<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:20175.wais] S. Hrg. 109-8 DEPARTMENT OF HOMELAND SECURITY'S BUDGET SUBMISSION FOR FISCAL YEAR 2006 ======================================================================= HEARING before the COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION __________ MARCH 9, 2005 __________ Printed for the use of the Committee on Homeland Security and Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 20-175 WASHINGTON : 2005 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas JOHN W. WARNER, Virginia Michael D. Bopp, Staff Director and Chief Counsel Gordon Lederman, Professional Staff Member Joyce A. Rechtschaffen, Minority Staff Director and Counsel Holly A. Idelson, Minority Counsel Amy B. Newhouse, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Collins.............................................. 1 Senator Lieberman............................................ 3 Senator Warner............................................... 4 Senator Lautenberg........................................... 10 Senator Pryor................................................ 13 Senator Coleman.............................................. 15 Senator Levin................................................ 17 Senator Dayton............................................... 19 Senator Carper............................................... 30 WITNESS Wednesday, March 9, 2005 Hon. Michael Chertoff, Secretary, U.S. Department of Homeland Security Testimony.................................................... 5 Prepared statement........................................... 33 Questions and responses for the Record from Secretary Chertoff................................................... 48 DEPARTMENT OF HOMELAND SECURITY'S BUDGET SUBMISSION FOR FISCAL YEAR 2006 ---------- WEDNESDAY, MARCH 9, 2005 U.S. Senate, Committee on Homeland Security and Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 10 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Susan M. Collins, Chairman of the Committee, presiding. Present: Senators Collins, Lieberman, Warner, Lautenberg, Pryor, Coleman, Levin, Dayton, and Carper. OPENING STATEMENT OF CHAIRMAN COLLINS Chairman Collins. The Committee will come to order. Good morning. The Committee faces a dilemma today. We have four stacked votes at 11:30, and our witness, Secretary Chertoff, has to leave around 1 o'clock. For that reason, I am going to greatly abbreviate my opening remarks, and I hope that my colleague from Connecticut will greatly abbreviate his opening remarks as well, so that we can get as many questions in as possible before we have to adjourn for the votes. Today the Committee will review the Department of Homeland Security's budget submission for fiscal year 2006, and it is a great pleasure to welcome Secretary Chertoff to his first official appearance before the Committee since his confirmation. We hope that this budget hearing will not be so arduous that you now regret your decision, for which we all praised you, to give up your prestigious lifetime appointment as a Federal judge. The Administration's proposed Homeland Security budget of $41.1 billion represents a 7-percent increase and recognizes that we have yet to address a great many homeland security threats and vulnerabilities. I applaud many of the initiatives targeted for increased spending in this budget, such as directing more resources to develop and deploy technology that can detect chemical, biological, and nuclear weapons, and to enhance the Immigration and Customs Enforcement Bureau. In addition, I am pleased that the budget proposes to bring together the various screening activities within the Department under a new Office of Screening Coordination and Operations. It would also consolidate research, development, testing, and evaluation activities of the Science and Technology Directorate. Again, I think all of these are proposals that will increase efficiency, eliminate duplication of effort, and help to promote integration and unity within the Department. At the same time, however, I find several provisions to be very troubling. The proposed cut of more than 30 percent in State homeland security grant programs in addition to the proposed cuts in other programs for first responders short- change those on the front lines in the war on terrorism. The attacks of September 11 were directed against two great centers of our Nation's financial and military power. But we all know that the enemy we face is nothing if not opportunistic. The enemy relishes the element of surprise and, thus, will strike wherever we leave ourselves vulnerable. The September 11 terrorists planned and trained in small cities and towns throughout the Nation. Two of the hijackers, including the ring leader, departed for their journey of death and destruction from Portland, Maine. Terrorist cells and financing operations have been uncovered in smaller communities. From farms and feedlots to power plants and chemical facilities, the entire length and breadth of our Nation offers targets of interest to the terrorists. All States must receive a fair share of funding, and that funding must be delivered in a way that will allow States to apply it with the flexibility that local circumstances require. At the same time, we all recognize that certain areas in this country are at greater risk, and they do deserve additional funding. But as I have said many times, you cannot simply look at population and population density and equate them with risk and threat. Last month, Senators Carper, Lieberman, Coleman, and several other Members of this Committee, and I reintroduced the Homeland Security Grant Enhancement