[Senate Hearing 110-633]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-633
 
 THE HOMELAND SECURITY DEPARTMENT'S BUDGET SUBMISSION FOR FISCAL YEAR 
                                  2008 

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 13, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs

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33-875 PDF                       WASHINGTON : 2008

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
              A. Patricia Rojas, Professional Staff Member
            Christian J. Beckner, Professional Staff Member
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
   Robert L. Strayer, Minority Director for Homeland Security Affairs
              Mark B. LeDuc, Minority Legislative Counsel
                  Trina Driessnack Tyrer, Chief Clerk


























                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     3
    Senator Levin................................................    14
    Senator Warner...............................................    16
    Senator Landrieu.............................................    18
    Senator Voinovich............................................    21
    Senator McCaskill............................................    24
    Senator Coleman..............................................    27
    Senator Obama................................................    29
    Senator Domenici.............................................    32
Prepared statement:
    Senator Akaka................................................    39

                                WITNESS
                       Tuesday, February 13, 2007

Hon. Michael Chertoff, Secretary, U.S. Department of Homeland 
  Security:
    Testimony....................................................     5
    Prepared statement...........................................    41
    Questions and responses for the Record from Mr. Chertoff.....    59

                                APPENDIX

Charts submitted for the Record by Mr. Chertoff..................   124
Homeland Security Budget-in-Brief, Fiscal Year 2008..............   133


 THE HOMELAND SECURITY DEPARTMENT'S BUDGET SUBMISSION FOR FISCAL YEAR 
                                  2008

                              ----------                              


                       TUESDAY, FEBRUARY 13, 2007

                                       U.S. Senate,
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:06 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Levin, Pryor, Landrieu, Obama, 
McCaskill, Collins, Voinovich, Coleman, Domenici, and Warner.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. Good morning. Welcome to this hearing. 
Secretary Chertoff, a particular welcome to you as we convene 
to discuss the Department of Homeland Security's fiscal year 
2008 budget request.
    Mr. Secretary, as you know, but I will say publicly, I 
appreciate very much the leadership that you have brought to 
the Department in melding these 180,000 employees, previously 
22 separate agencies, into an effective, united Department that 
can protect the American people here at home from disasters, 
natural and manmade terrorist disasters. And as I look at the 
budget, I do note and I will indicate during the hearing some 
of the places where I think there is some encouraging news. But 
I must say that I am deeply disappointed that this year's 
Administration budget request continues what I believe is a 
high-risk policy of underfunding some of the Nation's most 
pressing homeland security priorities.
    For the fourth year in a row, the Department's budget 
request cuts crucial support for our underequipped and 
undertrained first responders--the firefighters, police 
officers, and emergency medical workers who prepare for and 
respond to disasters, both natural and manmade.
    The Administration's budget proposal would cut overall 
homeland security grant funding by a staggering 40 percent, 
which I believe will seriously limit the ability of State and 
local officials to protect their communities the way they 
should be protected. And this goes not just to our ongoing 
effort to be prepared for and to prevent, of course, another 
terrorist attack here in the United States, but to be ready for 
the natural disasters that inevitably will come.
    We were lucky to have a mild hurricane season in 2006, but 
the next hurricane season is less than 4 months away, and I 
fear that these cuts in the homeland security grant funding 
programs will reduce the ability of every State and city to 
prevent and respond effectively. Under the Administration's 
proposal, the minimum amount each State would receive would be 
reduced from approximately $6.75 million in this fiscal year 
2007 to $625,000 for fiscal year 2008, which is obviously a 
very deep cut that will be difficult for many States to absorb.
    Second, rail and transit security is another area that I 
believe is seriously underfunded by the Department's budget 
request, although I guess I should say that at $175 million, it 
is a marked improvement over last year's request of zero. Mr. 
Secretary, you know well the vulnerabilities of our 
transportation systems and the history of al Qaeda attacks on 
those systems in London and Madrid. I know we can do more, and 
I believe it is urgent in this rail and transit security area 
that we do more.
    Third, last year this Committee worked in collaboration 
with the Commerce Committee and others in the House and the 
Administration to pass the Safe Port Act, which authorized $400 
million in Port Security Grant Program funding. I believe that 
was a reasonable, in fact in some ways, a moderate estimate of 
the needs in this critical area that everyone agrees is a 
vulnerability, which is port security. The Department is 
requesting just $210 million. I hope that we can find a way to 
go up to the $400 million that the bill authorizes because I 
truly do not believe that the $210 million is enough.
    I will say on the brighter side that I am heartened that 
the Department has recognized the recommendations made in the 
bipartisan Hurricane Katrina Report that came out of this 
Committee and the subsequent bipartisan legislation passed by 
Congress last year. The $142 million increase to FEMA's 
operating budget is a promising beginning toward helping the 
agency address critical shortcomings, such as incident 
management, disaster logistics, and emergency communications. I 
hope over the next several years the budget continues to 
provide the resources necessary to restore FEMA to an agency we 
can all be proud of again.
    As I believe you know, and I just want to state this 
briefly, 2 weeks ago, Senators Landrieu, Obama, and I traveled 
on behalf of this Committee to New Orleans for a field hearing 
on Gulf Coast recovery efforts. We toured the hardest hit parts 
of the city and heard firsthand the frustrations of people 
desperately trying to rebuild their communities against 
enormous odds.
    And here I would say the most poignant plea we heard was 
not for more money to be appropriated now, but for the money 
that has been appropriated to get to the victims for whom it 
was intended. The fact is that the Gulf Coast recovery 1\1/2\ 
years after the hurricane is painfully slow, needs the 
attention of your Department and the Administration, although 
it was clear to me at least that just as was the case in the 
inadequate reaction to Hurricane Katrina, the blame here for 
the slowness of the money that we have appropriated moving to 
the places where it is intended to go is shared at all levels 
of government as well.
    Finally, on a different note, I do want to indicate that I 
am pleased to see that the Department intends to conduct a 
Quadrennial Homeland Security Review in 2008. This requirement 
that was put into law, urged on you, is patterned after 
legislation that passed in 1997 that established the Department 
of Defense's Quadrennial Defense Review, which I believe has 
played an important role in helping both the DOD realign its 
strategies and missions, but also Congress to respond to those 
strategies and missions. And I wish you well as you go forward 
with your own Quadrennial Review as we approach, to me, 
surprisingly, the fifth anniversary of the Department.
    And let me indicate to you that tomorrow we will be marking 
up our bill on the so-called unimplemented 9/11 Commission 
recommendations, which contains provisions that we believe will 
strengthen the Department's information sharing, terrorist 
travel, emergency response, and private sector preparedness 
efforts. I know there has been cooperation together between the 
Committee staff and your Department staff, and we hope that we 
can continue to work with you on that to move the legislation 
forward.
    Thanks for being here. I look forward to your testimony, 
and I would now call on the Committee's Ranking Member, Senator 
Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman. Welcome back, Mr. 
Secretary.
    The budget for homeland security presents a mixed picture. 
On the positive side, the 8 percent increase in funding for the 
Department of Homeland Security stands as clear recognition of 
the vital importance of preventing and responding to terrorist 
attacks and preparing for and responding to natural disasters. 
Similarly, the nearly 50 percent increase in DHS budget 
authority since fiscal year 2003 is also notable. But we must 
not underestimate the daunting task that remains before us or 
forget that State and local first responders are on our 
Nation's front lines.
    Homeland security depends on partnerships--partnerships 
across Federal agencies, among various levels of government, 
and with the private sector. Key to these effective 
partnerships are our first responders. That is why I join the 
Chairman in being extremely concerned about the large cuts in 
grant funding proposed in this budget.
    First responder grants have been chronically underfunded 
since 2004, yet the new budget proposes only $250 million for 
the State Homeland Security Grant Program. That is a cut of 
more than 50 percent from the amount appropriated for fiscal 
year 2007. We must reverse this trend. Communities rely heavily 
on State Homeland Security Grants for emergency planning, risk 
assessments, mutual aid agreements, equipment, training, and 
exercises for first responders. Combined with the proposed 
reduction in the minimum allocation, the minimum State grant 
level would fall to only $625,000, as the Chairman has pointed 
out, if the President's budget is accepted.
    Now, to give you some comparison, that is less than what it 
costs Maine to staff its fusion center, employ the personnel 
who coordinate the training and exercises statewide, and to 
ensure that it effectively implements the National Incident 
Management System. We simply need a more robust level of 
minimum funding in order to ensure that all States are prepared 
in order to fortify our prevention and response capabilities as 
a Nation.
    The proposed budget also slashes grants for firefighters by 
$362 million. It zeroes out funds for the Metropolitan Medical 
Response System grants and the Commercial Equipment Direct 
Assistance Program.
    Now, these are not arcane budget details. These are vital 
programs that provide Americans, whether they live in New York 
City or the Connecticut suburbs or Maine's small towns, with 
additional security. I fear that funding cuts of this magnitude 
would be a blow to our homeland security.
    In an effort to ``offset'' these cuts, the President's 
budget refers to a $1 billion Public Safety Interoperable 
Communications program. However, these interoperability funds 
do nothing to supplant the cuts in grants for enhancing other 
preparedness capabilities. It is also my understanding that the 
Department is considering awarding grants under this program 
solely to urban areas. Such a plan, if implemented, would 
ignore the lessons learned from Hurricane Katrina. While the 
emergency communications needs of our urban metropolitan areas 
are certainly great, it is imperative that the Department use 
the $1 billion interoperability grant program to help build a 
national all-hazards emergency communications system.
    Like our Chairman, I am also very disappointed with the 
funding level for the Port Security Grant Program. We worked 
very hard in this Committee to produce significant port 
security legislation. We included an authorization level of 
$400 million. That was a level carefully arrived at, and yet 
the budget provides barely half the amount that we authorized.
    Another legislative accomplishment of the last Congress was 
enacting authority for the Secretary to regulate the security 
of thousands of facilities that manufacture, store, or use 
hazardous chemicals. Now, the budget includes $25 million to 
establish an office to exercise this new authority. I am 
pleased that is a $15 million increase over last year, but 
considering the scope of the new mandate and the risks that it 
addresses, I question whether that level of funding is 
adequate. And that is an area that I want to pursue further 
with the Secretary.
    The Administration deserves credit for increasing FEMA's 
budget by $101 million. This is strong reinforcement and 
includes funding for an additional 275 personnel. Strong 
leadership combined with more resources should put FEMA on a 
sound financial footing. The Administration also commits 
substantial resources to securing the border. As we work to 
defend our Southern border, however, we must not neglect our 
Northern border or our coasts.
    As we strengthen our defenses to the South, we increase the 
appeal of other avenues of approach for our enemies. We know 
from the case of the Millennium Plot that the Northern border 
is already attractive as a point of entry for those who would 
do us harm. Our Nation's security demands a balanced approach 
to border protection.
    The last concern that I will mention here involves those 
who were perhaps the most conspicuous heroes of the response to 
Hurricane Katrina, and that is the men and women of our Coast 
Guard. The new budget request for the Coast Guard is only 1.2 
percent higher than the amount enacted for this past year. That 
is an increase that does not match the rate of inflation, and 
it slights the fact that the Coast Guard is continuing to play 
more and more of an important role in homeland security, 
particularly in port security. In addition, the Coast Guard 
faces the challenge of the aging of its cutters and its 
helicopters.
    Now, the Deepwater Program has been poorly managed, and 
that has been a disappointment to all of us, but that does not 
take away the urgent need for modern, effective, and efficient 
assets for the Coast Guard.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks very much, Senator Collins, for 
that excellent statement.
    Secretary Chertoff, we welcome your testimony at this time.

