you, right? They 
are not subject to the control of the under secretaries at all, 
at least if I understand how to read these charts.
    Mr. Chertoff. The charts are probably a little bit more 
simple than, you know, perhaps they should be. Basically we 
divide the components into two pieces. There are the operating 
components that basically own most of the assets and have most 
of the people. And those are along the bottom.
    Then we have various components that perform functions that 
you would in some ways consider staff functions. They service 
the whole department as a whole. That has to do with 
management. That allows us to unify our procurement, our 
management, and our financial operations across the whole 
department.
    General counsel, which makes sure all the legal stuff is 
coordinated; Congressional affairs, which coordinates all the 
legislative affairs; and then you have some under secretaries 
that perform again a function that tends to span the entire 
department.
    Science and technology gives us the backbone, the research 
backbone that supports all the operating components as well as 
State and local government and things like that.
    Policy, again, it is a function that is a staff function. 
It helps us drive policy and planning for the whole department. 
It is not something that people report through.
    And preparedness, again, is a somewhat unique position 
because it reflects an unusual mission we have in the 
department which is with respect to a lot of preparedness. We 
do not own the assets or employ the people. It is the State and 
local government and the private sector that does. We have to 
network that. And we need to have one person who is responsible 
for managing that network for the department.
    So all these under secretaries essentially are operating 
across the department. They are dealing with the components for 
expertise and for coordination, but they do not own most of the 
people, and they do not own most of the stuff.
    Most of the people and most of the assets are controlled or 
owned by the individual components. I mean, although 
pictorially they are at the bottom, it does not really 
represent their importance.
    The Chairman. Senator Lautenberg has a question, and then I 
am going to ask you my last question.
    Go ahead.
    Senator Lautenberg. Thank you very much, Mr. Chairman.
    It is kind of mystifying when you say, Mr. Secretary, that 
a hundred percent of the cargo coming in is screened. And it is 
a little confusing.
    Are we talking about looking at manifests? And what do we 
do about those ports where the screening operation is done, 
kind of, considerably ahead of the time for shipment?
    Mr. Chertoff. I think screening, as you pointed out, does 
not involve actual physical inspection. What it does do is, it 
takes information from the manifest, what we know about the 
ship or what we know about the port and other information, and 
based upon an algorithm or an analysis that includes 
intelligence that we gather rates them in terms of their risk 
and whether we believe it is, based on any number of these 
characteristics, we think it is risky cargo or not risky cargo.
    And then there is, of course, a range in the middle where 
there is some judgment that is exercised based on some 
additional gathering of facts.
    So what we do is, we target those elements of cargo that 
based on all of these considerations, are those that we have 
some serious question about. And those do get inspected. They 
get inspected either nonintrusively or even sometimes by 
breaking into the cargo.
    So although the manifest and the information is one element 
of this, it is not the only element. There are other elements 
as well.
    Part of what we try to build into this is a, kind of, 
registered cargo program, where certain companies do have 
arrangements where if they put into place some protective 
measures, that essentially gives them a higher reliability 
score in terms of what we inspect.
    Senator Lautenberg. Thanks, Mr. Chairman.
    Mr. Secretary, I want you to know that included in the bill 
now under port security is a risk assessment, the basis for 
distribution. I hope that we will be able to do that in other 
programs as well.
    Thanks, Mr. Chairman, for your patience.
    The Chairman. Mr. Secretary, my last comment is this. We 
have jurisdiction over all forms of these containers, surface, 
transportation, ocean, and road, and air. We have got to get a 
hold on this container thing.
    I would like to suggest that we arrange a meeting with your 
people and just take the whole gang of this committee down to 
your department, and have some sort of briefing of how you are 
handling this problem, where are the problems, because I think 
we do not have time for everyone to ask the questions. We are 
much better off if we just got a little bit of a lecture from 
your people.
    Last, the bottom line. How much does this increase the cost 
of doing business for homeland security?
    Mr. Chertoff. The reorganization is neutral as to cost. 
What it does do is it will hopefully save us, actually save us 
money and certainly aggravation, in making sure we are able to 
do what I think the public and Congress expected us to do when 
they set it up which is running one department which is focused 
on bringing all the tools together to accomplish the very 
important things we have to accomplish.
    The Chairman. Well, I admire what you are doing, but some 
of us are on both this committee and the Appropriations 
Committee. And this is the department that is ever increasing 
its costs. I hope you are right.
    Thank you very much.
    Mr. Chertoff. Thank you, Mr. Chairman.
    [Whereupon, at 12:37 p.m., the hearing was adjourned.]

                                  
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