Act, which in my view provides a flexible and fair formula. I am also concerned that the budget eliminates the technology transfer grant program. It gets needed anti- terrorism and homeland security technology into the hands of law enforcement and first responders quickly and efficiently, and I believe it should be restored. I remain concerned about the underfunding of our port security. Incidents of human smuggling aboard cargo containers are becoming increasingly commonplace, and the interdictions that result more from chance than from any coherent policy are cause for concern. The lack of a separate line item in this budget for port security grants does not reflect the importance of international trade to our economy and the vulnerability of these ports. In addition, the Coast Guard is one of our best defenses, yet the deep water modernization program remains underfunded. I realize that this budget does not necessarily reflect the Secretary's personal views and priorities as it was constructed prior to his nomination. I hope, therefore, that the Secretary will listen carefully to the concerns raised today as he presents what I am sure will be a vigorous defense of a budget that he inherited rather than drew up. Senator Lieberman. Senator Lieberman. Nicely done, Madam Chairman. [Laughter.] OPENING STATEMENT OF SENATOR LIEBERMAN Senator Lieberman. Thank you very much. It is an honor and a pleasure to address you, Mr. Chertoff, for the first time as Mr. Secretary and to welcome you here in that capacity. Not long ago, Porter Goss, the Director of the CIA, told the Senate Intelligence Committee that, ``It may only be a matter of time,'' before terrorists try to attack us with weapons of mass destruction. And I know that he meant here at home. At the same hearing, FBI Director Bob Mueller warned of possible terrorist operations now under way within our borders and said finding such terrorists is ``one of the most difficult challenges'' his organization faces. Protecting Americans from these potential terrorist attacks is your responsibility and ours as we share it with you, and it cannot be done on the cheap. Yet in its fiscal year 2006 budget proposal for the Department of Homeland Security, the Administration, in my opinion, has underestimated what it will take to keep our citizens as safe as possible here at home. There are increases, but they are modest: Only a 3- to 4- percent increase in DHS discretionary spending after inflation, and even that increase largely depends on the adoption by Congress of a controversial airline ticket fee. And that adoption, frankly, may or may not occur. More important, the increases pale by comparison to what experts have told our Committee is necessary. And some key homeland security funding that was authorized by the Intelligence Reform and Terrorist Prevention Act, the so-called 9/11 legislation, signed into law by the President last November, has simply been ignored. That, I am afraid, leaves us with too many gaps in our defenses, gaps that range from the inability of first responders to communicate between their own agencies and jurisdictions, to a lack of preparedness for a biological attack, to inadequately defended train, railway, and highway transportation networks. So what do I think needs to be done? I have done some work with my staff on this, and the result is a letter that I have submitted to the Senate Budget Committee, whose contents I have shared with your office. In that letter I have proposed $8.4 billion in increases in the budget for homeland security governmentwide. Of that amount, $6.3 billion would be for programs within the Department of Homeland Security, and that is over and above the President's proposed $2.5 billion increase. I know that is a significant amount of money in a time of budget pressure, though it remains a relatively small, an extremely small percentage of the $2.57 trillion overall Federal budget. That is an $8.4 billion add-on to a $2.57 trillion budget. About half of the increase that I am proposing in the DHS budget would go for training, equipment, and support for first responders because, as you know, and I believe you agree--I am confident you agree--these first responders are not only that; they are hundreds of thousands of first preventers against a terrorist attack all around the country. A significant portion of what I am recommending here would be invested in interoperable communications equipment to allow first responders from different agencies and different jurisdictions to speak to one another during a crisis, which we know they were not able to do on September 11. I frankly do not understand why the Administration is seeking to cut first responder programs by $565 million in your Department and a truly jarring $1.7 billion governmentwide, which is to say that includes programs recommended for cuts particularly in the Justice Department, the COPS program, the Byrne grant program. Homeland security expert Steve Flynn, as you know, a former Coast Guard commandant, describes our predicament in his recent book, ``American the Vulnerable--How Our Government is Failing to Protect Us From Terrorism.'' He says, and I quote briefly, ``Homeland security has entered our post-9/11 lexicon, but homeland insecurity remains the abiding reality. With the exception of airports, much of what is critical in our way of life remains unprotected.'' Mr. Flynn further points out that homeland security spending is still very small compared to the overall Pentagon budget. Now, as a member of the Armed Services Committee, as all three of us here at this moment are, I am a strong supporter of the Pentagon budget. Mr. Flynn says that that