[Senate Report 105-185]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-185
_______________________________________________________________________


 
 AUTHORIZING APPROPRIATIONS FOR FISCAL YEAR 1999 FOR THE INTELLIGENCE 
ACTIVITIES OF THE UNITED STATES GOVERNMENT AND THE CENTRAL INTELLIGENCE 
     AGENCY RETIREMENT AND DISABILITY SYSTEM AND FOR OTHER PURPOSES

                                _______
                                

                  May 7, 1998.--Ordered to be printed

_______________________________________________________________________


 Mr. Shelby, from the Select Committee on Intelligence, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2052]

    The Select Committee on Intelligence, having considered the 
original bill (S. 2052), which authorizes appropriations for 
fiscal year 1999 for intelligence-related activities and 
programs of the United States Government, the Community 
Management Account, and the Central Intelligence Agency 
Retirement and Disability System, and which accomplishes other 
purposes, reports favorably thereon and recommends that the 
bill pass.

                          purpose of the bill

    This bill will:
          (1) Authorize appropriations for fiscal year 1999 for 
        (a) the intelligence activities and programs of the 
        United States Government; (b) the Central Intelligence 
        Agency Retirement and Disability System; and (c) the 
        Community Management Account of the Director of Central 
        Intelligence;
          (2) Authorize the personnel ceilings as of September 
        30, 1999, for intelligence activities of the United 
        States Government and for the Community Management 
        Account of the Director of Central Intelligence;
          (3) Authorize the Director of Central Intelligence, 
        with Office of Management and Budget approval, to 
        exceed the personnel ceilings by up to two percent;
          (4) Extend for one additional year the President's 
        authority to delay the imposition of proliferation-
        related sanctions when necessary to protect an 
        intelligence source or method or an on-going criminal 
        investigation;
          (5) Extend for two additional years the Secretary of 
        Defense's authority to engage in commercial activities 
        as security for intelligence collection activities;
          (6) Amend the National Security Education Act of 1991 
        to include the study of counter-proliferation within 
        the scope of the Act;
          (7) Extend for two additional years the Director of 
        Central Intelligence's authority under the Central 
        Intelligence Agency Voluntary Separation Pay Act of 
        1993 to offer separation pay to employees;
          (8) Authorize the Director of Central Intelligence to 
        designate personnel to carry firearms to protect 
        current and former Agency personnel and their immediate 
        families;
          (9) Authorize the Central Intelligence Agency's 
        Inspector General to review and comment in the 
        Inspector General's semiannual reports on existing and 
        proposed legislation relating to programs and 
        operations of the Agency;
          (10) Authorize the Attorney General or a designated 
        attorney for the Government to apply for a court order 
        authorizing the installation and use of a pen register 
        or trap and trace device for an investigation to gather 
        foreign intelligence information or information 
        concerning international terrorism;
          (11) Authorize the Director of the Federal Bureau of 
        Investigation or a designee to apply for a court order 
        to require common carriers, public accommodation 
        facilities, or vehicle rental facilities to release 
        certain records in their possession relating to a 
        foreign intelligence or international terrorism 
        investigation; and
          (12) Ensure that employees within the Intelligence 
        Community are made aware that they may, without prior 
        authorization, disclose certain information to 
        Congress, including classified information, that they 
        reasonably believe is specific and direct evidence of--
        a violation of law, rule or regulation; a false 
        statement to Congress on an issue of material fact; or 
        gross mismanagement, a gross waste of funds, a flagrant 
        abuse of authority, or a substantial and specific 
        danger to public health or safety.

             classified supplement to the COMMITTEE REPORT

    The classified nature of United States intelligence 
activities prevents the Committee from disclosing the details 
of its budgetary recommendations in this Report.
    The Committee has prepared a classified supplement to this 
Report, which contains (a) the classified annex to this Report 
and (b) the classified schedule of authorizations which is 
incorporated by reference in the Act and has the same legal 
status as public law. The classified annex to this report 
explains the full scope and intent of the Committee's action as 
set forth in the classified schedule of authorizations. The 
classified annex has the same status as any Senate Report, and 
the Committee fully expects the Intelligence Community to 
comply with the limitations, guidelines, directions, and 
recommendations contained therein.
    The classified supplement to the Committee Report is 
available for review by any Member of the Senate, subject to 
the provisions of Senate Resolution 400 of the 94th Congress.
    The classified supplement is made available to the 
Committees on Appropriations of the Senate and the House of 
Representatives and to the President. The President shall 
provide for appropriate distribution within the Executive 
Branch.

                       scope of committee review

    The Committee conducted a detailed review of the fiscal 
year 1999 budget requests for the National Foreign Intelligence 
Program (NFIP) of the Director of Central Intelligence; the 
Joint Military Intelligence Program (JMIP) of the Deputy 
Secretary of Defense; and the Tactical Intelligence and Related 
Activities (TIARA) of the military services. The Committee's 
review entailed a series of briefings and hearings with senior 
intelligence officials, numerous staff briefings, review of 
budget justification materials, and numerous written responses 
provided by the Intelligence Community to specific questions 
posed by the Committee. The Committee also monitors compliance 
with numerous reporting requirements contained in statute. Each 
report is scrutinized by the Committee and appropriate action 
is taken when necessary.
    In accordance with a Memorandum of Agreement with the 
Senate Armed Services Committee (SASC), the Committee is 
including its recommendations on both JMIP and TIARA in its 
public report and classified annex. The Senate Select Committee 
on Intelligence (SSCI) has agreed that JMIP and TIARA issues 
will continue to be authorized in the defense authorization 
bill. The SASC has also agreed to involve the SSCI staff in 
staff-level defense authorization conference meetings and to 
provide the Chairman and Vice Chairman of the SSCI the 
opportunity to consult with the SASC Chairman and Ranking 
Member before a JMIP or TIARA issue is finally closed out in 
conference in a manner with which they disagree. The Committee 
looks forward to continuing its productive relationship with 
the SASC on all issues of mutual concern.
    In addition to its annual review of the Administration's 
budget request, the Committee performs continuing oversight of 
various intelligence activities and programs. The Committee has 
a dedicated audit staff that conducts indepth audits and 
reviews of specific programs and activities identified by the 
Committee as needing a thorough and concentrated scrutiny. For 
example, the Committee audit staff recently concluded 
examinations of the use of cover by the Central Intelligence 
Agency and the administration of the Foreign Intelligence 
Surveillance Act of 1978. These inquiries frequently lead to 
Committee action with respect to the authorities, applicable 
laws, and budget of the activity or program concerned.
    The Committee also established a Technical Advisory Group 
(TAG) in 1997. The TAG is an independent panel of twenty-two 
experts drawn from the private sector. Each member of the TAG 
was selected by the Committee for their extensive expertise in 
a particular discipline. The purpose of the TAG is to provide 
the Committee an objective and comprehensive evaluation of 
various intelligence programs and activities. Many of the TAG 
members have never worked within the Intelligence Community and 
therefore being a fresh and independent perspective to 
intelligence programs and activities. The results of these 
examinations and the TAG will be discussed later in its report.

                       committee recommendations

    The vast majority of the Committee's specific 
recommendations relating to the Administration's budget request 
for intelligence and intelligence-related activities are 
classified and are contained in the classified schedule of 
authorizations and the classified annex. The Committee is 
committed, however, to making its concerns and priorities for 
intelligence programs and activities public to the greatest 
extent possible consistent with the nation's security. 
Therefore, the Committee has included in this report 
information that is unclassified and available to the public.

                 national foreign intelligence program

Areas of committee emphasis

    The Committee has continued its bipartisan efforts to 
``right-size'' and ``re-tool'' U.S. Intelligence Community 
programs and activities to reflect the new, post-Cold War era 
threats and challenges to U.S. national security.
    Specifically, the Committee recommends important new 
investments and initiatives in high-priority areas. These 
include: aggressive efforts in what the committee chairman has 
called the ``five C's'' (counter-proliferation, counter-
narcotics, counter-terrorism, counter-intelligence, and covert 
action); bolstering advanced research and development across 
the Intelligence Community to maintain the U.S. technological 
edge; improving the skills and tools of clandestine service 
personnel; developing new and innovative approaches to 
understanding ``hardtarget'' countries; building up 
capabilities in the area of measurments and signatures intelligence; 
and enhancing analytical capabilities as well as tools for conducting 
information operations.
    The Commission recommends significant funding increases in 
each of the priority areas listed above. At the same time, 
however, the Committee recommends reductions in programs and 
activities that are lower-priority or poorly justified, 
redundant, or that cannot be executed. Details of the 
Committee's recommendations are included in the Classified 
Annex accompanying this report.