    TESTIMONY OF HON. MICHAEL CHERTOFF,\1\ SECRETARY, U.S. 
                DEPARTMENT OF HOMELAND SECURITY

    Secretary Chertoff. Well, thank you, Mr. Chairman, and 
thank you, Ranking Member Collins. I am delighted to kick off 
my testimonial season before this Committee talking about the 
2008 budget proposal for DHS. Before I get into the meat of the 
budget proposal, let me say that I look forward to working with 
the new Congress and with the new Committee Members. We have 
worked well together in the past, and I believe we will 
continue to do so. I am particularly pleased that my Department 
is one of two that actually got a full appropriation bill out 
for 2007, and I know Members of this Committee worked hard to 
make that happen. And that has certainly made our life easier 
and produced better results this fiscal year.
---------------------------------------------------------------------------
    \1\ The prepared statement of Secretary Chertoff appears in the 
Appendix on page 41.
---------------------------------------------------------------------------
    Now, for 2008, we are looking at a $46.4 billion budget, as 
the Ranking Member said, an 8 percent increase over the fiscal 
year 2007 request and an increase of nearly 50 percent over the 
2003 fiscal year. So this is a strong budget.
    There is no doubt, as the preceding remarks have made 
clear, that there are many worthy objectives for this 
Department that deserve funding. Not surprisingly, we have to 
make trade-offs and we have to be disciplined in deciding where 
to allocate even a significant budget increase among these many 
deserving programs. And part of what we try to do in particular 
is to look at those areas where there is a unique value-added 
responsibility or capability on the part of the Federal 
Government. And I would observe that, for example, as we 
consider the allocation of grants, the $1 billion of money for 
interoperable communications is money that will be in the hands 
of the first responders next year, that will not be limited 
just to cities--it will be a national program--and that will 
address completing a task which I think everybody here agrees 
has been one long overdue to be completed.
    Rather than go through the typical testimony where I try to 
touch on every element of the budget, I am going to ask that my 
full statement be entered into the record.
    Chairman Lieberman. Without objection.
    Secretary Chertoff. And I am going to focus just on one 
issue, which I think may be particularly timely, and that is 
the effort that our 2008 budget focuses on building and 
enhancing our systems to detect, identify, and resolve threats 
posed by individuals who are trying to get into the United 
States through our ports of entry or between our ports of 
entry.
    Now, we have built over the last few years a very 
substantial border management system. We have US-VISIT's 
current biometric capability that takes two prints from 
everybody entering the country and has identified a host of 
people who, rightly, have been forbidden entry. We have new 
travel and identity document requirements under the Western 
Hemisphere Travel Initiative. The passport requirement for air 
travelers went into effect just about a month ago. It has been 
implemented virtually seamlessly, with very little delay, and 
has dramatically increased the ability of our inspectors to be 
able to rely upon the documentation people use when they fly 
up, for example, from the Caribbean or from the southern part 
of the hemisphere. And we are continuing to develop enhanced 
targeting capabilities that allow us to identify and defend 
ourselves against people who want to enter who would do us 
harm.
    A big part of what we want to do in 2008 is move the 
biometric program up significantly to continue collecting 10 
fingerprints from foreign visitors and to promote completion of 
database interoperability between US-VISIT and the FBI. Let me 
tell you why this 10-print capability is so important.
    We are now collecting latent fingerprints, kind of like 
that TV program ``CSI,'' from battlefields and safe houses all 
over the world. By putting them in the database and then 
getting the 10 prints from people who come across the border, 
either overseas when they get their visa or here at the port of 
entry, we can run these fingerprints against the latent prints 
and begin to identify terrorists, people who have trained in 
camps or been involved in building bombs, even though we don't 
know their names. So this really takes the watchlist to the 
next level and allows us to identify the remnants, the evidence 
that people leave behind them when they commit acts of terror 
so that we can identify them when they cross our borders.
    But it is important that we be comprehensive. So even as we 
are building up our airports of entry and seaports of entry 
capabilities in terms of people coming from overseas, we also 
have to worry about our Northern and Southern borders.
    One of the things which we have had a little bit of 
controversy over is the Western Hemisphere Travel Initiative, 
which is designed to build more secure documentation at our 
ports of entry in the land borders with Canada and Mexico. And 
here is a proposition I want to suggest to you, respectfully.
    As we continue to build up the screening tools we have for 
people who want to fly directly into the United States from 
overseas, we want to also make sure they do not end-run around 
us, go into Canada, and then come through using phony documents 
that they use at the Canadian border. So what we are trying to 
do is, very significantly, a matter of comprehensiveness.
    In this regard, let me focus on one issue which I know the 
Committee is going to be taking up, I think tomorrow, and that 
is the Visa Waiver Program. In November of last year, the 
President announced his desire to work with Congress to make 
some changes to the Visa Waiver Program, which allows people 
from a couple dozen countries to enter without going through 
the visa process. This is a very appealing program from the 
standpoint of trade and tourism, but it does expose a 
significant vulnerability to the United States.
    The visa process turns out to be a very good process for 
identifying bad people who should not be allowed in. So the 
question is: How do we promote trade and travel, but increase 
the degree of security we have under this program?
    The President's proposal envisions a secure travel 
authorization system that would do something similar to what 
they do in Australia. We would get electronic travel data in 
advance of people coming in, we would be able to analyze the 
data in much the same way as you do in the Visa Program, and 
then we would be able to identify a subset of people that we do 
require to go in to have an interview before they are allowed 
to come in, and most everybody else can come in directly. So it 
gives us much of the value of the Visa Program and much of the 
convenience of the Visa Waiver Program. And, of course, this is 
a system we would be happy to operate with on a reciprocal 
basis because we ought to be prepared to do with our allies 
what we want them to do with us.
    So I think the Senate's 9/11 proposed bill, which I think 
you are considering tomorrow, does make some of these very 
important security changes. I know, Senator Voinovich, you have 
been very active in working on this. But there are a couple of 
additional measures I think we ought to consider as the bill is 
before the Committee.
    First of all, I think the Senate should expressly require 
that visa waiver countries accept for repatriation all of their 
citizens who are subject to final orders of removal. It is very 
frustrating for us when we have someone who is deportable from 
the United States and the home country simply refuses to accept 
him or drags their feet. And it makes it very difficult for us 
to manage our immigration program.
    Second, I think the Senate should encourage member 
countries to assist us in the operation of an effective Air 
Marshal Program. Time and again, that program has proven to be 
an important element of our layers of defense which we use for 
air travel.
    The third piece, however, is a little bit of a different 
focus, and that has to do with the current requirement that 
visa waiver countries have a visa refusal rate of 3 percent or 
less in order to qualify for the program. This requirement has 
been a sticking point for a number of our allies in Eastern 
Europe that would otherwise be eligible to participate in the 
program. It, frankly, reflects not a direct assessment of the 
risk of illegal immigration from these countries, but rather, 
it is kind of the equivalent of a bank shot in pool. We are 
looking to see how our consular officials assess the program, 
and the rate of refusal is being used as a surrogate for 
determining whether there is a significant risk of immigration 
fraud.
    Frankly, we think a little bit of flexibility here would be 
useful. It is important to our allies. It does not increase 
vulnerability. In fact, the total package with the increased 
security measures actually dramatically increases our security. 
But it also promotes trade and travel and, most importantly, 
avoids what I have to say honestly is shaping up to be a fairly 
ugly dispute with Europe over this issue because there is a lot 
of push we are getting in terms of the fact that some of the 
Eastern European countries are not seeing progress forward on 
the path of getting into the program. So I think the 
President's proposal with the additional little bit of 
flexibility actually is a happy win-win situation.
    Let me briefly just talk about the rest of land border 
security to round this out. Last year under the President's 
mandate, we began Operation Jump Start, which put the National 
Guard on the border. We ended ``catch and release'' at the 
border so that we now detain and return all illegal migrants we 
capture at the border who are here illegally. And this has 
produced real results in terms of decreased flow across the 
Southern border.
    This year, to further the important progress, we are 
requesting $1 billion for additional technological and tactical 
infrastructure on the border. We are currently on the way, 
actually building fencing, as you can see, at the Barry 
Goldwater Range.\1\ We do not believe fencing is a total 
solution. It does have its place, and where it has its place we 
are building it.
---------------------------------------------------------------------------
    \1\ The photograph referenced by Secretary Chertoff appears in the 
Appendix on page 127.
---------------------------------------------------------------------------
    We are also on the way to increasing the Border Patrol to 
the prescribed doubling by the end of calendar year 2008, and 
the funding in the budget for this fiscal year puts us on 
course to complete that goal by adding 3,000 Border Patrol 
agents during the course of the year.\2\ And as I have said, 
that does not reflect itself. If we measured the past three 
quarters against the comparable prior period, what you will see 
is the measures we have done at the border have actually 
produced a reversal of momentum and a decrease in 
apprehensions, as well as a decrease in other metrics that show 
people crossing the border. This is not a declaration of 
victory, but it is a sign of encouragement that we ought to 
build upon as we move forward.
---------------------------------------------------------------------------
    \2\ The chart referenced by Secretary Chertoff appears in the 
Appendix on page 129.
---------------------------------------------------------------------------
    Finally, of course, because we need to make sure that when 
we apprehend people we just do not push them out the back door 
and into the country, a combination of increased detention beds 
and significant streamlining of our removal processes has ended 
catch and release, and we are continuing to build on that with 
the request for almost 1,000 additional beds for this year to 
make sure we do not lose ground.\3\
---------------------------------------------------------------------------
    \3\ The chart referenced by Secretary Chertoff appears in the 
Appendix on page 130.
---------------------------------------------------------------------------
    Since August of last year, anybody that we can legally 
deport at the border has been detained until they are deported, 
and that, again, has proven itself to be very powerful as a 
deterrent because the decrease over the last three quarters in 
the number of non-Mexicans apprehended has been between 48 and 
68 percent, which is even greater than the total decrease of 
Mexicans that were apprehended. That shows there is a real 
impact.\4\
---------------------------------------------------------------------------
    \4\ The chart referenced by Secretary Chertoff appears in the 
Appendix on page 131.
---------------------------------------------------------------------------
    Finally, we need, of course, to continue with interior 
enforcement. As I have testified previously, there has been a 
significant increase from 176 to 716 in criminal cases brought 
against employers who systematically violate the rules.\1\ And 
we have dramatically increased--tripled--the number of 
administrative apprehensions.
---------------------------------------------------------------------------
    \1\ The chart referenced by Secretary Chertoff appears in the 
Appendix on page 132.
---------------------------------------------------------------------------
    The President has made it clear that the solution here is a 
comprehensive approach and a total immigration program that 
deals with the temporary worker requirement. But we cannot 
expect to get that done and we cannot expect to have it work if 
we do not continue our commitment to upholding the rule of law 
and enforcing the law vigorously.
    So I look forward to working with the Committee on these 
and other issues and to answering your questions in this 
hearing and in future hearings.
    Chairman Lieberman. Thanks very much, Secretary Chertoff. I 
will begin the questioning. We will do a first round of 6 
minutes, and then we will see where we are as we go on with 
that.
    I do want to say that in the contention that there is an 8 
percent increase here, I want to explain how--that is 
technically correct, depending on how you look at the numbers, 
and I want to suggest that there is good news and bad news in 
that. And this is what I mean: The Department's fiscal year 
2007 baseline used for the year-to-year comparison and the 
resulting 8 percent increase conclusion excludes the $1.8 
billion in fiscal year 2007 border security emergency 
supplemental funding, which, as the word I have just used 
suggests, was added supplementally, and we all supported it.
    If that $1.8 billion is included in the fiscal year 2007 
levels, then the budget increase for the Department for the 
coming fiscal year is not 8 percent but significantly lower. It 
is 1.4 percent in net discretionary funding and 2.1 percent in 
gross discretionary funding.
    So, to me, if people are following this--and I know you are 
and you understand it--what this means is that you can have 
what you describe as an 8 percent overall funding increase, 
which means that you are basically renewing the $1.8 billion 
supplemental funding for border security, but it leaves the 
rest of the Department with very small increases, which 
explains why, I presume--well, some of it may be a matter of 
ideology or philosophy, but some of it was what turned out to 
be the constraints on the money available, which led to what I 
believe and many of us on the Committee believe is inadequate 
funding for first responders, etc.
    The interesting other aspect of this--and perhaps it is why 
you appropriately focused on what is being done at the borders. 
I looked at one of the pie charts, and it is quite interesting. 
At this point, if you put together the requested funding for 
the Customs and Border Patrol section and ICE, it comes to 
exactly 33 percent of the Department's budget. So one-third of 
the budget is being spent on border-related, immigration-
related activities.
    I totally support the funding level, but what I am 
suggesting is that we are not doing as well by a lot of the 
rest of the Department, and that is why we end up with the 
funding shortages that both Senator Collins and I spoke about 
in our opening statements.
    Let me ask you specifically about the Homeland Security 
Grants. As Senator Collins said, this budget cuts the State 
Homeland Security Grant Program by 52 percent and overall State 
grant funding by 72 percent. It would cut the FIRE Grants for 
our fire departments by 55 percent, and it would cut training 
and technical assistance programs to States and localities 
almost in half. This is on top of what each of us observes, 
notwithstanding the occasional much publicized use of some of 
this funding for something that does not seem directly related. 
But, generally speaking, certainly I can say for myself 
whenever I go out and see what they are using it for, it is 
very fundamental homeland security-related equipment. And we 
build on top of the 2003 Rudman report for the Council on 
Foreign Relations, which said we needed $100 billion additional 
funding for first responders over a 5-year period.
    Are these cuts simply because OMB did not give you enough 
money and you had to cut somewhere? Or is there some evidence 
that you have that I think most of us do not have that our 
first responders are sufficiently trained, equipped, and 
prepared now to respond to a catastrophic disaster, including a 
terrorist attack?
    Secretary Chertoff. I think, Mr. Chairman, you have very 
well characterized what the budgeting process is. It is a 
question of allocating among priorities. It does not mean that 
there are not many worthwhile things that could not be funded 
more. But as with any budget, even a budget that is generous, 
you have still got to make decisions about where you put 
things.
    Now, you quite rightly point out that when we compare our 
budget to last year's baseline budget, we exclude the emergency 
supplemental. Of course, to most people, I think, the idea of 
an emergency suggests one time. And if we start to treat 
emergencies as part of the baseline, it is a quick way to have 
the budget go out of control--in addition to which I will say a 
lot of the emergency supplemental is what I would call capital 
investment, investment in things like airframes, for example, 
for CBP, which one would not expect to be recurrent costs. So I 
think that what one sees is an attempt to actually increase the 
budget in terms of recurrent costs, recognizing that 
supplementals come along as emergencies require.