discrepancy suggests that the Federal Government continues to believe that our primary terrorist threat will be found outside our borders. We know that the threat from terrorism is both outside our borders and, self-evidently and in some senses most menacingly, within our borders. So I think we have to listen to the security experts who tell us that this terrorist threat is one we unfortunately must live with and defend against at home and abroad for the indefinite future. And we must listen to the experts who say we should match the threat at home and abroad with the resources necessary to vanquish it. Mr. Secretary, I note you are already hard at work examining the operations of your Department and the resources available to it. I look forward to hearing from you this morning about how together we can close our country's continuing insecurity gap. Thank you very much. Chairman Collins. Thank you, Senator Lieberman. My plan was to turn to our witness for a statement, but the distinguished Chairman of the Armed Services Committee and a Member of this Committee has joined us. Senator Warner, if you want to make some brief comments, feel free. OPENING STATEMENT OF SENATOR WARNER Senator Warner. Thank you very much, Madam Chairman, and our distinguished Ranking Member, Senator Lieberman. Judge, the honeymoon is over, as you can hear from the opening statements. But I would like to inquire as to what time the Chairman might consider having the Committee vote on the nomination of Mr. Jackson. I would like to be present. We do have three stacked votes. It could be off the floor. Chairman Collins. We will probably end up doing that off the floor. If, however, a quorum appears prior to our going to the floor for the stacked votes, we will do it at that time. Senator Warner. Thank you. Chairman Collins. Thank you. Senator Lautenberg, we are going to dispense with opening statements because of the stacked votes, but I want to make sure everybody gets a chance to question, so I just wanted to explain that is why---- Senator Lautenberg. Thank you. I would not think, Madam Chairman, that it was discriminatory, and I appreciate the message. Chairman Collins. Thank you. Secretary Chertoff, you may proceed. TESTIMONY OF HON. MICHAEL CHERTOFF,\1\ SECRETARY, U.S. DEPARTMENT OF HOMELAND SECURITY Secretary Chertoff. Thank you, Senator Collins, Senator Lieberman, and Members of the Committee. I will also cut my statement even further in the interest of saving time. --------------------------------------------------------------------------- \1\ The prepared statement of Secretary Chertoff appears in the Appendix on page 33. --------------------------------------------------------------------------- I am pleased to be back in front of this Committee as Secretary of Homeland Security. I appreciate your support through the confirmation process, and I look forward to working with you in the months and years to come. I thought I would simply make two points in my opening statement. One is to indicate that I have initiated a comprehensive review of the Department to better understand what is working and what is not. This is going to involve evaluating every element of our working mission and making sure that the organization of the Department and its operations conform with the threat, not vice versa; that we do not look at the threat in terms of our existing stovepipes. Our philosophy, our decisionmaking, and our operational activities have to be grounded in risk management as we determine how to best prevent, respond, and recover, if necessary, from attacks. So we have to analyze the threats and our mission and then adapt the organization and our operations and policies to meet those threats and carry out that mission, not vice versa. Now, a second point I would make, as you said, Madam Chairwoman, is that the President has affirmed again his staunch commitment to the Department with an increase of 7 percent in the 2006 budget over the prior year of $41.1 billion in resources. There are in this budget some critical structural changes: The establishment of a screening coordination office and a domestic nuclear detection office. And we are going to continue to work to protect our borders, strengthen law enforcement, leverage technology, improve preparedness and response, and streamline a 21st Century Department. At the same time, we will continue to recognize the Department's historical functions, including responding to natural disasters, securing our coasts, and providing immigration services and enforcement, as we have traditionally done. This Committee has supported and taken a very deep interest in the Department, and I welcome that. I look forward to the opportunity in the coming months to engage with Members of this Committee as we refine our ideas and our recommendations about how to best achieve homeland security. Our shared goal is an America that is safe and secure and also true to our fundamental values and civil liberties. Thank you, and I look forward to answering questions. Chairman Collins. Thank you very much, Mr. Secretary. We appreciate your abbreviating your statement so that we can get right to questions. I want to follow up on the comments I made and that Senator Lieberman made as well in our opening statements about the funding for the homeland security grant programs. Former Secretary Ridge often correctly said that homeland security begins with hometown security. When disaster strikes, our citizens do not call the Washington, DC, area code. They dial 911. And it is our police officers, our firefighters, and our emergency medical personnel who are always first on the scene. They truly are the front lines