Department of Defense Foreign Counterintelligence Program (DoD FCIP)

    The Committee notes the precipitous decrease in personnel 
and funding requested for the DoD FCIP since fiscal year 1993. 
The resources dedicated to the military's counterintelligence 
mission have decreased by nearly one half in five years. This 
significant decline, however, has been accompanied by a marked 
increase in operational tempo and increased emphasis on force 
protection which draws heavily on counterintelligence 
resources.
    As Congress strives to achieve and maintain a balanced 
budget, the Committee recognizes the need to reduce spending in 
many areas. The Committee is concerned, however, that certain 
programs and activities within the DoD FCIP have been cut 
without a realistic evaluation of the impact on the 
Department's counterintelligence mission. It appears to the 
Committee that the concept of doing more with less has led to 
declining morale, lack of training, and attrition of personnel 
with a corresponding loss of expertise. Further, the decreases 
in FCIP funding belie the growing dependence by commanders in 
the field on information collected by counterintelligence 
personnel. A 1996 Director of Central Intelligence study 
estimated that nearly 70% of the information used by combatant 
commanders for force protection comes from counterintelligence 
and HUMINT personnel. If this is indeed the case, the Committee 
would expect the counterintelligence mission to be targeted for 
funding increases to strengthen our collection capabilities and 
enhance our analytical capability in the field.
    Therefore, the Secretary of Defense shall submit, by March 
15, 1999, a report to the Congressional Intelligence Committee 
comparing the decrease in DoD FCIP, service TIARA, and Security 
and Intelligence Activities funding over the last five years 
with the operational demands placed on the Department's 
counterintelligence forces. The comparison shall address the 
average deployment schedule of counterintelligence personnel 
for each of the past five years. The report shall also explain 
the analytical methodology used by the Department to conduct 
mission impact analysis before it mandates cuts to the 
counterintelligence force structure. If such an analysis is 
conducted, the report shall include the Department's mission 
impact conclusions for the past five years. If no impact 
analysis is conducted, the report shall explain why no such 
analysis is conducted. The report shall also determine the 
optimum counterintelligence force structure considering 
intelligence requirements, operational tempo, and increased 
emphasis on force protection over the last five years.

Federal Bureau of Investigation foreign counterintelligence

    The Committee's audit staff recently completed a 
comprehensive review of the implementation and administration 
of the Foreign Intelligence Surveillance Act of 1978. During 
the course of this examination, the audit staff encountered 
many instances where the FBI has failed to address 
technological challenges that may, in time, degrade the 
Bureau's ability to collected critical counterintelligence and 
counter-terrorism information. Further, the audit revealed a 
Bureau-wide deficiency in information systems modernization and 
implementation. The dearth and diversity of information systems 
technology throughout the National Security Division, in 
particular, suggests that the Bureau has yet to develop a 
unified and comprehensive plan to address this challenge. The 
Committee believe that the Bureau either has neglected an 
opportunity to maximize the efficiencies available through 
automation, or lack the requisite resources, expertise and 
vision to develop, install, and operate Bureau-wide systems.
    The Committee understands that a Strategic Management Task 
Force within the Bureau is conducting a comprehensive review of 
the use of collection and information systems technology 
throughout the FBI. While this effort is long overdue, the 
Committee is encouraged by this initiative. The Committee urges 
the Director to share the findings and recommendations of this 
review with the Congressional Intelligence Committees. The 
Committee is concerned that the ability to conduct electronic 
surveillance may fall prey to the advance of technology if the 
Bureau does not keep pace with new software and hardware 
developments. Additionally, the Committee wishes to emphasize 
the need for systems that link elements within the National 
Security Division so that counterintelligence and counter-
terrorism information may be disseminated, shared, and accessed 
simultaneously by agents, language specialists, and analysts.

National Drug Intelligence Center

    As the Managers indicated in the Conference Report 
accompanying S. 858, the Intelligence Authorization Act for 
Fiscal Year 1998, the continued funding of the National Drug 
Intelligence Center (NDIC) from the National Foreign 
Intelligence Program deserves study. The Committee is prepared 
to support and provide additional resources for meritorious 
initiatives generated by the NDIC to the extent that the NDIC 
is truly an element of the Intelligence Community. The 
Committee cannot evaluate such initiatives, however, until it 
receives the report mandated in last year's Act. Congress urged 
the President to carefully examine the operations of the NDIC 
and report to the Congressional Intelligence Committees before 
April 1, 1998. Additionally, the managers directed that this 
examination should be undertaken and reported as a part of the 
National Counter-Narcotics Architecture Review being prepared 
by the Office of National Drug Control Policy (ONDCP). To date, 
no report has been received.
    Despite numerous attempts to obtain this information from 
the ONDCP, no information has been made available to support 
accurate and responsible budgeting of NDIC activities. The 
mandated report required detailed information on current and 
proposed efforts to structure the NDIC to effectively 
coordinate and consolidate strategic drug intelligence from 
national security and law enforcement agencies. It also 
required a detailed description of those steps that have been 
taken to ensure that the relevant national security and law 
enforcement agencies are providing the NDIC with access to data 
needed to accomplish this task.
    The Manager's also agreed that upon receipt of this report, 
the Committees would reconsider whether it is appropriate to 
continue funding the NDIC as a part of the National Foreign 
Intelligence Program.
    Therefore, because the report has not yet been received, 
the transfer of funds described in Section 104(e)(2), shall not 
be undertaken until 30 days after the Congressional 
Intelligence Committees are in receipt of the report mandated 
in the Intelligence Authorization Act for Fiscal Year 1998.

Money laundering activity by foreign narcotics traffickers

    The Committee is concerned by the number and magnitude of 
illicit financial transactions that take place within American 
financial systems initiated by foreign narcotics trafficking 
organizations. The Committee has received several briefings and 
reports from various government agencies, conducted hearings on 
this and related issues, and understands that the magnitude of 
the problem may exceed several hundred billion dollars 
annually.
    The Committee has concluded that there is not enough 
emphasis being placed on combating this serious problem. 
Accordingly, the Committee has augmented the resources of the 
DCI's Crime and Narcotics Center to begin to address this 
shortfall. It is also the Committee's intention to investigate 
this area further and consider, when appropriate, legislative 
initiatives.

Central Services Program Working Capital Fund (CSPWCF)

    The Committee strongly supports the Central Intelligence 
Agency's Directorate of Administration (DA) as it continues to 
make steady progress in its initiative--begun in fiscal year 
1998--to put administrative service providers on a business-
like footing through use of the CSPWCF. The Logistics Operation 
Center (LOC) was the first business area shifted into the CSP.
    The budget request did not include funds for CSPWCF because 
the DA continues to refine estimates of the funds required to 
shift six additional business areas--transportation services, 
facilities management and maintenance, foreign field 
communications, applications development, training, and 
telephone services--into CSPWCF in fiscal year 1999. By the end 
of fiscal year 1998, however, the DA will be able to determine 
the exact amount of funds needed for the CSPWCF in fiscal year 
1999 and will address funding as a fiscal year 1999 issue. Once 
those estimates are known, the Committee urges the Director of 
Central Intelligence to adequately fund any CSPWCF needs.

Commercial imagery

    Since 1993, the Committee has advocated the acquisition and 
use of commercial imagery where practicable. The Committee has 
urged the Department of Defense and the Intelligence Community 
to more aggressively pursue the use of commercial imagery.
    Through numerous briefings with the National Imagery and 
Mapping Agency, the National Reconnaissance Office, and 
industry representatives, the Committee is convinced that 
commercial imagery can satisfy a significant quantity of U.S. 
medium resolution imagery requirements. Current private sector 
launch plans will provide possibly up to six U.S.-owned 
satellites that can provide imagery with resolution of one 
meter prior to the launch of the first satellite in a follow-
on, government operated satellite imagery constellation. 
Unfortunately, NIMA has yet to solicit private sector proposals 
for acquisition of medium resolution imagery, nor has NIMA 
evaluated the potential purchase of a commercial satellite to 
meet future U.S. needs for medium resolution imagery.
    In an effort to implement increased use of domestic 
commercial imagery, the Committee recommends that the Senate 
Armed Services Committee adopt a ``buy America'' legislative 
provision related to acquisition of commercial imagery and 
further recommends an additional $10.0 million authorization 
for appropriations for purchase of commercial imagery.

Imagery archiving

    The Committee is concerned that the Intelligence Community 
and Defense have not adequately addressed the preservation of 
space and airborne reconnaissance imagery. While much of the 
current value of the investment in imagery reflects national 
defense requirements, the future value cannot adequately be 
estimated. The Committee recognizes that the life expectancy of 
archived imagery is dependent on the media on which it is 
stored and that some types of media may not survive for long-
term use. Therefore the Committee directs the Director of 
Central Intelligence and Deputy Secretary of Defense to conduct 
a review of archiving and preservation practices for imagery 
collected from space and airborne platforms, and deliver to the 
Committee, not later than March 15, 1999, a report on current 
and future plans to maintain those archives indefinitely at the 
lowest cost. The report should also address the architecture 
for accessing the imagery digitally in a geospatial reference 
frame. If the study projects a reduction in imagery holdings, 
the rationale for such reduction shall be explained. Finally, 
the Committee directs the Director, National Imagery and 
Mapping Agency, to investigate new data storage technologies to 
determine whether their application will decreasearchival costs 
by allowing, among other things, higher density storage, longer term 
storage between restorations, or less stringent storage-environment 
requirements, while maintaining data quality.