    I would say with respect to the way we have prioritized the 
amount of money available among the various missions, we have 
looked at, first of all, those things which everybody seems to 
say are uniquely Federal responsibilities. The border issue has 
been out there for 20 years. I hear actually from a lot of 
local and State responders across the country that they feel 
they are bearing the burden of our failure to enforce the 
border. Therefore, when we put--and I accept--about a third of 
the budget into border security measures, whether they are at 
the ports of entry or between them, I think in some ways we are 
actually doing a favor for first responders. We are doing what 
they have asked us to do, which is to get control of the 
border.
    As far as the grants are concerned, again, I would have to 
say I view the $1 billion that is going to be in the hands of 
first responders in 2008 as part of the money you have to 
consider. And I think if you add that in, when we look at this, 
we have about $3.2 billion that we expect to be in the hands of 
State and locals in fiscal year 2008, which is very close to 
the $3.4 billion we had last year. And we do expect, by the 
way, the interoperability funds to be made available to the 
Nation, not just the big cities.
    So, again, I think we are sustaining the basic level of 
spending. We do regard a lot of the grants as capital 
investments. If someone says give me the money to build a fence 
around my house and I give them the money and they build the 
fence, I do not expect to give them the same amount of money 
every year. So as we look at the budget, we try to put money 
into capital investments that should not be recurrent.
    The final issue, which I think you have alluded to, which I 
think we ought to have a candid conversation about, is how we 
allocate the money among many deserving recipients. We have 
committed ourselves at the Department to risk-based funding, 
and that does tend to look at putting a disproportionate sum, 
but not all the money, in those areas of highest risk.
    I will tell you that over the last 2 years, I have been 
beaten soundly about the face and head by those people who 
think that all the money ought to go to New York, Los Angeles, 
Chicago, and----
    Chairman Lieberman. So have we.
    Secretary Chertoff. Right. I know you have. And those who 
believe it ought to go evenly to everybody. We have kind of 
taken the middle position.
    But I think it is worth putting this on the table because I 
think the country and Congress ought to come to a final 
resolution and give the Department direction. We believe what 
we are doing is right. We are being risk based. We think 
eventually, as the high-risk cities have their capabilities 
met, more money will be available to the lower-risk cities. 
That will mean eventually New York will start to get less 
money. But help us out here. Give us congressional guidance. 
The worst thing you can do is tell the guys who are writing 
grants, give them contrary instructions.
    Chairman Lieberman. Thanks. My time is up, but I do want to 
say that, of course, I agree with you, we should put that 
question of the Homeland Security Grant funding formula on the 
table. In fact, Senator Collins and I are going to recommend to 
the Committee as part of the so-called 9/11 bill tomorrow what 
we think is a compromise proposal because I agree that Congress 
ought to be setting the rules here and not forcing you every 
year to come up with a system of allocating. And the proposal 
we are going to make certainly does tip toward a risk-based 
system.
    I certainly can pledge my full support, and I know Senator 
Collins, to working with the House in conference to try to 
resolve this, this year. I am going to leave the response on 
the grant funding to others. I know Senator Collins made a very 
important statement about where that $1 billion in 
interoperability grant money is going. It is something 
different than what we believe is the continuing need out 
there. And I guess I would say this is why I believe in the end 
the cuts are harmful. We are not giving the Department enough 
money--yes, of course, the local first responders, particularly 
police, end up having to deal with some of the consequences of 
inadequate border security. But, frankly, if you asked any--I 
would say most--first responders across America whether they 
would want more money in the first responder grant programs or 
in border security, they would say, ``We desperately need it in 
the first responder grant programs.'' Thank you.
    Senator Collins.
    Senator Collins. Thank you.
    Mr. Secretary, to finish up that discussion, I do hope the 
formula that we are proposing tomorrow will be adopted. It is 
reasonable. It is an attempt to compromise among all the 
various interests. And one reason that I joined the Chairman in 
being determined to get the Department guidance on this is we 
need predictability in the funding so that States and 
communities can embark on multi-year projects to improve their 
homeland security. And if there is so much uncertainty in what 
the formula is going to be from year to year, it impedes their 
ability to do that. So I look forward to working further with 
you and all of my colleagues.
    Mr. Secretary, I want to switch to the issue of the REAL ID 
Act. You mentioned this in your written statement. When the 9/
11 Commission made its recommendation for improving the 
security of driver's licenses, Senator Lieberman and I 
incorporated into the Intelligence Reform bill a negotiated 
rulemaking procedure which would bring all interested parties 
to the table--State officials, privacy advocates, technological 
experts, as well as the Federal Government--to try to come up 
with an appropriate and cost-effective way to achieve the goal. 
And the group was making great progress. Unfortunately, 
however, that process was repealed by an appropriations bill 
that came over from the House, and thus, it was replaced by the 
REAL ID Act.
    Now, 2 years later, we are facing three problems that the 
States have brought to our attention.
    The first is a lack of guidance. It has been 2 years since 
the REAL ID Act passed, and yet we do not have detailed 
regulations or guidance from the Department setting forth the 
standards that the States are going to have to follow.
    The second problem is the cost. This is obviously an 
unfunded Federal mandate. The National Governors Association 
has estimated that the 5-year cost is $11 billion. In the State 
of Maine, the Secretary of State has estimated that compliance 
will cost six times the entire budget of his office. So the 
cost is not inconsequential.
    And the third issue that I am hearing from State officials 
about are technological barriers. What is really possible? 
There are also, obviously, privacy concerns about having 
interlocking databases and States being able to tap into one 
another's databases.
    Now, I do not think we should go back to square one, and I 
think the goal set forth by the 9/11 Commission is an important 
goal. But it seems to me that we would be far better off if we 
more fully involved State officials, in particular, in the 
design of the system.
    So my question for you is twofold. First, when do you 
expect the Department to issue the regulations, which are 
overdue? And, second, would you find value in having a group 
constituted similar to the negotiated rulemaking process that 
Senator Lieberman and I proposed in 2004 to get together to 
review the regulations in a formal way rather than having every 
State giving comments, which they could do as well, but having 
a committee of State officials, of privacy experts, of 
technological experts advise the Department?
    Secretary Chertoff. Well, let me respond as follows: The 
proposed regulations, which, of course, will then be subject to 
a comment period, will be out this month, in February. And I do 
want to make it clear that one of the reasons it has taken a 
while is we have actually done quite a bit of consultation, 
even in a preliminary stage, with State officials and privacy 
advocates and other folks. I know we did a lot of work, for 
example, with the Association of Motor Vehicle Administrators 
because they are actually the association that has the most 
experience working with driver's licenses since their 
constituents do that.
    So we do expect to have guidance out, and the guidance will 
reflect a very clear message we had to keep this as simple and 
as inexpensive as possible. And I am not convinced that $11 
billion is an accurate assessment. I have heard some much lower 
estimates from individual States.
    I also think that the technical barriers are vastly 
overstated. In terms of the ability to produce a biometric 
card, we have them all over the place now. I was just in 
Arlington, Virginia, yesterday, and they are putting together a 
biometric credential for law enforcement that we are going to 
use. Ultimately, we hope to make a national credential that can 
be used interoperably. And the card is pretty easy to put 
together. I think the hard issue is going to be determining 
issues of citizenship and what are the rules that are going to 
be required.
    In terms of setting a group up, I guess I have two 
reactions. One is that typically, of course, everybody thinks 
they ought to be in the group, and you have a large group, and 
you do not get a lot of progress. I am not in principle opposed 
to meeting with a group, but I think it is very important to 
continue to move forward with the deadline that we have 
originally set, recognizing that the deadline only begins a 5-
year implementation period, so it is not a drop-dead deadline. 
And I say that because my experience with the WHTI air rule has 
confirmed my opinion that if you set a deadline and you 
introduce some level of flexibility but you hold people to it, 
they will actually accommodate. But if people continue to feel 
they can get the deadline put off, they will postpone, and they 
will temporize.
    And, look, at the end of the day, there is no way to say it 
is not going to have some expense. It is going to be somewhat 
inconvenient. But if we do not get it done now, someone is 
going to be sitting around in 3 or 4 years explaining to the 
next 9/11 Commission why we did not do it.
    So I think we owe everybody an open process, a transparent 
process, but I do want to keep in place the discipline of 
kicking this off in the spring or summer of next year, which 
was the original deadline.
    Senator Collins. Mr. Chairman, if I could just make one 
quick comment.
    Chairman Lieberman. Yes.
    Senator Collins. I think it is unfair to ask States to 
comply with a costly unfunded mandate when the Department has 
yet to issue the guidance. The deadline is May of next year. 
That is not much time. States are preparing their budgets now. 
They are looking ahead at this. And it would be one thing if 
the Department had issued the guidance last year, but I do not 
think it is unreasonable to give States 2 years to comply given 
the cost and all that needs to be done in light of the 
Department's delay.
    I think it is unfortunate that we did not stick with the 
first system that we designed because I think we would be 
further along by now.
    Thank you, Mr. Chairman.
    Chairman Lieberman. I definitely agree with that, Senator 
Collins. Thank you.
    Senator Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Thank you, Mr. Chairman.
    First, let me say I agree with the Chairman and Ranking 
Member's comments relative to the budget overall. I think their 
points reflect not a consensus of sentiment, because there may 
not be such a consensus, but a very widely supported view on 
this Committee relative to the budget and its shortfalls and 
its strengths as well. So I just want to associate myself with 
their comments overall.
    On the REAL ID Act implementation, was there not, when this 
act passed, an understanding that there would be some Federal 
funding for the implementation of the REAL ID Act at a State 
level?
    Secretary Chertoff. Well, I am not sure there was an 
understanding. I would have to look at the statute to see 
whether the statute authorized it.
    Senator Levin. In any event, there is no funding in this 
year's budget request. Is that correct?
    Secretary Chertoff. There is some funding for the piece 
that we have to do.
    Senator Levin. Right.
    Secretary Chertoff. But I do not think it is viewed as 
being something the Federal Government is going to pick up the 
cost for.
    Senator Levin. Or part of it, of the States' costs. Would 
you go back--and I do not know the answer to this question 
myself, and we will, too--and review when that act was passed 
whether or not there were not representations made that the 
States' costs of this would be borne, at least in part, by the 
Federal Government?
    Secretary Chertoff. I will check that.
    Senator Levin. Second, there are a number of States--first 
of all, Secretaries of States are involved in this issue, 
including Michigan, because many of our Secretaries of States 
are the ones that issue driver's licenses. A number of State 
officials have suggested that there be pilot States, a couple 
of States that would be allowed to have a pilot project to 
demonstrate that the driver's license could meet the 
requirements of both the REAL ID Act and the Western Hemisphere 
Travel Initiative.
    Would you be willing to support such trials in a number of 
States to see whether that is possible to avoid this 
multiplicity of documentation, the expense, and the confusion? 
And this is particularly important in States that have large 
numbers of people that come in daily to work, such as our State 
of Michigan.
    Secretary Chertoff. We have currently authorized a pilot in 
the State of Washington with British Columbia to do that. So I 
think we are certainly interested, and I think the vision of 
having driver's licenses do double duty is a very good vision.
    Again, the only thing I want to say is I am pretty adamant 
on the issue that we have got to keep essentially to the 
deadline we have set because what I very much fear is a 
succession of pilots that leads to drift. And you have been in 
Congress longer than I have been in Washington, many of you 
here. You know there is a typical thing where we set a 
requirement; we then have lots of pilot programs; then after 5 
or 6 years of kicking the can down the road, someone is called 
up in front of the Committee and they say, ``Why haven't we 
implemented this yet? We have been postponing.''
    So I am all in favor of flexibility in doing pilots. I just 
want to make sure we keep to a disciplined set of deadlines.
    Senator Levin. You are going to be in Detroit, I believe, 
in the next----
    Secretary Chertoff. Next week.
    Senator Levin. Next week. Would you be willing to meet with 
our Secretary of State on this issue? Because she has got a 
very specific idea.
    Secretary Chertoff. Sure.
    Senator Levin. And I think it is a very sound idea, to try 
to make one driver's license serve three purposes.
    Secretary Chertoff. Sure. And, by the way, I would 
encourage you to speak to the governor and Secretary of State 
of Washington because they have got something they are looking 
at right now.
    Senator Levin. Good. She already has done that, and, of 
course, our governor and our legislature are very much 
supportive of this. It is an unnecessarily burdensome 
requirement to have these three documents if, in fact, a 
driver's license can meet the security needs as well as the 
other needs. So if you would have your staff get a hold of 
her----
    Secretary Chertoff. Sure, we will.
    Senator Levin. There was some discussion here about the 
formulas that are being used in the programs of the Department. 
What is the minimum funding level or the percentage that the 
Administration is proposing in its budget for allocation of 
Homeland Security Grant Program funds?
    Secretary Chertoff. It is 0.25 percent per State.
    Senator Levin. And in your budget request, you are giving 
the rationale for the 0.25 percent argument that you are 
making? If not, would you provide that for the record?
    Secretary Chertoff. I do not think it is in the budget. I 
can tell you, because we have been consistent about it since I 
have been here, which is we believe the funding--fixed formulas 
are generally contrary to the issue of being risk based, but I 
think with some nod to reality, I think we are prepared to say 
that some level is appropriate. But we are trying to reduce it 
from the PATRIOT Act 0.75 percent, which absorbed about 40 
percent of the total funding, down to 0.25 percent, which would 
be about a third of that.
    Senator Levin. All right. Now, did the 9/11 Commission have 
a recommendation on this, do you know?
    Secretary Chertoff. I believe they want it entirely risk 
based, which would take it down to zero.
    Senator Levin. The Intelligence Reform and Terrorism 
Prevention Act authorized your agency to hire an additional 
2,000 Border Patrol agents each year from 2006 to 2010. It also 
required that 20 percent of the annual increase in the agents 
be assigned to the Northern border, which has been 
significantly shorted over the years. We have the longest 
border in the country, but we have a much tinier percentage of 
Border Patrol agents than other borders do.
    So apparently you have not complied with that act. Is that 
true?
    Secretary Chertoff. I do not think right now 20 percent are 
going up there. Of course, the appropriations since that 
authorizing act have laid down their own formula, so from a 
legal standpoint, I guess the lawyers have to explain why it is 
that the subsequent act defines what the requirement is.
    We did increase the Border Patrol to 1,000 at the Northern 
border, and we are putting air wings up there.
    Senator Levin. The air wings you have not put up there that 
you committed to put up there.
    Secretary Chertoff. I know.
    Senator Levin. Including one in Michigan. Are you going to 
carry out that commitment?
    Secretary Chertoff. We will carry that one out, and there 
is money in the 2008 budget for that.
    Let me, though, explain exactly what the facts are. The 
facts are--and I had this checked the other day--of people 
coming between the ports of entry, not at the ports of entry, 
98 percent of the illegals, Customs and Border Protection, are 
coming through the Southern border and 2 percent through the 
Northern border. So, if the house is burning, you want to get 
the part where the flames are the hottest first, and, frankly, 
that is kind of what our Strategic Plan is.
    Senator Levin. Would you check and see if you have complied 
with our legal requirement?
    Secretary Chertoff. I will.
    Senator Levin. Thank you. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Levin. Senator Warner.