in the war against terrorism. States and communities have made progress over the past few years in improving their preparedness, but they still have enormous needs. For example, the lack of compatible communications equipment, which was cited by the 9/11 Commission, remains a major problem, and it is one that the Ranking Member and I have introduced legislation to try to address. And it is a very costly problem to solve. Yet the Administration's budget would cut and reshape the basic grant programs such that smaller States could see as much as an 80-percent decrease in the amount of baseline funding that they could count on. That is not just a small drop. That is a leap off the cliff. I am very concerned that those proposed reductions also come at a time when the Department is about to issue preparedness standards for States that are pursuant to Homeland Security Presidential Directive No. 8. And the purpose of this directive, is ``to strengthen preparedness capabilities in Federal, State, and local entities, and to help the entities meet new domestic all-hazards preparedness goals.'' How can you expect States and localities to meet these new preparedness standards to solve the problem of the interoperability of communications equipment and to continue their progress with a budget that proposes to drastically slash the baseline funding that States and communities can count on? Secretary Chertoff. Senator, I think there are a number of principles that we want to observe in our handling of funding, which I think are things I alluded to when I was testifying here last time. We need to be risk-based, and that means looking at threats, consequences, and vulnerabilities. And those characteristics do not necessarily arise in large or small States per se. They depend on a whole host of characteristics: The nature of the infrastructure we are worried about, the exposure and proximity to borders, historical information from intelligence about what kinds of areas are targets. I think, in general, the budget drives increasingly towards a model of funding and grant-making and deployment of resources that is focused on this overall strategic analysis under these three heads. I think, therefore, it is kind of hard on an abstract level to say that certain States are going to do better or certain States are going to do worse because frankly the issue is not where State lines are drawn. The issue is where are the vulnerabilities and what are the consequences. If there is a power plant, for example, that serves a number of States and it is located in a small State, that may very well require some funding and some support because there is a major consequence if something happens, and there may be major vulnerabilities. Obviously, therefore, we have to be the most effective we can in terms of deploying what are necessarily finite resources. One thing we want to encourage in the grant-making process is shared services, and I think we have already built this in, and I want to continue to move forward on this. The fact of the matter is not every community, for example, needs to have one hazmat suit. That does not do anybody any good. What is useful is when communities in a particular area can pool their operations so that they can centralize a response team, and then we could give hazmat suits to that team that might be located in one community, it might be done through a county, and then get service over an entire area. So what we are looking for is trying to maximize the way we use resources to get the most effective deployment and, again, to always be focused on where are the greatest potential negative consequences, where are we most vulnerable, and where are the threats. Chairman Collins. Well, I would say to you that the problem, however, with reducing the small-State minimum by such a dramatic amount is that States cannot count on a certain level of funding other than one that is dramatically below what they now receive. Instead, there is going to be what appears at this point to be a very ill-defined process for sorting out risk and threat vulnerabilities. And I agree that we certainly need to focus more of the funding, but I think that, to so dramatically reduce the small-State minimum, all you are going to do is create new vulnerabilities. This Committee last year had a hearing on agroterrorism, an issue that has not gotten much attention, but which Secretary Tommy Thompson cited as he was departing his post. We cannot assume that the threat is concentrated just in large urban areas, and we have to assume that the terrorists are smart enough to figure out where we are not putting the resources. So I think we need to proceed very carefully, particularly as the Department is imposing new preparedness standards that every State, regardless of its size or population, will be required to meet. Secretary Chertoff. I completely agree with that, and I think that the example you give is actually a really good one. It might turn out, based on food distribution, for example, that there are risks in a particular State, perhaps a small State, that happens to be the place where there is food distribution that covers a wide area. And for that reason, that State could benefit under our risk analysis approach because we would identify the consequence of something happening, the vulnerability, and the threat. And that is why I quite agree we need to move away from a population-driven or size-of-state- driven model to one which really focuses on what I think there is general agreement, which is that we ought to be focused on risk. And the winners and losers there will depend on what the facts are and not on what some predetermined, cookie-cutter