Intelligence dissemination architecture

    The Committee notes the progress being made by the 
Department of Defense in developing a coherent, near-real time 
intelligence data dissemination architecture. Plans being 
developed for the Integrated Broadcast System (IBS) will serve 
as a focal point for continued progress in this regard. The 
Navy, as Executive Agent for IBS, is to be commended for moving 
quickly to get the initial broadcast service platform in space. 
There remains, however, an area of some concern with respect to 
the overall dissemination architecture relating to the specific 
bandwidths being acquired within the National Foreign 
Intelligence Program to support specific broadcast needs that 
do not seem to have any validated linkage to the IBS program.
    The Committee is aware that the Tactical Related 
Applications (TRAP) Data Dissemination system (TDDS) will 
provide multiple channels for rapid broadcast of critical 
intelligence information in support of tactical operations. The 
distribution center for TDDS is called Upgraded Dissemination 
Ground Segment (UDGS) and will become operational in fiscal 
year 1999. This is a very capable system with capacity that is 
global in scope and flexible in format. This bandwidth must be 
factored into the IBS architecture and managed as part of that 
architecture.
    Therefore the Committee directs that the Assistant 
Secretary of Defense for Command, Control, Communications, and 
Intelligence, with the Executive Agent for IBS and the 
Acquisition Agent for IBS, prepare a study that shows the 
integration of broadcast systems into the IBS program. This 
study should validate the location of the UDGS as optimum for 
the IBS program and give detailed descriptions of the various 
intelligence source inputs, as well as the information 
management scheme that will be implemented to ensure the 
military customer is getting the necessary information in a 
usable format. Specifically, the Committee seeks to ensure that 
the adjudication and deconfliction authorities are adequate to 
maintain broadcast discipline and ensure that the customer 
identifies and receives critical intelligence information, as 
defined by the customer, in a timely manner.
    The Committee does not believe that a robust architecture 
implies a single dissemination system. The Committee is 
concerned that broadcast services are being buried within 
intelligence ``stovepipes'', when they could better serve the 
same customers in a more efficient and effective manner if they 
were brought under centralized control within the Department of 
Defense. This issue has languished in the Department for 
several years and acquisition decisions have been effected that 
are not consistent with a ``system of systems'' approach. The 
report directed above shall be due not later than March 15, 
1999.

NSA declassification

    The National Security Agency has several declassification 
programs, which are split among many offices, and funding for 
which is buried in the budget submissions of those offices. NSA 
was unable to provide the Committee with the total amount 
requested for all declassification programs in fiscal year 
1999. In addition, with respect to the only declassification 
program specifically identified in the Congressional Budget 
Justification Book, NSA was unable to explain how those 
resources would be allocated. It is impossible for the 
Committee to determine the scale of the declassification 
effort, the effectiveness of declassification tools, and how 
well NSA is meeting declassification requirements. To enhance 
oversight, the Committee directs the Director of NSA to 
consolidate all declassification programs into a single budget 
submission beginning in fiscal year 2000, to include a 
breakdown of how the resources will be allocated.

                  joint military intelligence program

Joint SIGINT Avionics Family

    The objective of Joint SIGINT Avionics (JSAF) is the 
creation of functional commonality and interoperability among 
all U.S. airborne reconnaissance platforms, regardless of 
service or airframe type. Commonality and interoperability are 
accomplished through an open architecture, common sensor 
payload, and software reconfigurable processors. The 
development is being accomplished through a series of 
technology modules that can be incrementally integrated into 
existing systems and platforms.
    The JSAF is designed to adapt to rapidly changing future 
threat capabilities through software exploitation rather than 
by more costly hardware alterations and upgrades. The program 
is divided into a low band subsystem (LBSS) and a high band 
subsystem (HBSS). The system design relies on commercial off-
the-shelf software and hardware to increase affordability. 
Initial system implementation is planned for completion in 
fiscal year 2007.
    Currently, there are four platforms scheduled to receive 
either the LBSS, the HBSS, or both. The Air force plans to 
install JSAF on two platforms, the RC-135 Rivet Joint and the 
Air Force special platform. There are 16 of each of the two 
platforms in the Air Force. The navy plans to install JSAF on 
its EP-3E aircraft. The Navy maintains 12 EP-3E platforms. The 
Army plans to install JSAF on nine Airborne Reconnaissance Low 
(ARL) aircraft for a total of 53 manned platforms. Under the 
present plan, the Air Force special platform will be the only 
aircraft equipped with the LBSS and the HBSS.
    The LBSS/HBSS production schedule (including development 
units) is as follows:

----------------------------------------------------------------------------------------------------------------
                                                                              Fiscal years--                    
                                                         -------------------------------------------------------
                                                           2000   2001   2002   2003   2004   2005   2006   2007
----------------------------------------------------------------------------------------------------------------
LBSS....................................................  \1\ 3      9     10     10      9      7      4      1
HBSS....................................................  \1\ 1      3      3      3      3      3      1  .....
----------------------------------------------------------------------------------------------------------------
\1\ Developmental units.                                                                                        

    In an effort to expedite delivery of this capability, the 
Committee reviewed as accelerated production effort that would 
not increase program risk. The Committee found that the 
delivery schedule could be accelerated by up to three years in 
the case of the Air Force special platform, and two years with 
other platforms, by requiring that platforms be equipped with 
JSAF components at their next depot maintenance (PDM).
    Under the current plan, both low and high band subsystems 
begin delivery to the services in fiscal year 2001 and conclude 
delivery in fiscal year 2007. During this period, some aircraft 
will go through a PDM cycle and not have the new component 
installed even though the components could be readily 
available. Maintaining these older systems when they could be 
replaced will increase support costs. An accelerated delivery 
schedule consistent with platform PDM schedules would be as 
follows:

------------------------------------------------------------------------
                                             Fiscal years--             
                               -----------------------------------------
                                 2000   2001   2002   2003   2004   2005
------------------------------------------------------------------------
LBSS..........................  \1\ 3     10     14     14      7      5
HBSS..........................  \1\ 1      4  .....      6  .....      6
------------------------------------------------------------------------
\1\ Developmental units.                                                

    The accelerated schedule does not increase risk and has no 
budgetary impact in fiscal year 1999. It requires that funding 
be accelerated in fiscal years 2000 through 2003 over current 
plans. The accelerated schedule not only delivers capability 
faster, but also saves $44 million in initial JSAF costs over 
the current acquisition plan. The alternative funding profile 
would be as follows:

                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                 Fiscal years--                                 
                                          Prior  ---------------------------------------------    TC      Total 
                                           yrs.     2000     2001     2002     2003     2004                    
----------------------------------------------------------------------------------------------------------------
Baseline...............................     34.6     24.1    192.0    173.5    164.1    105.4     152.4    846.1
Acclerated.............................     34.6     29.7    212.1    238.4    218.5     42.9      25.9    802.1
                                        ------------------------------------------------------------------------
Delta..................................        0     +5.6    +20.1    +64.9    +54.4    -62.5    -126.5    -44.0
----------------------------------------------------------------------------------------------------------------

    The Committee recommends the adoption of language directing 
the Department of Defense to adopt an accelerated JSAF 
acquisition strategy consistent with the earliest platform 
availability for PDM schedules.

Defense Airborne Reconnaissance Program integration & support

    The budget request included $17.04 million, an increase of 
more than 100 percent over fiscal year 1998, for program 
integration and support. The budget justification materials did 
not demonstrate a convincing requirement for such a dramatic 
increase. One of the stated justifications for these funds is 
development of transfer plans of Unmanned Aerial Vehicle (UAV) 
capabilities to the services. Given the serious delays in both 
the High Altitude Endurance UAV and Tactical UAV programs, 
coupled with the Air Force's negative experience with the 
Predator program and the fact that the Air Force has conducted 
detailed planning for assumption of responsibility for the High 
Altitude Endurance UAV program, the Committee finds the 
administration's rationale redundant.
    Therefore, the Committee recommends a reduction of $8.0 
million for Defense Airborne Reconnaissance Program Integration 
and Support for fiscal year 1999.

Common ground segment

    The Committee remains concerned about the delays in the 
High Altitude Endurance Unmanned Aerial Vehicle (HAE UAV) 
Advanced Concept Technology Demonstration (ACTD), especially 
with regard to the Dark Star UAV, which continues to fall 
further behind schedule. Information provided to the Committee 
casts serious doubt on the viability of the Dark Star portion 
of the ACTD.
    Because of repeated schedule delays and program problems 
the Committee believes that the administration request for 
fiscal year 1999 for the Common Ground Segment cannot be 
executed in an efficient manner. Therefore, the Committee 
recommends a reduction of $8.0 million in Common Ground Segment 
for fiscal year 1999.

Dark Star

    Dark Star is the Low Observation air vehicle component in 
the HAE UAV Advanced Concept Technology Demonstration (ACTD) 
currently managed by the Defense Advanced Research Projects 
Agency (DARPA). The Dark Star program remains plagued by 
program delays and is substantially behind the projected 
schedule. The Congress has appropriated more than $100.0 
million for fiscal years 1997 and 1998 combined, and the 
administration has requested $40.5 million for fiscal year 
1999.
    The Committee believes that the unexpended prior year funds 
and a reduced fiscal year 1999 authorization for appropriations 
will be sufficient to sustain the Dark Star ACTD through the 
upcoming fiscal year. Therefore, the Committee recommends a 
reduction of $10.0 million for Dark Star in fiscal year 1999.