              OPENING STATEMENT OF SENATOR WARNER

    Senator Warner. Thank you very much, Mr. Chairman.
    We welcome you, Mr. Secretary. I am one who continues to be 
amazed at how well you are able to function under the 
extraordinary diversity of your responsibilities and the 
constant drumbeat from Capitol Hill. But you seem to be 
weathering the storm quite well.
    I am particularly pleased with the Office of the National 
Capital Region. This is a matter which I have taken an interest 
in, together with my colleagues from Maryland. For those that 
have not followed this, we recognize that the Nation's capital 
and the two adjoining States are clearly identified as one of 
the areas of the greatest sensitivity, and we wanted to put 
ourselves as a triumvirate--the District of Columbia, Virginia, 
and Maryland--with regional homeland security representation, 
similar to how the other States have their own homeland 
security coordinators. It does not replace our respective 
individual that represents Virginia and Maryland, but it brings 
together in one location the centralized requirements of the 
three jurisdictions. And through the years, I want to thank you 
and your Department because you have recognized it, you have 
begun to fund it, and I guess my question to you is: Are you in 
a position yet to give a report card on its value that we felt 
would be there were it to be established, it is established, it 
is running, and what kind of report card can you give us?
    Secretary Chertoff. Well, I am delighted--I tend to shy 
away from report cards because it brings back flashbacks from 
being in elementary school, but I think that the effort of this 
region has been outstanding.
    First I have to say, as it relates not only to 
interoperability but to coordination among the various 
localities, the two States and the District, I think it is 
about as good as anywhere I have seen in the country.
    Now, we are underway with emergency planning, including 
evacuation planning, that is particularly focused on what we 
would do if there was a mass event in the District and how the 
flow would proceed not only into the immediately adjoining 
counties, but even further into, for example, West Virginia or 
southeastern Pennsylvania. And that process is underway, and I 
think when it gets done, it will be another significant 
advance.
    We have got Biowatch up and running here. I think we have 
done a better job in the last couple of years of integrating 
our warning and threat activities with those of the District 
and the surrounding areas. And we have two new governors or 
comparatively new governors and a new mayor, and I look forward 
in the next few weeks to meeting with them and talking about 
how we can continue to move forward on this.
    Senator Warner. I understand that the Capital Region is one 
of only five major metropolitan areas in the entire country 
deemed prepared with regard to interoperable communications by 
the DHS Interoperability Report. Could you comment on that, 
please?
    Secretary Chertoff. You are correct, Senator, that we do 
give them very high marks for interoperability. I was actually 
out in Arlington at the Emergency Operations Center. One of the 
reasons they have high marks, it is not just equipment; they 
have governance. They have sat down, they have put their egos 
aside, and they have agreed on a common set of rules and 
protocols which are really the foundation of communication. And 
I think that is an area where it is not a money area, it is a 
will power area. That is a great model for the rest of the 
country.
    Senator Warner. Well, I think those are helpful comments.
    I am going to tread into an area which borders on action 
that my distinguished colleague and Ranking Member are going to 
put in an amendment tomorrow on--this REAL ID and the 2-year 
delay. To me that REAL ID permit thing is a first step toward--
well, it may be significant enough to put the national ID 
concept on hold. If you want to drive a car, you better have 
the proper identification. It also provides the individuals 
with that identification needed to go through our airports and 
other checkpoints.
    Clearly, I am of the long-time group in this Senate that 
say if you are going to mandate to a State a requirement, you 
had better fund it. And I can understand the need to get some 
delay if we are not going to fund it. When you looked at the 
REAL ID program and you looked at all your other programs, did 
you weigh the benefits of REAL ID against some other program? 
It might have been the controversial concept of the border 
fence because I think this REAL ID program could make 
tremendous inroads on bringing together greater security in all 
50 States if they begin to have a common system of 
identification and an identification that, to the extent 
science is able to do it, defies counterfeiting.
    So did you, in fact, weigh a program this year in your 
budget to partially or, if necessary, wholly fund the States' 
requirements under that program to get it going?
    Secretary Chertoff. Well, I think it is a very important 
program because having a secure form of driver's license not 
only is a major step forward in security, it actually protects 
privacy because it reduces the ability for someone to forge my 
name and address on a driver's license and then invade my 
privacy and degrade my reputation.
    I think the concept, though, was that this, like all 
driver's licenses, is largely a fee-based system and that 
ultimately the cost of building REAL ID should be amortized 
over the driver's license fee. It is actually probably a one-
time cost. I do not think it is a recurrent cost. Although 
there probably is a certain amount of money up front, I am 
hoping that the regulations that come out work sufficiently 
with the existing systems so that it does not require $11 
billion and that any additional marginal cost would be picked 
up as part of the cost of paying for your driver's license.
    Senator Warner. Would you be bold enough today to take a 
stance on the proposed amendment by my distinguished colleague 
that would be put forth tomorrow in a markup?
    Secretary Chertoff. I have not seen it.
    Chairman Lieberman.  That is no excuse.
    Secretary Chertoff. I think I have expressed my view about 
the importance of--we want flexibility, but we do want to make 
sure that we move forward, that we do not kick the can down the 
road.
    Senator Warner. Well, we will wait until tomorrow, and I 
always want to support my distinguished Ranking Member. But I 
tell you this program, I think, in the concept of the average 
citizen, at long last government is really beginning to do 
something to cut down all the forgery and other things. And 
there is nothing more important to a person than their home, 
but next to their home is the car and the ability to operate 
that car. So I am going to be agitating in this area to see 
what we can do to make sure that we just do not park this whole 
concept on the side of the road for 2 years and go on about our 
merry way.
    I thank our witness.
    Chairman Lieberman. Thanks, Senator Warner.
    Senator Landrieu.

             OPENING STATEMENT OF SENATOR LANDRIEU

    Senator Landrieu. Thank you, Mr. Chairman.
    Again, I want to thank the Chairman for my position on this 
Committee, and, Mr. Secretary, I look forward to working 
closely with you to improve significantly the response of this 
Department to people in need when a catastrophe strikes, 
regardless of the reasons, whether it is a terrorist attack or 
natural disaster.
    I want to begin by saying that it is disconcerting to me to 
have you appear before this Committee as the Secretary of 
Homeland Security for the first time this year and not even 
mention the more than a quarter of a million people who are 
still out of homes, many of whom are out of jobs, many of their 
businesses destroyed, neighborhoods destroyed, and future in 
question because there is a part of this Nation, a part of this 
homeland that is still struggling to stand up.
    I mentioned after the State of the Union on behalf of the 
4.5 million people that I represent how disappointed I was in 
the President that he could not even manage one line out of his 
State of the Union. And I want to say to you that I am very 
disappointed in your opening statement that there was no 
mention of it verbally. There is some reference in your 
testimony.
    Second, I would like to believe, Mr. Chairman, that the 
information that I receive in this Committee is true and 
accurate from the Department. But I will say that in reading 
the prepared statement--I do not have a page number, I am 
sorry, but it is under ``Goal 4: Build a Nimble, Effective 
Emergency Response System and a Culture of Preparedness''--in 
the fourth paragraph it says that there is a 90 percent 
satisfaction rate with Individual Recovery Assistance programs 
for FEMA.
    I would have to say, without the benefit of that survey, 
that we would not come anywhere near 90 percent satisfaction in 
Louisiana, Mississippi, Alabama, or South Texas. So I am going 
to ask your staff to provide for me the details of this because 
if we are basing policy on effective communication from 
customers and clients and taxpaying citizens, I think we need 
to have much more accurate information. Now, perhaps that is an 
overall goal of the Nation, but I can promise you that it is 
not the satisfaction level along the Gulf Coast.
    Third--and I will get to my questions in a minute--Mr. 
Chairman, I cannot tell you and the Ranking Member how 
concerned I am, having watched us try to evacuate over 2 
million people without a public communications system and an 
interoperability system, why we would possibly be taking $1 
billion from the State Preparedness Grant Program to fund 
interoperability. In the entire budget, we cannot find an extra 
$1 billion? So from 2006 where we used to fund State 
Preparedness at $1.185 billion, we are now funding it, Mr. 
Chairman, at $465,000? Am I reading this document correctly? 
$1.185 billion in 2006, and this year, after Hurricane Katrina, 
after Hurricane Rita, after more than 250,000 people are 
displaced, after tens of thousands of people have lost their 
businesses, still living in trailers, and without their jobs, 
we have now cut this from $1.1 billion to $465,000. Is that 
correct?
    Secretary Chertoff. Well, actually, no. That does not 
include the $1 billion that is going to be available through 
the interoperability grants. So if you add in the $1 billion 
that is available in interoperability grants, that would be $1 
billion plus the $465 million.
    Senator Landrieu. But it is still a very minor increase for 
the State Homeland Security Grants that have decreased, 
according to this, from $550,000 to $260,000, or the 
Firefighters Grants that have been reduced, State and local 
training program, from $210,000 to $95,000, or the FIRE Act 
from $655,000 to $300,000.
    Secretary Chertoff. I think, Senator, first of all, before 
I forget, let me respond to your earlier observation. If you 
read my prepared testimony, I do talk about Hurricane Katrina. 
Obviously, I mean, I could talk for 15 or 20 minutes in my 
opening statement. I do not think that would be a benefit to 
everybody. I chose to speak about an issue that I knew was on 
the legislative agenda for tomorrow, but it does not reflect 
any lack of concern or focus on Hurricane Katrina, which does 
occupy a significant amount of time for me and the Department.
    As far as this budget is concerned in terms of grants, the 
bottom line is that with the $1 billion in interoperability, we 
are talking about $3.2 billion in the hands of communities next 
year, and I might add there are over $5 billion yet unspent 
from prior years of grants. So the pipeline is very full of 
money, and while I understand that there are always needs that 
are deserving and that cannot be met in any budget context--we 
all live with that even in our home lives--I think this is a 
very generous budget and puts a lot of capability in the hands 
of responders.
    I also have to say, wholly apart from the grants, we are 
spending, as the Chairman and the Ranking Member noted, 
significantly more at FEMA, giving FEMA the capabilities to 
develop communications. And we are standing up an Office of 
Emergency Communications which is going to be working with 
communities around the country to build communications systems 
with them and to get the early warning system into the 21st 
Century with reverse 911 and text messaging and all of that.
    So you cannot look at the grants as the totality of what we 
are spending on preparedness. It is merely one slice of the 
pie.
    Senator Landrieu. Well, let me just respond because my time 
is up. I am looking forward to working with the new 
Subcommittee, with Senator Pryor's Subcommittee on State, 
Local, and Private Sector Preparedness and Intergration. And as 
you know, I am going to be chairing the Subcommittee on 
Disaster Recovery. And I hope that we share enthusiasm to 
redesign and retool and reform FEMA so that it actually 
responds much better than it did the last time.
    I do not want this country to believe that there is plenty 
of money in the system and that there is not a need to get 
additional funding for interoperability. Some of those grants, 
Mr. Secretary, are not being pulled down because there is no 
standard, and people do not want to waste money taking and 
spending it on interoperability, only to find out that after 
they have spent it, they cannot talk to the county next door. 
We have a lot of work to do to get standards out there to be 
able to pull that funding down.
    I have a long list of questions, but my time is up, and, 
Mr. Chairman, I will submit those for the record and continue 
to work with you and the Ranking Member to get more of a focus, 
not just on our border security, not just on what might occur 
if a terrorist attacked, but the damage could not have been 
greater had a terrorist attacked, Mr. Chairman, than for a 
hurricane to strike and put 250,000 people out of their 
permanent homes. We have counties that are still virtually 
empty--parishes, in our case--and a major American city, not a 
minor city, a major American city that is less than half 
occupied--and a Secretary that shows up at this Committee and a 
President that gave a State of the Union that could not spare 5 
seconds of an opening statement on the subject.
    Thank you.
                 PREPARED STATEMENT OF SENATOR LANDRIEU
    Mr. Chairman, thank you for allowing me to address Secretary 
Chertoff concerning the Department of Homeland Security's budget and 
its proposal to reshape the Federal Emergency Management Agency. My 
time is short, so I will make just a few comments. As you may know, 
Secretary Chertoff, I now chair the Subcommittee on Disaster Recovery. 
The Subcommittee is charged with oversight of disaster recovery, and I 
plan to look at FEMA reform, woefully needed Stafford Act changes, how 
the Federal Government responds to a disaster, and short term needs and 
fixes for the Gulf Coast recovery.
    In reviewing your budget, I have some concerns and am not certain 
that we are meeting the necessary objectives.
    We need to ensure the Federal Response and Recovery structure is 
synchronized. Local, State, and Federal agencies, including the 
military, must all be working off the same ``sheet of music.'' Everyone 
must know who is in charge; relationships and lines of authority must 
be developed before the disaster, not during the disaster. This means 
that drills and exercises must be held on a regular basis.
    Radio interoperability must also be fixed in this country. It is 
not acceptable that emergency responders cannot talk to each other. All 
local, State, and Federal agencies and the military should be able to 
talk with each other when responding to the same disaster.
    We must remove every impediment that prevents a community from 
recovering that has been hit by a catastrophic disaster. This means 
removing regulations that don't make sense, while obviously making sure 
we account for tax dollars. In order to really make a recovery work, 
you must ensure your department's first responders are professionals, 
who understand the Stafford Act and how it impacts a local and State 
government's ability to recover. This has been an ongoing problem for 
this agency and one that I am not certain is met in this budget.
    So the question remains, does this budget accomplish these goals?