formula tells us. Chairman Collins. Thank you. Senator Lieberman. Senator Lieberman. Thanks again, Madam Chairman. Secretary Chertoff, in the past this Administration has been reluctant to recommend and allocate funds for rail and transit security. Indeed, in last year's budget, fiscal year 2005, in the budget proposal, there were no dedicated grant programs for non-aviation security. Congress in a bipartisan way rose up and adopted $150 million in rail and transit security grants. In this budget, the Administration has essentially taken that $150 million and put it together with a series of other grant programs in the so-called TIP, Targeted Infrastructure Protection program, which it will be your responsibility to allocate. But all that will have to go not only for rail and non-aviation transit, but for things like port security grants. So I feel point-blank that we are not giving enough--we are not investing enough in the security of non-aviation modes of transportation--and I particularly say it after the Madrid train bombings and other indications that we have that terrorists may be tempted to strike at non-aviation transportation, particularly rail, here in the United States. So I want to ask you: As you come in, what is your philosophy about the Federal Government's role in ensuring rail and transit security and what do you hope the Department's action will be in that regard? Secretary Chertoff. I appreciate the opportunity to talk about that, Senator. Let me first begin by harking back to my statement about doing this comprehensive review because part of my philosophy going into this is that we have various components that are focused on types of threats, we have various funding programs, but I want to step back and look at not where we have the money now and where we have the jurisdictional lines now, but first, where are the actual threats and where are the actual consequences and vulnerabilities. Clearly, transportation of a non-aviation kind is historically an area that has been subject to threat and is one which plays a very important role in our national infrastructure. So I want to analyze across the board, without regard to what particular box we are talking about, how we deal with the whole gamut of threats. Some of these issues involve how we deal with cargo, for example, that may be currently handled under CBP. Some of them deal with fixed infrastructure. Some of them may deal with rolling stock. Some of them are private-party issues. Once we look at that, I think we have a strategy we can put on top of that as an overlay the way we are currently organized, and that is one of the reasons I feel that in the next 60 to 90 days as we do this evaluation, we may get a better idea of things we could do to align our structure and our operations with these missions, such as, for example, non- aviation security. Every type of transportation presents its own issues. Cars and trucks, for example, are essentially heavily operated by the private sector, and so private sector involvement is very important there. We are doing things with respect to rail where we have pilot programs with respect to explosives. We have other kinds of enhancements. And there we have obviously much more government involvement, including, frankly, State and local government. So I would like to be able to say at the end of this process that we are headed in a direction of, again, increasing the way we deploy our resources and our money in an analytically sound and transparent way so that I can come to you at some point and say, ``look, we are doing this because we have the following intelligence and we have made the following evaluations, and we are being consistent and complementary across the board.'' Senator Lieberman. I appreciate that. I urge you to do it. I am sure you will do it, anyway, approach that view with the sense of urgency that the reality of the threat justifies. And I urge that we work together on this Committee with you on it. I want to just pick up and mention, in a related matter to the topic that the Chairman was talking about, the Urban Area Security Initiative, a really important program. And what troubles me, as I have said to you privately, is that the Department now administers the program in such a way that there is a threshold of population of 225,000 in a city before it can qualify for funding under this program. And that just does not make sense to me because there are some--this is slightly different from what the Chairman was saying--there are clearly some smaller cities in which there are real targets for terrorism. And I urge you to review that requirement and basically make a threat assessment free of an arbitrary threshold. I welcome any comment. If not, I am happy to go on and---- Secretary Chertoff. I will certainly look at that issue. I think it is important. Senator Lieberman. Good. Finally, the 9/11 bill did include, as I mentioned in my opening statement, a number of authorizations which at this point the President's budget does not respond to. And some of them are really quite critical, and I hope are now coming in. I understand the turnaround time between budget preparation and submission and the 9/11 legislation adoption was not long. But these go to equipment that is necessary for transportation security, and the one I want to ask you about, finally, is border security. The 9/11 legislation authorized 2,000 new Border Patrol agents. The Administration's budget would fund about 200 positions, which I understand to be replacement for agents that were deployed from the Southern border to the Northern border in response to congressional mandates to increase Northern