Interferometric synthetic aperture radar

    Forward deployed U.S. armed forces have a need for up-to-
date and highly accurate maps that provide three-dimensional 
location of targets, including altitude, latitude and 
longitude, and for reconstruction of terrain in a three-
dimensional setting for planning combat missions. Airborne 
interferometric synthetic aperture radar (IFSAR) has the 
potential to provide such maps with an accuracy and timeliness 
that meets the demanding digital terrain elevation data (DTED) 
Level 5 specifications. Such performance would meet all 
validated Army and Air Force requirements for battlefield 
visualization and precision strike. A demonstration IFSAR at 
somewhat lower performance parameters flew successfully on a 
commercial jet in support of U.S. forces in Bosnia. The 
Committee believes that this capability can now be transferred 
to an operational military platform.
    Therefore, the Committee recommends an addition of $4.0 
million within the Advanced Topographic Mapping System (ATOMS) 
program for fiscal year 1999 to expedite development of a DTED 
Level 5 IFSAR for installation on the Army's Airborne 
Reconnaissance Low (ARL) platform.

       improving intelligence community management and operation

The biological and chemical weapons threat

    In March and April 1998, the Committee held a series of 
joint hearings with the Judiciary Subcommittee on Technology, 
Terrorism & Government Information to receive both open and 
classified testimony on the subject of the biological and 
chemical threats to the United States by states and non-state 
actors such as terrorists, and on the United States 
government's strategy and capabilities to prevent or respond to 
such an attack. Witnesses included the Attorney General, the 
Director of the FBI, senior intelligence community officials, 
medical experts from the U.S. Army and the Centers for Disease 
Control, and expert private witnesses. In addition, Committee 
staff met with and debriefed a defector who until 1992 served 
as a senior scientist in the Soviet/Russian offensive 
biological weapons program.
    In the wake of the 1993 World Trade Center bombing, the 
1995 Aum Shinrikyo attack in the Tokyo subway, and most 
recently, the arrests in Las Vegas of persons suspected of 
possessing deadly anthrax agent, the Committee has been 
concerned by the proliferation of biological and chemical 
weapons and the growing prospect of a terrorist attack against 
the United States using biological or chemical agents. The 
Committee has initiated or supported a number of programs to 
enhance the Intelligence Community's capabilities to monitor 
this threat, including new legislative authorities in the 
Intelligence Authorization Act of Fiscal Year 1999 to collect 
certain kinds of critical preliminary information of relevance 
to FBI investigations into international terrorism, and to 
provide policymakers with the information and tools needed to 
support U.S. counter-proliferation and counter-terrorism 
policies. The Classified Annex to the Intelligence 
Authorization Act for Fiscal Year 1999 continues the 
Committee's efforts in this regard.
    The threat of biological or chemical attack poses 
extraordinary and, in some cases, unique challenges, ranging 
from the difficulty of detecting the production of such agents 
and providing timely warning of a potential attack, to the 
consequences of a biological event, which could under certain 
circumstances be more lethal than a nuclear explosion. Of 
particular concern, from the Committee's viewpoint, are the 
ready availability and dual use nature of the materials and 
equipment used to prepare biological and chemical agents; the 
relative ease with which a small group of terrorists could 
produce such substances (compared, for example, with nuclear 
weapons); the possibility of genetic engineering to defeat 
countermeasures and increase the virulence and infectivity of 
biological agents; the threats posed by the Iraqi and Iranian 
biological weapons programs; and concerns over Russia's 
remaining offensive biological warfare program, which according 
to published reports could include biological warheads on 
ICBMs, as well as the potential for transfer of scientific 
expertise, or actual biological agents, from the Russian 
program to rogue states or terrorist groups.
    Many of the challenges cited above are intrinsic to the 
nature of biological and chemical weapons, or otherwise largely 
beyond the capacity of the U.S. Government to influence. The 
Committee is disturbed, however, by public reports that a major 
interagency study has revealed widespread problems and 
deficiencies in the U.S. Government's counter-terrorism 
strategy and capabilities, including intelligence programs and 
activities under the Committee's jurisdiction. This is 
discussed in greater detail in the Classified Annex, where the 
Committee is directing that the Director of Central 
Intelligence and the Attorney General report to the Committee 
on measures they are taking or intend to take to address any 
shortcomings they have identified.

DoD IG oversight of intelligence issues

    In 1995, responding to Congressional concerns about DoD IG 
oversight of DoD organizations within the Intelligence 
Community, the DoD IG established an Office of Intelligence 
Review. The Office of Intelligence Review's mission includes 
overseeing DoD intelligence programs and activities as well as 
coordinating activities of the Inspectors General within DoD 
intelligence agencies such as NSA, NRO, and DIA. Many products 
of the Office of Intelligence Review have been very useful to 
this Committee.
    In January 1998, as a result of overall DoD IG downsizing, 
the Office of Intelligence Review was made a separate entity 
reporting directly to the DoD IG. However, as part of this 
reorganization, the staffing of the Office of Intelligence 
Review was cut nearly in half. While the Committee applauds the 
increased oversight potential created by establishing a 
separate DoD IG office dedicated to reviewing intelligence 
programs and activities, it is concerned that currentDoD IG 
resource constraints could result in the Office of Intelligence Review 
being reduced to an ineffective level or eliminated completely. Over 
the next fiscal year the Committee will be evaluating the Office of 
Intelligence Review's ability to continue to provide quality products 
at its current staffing level.

Computer-proliferation education and training

    The United States faces a qualitatively new proliferation 
challenge to its national security interests. Because the 
proliferation of weapons of mass destruction (WMD) and their 
delivery systems poses a paramount, long term threat to the 
country, the Committee is of the view that the country should 
utilize education as an essential tool in support of the 
training of counter-proliferation specialists equipped to 
address this threat.
    At the present time, however, explicit program authority is 
not available to train American students adequately to confront 
the proliferation challenge. Particularly noticeable by its 
absence is government support for graduate training in the 
counter-proliferation area, which includes WMD technologies and 
capabilities, missile and other delivery system technologies 
and capabilities, existing and required domestic response 
capabilities, motivations and techniques of state and 
subnational proliferators, and a careful assessment of existing 
counter-proliferation regimes.
    The National Security Education Act (NSEA) was enacted in 
1991 ``to provide the necessary resources, accountability, and 
flexibility to meet the national security education needs of 
the United States, especially as such needs change over time''. 
As drafted in 1991, the NSEA emphasized language and area 
studies. Since then, the national security needs of the country 
have changed. In an effort to generate limited but sustained 
Federal support for counter-proliferation activities and 
studies, the Committee amends the National Security Education 
Act of 1991 to (1) specify counter-proliferation studies as a 
primary area for Federal support, and (2) require that the 
National Security Education Board established by the Act 
include the Secretary of Energy. The Committee has as a goal 
the allocation of not less than one-third of the amounts 
specified under the Act for the awarding of fellowships to 
graduate students and grants to institutions of higher learning 
in the field of counter-proliferation training and studies.
    In addressing the threats posed by the proliferation of 
weapons of mass destruction, the Committee has not only been 
supportive of the funding requests of the Intelligence 
Community in combating this threat, but has also pointed the 
way toward enhanced efforts by the community in newer, 
nontraditional areas. Committee support for funding of counter-
proliferation education and training through an amended 
National Security Education Act is not only consistent with 
these efforts but can ultimately contribute to their success.

           impact of technology on the intelligence community

Technical Advisory Group

    In 1997, the Committee established a Technical Advisory 
Group (TAG) to consider selected, highly significant technical 
issues relating to national security or intelligence. The TAG 
is comprised of leading U.S. scientists and experts in 
technology and intelligence. The Committee wishes to thank the 
TAG members for the many hours they devoted to examining both 
the HUMINT and SIGINT capabilities of the Intelligence 
Community (IC). The TAG concluded that intelligence collection 
will pay an increasingly important role in defending U.S. 
national security interests, and recommended that the IC 
develop a comprehensive plan for transition to the future which 
recognizes the technically sophisticated, rapidly changing 
world that now confronts the IC. The Committee will continue to 
review the recommendations of this distinguished group and work 
with the Director of Central Intelligence to implement them. 
Many of the initial recommendations of the TAG have been 
incorporated throughout the Intelligence Authorization Act of 
1999.

Encryption

    The Committee remains concerned about efforts to 
inappropriately ease or remove export restrictions on hardware 
and software encryption products. Export controls on encryption 
and other products serve a clearly defined purpose--to protect 
our nation's security. Therefore, the Committee believes that 
the effects on U.S. national security must be the paramount 
concern when considering any proposed change to encryption 
export policy, and will seek referral of any legislation 
regarding encryption export policy under its jurisdiction 
established under Senate Resolution 400.
    Export restrictions on encryption products assist the 
Intelligence Community in its signals intelligence mission. By 
collecting and analyzing signals intelligence, U.S. 
intelligence agencies seek to understand the policies, 
intentions, and plans of foreign state and nonstate actors. 
Signals intelligence plays an important role in the formation 
of American foreign and defense policy. It is also a 
significant factor in U.S. efforts to protect its citizens and 
soldiers against terrorism, the proliferation of weapons of 
mass destruction, narcotics trafficking, international crime 
and other threats to our nation's security.
    While the Committee recognizes the commercial interest in 
easing or removing export restrictions, it believes the safety 
of our citizens and soldiers should be the predominant concern 
when considering U.S. policy towards the export of any product. 
The Committee supports the continued control of encryption 
products, and believes that a comprehensive strategy on 
encryption export policy can and must be developed that 
addresses national security concerns as well as the promotion 
of American commercial interests abroad. The Committee looks 
forward to working with senior Administration officials in 
developing such a strategy.