    Chairman Lieberman. Thank you, Senator Landrieu. As you 
know, when Senator Obama, you, and I were there, it is stunning 
to see how much of New Orleans remains devastated. A lot of the 
debris is cleaned up, but there is just a lot of empty street 
after empty street. And as I said to you when we were there, as 
a member of the Senate Armed Services Committee, I have been to 
now four war zones after the wars are over, and I have never 
seen devastation as comprehensive and broad as I did in New 
Orleans and Mississippi along the Gulf Coast after Hurricane 
Katrina. So I appreciate what you have said.
    Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you Mr. Chairman.
    Mr. Secretary, in your opening statement you mentioned the 
Administration's desire to modify the Visa Waiver Program, and 
as you have mentioned, I have been working with Senators Akaka, 
Stevens, and Mikulski on legislation that would simultaneously 
enhance travel security and create common security standards in 
providing the Department with the flexibility needed to expand 
the program to additional countries who do not pose a threat to 
our security, law enforcement, or immigration interests.
    You mentioned there were three things DHS wants in the 
legislation. I want to thank you very much for your input on 
this issue. I want to make clear that my legislation has 
already incorporated the repatriation of citizens who violate 
the law, air marshal cooperation, and flexibility and 
discretion with regard to the 3 percent visa refusal rate 
requirement.
    I think one of the things that some of my colleagues do not 
understand is what you referred to as an ``ugly dispute'' the 
United States has with some of our best allies. I think of 10 
countries that we brought into NATO, there is only one that has 
visa waiver, and that is Slovenia. I think you also know that 
U.S. public diplomacy and our image abroad probably is at the 
lowest point it has ever been. Modifying the Visa Waiver 
Program will mean a great deal to these countries. Every time I 
talk to an Ambassador or Foreign Minister, they are up in arms 
about their desire to join the Visa Waiver Program. They do not 
think they are being treated fairly.
    The point I would like to make is--and maybe you can 
explain it a little bit more--that we are not only talking 
about expanding the program, but we are also talking about 
modernizing and improving the Visa Waiver Program.
    Secretary Chertoff. This is a very important point, 
Senator. As I said in my opening statement, it is a 
vulnerability, and we do worry about the possibility of 
terrorists coming in from countries in Western Europe that have 
been part of the program. So this is most definitely, net-net, 
an upgrade in security to a very significant degree. And 
although the 3 percent flexibility, I think, has a very 
positive element with respect to showing a more welcoming face 
to some very good allies, no one should be under any illusion. 
This proposal is, first and foremost, a security measure that 
dramatically increases the level of security not only for the 
new countries, but for existing countries.
    Senator Voinovich. Thank you. As you know, I have been 
harping regarding management issues. The GAO has designated 
implementing and transforming the Department of Homeland 
Security as a high-risk area. DHS has been on the high-risk 
list since 2003, and that is understandable because you are 
talking about the complex merger of 22 agencies and 180,000 
employees. But one of the things that is really of concern to 
me is that Clay Johnson with the Office of Management and 
Budget has taken all of the high-risk departments and approved 
a corrective action plan on how they can get off the high-risk 
list. And to my understanding, DHS is the only Department that 
does not have a published strategic plan on how you are going 
to take corrective action to get off the high-risk list.
    For example, I am working specifically on supply change 
management with the Department of Defense. They have developed 
a strategic plan. I am also working on security clearances with 
OPM; they have a plan. Congress can monitor their performance 
in getting the plans implemented. We do not have that in your 
case. You and I have talked about this. The remaining 2 years 
of this Administration is going to go by fast. And from this 
Committee's oversight point of view, I would like to know where 
you are in developing the Department's strategic plans to 
improve management and remove the Department from the GAO high-
risk list. It is important that you lay a strong foundation for 
the next Administration to build on.
    Of course, that gets into another issue, and that is having 
a CMO, chief management officer, in the Department of Homeland 
Security. I think you have to have one. If you don't have one, 
when you leave, progress will halt for 6 months, and then we 
will have to start from scratch. We will never get the 
Department off the high-risk list.
    So I would like you to comment. When are we going to have a 
strategic plan that is published, that we can monitor in terms 
of your performance? Also, I would like your opinion on the 
need to have a chief management officer that will carry the 
ball forward into the next Administration.
    Secretary Chertoff. Well, first of all, I agree with you 
that it is very important to institutionalize what have been 
some significant management reforms and continue and complete 
the process of what we need to do to get off the high-risk 
list--which, as you point out, is not surprising given that we 
are a new Department.
    We are building and have a set of plans to get off this 
list. I know the Deputy has been working with Clay Johnson on 
putting together something that can be published. And I cannot 
tell you right now what the timeline is, but we certainly need 
to get it done, and I will get back to you as to the timeline.
    We have a chief management officer who is the Under 
Secretary for Management. We have a new Under Secretary, Paul 
Schneider, who comes to us----
    Senator Voinovich. I am very impressed with him. I would 
love to have him have a 5-year term and be in charge of 
carrying the ball into the next Administration, or somebody 
with his qualifications. He is terrific.
    Secretary Chertoff. And, Senator, I think it would be a 
great thing if the next President decides he wants to keep Paul 
Schneider on. I think that the issue with 5-year terms--and 
here I am going to be a little altruistic because I am speaking 
for the next President, as yet unknown. That President may 
choose to replace the Under Secretary for Management with his 
own person. So putting aside the various legal issues raised 
about it, let me say this: We are very committed to actually 
embedding at senior levels in the Department at every level 
Deputies who are career people. I think it is very important to 
put this Department on a career footing, and that is with 
career civil service professionals.
    When it comes to the top job, the Under Secretary job, I do 
think you have to balance the desire for continuity with the 
need for a President and a Secretary to have confidence in the 
person in the job. For the sake of future Presidents, not this 
one, who are going to inherit someone with a 5-year term, I 
think that is the issue that you need to reflect upon.
    Senator Voinovich. All right. We will talk about it some 
more. Thank you.
                PREPARED STATEMENT OF SENATOR VOINOVICH
    Thank you, Mr. Chairman, for holding today's hearing to consider 
the Department of Homeland Security's budget submission for fiscal year 
2008.
    The Department's budget request coincides with its third major 
reorganization. March 1 marks the 4-year anniversary of the Department. 
As this date approaches, we must examine both the Department's 
accomplishments and its deficiencies.
    I am concerned that the array of management and programmatic 
challenges continue to limit the Department's ability to accomplish its 
mission. As we discuss the details of the budget request, I look 
forward to learning the Department's plan to employ effective 
management strategies to ensure its resources are spent in a cost-
effective manner.
    One deficiency that continues to plague the Department's ability to 
accomplish its mission is the lack of a Chief Management Officer. 
Accordingly, I introduced legislation yesterday to elevate the existing 
Under Secretary for Management to Deputy Secretary. This position will 
provide the sustained, top-level leadership and continuity necessary 
for improving the long-term efficiency and effectiveness of the 
Department. I look forward to discussing with Secretary Chertoff today 
how this legislation and the overall budget will produce far better 
results for the Department.
    Accomplishment of the mission will depend in large part on whether 
or not the Department has the workforce it needs. The recent OPM 
Federal Human Capital Survey ranked DHS at or near the bottom in the 
four major categories, including job satisfaction and performance. The 
low employee morale identified by the survey is especially disturbing 
for an agency responsible for securing our homeland.
    Secretary Chertoff, it is our job to ensure that you have the 
resources you need to get the job done. With the bulk of the increase 
in discretionary spending devoted to border security, I question 
whether the Department's budget allocates its resources in a manner 
that does so. Including this year's budget request, total budgetary 
authority for the Department will have grown 49 percent since the 
Department's creation in 2003. Government-wide homeland security 
spending has more than tripled since 2001.
    A thoughtful discussion of the need to secure our homeland against 
terrorism and strengthen our response capabilities is pointless absent 
an acknowledgment of the fact that our country has finite budgetary 
resources. As we work to improve our risk management capabilities, we 
must ensure that the accompanying growth in Federal homeland security 
spending does not come at the detriment of our other national 
priorities, particularly when we lack a plan to restore the fiscal 
health of our Nation.
    It is simply not possible for us to guard against every threat--and 
frankly, if we tried to, we would bankrupt our Nation in the process. 
As our national homeland security policy matures, we have to use our 
common sense and begin to prioritize by allocating our limited 
resources based upon risk assessments. Mr. Secretary, you have been a 
consistent advocate for increasing our use of risk assessments in 
determining homeland security policy and spending priorities. I applaud 
you for this position. You have rightly noted that it is impossible to 
eliminate every threat, and while we can minimize risk, we can never 
fully eliminate it.
    I look forward to learning of your strategic vision for the 
Department, and how your goals and priorities are reflected in the 
Department's fiscal year 2008 budget request.
    Thank you, Mr. Chairman.