Intelligence Community role in national infrastructure protection

    The Committee believes the Intelligence Community has an 
important role to play in the protection of our nation's 
critical infrastructure. The President's Commission on Critical 
Infrastructure Protection (PCCIP) issued a report in October 
1997 which identified five critical infrastructures--energy, 
banking and finance, transportation, vital human services, and 
telecommunications--that are essential to national defense, 
public safety, economic prosperity, and quality of life. In 
pursuit of greater effectiveness and efficiency, the private 
and public sector entities which manage these infrastructures 
have integrated advanced information and communications 
technologies into their systems. However, the widespread use 
and interlinkage of computer and telecommunications throughout 
these infrastructures has created new vulnerabilities which, if 
not addressed, pose significant risks to our national security.
    In response to the recommendations included in the PCCIP 
Report, the Administration in February 1998 created a National 
Infrastructure Protection Center (NIPC) within the Federal 
Bureau of Investigation. The NIPC will be composed of the 
former Computer Investigations and Infrastructure Threat 
Assessment Center (CITAC), originally funded through the NFIP, 
and other offices whose responsibilities include operational 
response to computer intrusion incidents, and indications and 
warnings for infrastructure and key asset protection. To be 
successful in performing its mission, the NIPC must rely on the 
Intelligence Community to provide timely and reliable 
information regarding possible intrusions, disruptions, and 
attacks committed by foreign actors on the critical 
infrastructures.
    In its version of the Intelligence Authorization Act for 
Fiscal Year 1998 the Committee directed the Director of Central 
Intelligence, the Secretary of Defense, and the Director of the 
Federal Bureau of Investigation to submit a report articulating 
a counterintelligence strategy for critical infrastructure 
protection. The Committee received this report on March 30, 
1998. While describing how intelligence agencies have chosen to 
approach the infrastructure protection issue, this report did 
not provide a detailed counterintelligence strategy nor did it 
provide adequate information regarding current or planned 
counterintelligence activities. With the creation of the NIPC, 
the Committee believes the Intelligence Community needs a 
comprehensive strategy to address counterintelligence, threat 
assessment, indications and warnings, and other intelligence 
requirements necessary to assist the NIPC in its infrastructure 
protection mission. Therefore, the Committee directs the 
Director of Central Intelligence and the Secretary of Defense 
to perform a joint review to determine the proper role of the 
Intelligence Community in critical infrastructure protection.
    This review should: identify the assets and capabilities of 
the Intelligence Community which may be of value to the 
protection of the critical infrastructures; identify which 
capabilities or technologies useful to intelligence collection 
or analysis on infrastructure protection are presently lacking 
within the Intelligence Community, including the capability to 
provide indications and warnings; provide a counterintelligence 
strategy designed to protect information regarding 
vulnerabilities in United States infrastructure; state what, if 
any, additional collection requirements have been implemented 
to gain insight into activity against U.S. systems; describe 
any training programs developed to increase awareness and 
knowledge of analysts and collectors regarding infrastructure 
protection concerns; explain how the Intelligence Community 
will use its expertise and assets to assist the critical 
infrastructures protection mission of the NIPC and other 
government entities; and detail how the Intelligence Community 
will provide timely and actionable intelligence regarding 
foreign intrusions and attacks to the NIPC and other government 
entities involved in critical infrastructure protection. This 
review should also propose how protective techniques and 
technologies developed or identified by the Intelligence 
Community may be shared with the private and public sector 
actors that manage these infrastructures. The Committee directs 
that the review of the Intelligence Community's role in 
infrastructure protection be provided to the Congressional 
Intelligence Committees not later than March 15, 1999.

Assessment of the Intelligence Community's information infrastructure

    In recent years, the Intelligence Community has 
incorporated advanced computer and telecommunications 
technologies into its organizations to improve their 
intelligence collection and analytical capabilities, to 
increase the productivity of its workforce, and to facilitate 
communications between different member organizations. As the 
agencies and offices of the Intelligence Community become more 
reliant on these technologies, they have become more vulnerable 
to intrusions, disruptions, and attacks against these systems. 
The Committee realizes that any breakdown in the information 
infrastructure of the Intelligence Community will adversely 
affect its ability to provide timely intelligence to our 
national security policymakers and military leaders.
    To address this potential vulnerability, the Committee 
directs the Director of Central Intelligence and the Secretary 
Of Defense to formulate an Intelligence Community information 
infrastructure security program to ensure the viability and 
effectiveness of the Intelligence Community's information 
infrastructure. This program shall develop and implement 
procedures, practices, policies, and technologies designed to 
secure and protect the IC's information infrastructure from 
intrusion, disruptions, and attacks. It should also provide 
internal controls, audit features, and other necessary elements 
to address possible insider attacks and other 
counterintelligence concerns. The Committee directs that the 
Director of Central Intelligence and the Secretary of Defense 
forward a report to the Congressional Intelligence Committees 
not later than March 15, 1999.
    The Committee is also concerned that there is no formal, 
periodic review of the technologies and practices used by the 
Intelligence Community to provide security and protection for 
its information infrastructure. Therefore, the Committee 
directs the Director of Central Intelligence and the Secretary 
of Defense to perform regular, periodic assessments of 
theprocedures, policies, and technologies implemented by the various 
intelligence agencies and offices to secure and protect their computer 
and telecommunications systems. These assessments shall be performed on 
at least an annual basis. Further, the Committee directs that the 
Intelligence Community complete an initial series of assessments by the 
end of fiscal year 1999.
    These assessments should include the following: a 
determination of the adequacy of information infrastructure 
security procedures and policies; a review of any technologies 
in use to provide security and/or protect information 
infrastructure; and the result of aggressive systematic, 
controlled testing of the Intelligence Community's computer and 
telecommunications systems for vulnerabilities to intrusion, 
denial of use, attack, or other disruptive activity. These 
assessments shall be provided by the Director of Central 
Intelligence and the Secretary of Defense to the Congressional 
Defense Committees not later than March 15, 1999.