    Chairman Lieberman. Thanks very much, Senator Voinovich.
    Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you, Mr. Chairman.
    I wanted to first briefly go over some concerns I have 
concerning the way GAO has been handled within your Department. 
Delay is the archenemy of accountability. There is nothing that 
is more damaging to the ability of independent auditors to help 
us do our job than their inability to do their work quickly and 
efficiently. In visiting with David Walker this week--I called 
him after I saw some accounts because I wanted to hear from him 
firsthand how bad the problem is at the Department of Homeland 
Security. He said that your Department was one of the very 
worst, if not worst, in terms of access issues; that they 
continually have access issues, not just to people but also to 
records. Let me first ask about the records.
    He indicated that you were perhaps the only Department that 
requires every request for records that GAO makes to go through 
the lawyer's office. I would like to understand that. It seems 
incredibly cumbersome and inappropriate, completely 
unnecessary--in fact, wastes taxpayer money, a lot of taxpayer 
money.
    I would like to hear your view on whether you are willing 
to make the decision that no longer will all the requests for 
access for records go through the lawyer's office at GAO. And, 
second, the policy that you have had there that puts lawyers in 
interviews. It is so important for a government auditor to be 
able to get information that is not being chilled, or there not 
be any sense that they, the people being interviewed, have to 
be careful what they say. You put a lawyer in the room from the 
Department, and the quality of the product will be impacted. 
And to have a lawyer in the room when auditors are interviewing 
government employees--to somebody who has spent a great deal of 
time doing this--it is like fingernails on a blackboard. And I 
would like your comments on both access to records and access 
to people without the interference of lawyers from your 
Department.
    Secretary Chertoff. Well, first of all, with respect to 
records, I think it depends on what the nature of the inquiry 
is. I do not have a problem in a significant majority of cases 
where I think the records are being sought; it is probably 
pretty self-evident and pretty contained. There are times when 
there is a broad request for records, and I think it is 
important to make sure that we actually respond to the requests 
accurately and comprehensively, and sometimes actually the 
lawyers facilitate that.
    I am always a little taken aback when Mr. Walker never 
calls me or writes me or raises a complaint with me personally, 
but airs it first in a public forum. That always makes me feel 
a little bit upbraided because if there was a particular issue, 
I could deal with it. That does not mean I am always going to 
agree with him, though.
    As to the issue of lawyers in interviews, I do not know 
that it is true that lawyers are in interviews all the time. My 
understanding from talking to the General Counsel's office is 
that, in fact, in many cases they are not in the interviews. 
However, in some cases they are, and I frankly do not 
understand--putting aside whistleblowers, which is a separate 
issue and treated separately--why that would have a chilling 
effect.
    I have to say I also have a lot of experience 
investigating, and I was accustomed to having lawyers in rooms 
when I interviewed people and sometimes actually found it 
facilitating in terms of accuracy.
    So, again, I do not think there is any desire here to delay 
or to make things cumbersome. I do think we have a desire to 
make sure we are accurate, that when we say we are turning 
things over and we are doing a complete turnover, it is a 
complete turnover; that we are protecting whatever legal rights 
the Department and the Executive Branch have so we are not 
taking a position that we should not be taking, or letting 
something go that we should be raising an objection to.
    So I am very practical about these things, and I have 
talked to the Acting General Counsel about being as 
accommodating as possible. I cannot tell you, though, that I 
necessarily think it is always a bad thing or a wrong thing to 
have lawyers in an interview.
    Senator McCaskill. Well, let me just say that unlike an 
investigatory interview, where you are dealing in a law 
enforcement capacity, an auditing interview is a much different 
animal, and having experience with both, they are much 
different. The auditing process has many different reviews for 
accuracy. The information that an auditor gets from a line 
employee, that is not something that is disseminated to the 
public. That is something that is checked and checked again 
through the government auditing standards. And, in fact, the 
lawyers in your Department would have every access to that exit 
report before it is even made a public document.
    So there is plenty of opportunity to review for accuracy, 
and I fundamentally disagree with you. A lawyer in the room 
with a government employee when an auditor is asking questions 
sends a signal. And I would urge you to take a look at a policy 
that would set out when you thought lawyers would be there as 
opposed to the current policy, which evidently allows the 
lawyers to go whenever they feel like it, because I do think it 
really hampers the ability of the GAO to do their job.
    Secretary Chertoff. Well, I certainly will look at it and 
work with the General Counsel to make sure we are not--I do not 
want to waste anybody's time. I certainly do not want to waste 
a lawyer's time. So certainly on routine things, I do not think 
they do, and I certainly will make sure they have an approach 
that makes sense in terms of making sure we are not just 
putting lawyers in there when there is no reason to do so. 
There should be a good reason, a sound reason.
    Senator McCaskill. Finally, briefly--and I will submit 
these questions, some of these, for the record. But there is in 
this budget a three-quarters of a billion dollar request for 
Deepwater. I am aware of the problems that have been brought to 
the attention. The question that I would like answered, and if 
you cannot answer it today--it is a yes or no question: Is it 
true that red ink warnings on design flaws were deleted from 
documents given to the Homeland Security auditors?
    Secretary Chertoff. I believe that Admiral Allen answered 
that question in another hearing, and I think probably the best 
thing for me to do, since I have no first hand knowledge, is to 
suggest that you look at the answer that he furnished, which we 
can give you.
    Senator McCaskill. And then the other question I would 
have--once again if you need to make the answer later, that is 
fine, if it is too lengthy because I am out of time. But is 
there a commitment to redraft the Deepwater agreement so that 
it does not presume that Lockheed and Northrop continue to be 
the only contractors on that system?
    Secretary Chertoff. I know Admiral Allen has been working 
with the contractors and with his procurement people to 
redesign this to give him and his people greater visibility and 
greater control. But, again, I probably ought to have someone 
get back to you with the specifics of what they are going to 
do.
    Senator McCaskill. Thank you very much. Thank you, Mr. 
Chairman.
    Chairman Lieberman. Thank you, Senator McCaskill. Senator 
Coleman.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Thank you, Mr. Chairman.
    Mr. Secretary, thank you. Thanks for what you do. When we 
went through your confirmation, I said you have perhaps the 
most difficult job of all Cabinet Secretaries. One failure for 
you is not acceptable, and I think you understand that.
    Let me talk a little bit about the Western Hemisphere 
Travel Initiative. I appreciate your perspective on wanting to 
push this forward. We have had a number of hearings on this, 
and I think across the Northern border, the uniform concern is 
that if you do not do it right, there are going to be great 
impacts, great consequences. So the concern is to make sure we 
do it right.
    You have indicated that you are in discussion with the 
State of Washington to carry out a pilot. Is that correct?
    Secretary Chertoff. Yes, we are.
    Senator Coleman. Do you have a Memorandum of Understanding, 
do you have a signed agreement with the State of Washington as 
to how this is going to proceed and how long it is going to 
take and how you are going to measure the results of the pilot?
    Secretary Chertoff. I did not sign it myself. I know we are 
working with them. I cannot tell you exactly how it has been 
embodied, but I will get back to you.
    Senator Coleman. I would certainly like to see a Memorandum 
of Understanding. Again, the consequences of failure in this, 
the economic consequences, the delays, there are a lot of human 
consequences. One of the encouraging things about this whole 
discussion is typically in dealing with Canada we are dealing 
with fights about fishing rights and timber and wheat, and yet 
in the process of looking at this issue, I saw communities 
across the border come together with a shared interest. I just 
want to make sure that what we do we do right.
    Tied into that, do you intend to issue a report? Do you 
intend to analyze the Washington pilot? Is there a set period 
of time before you issue a report that we in Congress could 
take a look at before we proceed further?
    Secretary Chertoff. Well, I don't think we are envisioning 
the completion of the pilot as something that is a pre-
condition to putting this into effect. I think we are viewing 
that, as in any process, as a parallel process. We are more 
than happy to put into place alternatives. For example, the 
NEXUS card is one alternative that we are going to embrace, the 
PASS card that the State Department is going to issue, as well 
as the passport. But the one thing that we really do not want 
to do is put a significant amount of delay into this because I 
go back to what I said earlier about the passport. When we put 
the air requirement in effect earlier this year, in the 6 
months before, all I heard was the sky is going to fall. And by 
keeping to the deadline, working with the destinations, and 
doing a communications plan, we had a flawless roll-out. There 
was better than 99 percent compliance. All the doom and gloom 
turned out not to come out, and that is because we stuck to the 
program.
    Senator Coleman. I would maintain there is a perceptible 
difference between the air program and the sea program and the 
type of travel that you get. That is what our hearings were. We 
had a lot of discussion on this. I did not hear the doom and 
gloom over the air program. I did not hear the problems about 
the sea program. What I heard were neighbors saying I want to 
go fishing in Minnesota, and I have a resort that is across the 
border, and all of a sudden we are going to now require a 
passport.
    My concern is that, for instance, in the budget you have 
$250 million for PASS card readers at 13 high-volume border 
ports of entry. Is that correct?
    Secretary Chertoff. Yes.
    Senator Coleman. How many border ports of entry are there?
    Secretary Chertoff. Oh, there are many. But most of them do 
not need high-tech readers because all that we are going to 
need is for someone to present the appropriate document instead 
of one of the 8,000 types of documentation currently being 
presented.
    Senator Coleman. And I understand that we need to have 
them, but my concern is this: That we will have the PASS card 
readers at high-volume border crossings.
    Secretary Chertoff. Right.
    Senator Coleman. But for the individuals in the small towns 
along the Maine border and the Minnesota border who do not have 
that high technology, if, in fact, we do not have a system that 
allows for the smooth flow of traffic--and it may not be big 
volume, but for them and their businesses and their lives, 
these have huge impacts. We want the same result.
    Secretary Chertoff. Yes.
    Senator Coleman. I just do not want the small towns and 
small communities kind of glossed over in this and let them do 
what they may if we do not have in place a system that allows 
for quick, accelerated entry between Canada and the United 
States.
    Secretary Chertoff. I agree. I think at the small ports of 
entry--I carry this around with me. This is a NEXUS card. This 
card will do it.
    Senator Coleman. But there are not NEXUS ports along the 
way. So for the smaller communities, they cannot use that card.
    Secretary Chertoff. Well, you could because all we will 
need to do at the smaller border crossing is simply present the 
card, and the border inspector will look at the card, and that 
will be sufficient.
    Senator Coleman. So NEXUS will be available at every border 
crossing?
    Secretary Chertoff. The NEXUS card will be usable at every 
border crossing for this purpose. Now, the real value of NEXUS 
comes in the high-volume ports because of the special lane. But 
in terms of the identification, this does the trick at a small 
border crossing. So it is not going to slow you up at all, and 
there will be a PASS card similar to that. You do not need the 
reader if you have low volume because then the inspector can 
just look at it himself.
    Senator Coleman. Again, my concern is that as we move 
forward, the smaller communities are not put in a place where 
you have the negative economic impact. And, from a percentage 
perspective, it is as important to them as the high volume. It 
is their lives.
    Secretary Chertoff. Sure. I agree with that.
    Senator Coleman. And I just do not want them getting lost 
in the mix. I do hope that we see the results of the pilot and, 
if there are problems, that we address them before we institute 
this across the border.
    I think my time is up.
    Chairman Lieberman. Thanks, Senator Coleman. Senator Obama.

               OPENING STATEMENT OF SENATOR OBAMA

    Senator Obama. Thank you very much, Mr. Chairman.
    Mr. Secretary, thank you for your testimony. I have two 
areas that I want to touch on real quickly. The first goes to 
the budget. I know that this has been touched on somewhat, but 
I just want to make sure that I am understanding this 
correctly.
    As I understand it, the President has requested a 52 
percent reduction in State Homeland Security Grant programs, 
and that reduction is actually a 72 percent reduction in 
overall funding when it is combined with the President's 
decision not to fund the Law Enforcement Terrorism Prevention 
Program. But under the President's proposal, States have to 
spend 25 percent of their SHSGP funds for the Law Enforcement 
Terrorism Prevention Program. Is that a fair assessment or do 
you think that mischaracterizes it?
    Secretary Chertoff. I think that I would put it this way: 
In addition to the Homeland Security Grants, which are funded 
at $250 million, there is an additional $1 billion coming 
through the interoperability grants which will be made 
available to the States. So that although there are some 
differences in the categories that we fund as opposed to last 
year's funding, the bottom line is that in fiscal year 2008, we 
will have $3.2 billion in the hands of first responders as 
opposed to about $3.4 billion last year.
    Senator Obama. But let me just, on the interoperability--
because I recognize that you may be shifting some money around. 
We do not want to get too caught up in categories. But my 
understanding is the $1 billion that you are talking about in 
terms of interoperability comes out the Department of Commerce 
and that it is actually fiscal year 2007 money which is 
supposed to be for this year, not for next year. But you seem 
to be counting that as sort of the stopgap to justify the 
reductions that we are making here.
    Secretary Chertoff. Right.
    Senator Obama. Am I misunderstanding that?
    Secretary Chertoff. Let me clarify. We will co-administer 
this money with the Department of Commerce. Putting aside 
whether we come back to Congress and actually ask for more time 
to distribute it past the end of the fiscal year, even if we 
were to allocate it by September 30, 2007, at the end of the 
fiscal year, it would not be expended until fiscal year 2008. 
So in the real-world sense of when the money actually starts to 
go out the door, State and local responders will have that 
money, plus the other money, totaling $3.2 billion in fiscal 
year 2008, plus the $5 billion that has not been spent yet.
    Senator Obama. Can we talk about that just for a second? 
Because you mentioned that earlier. Why is there $5 billion in 
the pipeline that has not been spent? Is it because of the 
incapacity to absorb the money in an effective way at the local 
level? Is it because local communities are coming up with a 
bunch of good ideas but your Department cannot process these 
requests? Because I think there is nobody on this Committee who 
is not hearing from their State and local communities saying, 
``We need the money, and we know exactly what we want to do for 
it.''
    Secretary Chertoff. I think that there is not a single 
answer to all the questions. Obviously, there is always a delay 
while we get out the grant guidance. This year we were far 
ahead of where we were in previous years. Then there is some 
delay--there is nothing wrong with this--because the States may 
obligate the money, they may contract for certain things, but 
if they are smart, they are not going to actually pay the 
vendor until the stuff is delivered and it actually works. So 
there is a whole process of getting the money allocated. Then 
you go out and you figure out exactly what you want to get from 
the vendor. Then the vendor delivers it, and then you pay him.
    So it is part of a stream of work, and I am not being 
critical in suggesting it. I am just saying that there is 
plenty of money that is working its way through the pipeline, 
and it is not as if the pipeline is dry at this point. And that 
is a lot of work for States and locals to make sure they 
continue to spend the money wisely.
    Senator Obama. OK. Well, I have got another area that I 
want to explore real quickly, and I am running out of time. So 
let me just make this note. Your Department made a decision to 
deny some pretty major cities, like Las Vegas and San Diego and 
Phoenix, UASI dollars. Although Chicago has done well, and so 
this is not a parochial question that I am asking here, I think 
there are communities like New York, Boston, and others around 
the country that would argue that they still have been 
shortchanged.
    It just strikes me that the President's drastic cuts in 
these areas are inexplicable, and I recognize it takes some 
time to get the money out, but these communities have very real 
needs. They are talking to me about them on an ongoing basis, 
and it seems to me that this is a shortsighted decision on the 
Department's part.
    Secretary Chertoff. If I could just respectfully correct 
you in one respect.
    Senator Obama. Only if I can maybe get half a minute.
    Secretary Chertoff. If I could ask the Chairman to add that 
time. In 2006, Las Vegas, San Diego, and Phoenix were told that 
they did get the money, but they were told that they would not 
get it the following year, proving that we do listen.
    I met with the mayors. We reanalyzed what was going on, and 
we announced for 2007 that they were on the list. So actually, 
all those cities are----
    Senator Obama. Are now on the list.
    Secretary Chertoff. And have remained on the list. They 
have never dropped off the list.
    Senator Obama. Let the record reflect my wrong information 
on that.
    The final question I wanted to ask about was on the rise in 
immigration fees. We are all concerned about illegal 
immigration. Your Department has budgeted significant amounts 
for this. I have been supportive of controlling our borders in 
the context of comprehensive reform, but we are now talking 
about the process of naturalization for people who are legally 
pursuing the dream of becoming an American citizen.
    The fees involved for naturalization have gone from $95 in 
1998 to $310 in 2002. Today it is $330, and as I understand it, 
the latest proposal is to raise it to $595. So if you are a 
family of four residing here legally, trying to pursue 
naturalization, you are now looking at shelling out over $2,000 
just for the application process.
    Now, I recognize that the Immigration and Naturalization 
Act authorizes you to do this. It says you may do it, but it 
does not mandate you do it. And so I am just curious as to 
whether you have thought about some process to cushion the blow 
for low-income legal residents who are trying to pursue 
citizenship. Have we thought about staging this in ways that do 
not prevent legal residents from obtaining their citizenship?
    It strikes me that there is something fundamentally unfair 
if whether or not you can become naturalized ends up depending 
on your wealth as opposed to your commitment to becoming a U.S. 
citizen. Do you want to address that real quick?
    Secretary Chertoff. Well, we drove the backlog 
substantially down, which was a good thing, and the rise in 
fees reflected the fact that if we were to continue to maintain 
and actually do a better job of servicing the people who wanted 
to become citizens, we needed to make some investments. So we 
needed the money to do it.
    We did exclude, for example, refugees and some other 
categories from having to pay fees. The actual budgeting of the 
additional fees was based upon a quite rigorous analysis of the 
costs. In some respect, what we did was we moved from a model 
that charged a lower initial fee but required you to pay every 
time there was an extension, which had the perverse economic 
effect of actually incentivizing the Department to delay 
because you actually made more money that way, to a system that 
you pay once but then that covers you until you are cleared.
    In terms of people who are truly in economic need and 
cannot make the difference, I do not know whether we have a 
program for true indigency, to waive the fees or to scale it 
out over a period of time. But I will get back to you on that.
    Senator Obama. Well, I would like to work with you on that. 
I do not think you have to be a true indigent to not be able to 
come up with $2,000 for fees. I think a lot of working families 
around the country would say $2,000 is real money. And so 
people who are working every day as a home health care worker, 
for example, and are trying to get naturalized, they may just 
be above the poverty line but, nevertheless, still need some 
help.
    I would like to work with your office on this because I 
think this could have some negative consequences, particularly 
when we are trying to send a signal that if you do things right 
and you come here legally, then you have the opportunity to 
pursue the American dream.
    Secretary Chertoff. We would be happy to do that.
    Senator Obama. Thank you, Mr. Chairman. I apologize for the 
delay.
    Chairman Lieberman. Thank you, Senator Obama. Senator 
Domenici.