                 DISCLOSURE OF INFORMATION TO CONGRESS

Background and need for legislation

    It is not generally known that the ``Whistle Blower 
Protection Act'' does not cover employees of the agencies 
within the Intelligence Community. See 5 U.S.C. Sec. Sec. 2301 
et seq. The ``whistle blower'' statute also expressly 
proscribes the disclosure of information that is specifically 
required by Executive Order to be kept secret in the interest 
of national defense or the conduct of foreign affairs. 
Therefore, employees within the Intelligence Community are not 
protected from adverse personnel action if they choose to 
disclose such information, irrespective of its classification, 
to Congress. In fact, an employee who discloses classified 
information to Congress without prior approval is specifically 
subject to sanctions which may include reprimand, termination 
of security clearance, suspension without pay, or removal. See 
Exec. Order No. 12,958, 60 Fed. Reg. 19825 (1995). Some types 
of unauthorized disclosures are also subject to criminal 
sanctions. See 18 U.S.C. Sec. Sec. 641, 793, 794, 798, 952 
(1996); 50 U.S.C. Sec. 783(b) (1996).
    In accordance with Executive Order No. 12,958, classified 
information must remain under the control of the originating 
agency and may not be disseminated without proper 
authorization. Consequently, an Executive Branch employee may 
not disclose classified information to Congress without prior 
approval. In fact, employees are advised that the agency will 
provide ``access as is necessary for Congress to perform its 
legislative functions. * * *'' ``Information Security Oversight 
Office, General Services Administration, Classified Information 
Nondislcosure Agreement (SF-312) Briefing Booklet,'' at 66. In 
other words, the executive agency will decide what Members of 
Congress may ``need to know'' to perform their constitutional 
oversight functions. The President, in effect, asserts that he 
has exclusive or plenary authority to oversee the regulation of 
national security information.
    In response to the Administration's position, the Select 
Committee on Intelligence of the United States Senate reported 
the Intelligence Authorization Act for Fiscal Year 1998, which 
included a provision that specifically addressed this issue. 
See S. 858, 105th Cong., 1st Sess. Sec. 306 (1997). The Senate 
passed the bill by a vote of ninety-eight to one. Shortly after 
the Senate vote, the Administration issued a Statement of 
Administration Policy stating that section 306 was 
unconstitutional, and that if it remained in the bill in its 
present form, senior advisers would recommend that the 
President veto the bill.
    Section 306 directed the President to inform all Executive 
Branch employees that disclosing classified information to an 
appropriate oversight committee to their Congressional 
representative is not prohibited by any law, executive order, 
or regulation or otherwise contrary to public policy, if the 
employee reasonably believes that the classified information 
evidences: a violation of any law, rule, or regulation; a false 
statement to Congress on an issue of material fact; or gross 
mismanagement, a gross waste of funds, an abuse of authority, 
or a substantial and specific danger to public health or 
safety. This provision was intended to ensure that Congress 
received information necessary to fulfill its constitutional 
oversight responsibilities. It was also intended to protect 
employees from adverse actions based on what was heretofore 
considered an unauthorized disclosure to Congress.
    The Committee intended disclosure to an appropriate 
oversight committee to mean disclosure to cleared staff or a 
member of the committee with jurisdiction over the agency 
involved in the wrongdoing. Members or committee staff who 
received such information from an employee were to be presumed 
to have received it in their capacity as members or staff of 
the appropriate oversight committee. The Committee believed 
that this presumption was necessary because Members and staff 
are responsible for ensuring that the information is protected 
in accordance with committee rules and brought to the attention 
of the leadership of the committee. The President, by informing 
Executive Branch employees as directed in section 306, would 
have authorized disclosure to the appropriate oversight 
committee or members, thereby recognizing that these committees 
and members have a ``need to know'' the information as required 
by current Executive Branch restrictions on disclosure of 
classified information.
    In conference, members of the House Permanent Select 
Committee on Intelligence (HPSCI) and the Senate Select 
Committee (SSCI) did not agree to include section 306 as passed 
by the Senate. The Senate offered to amend section 306, thereby 
significantly narrowing the scope of the provision to cover 
only employees of agencies within the Intelligence Community 
(the Senate-passed version covered all executive employees). 
The Senate amendment further narrowed the provision by allowing 
disclosure only to committees with primary jurisdiction over 
the agencies involved (the original language also allowed 
disclosure to a Member of Congress who represented the 
employee).
    The Chairman and Ranking Member of the House Committee 
expressed concern over the possible constitutional implications 
of such language. They were also mindful of the 
Administration's veto threat as expressed in the Statement of 
Administration Policy. The Chairman and vice Chairman of the 
Senate Select Committee, in deference to their Housecolleague's 
concerns, agreed to amend the provision to express a sense of the 
Congress that Members of Congress have equal standing with officials of 
the Executive Branch to receive classified information so that Congress 
may carry out its oversight responsibilities.
    The managers' decision not to include section 306 of the 
Senate bill in the conference report, however, was not intended 
by either body to be interpreted as agreement with the 
Administration's position on whether it is constitutional for 
Congress to legislate on this subject matter. The managers' 
actions were also not to be interpreted as expressing agreement 
with the opinion of the Justice Department's Office of Legal 
Counsel, which explicitly stated that only the President may 
determine when Executive Branch employees may disclose 
classified information to Members of Congress. The managers 
asserted in their Conference Report that members of 
congressional committees have a need to know information, 
classified or otherwise, that directly relates to their 
responsibility to conduct vigorous and thorough oversight of 
the activities of the executive departments and agencies within 
their committees' jurisdiction. Therefore, the President may 
not assert an unimpeded authority to determine otherwise.
    While the managers recognized the Chief Executive's derived 
constitutional authority to protect sensitive national security 
information, they did not agree with the Administration that 
the authority is exclusive. Members of both committees also 
agreed that whatever the scope of the President's authority, it 
may not be asserted against Congress to withhold evidence of 
misconduct or wrongdoing and thereby impede Congress in 
exercising its constitutional legislative and oversight 
authority. Therefore, the managers committed to hold hearings 
on this issue and develop appropriate legislative solutions in 
the second session of the 105th Congress.
    The Senate Select Committee held public hearings on 
February 4 and 11, 1998 to examine the constitutional 
implications of legislation such as section 306. The Committee 
heard from constitutional scholars and legal experts on both 
sides of the issue. Mr. Randolph D. Moss, Deputy Assistant 
Attorney General from the Department of Justice Office of Legal 
Counsel, testified in support of the Administration's position 
that section 306 and any similar language represents an 
unconstitutional infringement on the President's authority as 
Commander in Chief and Chief Executive. Mr. Moss asserted the 
following:
    (A) The President, as Commander in Chief, Chief Executive, 
and sole organ of the Nation in its external relations has 
ultimate and unimpeded authority over the collection, 
retention, and dissemination of intelligence and other national 
security information.
    (B) Any congressional enactment that may be interpreted to 
divest the President of his ultimate control over national 
security information is an unconstitutional usurpation of the 
exclusive authority of the Executive.
    (C) The Senate's language vests lower-ranking personnel in 
the Executive Branch with a ``right'' to furnish such 
information to a Member of Congress without prior official 
authorization from the President or his delegee. Therefore, 
section 306 and any similar provision is unconstitutional.
    The Committee also heard Professor Peter Raven-Hansen, Glen 
Earl Weston Research Professor of Law from the George 
Washington University Law School, and Dr. Louis Fisher, Senior 
Specialist (Separation of Powers) from the Congressional 
Research Service, testify that the President's authority in 
this area is not exclusive. Hence, these experts believed that 
Congress already has authority to regulate the collection, 
retention, and dissemination of national security information. 
Professor Raven-Hansen and Dr. Fisher asserted the following:
    (A) A claim of exclusive authority must be substantiated by 
an explicit textual grant of such authority by the 
Constitution.
    (B) There is no express constitutional language regarding 
the regulation of national security information as it pertains 
to the President.
    (C) The President's authority to regulate national security 
information is an implied authority flowing from his 
responsibilities as Commander in Chief and Chief Executive.
    (D) As the regulation of national security information is 
implicit in the command authority of the President, it is 
equally implicit in the broad array of national security and 
foreign affairs authorities vested in the Congress by the 
Constitution. In fact, Congress has legislated extensively over 
a long period of time to require the President to provide 
information to Congress.
    (E) Congress may legislate in this area because the 
Executive and Legislative Branches share constitutional 
authority to regulate national security information.
    (F) The Supreme Court has never decided a case that 
specifically addressed this issue.
    (G) The provision is constitutional because it does not 
prevent the President from accomplishing his constitutionally 
assigned functions, and because any intrusion upon his 
authority is justified by an overriding need to promote 
objectives within the constitutional authority of Congress.
    The Committee found the last argument to be persuasive and 
determined that the Administration's intransigence on this 
issue compelled the Committee to act.
    Following the public hearing on February 11th, the 
Committee met to mark up a modified version of section 306. One 
amendment was offered by a member of the Committee and 
wasadopted unanimously. The bill was favorably reported from the 
Committee on February 23, 1998. The Senate considered the bill (S. 
1668) on March 9, 1998 and passed it on a roll call vote of 93 to one. 
The bill was sent to the House of Representatives and has yet to be 
considered by that body. Despite assurances by the Chairman and Ranking 
Member of the Permanent Select Committee on Intelligence of the House 
of Representatives, the HPSCI has not, as of this printing, held a 
hearing or met to consider similar legislation. Therefore, in light of 
the relatively short legislative calendar in this session, the 
Committee has included this provision in order to give the House of 
Representatives another opportunity to consider the benefits of this 
type of legislation.
    This bill as passed by the U.S. Senate is contained in 
title V of this bill and is explained in the section by section 
analysis.

              SECTION-BY-SECTION ANALYSIS AND EXPLANATION

                    TITLE I--INTELLIGENCE ACTIVITIES

Sec. 101. Authorization for appropriations

    Section 101 lists departments, agencies, and other elements 
of the United States Government for whose intelligence and 
intelligence-related activities the Act authorizes 
appropriations for fiscal year 1999.

Sec. 102. Classified schedule of authorizations

    Section 102 makes clear that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and personnel ceilings for the 
entities listed in section 101 for fiscal year 1999 are 
contained in a classified Schedule of Authorizations. The 
Schedule of Authorizations is incorporated into the Act by this 
section.

Sec. 103. Personnel ceiling adjustments

    Section 103 authorizes the Director of Central 
Intelligence, with the approval of the Director of the Office 
of Management and Budget, in fiscal year 1999 to exceed the 
personnel ceilings applicable to the components of the 
Intelligence Community under section 102 by an amount not to 
exceed 2 percent of the total of the ceilings applicable under 
section 102. The Director may exercise this authority only when 
necessary to the performance of important intelligence 
functions or to the maintenance of a stable personnel force, 
and any exercise of this authority must be reported to the two 
intelligence committees of the Congress.

Sec. 104. Community management account

    Section 104 provides certain details concerning the amount 
and composition of the Community Management Account (CMA) of 
the Director of Central Intelligence.
    Subsection (a) authorizes appropriations in the amount of 
$138,623,000 for fiscal year 1999 for the staffing and 
administration of various components under the CMA. Subsection 
(a) also authorizes funds identified for the Advanced Research 
and Development Committee and the Environmental Intelligence 
and Applications Program to remain available for two years.
    Subsection (b) authorizes a total of 283 full-time 
personnel for elements within the CMA for fiscal year 1999 and 
provides that such personnel may be permanent employees of the 
CMA element or detailed from other elements of the United 
States Government.
    Subsection (c) explicitly authorizes the classified portion 
of the CMA.
    Subsection (d) requires that personnel be detailed on a 
reimbursable basis, with certain exceptions.
    Subsection (e) authorizes $27,000,000 of the amount 
authorized for the CMA under subsection (a) to be made 
available for the National Drug Intelligence Center (NDIC) in 
Johnstown, Pennsylvania. Subsection (c) requires the Director 
of Central Intelligence to transfer the $27,000,000 to the 
Department of Justice to be used for NDIC activities under 
authority of the Attorney General, and subject to section 
103(d)(1) of the National Security Act. The Committee has also 
restricted the transfer of the funds authorized in subsection 
(e) pending the receipt by the congressional intelligence 
committees of a report mandated in the Intelligence 
Authorization Act for Fiscal Year 1998.