             OPENING STATEMENT OF SENATOR DOMENICI

    Senator Domenici. Thanks very much.
    How are you? I am just looking at you there, and thinking 
back to when we confirmed you to be a circuit court judge for 
life and just wondering what you think about your decision to 
change jobs. [Laughter.]
    But I will not make you answer it. You look all right 
today, but about a year and a half ago, you did not look so 
good. I thought then you might want to go back to the court. 
But today you look all right. Things going pretty well?
    Secretary Chertoff. I think they are, Senator. Thanks.
    Senator Domenici. Now, you have a $37.7 billion budget. Do 
you think that the various agencies and departments that you 
were charged with starting up are now all in place? Would that 
be a fair question for you to answer?
    Secretary Chertoff. I think things are much better in place 
now than they were a year ago and when they were when I 
arrived. But we still have work to do.
    Senator Domenici. Well, how long do you think it will take?
    Secretary Chertoff. Well, I always use the example of the 
Defense Department, which it took them 40 years until there was 
Goldwater-Nichols, and then the first Secretary committed 
suicide, and someone told me the second one was fired.
    Senator Domenici. Look, we do not want any of that to 
happen at DHS.
    Secretary Chertoff. Right, we do not want any of that. I am 
confident by the time--and I am committed to this--the 
President leaves office, we will be a fully mature Department.
    Senator Domenici. OK. I have three things you do or use 
that I am wondering about. One is called NISAC. You know that.
    Secretary Chertoff. I have been out there.
    Senator Domenici. You have been out there, the National 
Infrastructure Simulation and Analysis Center. It is a rather 
fantastic facility. It is run by the two national laboratories 
in my State, and it answers questions for anybody, and DHS is 
supposed to use it. DHS pays for it. And I am just wondering 
what does the Department propose for NISAC's 2008 budget and 
what are your plans to coordinate the Department's efforts so 
NISAC is utilized by the entire Department?
    Secretary Chertoff. We have proposed $16 million for 2008, 
and we do propose not only for the Department but for other 
agencies we work with, as they report to us about what they are 
doing in terms of their homeland security planning, to build 
into it having them report on their use of the modeling 
capabilities for purposes of their planning. We do use it for 
planning for catastrophes and a whole host of activities, and 
we think it is valuable.
    Senator Domenici. Still a pretty valuable tool?
    Secretary Chertoff. Yes.
    Senator Domenici. Let me quickly go to another one, the 
Domestic Nuclear Detection Office, DNDO. That is given the job 
of deploying radiation detection technologies and systems 
designed to detect attempts to smuggle nuclear weapons material 
into the United States.
    How is DNDO interacting with the Department of Energy where 
they have efforts that are similar?
    Secretary Chertoff. Actually, many of the research and 
development activities undertaken by DNDO under its auspices 
and funded by it are done through the laboratories of Sandia 
and I think also Livermore. And I have actually been out myself 
to see some of the tools that they are developing that we are 
going to deploy eventually under this program.
    Senator Domenici. So where they have the capacity or are 
developing it, you are saying you welcome that?
    Secretary Chertoff. Yes, and we use it.
    Senator Domenici. Last, the Federal Law Enforcement 
Training Center (FLETC) has its principal location in Georgia 
and three other sites, one of which just happens, for the last 
20 years, to be in Artesia, New Mexico. That is the one where 
you are training all of the people who work for you on the 
border, and you are training people like the Air Marshals that 
occupy seats in airplanes and are equipped to handle problems 
that come up.
    Do you agree that each of these FLETC sites is now 
integrated in a way and being used in a way that they should be 
utilized by the Federal agencies?
    Secretary Chertoff. Yes, and we are actually expanding 
Artesia. I think we are building an additional dormitory 
because of the increase in the flow of Border Patrol we are 
going to be training. We are bringing back some retired Border 
Patrol to instruct, so we are going to be actually increasing 
the capacity there over the next couple of years.
    Senator Domenici. Can you give us an idea of which of the 
FLETC facilities are operating at full capacity?
    Secretary Chertoff. Well, I know Artesia is probably 
exceeding capacity, which is why we are building the new dorm, 
and I believe the others are, if not fully utilized, close to 
fully utilized.
    Senator Domenici. I did not run out of time yet so I can 
tell you a little story. When I was a brand-new Senator, we 
were trying to find a location to put FLETC at, and someplace 
in Maryland was supposed to get it. And they got mad. They did 
not want it. They thought it was a bad thing to have FLETC 
there. So we put it off, and we were going to buy a big piece 
of property and spend millions. And I said to the Chairman, 
``Why don't we adopt a resolution that the GAO will look all 
over the country for the next 6 months? Maybe they will find a 
property we could use.'' And they all said to me, ``You know, 
you are a young Senator. Why don't you kind of keep your mouth 
shut?'' I said, ``Well, I will keep it shut if you do that.''
    Do you know what? They found FLETC-Artesia. It was a 
college that was being abandoned. That is why we got it free.
    Secretary Chertoff. Good investment.
    Senator Domenici. Good investment. Thank you, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Domenici. You are 
always free to tell your stories whether you have time or not.
    Senator Domenici. Well, thank you.
    Chairman Lieberman. Thank you. I appreciated that one.
    Senator Domenici. You are terrific. I know why you won up 
there. [Laughter.]
    Chairman Lieberman. Many people are still asking that 
question, so I appreciate your answer.
    Senator Domenici. They do not know which side to be on as a 
result of that.
    Chairman Lieberman. Right in the middle here.
    Senator Chertoff, if you have got the time, Senator Collins 
and I will do one more round of 6 minutes each. I want to come 
back to you on the funds in the pipeline response about 
explaining why there is not more funding for States and locals 
because my staff follows this pretty closely and says that they 
get reports regularly from the Department of Homeland Security 
that lead them to conclude that well over 90 percent of the 
Homeland Security Grants that have been awarded actually are 
already committed, they have been obligated by the States, and, 
therefore, are not really available to provide additional 
support for communities in fiscal year 2008.
    So isn't it true that those funds in the pipeline that you 
talk about are not actually available to provide additional 
assistance in this coming fiscal year and, therefore, it is not 
a substitute for the money that we believe should have been in 
the grant programs?
    Secretary Chertoff. I agree with you. A significant amount 
of the money is obligated. My point was not that it is a 
substitute. It is that the States and locals are not just 
cooling their heels. They have a lot to do, from the time of 
obligating to the time of expending, to manage, deploy, and 
train on the systems they are requiring. So that it is not so 
much that it is meant to say let's take a year off because we 
are trying to resorb the money; it is, rather, to indicate that 
we actually have a steady flow of money and people are 
occupied. And to the extent that there is a lag in seeing the 
results of the money, the lag comes in that gap between the 
time we push it out the door and the time it is expended after 
the equipment is received.
    So it not meant to be a knock on anybody, and you are quite 
right that much more of the money is obligated than is 
expended.
    Chairman Lieberman. Right.
    Secretary Chertoff. But that is part of an ongoing process.
    Chairman Lieberman. OK. I appreciate the clarification, and 
that is why, of course, I think we need to appropriate more 
money.
    Let me ask you a question about chemical security 
regulations. I know we all agree on the urgency of moving 
forward with the chemical security program, and I compliment 
you and the Department for moving ahead promptly with the 
regulatory authority Congress gave you last fall.
    However, I am troubled by three or four aspects of the 
regulations. I particularly want to ask you on the question of 
preemption, which is whether these Federal regulations will 
preempt the States from taking steps that are perhaps more 
demanding in the exercise of their individual judgment about 
what they need to do to protect their citizens from an accident 
or a terrorist attack on a chemical security facility.
    Also, I believe that it is important to note here that when 
we worked this over, Senator Collins and I and others, Congress 
had alternatives before us, and we specifically chose to remain 
silent on the issue of preemption. We had two sides that were 
arguing on it from different points of view, and we thought in 
this case that silence was golden. But you have opted not to be 
silent in the regulations. And I want to ask you whether you 
are open to consider revising the regulations with respect to 
preempting State action to protect our people with regard to 
chemical facility accidents. And the revision would be simply 
to remain silent.
    Secretary Chertoff. Well, the short answer is we are 
actually in the comment period, the reason we put them out and 
get comments.
    Chairman Lieberman. Right.
    Secretary Chertoff. And we actually read the comments, and 
sometimes we make revisions. So we are in the middle of a 
process of considering that.
    I do want to say I think the original intent of that 
passage was not to suggest that we are altering the standard 
set by Congress or by the law or setting ourselves up as the 
deciders of what is preempted or not because I do not think 
that we can do that legally. I think it was merely to indicate 
that we would be willing to advise on whether we viewed 
something as preempted or not under the pre-existing legal 
standard that exists, and then also make our advice known.
    The courts ultimately decide these issues and accord the 
agency whatever weight is appropriate under the law.
    So certainly we are going to look at that provision and 
make sure that it is clear about what we want to do and what we 
do not want to do and make it clear that we are not arrogating 
unto ourselves power to adjudicate these things that really 
ultimately rest with the courts.
    Chairman Lieberman. So you interpret the language in the 
draft regulations as not of itself preempting greater State 
protections, but simply saying that the Department is available 
to advise.
    Secretary Chertoff. Yes, and I do not have the text in 
front of me, but my understanding of the law is that preemption 
comes from the statute and what the statute authorizes or does 
not authorize, and that the provision in question indicated--
and maybe I have to go back and look at the wording--that we 
would take a position, but a recognition that this position is 
ultimately one which gets before a court and a court either 
decides to accept, reject, or give it some weight.
    There might be some element of moral suasion that we could 
inject into it, but I do not think it was meant to say that we 
somehow have the conclusive ability to make that judgment 
because I do not think that is actually what the law indicates.
    Chairman Lieberman. I agree, or the ability to essentially 
freeze--give the States the impression that they do not have 
the right to regulate, or legislate, more particularly, beyond 
that.
    I am going to follow the comment period and continue to 
work with you on it because I think it is very important that 
the regulations you adopt create a floor, which would be a 
significant step forward, of protection but that if individual 
States because if their individual circumstances want to go 
beyond that, they should have the right to do that.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Let me follow up on that point, and you and I have 
discussed this issue before the regulations were issued. The 
intent of Congress was very clear. We decided to be silent on 
the issue of preemption and to leave it up to the courts. And 
my reading of the regulations is that you go beyond that 
intent, so I would urge you to take a second look at them to 
see if you can clarify that issue.
    My own belief is that States will stop legislating in this 
area now that there is a Federal standard. I think it was the 
void that caused States like New Jersey to step forward and 
legislate, but most States recognize that they do not have the 
expertise or the resources and would rather leave it to the 
Federal Government. So my hope is that States will stop 
legislating in this area, but I would urge you to tread very 
carefully on the preemption issue.
    I do want to switch to the issue that I brought up in my 
opening statement about the adequacy of the $25 million budget 
for chemical security efforts. There are some 15,000 chemical 
facilities that are likely to be assessed and classified under 
the new law. The Department has indicated that perhaps 500 of 
them would fall in the higher-level tiers.
    Do you really think $25 million is adequate to accomplish 
this task?
    Secretary Chertoff. Well, I think it is if you recognize 
that we are not going to fund the improvements. The 
improvements are going to be funded by the chemical companies. 
And I am not going to suggest that the taxpayer pay to make 
ExxonMobil have the capability to protect its own assets.
    So in terms of what our function is, which is to work with 
them and do the assessments--it is an increase of $15 million. 
We think this will allow us to do the job. If it turns out that 
at some point we need a little more and there is money, 
obviously we could seek to get Congress to allow us to 
reprogram from some other function to do that. But we are going 
to try to leverage as much as possible the private sector's 
assets and, frankly, money to do a job which in the long run 
benefits them as much as it benefits the communities.
    Senator Collins. I hope you will keep in touch with us. I 
think it is very difficult at the launch of a new regulatory 
program that has this scope, that has so many facilities, to 
really determine what amount of money is right. And that is why 
I questioned rather than criticized the amount because I think 
it is very difficult to determine at this point. But I hope you 
will not hesitate to come back to us if you find that it is 
insufficient because the task is so vital.
    I want to end my questioning on the FIRE Grant program. 
This has been an enormously effective program that is really 
welcomed by fire departments across the country. They like it 
because there is a minimum of bureaucracy in applying for the 
grants. They like it because it is a peer-reviewed grant 
process. And over the past few years, it has allowed thousands 
of fire departments all over the Nation to increase their level 
of readiness to respond to potential threats. And I think that 
benefits our country as a whole.
    I would point out that the Department received an 
astonishing $3 billion worth of applications for funding, and I 
think that shows the great demand for this program. Yet you are 
actually cutting it back.
    Doesn't the ratio between demand and what you are 
suggesting for supply trouble you in that program?
    Secretary Chertoff. Well, let me preface what I say by 
saying I have no quarrel with the fact that the program 
provides needed tools to firefighters, and in fact, although we 
have requested less than Congress appropriated last year, we 
have requested actually slightly more than we requested last 
year.
    So we really get down to a philosophical issue. To what 
extent is Homeland Security funding a risk-based movement of 
money to the States that is focused on issues of homeland 
security, issues of national significance? And to what extent 
is it a revenue-sharing program for police and firefighters and 
things of that sort where we just give money out to the States, 
a certain amount of just general sustainment money?
    I think the Administration--I think this even pre-dates my 
presence in the job--has typically looked at Homeland Security 
funding as money that should be not exclusively, but heavily 
oriented to risk-based and particularly homeland-wide issues of 
national scope, rather than revenue-sharing like the old COPS 
program, which we haven't supported. And I had a conversation--
or testimony, rather, but it was almost a conversation--with 
Chairman Price on the House Appropriations Committee about 
this. It is a philosophical issue.
    I think obviously making tough choices, we have funded more 
fully the elements that we think are really what homeland 
security is about. In the end, if Congress thinks that money 
ought to move more to the kind of traditional sustainment stuff 
that was done in the 1980s and 1990s, Congress will do that. 
But we think that where the National Government really adds 
value and where the urgency is, because we are still in an 
emergency situation, is building the capabilities that are most 
relevant to the core Homeland Security mission. And that is not 
denigrating the importance of the FIRE grants. It is just 
trying to be really open about the fact that there is a little 
bit of a philosophical divergence here.
    Senator Collins. I think there is a difference in 
philosophy, but what I would encourage you to remember is that 
homeland security really does depend on partnerships, and that 
if there is a terrorist attack or a natural disaster tomorrow, 
people are not calling the Washington, DC, area code. They are 
calling 911. And it is the firefighters and the police officers 
and the emergency medical personnel and the State and local 
emergency managers that are first on the scene.
    We have seen that with every natural disaster, and we 
certainly saw it on September 11, 2001, when more than 360 
firefighters lost their lives.
    So I understand the priorities that you have to set. I 
understand that the Federal Government cannot meet every need 
in every community. But this is a critical partnership, and our 
troops, if you will, are the first responders. They are the 
ones who are called upon, and that is why I strongly support 
this program because they are the ones on the front lines.
    So I hope we can continue to work on this, and, again, I 
thank you for your leadership.
    Secretary Chertoff. Thank you very much.
    Chairman Lieberman. Thanks very much, Senator Collins. And, 
of course, I agree with you.
    Secretary Chertoff. Let me just clarify one thing for the 
record. I told Senator Landrieu that I had mentioned Hurricane 
Katrina in my written statement here. I think the answer is I 
did not do it here. I think I did it in the House, if I am not 
mistaken. I want to check that. And I have to confess, 
testifying three times in a week does tend to conflate the 
memory a little bit.
    I will get back and we will verify for the Committee where 
it appeared. I can assure you that we do spend a lot of time 
thinking about it.
    Chairman Lieberman. I appreciate your clarifying that for 
the record. I would just continue to say that I agree with what 
Senator Collins has said. This is an interesting governmental, 
philosophical discussion. Obviously, a lot of it has to do with 
who pays. But it does seem to me today, particularly post-
September 11, that the State and local first responders are 
increasingly fulfilling a national role. There is certainly a 
national preventive role and a national response role when 
disaster strikes. And the problem, of course, goes back to who 
pays because traditionally at the local level, and certainly in 
my State, most of the local budget goes for education, and most 
of the fire and police budgets go for personnel. So what gets 
left out is the kind of capital investments that, for instance, 
these FIRE Grants make possible.
    I thank you for your testimony. You have a tough job, as 
everybody agrees. I know you are working very hard and making 
progress at doing it. We have some disagreements about the 
budget. I presume if Congress rises up on a bipartisan basis 
and gives you more money for Homeland Security Grants and First 
Responder Grants, you will not refuse to accept and spend it.
    Secretary Chertoff. We will follow the law, and we will do 
it in a way that is responsible in our role as stewards of the 
taxpayers' money.
    Chairman Lieberman. Hear, hear. So I thank you.
    I am going to leave the record open for 15 days for the 
submission of additional statements or questions that we will 
forward to you. I thank you very much.
    The hearing is adjourned.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