 TILE II--CENTRAL INTELLIGENCE AGENCY RETIREMENT AND DISABILITY SYSTEM

Sec. 201. Authorization of appropriations

    Section 201 authorizes appropriations in the amount of 
$201,500,000 for fiscal year 1999 for the Central Intelligence 
Agency Retirement and Disability Fund.

                     TITLE III--GENERAL PROVISIONS

Sec. 301. Increase in employee compensation and benefits authorized by 
        law

    Section 301 provides that appropriations authorized by the 
conference report for salary, pay, retirement and other 
benefits for federal employees may be increased by such 
additional orsupplemental amounts as may be necessary for 
increases in such compensation or benefits authorized by law.

Sec. 302. Restriction on conduct of intelligence activities

    Section 302 provides that the authorization of 
appropriations by the conference report shall not be deemed to 
constitute authority for the conduct of any intelligence 
activity which is not otherwise authorized by the Constitution 
or laws of the United States.

Sec. 303. Extension of application of sanctions laws to intelligence 
        activities

    Section 303 extends until January 6, 2000, the authority 
first granted by section 303 of the Intelligence Authorization 
Act for Fiscal Year 1996 for the President to delay the 
imposition of an economic, cultural, diplomatic, or other 
sanction upon his determination that proceeding with the 
sanction could compromise an ongoing criminal investigation or 
an intelligence source or method. This authority was extended 
until January 6, 1998, by section 304 of the Intelligence 
Authorization Act for Fiscal Year 1997, and again until January 
6, 1999, by section 304 of the Intelligence Authorization Act 
for Fiscal Year 1998. There is a continuing need for this 
authority in the event that an automatic or immediate 
imposition of sanctions would seriously jeopardize a criminal 
investigation or sources and methods of intelligence 
collection.

Sec. 304. Extension of authority to engage in commercial activities as 
        security for intelligence collection activities

    Section 304 amends section 431(a) of title 10 to extend 
current Department of Defense authority to engage in commercial 
activities as security for intelligence collection activities 
until December 31, 2000.

Sec. 305. Modification of National Security Education Program

    Section 305 amends the David C. Boren National Security 
Education Act of 1991, by adding counter-proliferation studies 
as an area of primary emphasis in the Act. Section 305 
substitutes the Secretary of Energy for the Director of the 
United States Information Service as a Member of the National 
Security Education Board, which continues to include the 
Secretaries of Defense, Education, State, and Commerce, and the 
Director of Central Intelligence.

Sec. 306. Technical amendments

    Section 306 makes technical corrections to section 5(a)(1) 
and section 6 of the Central Intelligence Agency (CIA) Act of 
1949 and section 201(c) of the CIA Retirement Act. The cross-
reference in section 5(a)(1) of the CIA Act to subparagraphs 
(B) and (C) of section 102(a)(2) of the National Security Act 
is no longer current or accurate, and should cite instead to 
subsections (a)(2) and (a)(3) of section 102. Section 805(a) of 
the Intelligence Authorization Act for Fiscal Year 1997 (Pub. 
L. No. 104-293) changed what had been sections 102 (a)(2)(B) 
and (C) of the National Security Act to sections 102 (a)(2) and 
(a)(3) of the Act. Similarly, the cross-references in section 5 
(a)(1) and section 6 of the CIA Act to ``subsection (c)(5) of 
section 103'' and to ``section 103 (c)(5) of the National 
Security Act of 1947 (50 U.S.C. Sec. 403-3 (c)(5));'' 
respectively, are no longer current or accurate. The cross-
reference in section 201 (c) of the CIA Retirement Act to that 
same provision of the National Security Act is also outdated. 
Section 807 (a)(2) of the Intelligence Authorization Act for 
Fiscal Year 1997 changed what had been section 103 (c)(5) to 
section 103 (c)(6) (50 U.S.C. Sec. 403-3 (c)(6)). Section 401 
of the present legislation simply updates the cross-references 
in section 5 (a)(1) and section 6 of the CIA Act and section 
201 (c) of the CIA Retirement Act to the pertinent provision of 
the National Security Act.

                 TITLE IV--CENTRAL INTELLIGENCE AGENCY

Sec. 401. Extension of separation pay program for voluntary separation 
        of CIA employees

    Section 401 amends section 2(f) of the CIA Voluntary 
Separation Pay Act, Public Law 103-36, 50 U.S.C. Sec. 403-4 
note, to extend the Agency's authority to offer separation 
incentives until September 30, 2001. Without this amendment, 
the Agency's authority to offer such incentives would expire on 
September 30, 1999.
    The net impact of the six CIA ``early out'' exercises thus 
far, along with normal attrition and reduced hiring, has been a 
significant drop in the Agency's on-duty strength since the 
separation incentive program began in FY 1993. However, rapid 
worldwide technological change and increasing concern about 
such diverse issues as international terrorism, proliferation, 
drug trafficking, and political instability require the Agency 
to do more to address the skills mix of the Agency population.
    The Agency must continue to reduce or eliminate outdated 
professions, accelerate the transfer of resources from support 
to mission-critical work, and hire people with state-of-the-art 
skills. Voluntary Separation Incentive Pay authority--used for 
specific, targeted populations--will help the CIA achieve those 
goals without resorting to involuntary separations in certain 
occupational categories. The incentive pay would be targeted 
principally at individuals in outdated occupations and skill 
categories who would not be separating via regular attrition or 
switching to another work area after retraining.
    Incentive authority through the year 2001 will help enable 
the Agency to ensure its workforce has the right skills in the 
right areas at the right time.

Sec. 402. Additional duties for Inspector General of Central 
        Intelligence Agency

    Section 402 gives the CIA Office of Inspector General (OIG) 
responsibility to review and comment in the Inspector General's 
(IG) semiannual reports on existing and proposed legislation 
relating to programs and operations of the Agency. Review and 
comment by the IG on legislation will complement the IG's 
responsibility to promote economy and efficiency in Agency 
programs and operations and will be useful to the DCI and the 
intelligence committees of Congress as an independent source of 
analysis.
    This function enables the IG to express OIG's views 
concerning the impact of legislation on the economy and 
efficiency of Agency activities and the prevention and 
detection of fraud in such activities. While such a function is 
implicit in the broad mandate of the Inspector General, the 
Committee believes that authority for legislative review should 
be recognized explicitly in the statute.

       TITLE V--DISCLOSURE OF CLASSIFIED INFORMATION TO CONGRESS

Sec. 501. Encouragement of disclosure of certain information to 
        Congress

    Section 501 is divided into subsections (a) through (d). 
Subsection (a)(1) directs the President to take appropriate 
actions to inform the employees of agencies covered in 
subsection (d) and employees of contractors of such agencies 
that the disclosure of information described in paragraph (2) 
to individuals referred to in paragraph (3) is not prohibited 
by law, executive order, or regulation or otherwise contrary to 
public policy. In other words, the President is directed to 
inform ``covered employees'' that it will not be considered an 
``unauthorized disclosure'' if they provide certain information 
to Congress, if that information is provided to the appropriate 
member and the information falls within the specified 
categories.
    Subsection (a)(1) does not, however, define the means by 
which the President must implement this direction. The 
Committee refrained from expressly stating the types of actions 
that the President should take as we have in previous measures. 
See, e.g., Counterintelligence and Security Enhancements Act of 
1994, Pub. L. No. 103-359, title VIII, Sec. 802(a), 108 Stat. 
3435 (1994). The Committee has intentionally allowed the 
President a great deal of latitude to implement this 
legislation. The Committee does not, however, intend this 
permissive approach to be interpreted as license ity to promote 
economy and efficiency in Agency programs and operations and 
will be useful to the DCI and the intelligence committees of 
Congress as an independent source of analysis.
    This function enables the IG to express OIG's views 
concerning the impact of legislation on the economy and 
efficiency of Agency activities and the prevention and 
detection of fraud in such activities. While such a function is 
implicit in the broad mandate of the Inspectuch information. 
This language is consistent with the argument propounded by the 
Administration in a brief that it filed in the Supreme Court in 
1989. See Brief for Appellees, American Foreign Service 
Association v. Garfinkel, 488 U.S. 923 (1988) (No. 87-2127). In 
the Garfinkel brief the Department of Justice stated that ``the 
President has uniformly limited access to classified 
information to persons who have a need to know the particular 
information, such as a congressional committee having specific 
jurisdiction over the subject matter.'' Id at 16 (emphasis 
added).
    Paragraph (1)(C) is intended to ensure that members receive 
information only in their capacity as a member of the committee 
concerned. The Committee is adamant that any information 
received by a member of one of the appropriate committees be 
protected in accordance with that committee's rules for 
safeguarding classified material and be reported to the 
committee's leadership. Accordingly, a member is not free to 
accept covered information as a member of a committee 
unrestrained by such rules or to withhold knowledge of the 
information from the committee's leadership. The various 
national security committees enjoy a long history of trust with 
the Executive Branch and that record will be continued.
    Paragraph (2) defines the type of information that an 
employee may bring to Congress. It is intended to cover all 
information in the covered categories, including classified 
information. Paragraphs (2)(A) and (C) are taken nearly 
verbatim from the text of the ``Whistle Blower Protection Act'' 
and are intended to have the same meaning. See 5 U.S.C. 
Sec. 2302(b)(8)(A)(i)-(ii) (1994 & Supp. II 1996). The 
Committee did slightly narrow the language, however, to cover 
only flagrant abuses of authority. The Committee intended to 
address only those abuses that are so objectionable as to 
warrant the attention of Congress.
    Paragraph (2)(B) is not found in the ``whistle blower'' 
statute and was added to ensure that information pertaining to 
a false statement to Congress is brought to our attention. In 
the interest of legislative efficiency, however, the Committee 
is most concerned with those false statements that pertain to 
an issue of material fact. The material facts of an issue are 
those facts that a reasonable person would consider important 
in reviewing that particular issue. Congress depends on the 
accuracy of the information provided to it, and when our 
oversight is based on false information, we must be made aware 
of it even if the President would prefer to withhold the fact 
that false information has been provided.
    Paragraph (3) refers to the individuals to whom information 
described in paragraph (2) may be disclosed. Although the 
Senate Select Committee on Intelligence is composed, inter 
alia, of members from the Committee on Appropriations, Armed 
Services, and the Judiciary, we recognize that those committees 
share jurisdiction with this Committee and each has as 
itsprimary responsibilities the oversight of some of the department, 
agencies or elements of the Federal Government to which such 
information relates. As noted earlier, the individuals to whom 
information may be disclosed was narrowed significantly from section 
306 of the Intelligence Authorization Act of Fiscal Year 1998 to 
further ensure the protection of the information.
    Paragraph (4) recognizes the inviolability of the rule of 
secrecy in grand jury proceedings. The Committee does not 
intend this legislation to circumvent the obligation of secrecy 
imposed by Rule 6(e) of the Federal Rules of Criminal Procedure 
and therefore paragraph (1)(A) does not apply to such 
information. The Committee does not believe, however, that 
disclosures to Congress fall under the rubric or other statutes 
that prohibit the disclosure of certain information. The 
Congress is an entity of the federal government and is capable 
of protecting such information in the same manner as an 
executive agency or department. Accordingly, the Committee does 
not view a disclosure to Congress as a disclosure outside of 
the government.
    Subsection (b) directs the President to submit a report to 
Congress on the actions taken under subsection (a). The 
Committee expects to see a report that describes any procedures 
established or guidance given to the various agencies, 
departments, or elements. If the President gives wide 
discretion to agency heads, the Committee would also like the 
report to address how each agency or department has implemented 
this legislation.
    Section (c) is intended to protect the integrity of other 
reporting requirements enacted into relevant law.
    Section (d) defines the covered agencies. These are the 
agencies exempted from the ``whistle blower'' statute. See 5 
U.S.C. Sec. 2302(a)(2)(C)(ii) (1994 & Supp. II 1996).

      TITLE VI--FOREIGN INTELLIGENCE AND INTERNATIONAL TERRORISM 
                             INVESTIGATIONS

Sec. 601. Pen registers and trap and trace devices in foreign 
        intelligence and international terrorism investigations

    Section 601 amends the Foreign Intelligence Surveillance 
Act of 1978, 50 U.S.C. Sec. 1802, et seq. (FISA) to authorize 
pen registers and trap and trace devices in foreign 
intelligence and international terrorism investigations being 
conducted by the FBI under guidelines approved by the Attorney 
General. In particular, it authorizes FISA judges to issue a 
pen register or a trap and trace order upon a certification 
that the information sought is relevant to such an ongoing 
investigation.
    The amendment allows the use of pen registers and trap and 
trace devices in foreign intelligence and international 
terrorism investigations. Although such devices can be utilized 
at present, current procedures do not reflect changes in the 
law since FISA was enacted. Before the use of such device 
today, the complete FISA predicate for actual interception of 
the oral or verbal contents on the communication itself must be 
satisfied. That predicate is designed to satisfy strict 
constitutional requirements or the conduct of a ``search'' 
within the meaning of the Fourth Amendment. However, and 
subsequent to passage of FISA in 1978, the Supreme Court held 
in Smith v. Maryland, 442 U.S. 735 (1979), that accessing 
numbers dialed to contact another communications facility is 
not a Fourth Amendment ``search''. Thus, current procedures 
impose a standard that is more rigorous than the constitution 
requires. Section 501 establishes a predicate for the use of 
pen registers or trap and trace devices that is consistent with 
that opinion and is analogous to the statutory standard for the 
use of these devices in criminal investigations. This authority 
is necessary in order to permit, as is the case in criminal 
investigations, the use of this very valuable investigative 
tool at the critical early stages of foreign intelligence and 
international terrorism investigations.
    Unlike the criminal standard, however, this section 
requires substantially more than mere ``relevance'' to an 
ongoing investigation see 18 U.S.C. Sec. 3122(b)(2). In 
addition to relevancy, the government must also demonstrate 
that the telephone line involved has been or is about to be 
used in communication with an international terrorist or a 
person engaged in clandestine intelligence activities that may 
involve a violation of law.
    Each application must also be approved by the Attorney 
General or a designated attorney for the Government, with 
certification by the Federal Bureau of Investigation that the 
underlying investigation is being conducted under guidelines 
approved by the Attorney General. It is the committees 
understanding that the ``designated attorney'' for the 
Government will be the Counsel for Intelligence Policy in the 
Department of Justice. Further delegation of this authority 
should be done only after the committee is briefed on the 
compelling need for it.
    Applications must be submitted to the Foreign Intelligence 
Surveillance Court established by FISA; however, the section 
also allows the designation of Federal magistrates to hear 
applications for and grant orders approving the installation 
and use of pen registers or trap and trace devices. This 
procedure will possibly permit these applications to be heard 
in a more timely manner and is an appropriate analog to that 
used in criminal investigations. The committee expects that the 
exercise of this new authority will be carefully monitored by 
the Justice Department, and that no magistrates will be 
designated to hear applications until the committee is briefed 
on the compelling need to do so, which could be demonstrated, 
for example, by the number of applications presented to the 
FISA Court under this new procedure.
    Upon request of the applicant, the order authorizing the 
use of such devices can require that the provider of a wire or 
electronic communication service, landlord, custodian, or other 
person not disclose the existence of the investigation or of 
the pen register until ordered by the Court. The order can also 
direct hat any records concerning the pen register or trap and 
trace device held by such persons be maintained under security 
procedures approved by the Attorney General and the Director of 
Central Intelligence. These two provisions are identical to 
existing FISA provisions regarding electronic surveillance and 
are necessary to protect the FBI's foreignintelligence 
investigations from disclosure to hostile powers or international 
terrorist organizations. In addition, the new section includes 
restrictions or the use of information and the requirement for 
continuing congressional oversight, similar to provisions in Sec. 106 
and 107 of the FISA.

Sec. 602. Access to certain business records for foreign intelligence 
        and international terrorism investigations

    Section 602 also amends the Foreign Intelligence 
Surveillance Act (FISA) by giving the Federal Bureau of 
Investigation, in conducting foreign intelligence and 
international terrorism investigations, authority to apply for 
court orders to obtain records to common carriers, hotels, 
communications providers, and storage facilities.
    Under existing criminal law, grand jury subpoenas may be 
issued, and the Attorney General has delegated authority to 
certain Federal agencies in narcotics investigations to issue 
administrative subpoenas. No analogue to these authorities 
exists in foreign intelligence and international terrorism 
investigations. When the FBI seeks common carrier records 
relating to the clandestine activities of an agent of a foreign 
power or an international terrorist, compliance is voluntary, 
and some entities have chosen not to cooperate.
    This new section requires that any or all of the four 
entities (common carrier, hotel, communications provider, and/
or storage facility) comply with a court order based on the 
certification by the FBI that the records are sought for 
foreign intelligence purposes, and that there are specific and 
articulable facts giving reason to believe that the person to 
whom the records pertain is a foreign power or an agent of a 
foreign power.
    The section also requires that any or all of the four 
covered entities not disclose the fact that the FBI has sought 
or obtained the records in question. This is necessary to 
protect the existence of the investigation from hostile foreign 
powers or international terrorist groups.
    The terms ``common carrier,'' public accommodation 
facility,'' ``physical storage facility,'' and ``vehicle rental 
facility'' are defined. These are the four entities where the 
greatest need for compulsory access exists because of their 
frequent use by subjects of FBI foreign intelligence and 
international terrorism investigations.
    In additional, the section includes provisions for 
continuing congressional oversight. The committee feels 
strongly that these provisions are necessary to insure that 
these new authorities are carefully executed.

                            committee action

    On May 7, 1998 the Select Committee on Intelligence 
approved the bill and ordered that it be favorably reported.

                           estimate of costs

    Pursuant to paragraph 11(a) of rule XXVI of the Standing 
Rules of the Senate, the estimated costs incurred in carrying 
out the provisions of this bill, for fiscal year 1999, are set 
forth in the classified annex to this bill. Estimates of the 
costs incurred in carrying out this bill in the five fiscal 
years thereafter are not available from the Executive Branch, 
and therefore the Committee deems it impractical, pursuant to 
paragraph 11(a)(3) of rule XXVI of the Standing Rules of the 
Senate, to include such estimates in this report.

                    evaluation of regulatory impact

    In accordance with paragraph 11(b) of rule XXXVI of the 
Standing Rules of the Senate, the Committee finds that no 
regulatory impact will be incurred by implementing the 
provisions of this legislation.

                        changes in existing law

    In the opinion of the Committee, it is necessary to 
dispense with the requirements of section 12 of rule XXVI of 
the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                                
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