                  PREPARED STATEMENT OF SENATOR AKAKA
    Today's hearing on the proposed Department of Homeland Security 
(DHS) FY08 budget is timely. Tomorrow, the Committee will consider 
legislation to implement fully the recommendations of the 9/11 
Commission, a significant part of which is focused on DHS and its 
activities. Although I am unable to be present for this critical 
hearing due to the need to chair a Veteran's Committee hearing, I 
welcome the opportunity to comment on the Department's proposed budget.
    This budget hearing is being held amid a number of troubling 
findings about the Department, including its continued inclusion on the 
Government Accountability Office (GAO) High-Risk List, recent findings 
of the DHS Inspector General critical of financial management and 
internal control systems, and the results of the semiannual survey by 
the Office of Personnel Management evaluating the level of employee 
satisfaction at government agencies. It is important that they be 
considered alongside the proposed budget.
    I am concerned by the Administration's FY08 budget priorities. 
Despite mandating more homeland security requirements for State and 
local governments, funding for first responders, State and local 
emergency management and homeland security professionals--our first 
line of defense--continue to be insufficient. While I understand that 
State and local governments must shoulder an appropriate part of this 
burden, homeland security is a Federal mandate and, as such, the 
government must assist State and local governments with the means to 
meet these mandates. I am concerned that States are being short-changed 
in this budget. States are dependent on such funding for the effective 
implementation of State homeland security strategies, which include 
programs such as pre-disaster mitigation, effective interoperable 
communications, protection of critical infrastructure, and the conduct 
of appropriate training and exercises.
    I am particularly concerned about three programs: The Emergency 
Management Performance Grant (EMPG), the State Homeland Security Grant 
Program (SHSGP) and the National Pre-Disaster Mitigation (PDM) fund.
    In the case of funding for the Emergency Management Performance 
Grant (EMPG), a program that provides grant funding to sustain and 
enhance State and local emergency management capabilities, the Federal 
Government should be holding up its end of the bargain by providing 50 
percent of the matching funds, as required by Congress. It is my 
understanding that this is currently not happening. In order to 
compensate for a funding shortfall, the National Emergency Management 
Association (NEMA) has noted that States have been forced to overmatch 
their share by about $96 million annually. Because the FY08 budget 
request does not add any Federal dollars to EMPG, the shortfall will 
continue, forcing State and local governments to continue to overmatch 
their share, further draining their coffers of scarce resources. A 
shortfall in funding for EMPG has also meant that a number of States' 
high-priority projects are not funded at all.
    I am also concerned with the sizable reduction in overall funding 
for the State Homeland Security Grant Programs (SHSGP) in the budget 
request. A cut of $275 million in this important grant program, which 
funds enhancements in the ability of States, territories, and urban 
areas to prepare for, prevent, and respond to terrorist attacks, and 
other major disasters will impact all States, including my own home 
State of Hawaii, in their ability to continue developing an all-hazards 
capability for preparedness and response. This grant program is a 
critical funding source for building homeland security capabilities at 
the State and local levels, capabilities that are focused on an all-
hazards approach to preparedness and response.
    In my own State, these programs provide critical capabilities and 
equipment for effective preparedness and response. For example, in 
FY2006, Hawaii received $4.5 million from this program to fund key 
communications equipment including radios, towers, fiber optics and 
mesh networking, equipment to support law enforcement and HAZMAT teams, 
power generation, critical infrastructure, and exercises and training.
    Some State government agencies, including the Hawaii State Civil 
Defense, rely on homeland security grant programs, including the EMPG 
to pay for 50 percent of salary and other personnel costs. The lack of 
any increase in FY08 over the FY07 level of $200 million will leave 
State emergency response agencies unable to respond to unexpected 
funding contingencies, shortfalls or the ability to pay for required 
program implementation costs.
    EMPG and SHSGP are not the only programs to be short-changed. DHS 
should develop an anticipatory culture of preventing and responding to 
disasters, but the program designed to do this, the National Pre-
Disaster Mitigation Fund (PDM), does not receive the support it needs. 
In the proposed FY08 budget, PDM, which is dedicated to competitive 
pre-disaster mitigation activities to reduce the risk of flood damage 
to structures, receives a paltry $53,000 increase over FY07 funding 
level, despite the fact that pre-disaster preparation has been 
demonstrated to be one of the most cost-effective means to reduce the 
consequences of disasters. This is only about $1,000 per State.
    In my home State of Hawaii, PDM grants supplement available State 
funding by providing funding for drought mitigation, multi-hazard 
mitigation planning, flood-proofing, and an all-hazards evaluation of 
critical facilities. The proposed minimal increases in PDM grant 
funding will keep States from fully implementing mitigation efforts in 
all sectors that could reduce the effects of a natural disaster like 
Hurricanes Katrina or Rita, or a 9/11-style terrorist attack.
    I would like to comment on two other issues. The first is the need 
for DHS to be more responsible to Congress and, second is the need to 
continue to consider ways to further rationalize the Department's 
structure.
    The need to create a strong, unified Department of Homeland 
Security with sound and effective programs is a challenge. Gathering 22 
disparate agencies, with 22 different cultures and problems under one 
roof presents unprecedented management challenges. But almost 6 years 
after the terrorist attacks of September 11, 2001, the Department is 
still struggling.
    Creating an effective department can only be achieved through close 
cooperation between the Administration and the Congress. I am troubled 
that DHS continues to resist requests for information by Congress and 
the GAO. As David Walker, Comptroller General of the Government 
Accountability Office (GAO) testified on February 7, 2007 before the 
House Homeland Security Committee, ``DHS has not been receptive towards 
oversight and its delays in providing Congress and us [GAO] with access 
to the various documents and officials have impeded our work.'' GAO has 
testified numerous times about the need for increasing transparency of 
operations at DHS. Unfortunately, this has not yet happened.
    The creation of a separate Domestic Nuclear Detection Office (DNDO) 
is indicative of the continuing challenges to a unified DHS with 
clearly delineated roles and responsibilities. In this area, as in 
others, DHS is moving in the wrong direction. According to DHS, DNDO 
was established to improve the Nation's capability to detect and report 
unauthorized attempts to import, possess, store, develop, or transport 
radiological or nuclear material for use against the Nation, and to 
further enhance this capability over time.
    By comparison, the Science and Technology (S&T) Directorate's 
mission is to protect the homeland by providing Federal, State, local, 
tribal and territorial officials with state-of-the-art technology and 
other resources. Both DNDO and S&T will be devoting considerable 
resources to developing Chemical, Biological, Radiological and Nuclear 
(CBRN) technologies. We should be seeking ways to leverage this 
investment rather than risk spending scarce resources on duplicative or 
parallel programs by considering putting the DNDO function back where 
it was initially placed: In the S&T directorate.
    Thank you Mr. Chairman. I look forward to working with you and 
discussing the Department's FY 08 budget proposal today.

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