border protection. In my own letter to the Budget Committee, which I referred to earlier, I recommended an increase in funding to allow for a thousand new Border Patrol agents because the best evidence I had was that it would be impossible to really find, train, and hire more than that number in this year. Would you support an effort to increase funding for the Border Patrol agents that we have working for us in that critical function, antiterrorism function? Secretary Chertoff. Well, of course, protection of the border is critical, and it has to be part of a comprehensive strategy. As you know, the President has advanced the idea of a temporary worker program, and I think that fits well with the enforcement notion, the idea being that by reducing pressure on the border from those who really do not want to do us any harm, we then can deploy our resources more effectively against those who do. As I understand it, this 210 additional Border Patrol slots represent a net increase. In other words, it does not merely backfill, but it actually raises the bar. So it clearly moves in the direction of what Congress was interested in and what we think is appropriate. As with anything else, as part of this general review, we want to look at what we need to do to be as robust as possible in protecting the border. That includes things we are doing technologically with unmanned aerial vehicles, our consolidation of air resources, sensors, and also, we are working, frankly, with State and local partners, as we are currently doing with our Arizona border control initiative. So I look forward to the opportunity to work with you on this issue. I think it is very important to the Committee, it is very important to me, to make sure we are being efficient but also effective in protecting our borders. Senator Lieberman. Thank you. I do not think 210 is enough, so I hope we can raise it up beyond that. Thanks, Madam Chairman. Chairman Collins. Thank you. Senator Lautenberg. OPENING STATEMENT OF SENATOR LAUTENBERG Senator Lautenberg. Thank you, Madam Chairman. Secretary Chertoff, it is interesting to see you in a different facility where before we used to meet in the hall of our respective office building. We shared some space in the same building before Secretary Chertoff volunteered for something he, I hope, will never regret. I don't know whether the few days at the job has given you any further trepidation about the massive assignment that you have in front of you, or whether you have had a chance to get enough time with the organization, with the people who will help you run it, to feel like this assignment is something that you can deal with and make differences with and in a relatively short while. Secretary Chertoff. This is a great privilege. I have been tremendously impressed by the people in the Department. I have enjoyed starting to work with Congress on this. I think this issue is one in which there is a real sense of agreement on the mission. And there are areas for honest debate and discussion about how we get the mission accomplished most effectively, which I really look forward to engaging in, and I particularly look forward to hearing from others and getting input from others, including, most importantly, this Committee on what we might do, because we are a young organization, there is an opportunity to really shape the way homeland security is dealt with in the years to come. And that is a very exciting and very important thing to do. Senator Lautenberg. I want to say this in the time I have allotted here. I think that for the most part, DHS has had a good start on this huge task. I have concerns about some of the areas of particular interest to my home State. I offer no compromise by saying our home State. I just don't want you to forget your past. But some States get their grant money that they really do not need, and others, like New Jersey, I think are on the short side of the grant. As the Secretary knows, we have a stretch of land, a stretch of territory between the port of Newark and New York and Newark Airport designated the most dangerous 2 miles in the United States when it comes to terrorism. Despite this and other warnings, our funding from DHS was cut last year by $32 million. The 9/11 Commission report recommended that homeland security grants should be based on risks and vulnerabilities. Senator Corzine and I have introduced a bill to implement that view. And we have our problems, Senator Lieberman discussed it, and that is, it goes far beyond the focus on aviation. We have got 120,000 New Jerseyans who use the Hudson River rail tunnels each day. And with our port situation, a recent report from the DHS Inspector General pointed out that port security funds have not been allocated on the basis of need and money has gone to other States. So September 11, I think showed that the dependence on one principal mode of transportation leaves us vulnerable. When aviation shut down, not only was it an impediment to our resuming life or continuing life as we knew it before the September 11 tragedy, but we were very dependent on Amtrak and its ability to carry people. And I think that in the evaluation of where we stand ready to respond to terrorist attacks, I believe that we have to make sure that we have all modes of transportation, principal modes, that is, rail, highway, and obviously aviation in mind. Mr. Secretary, did you have a chance in the production of this? Secretary Chertoff. I actually think I was confirmed after the budget was issued. Senator Lautenberg. OK. Secretary Chertoff. But, of course, I am familiar with it now. Senator Lautenberg. Well, there has been a reduction in the size of the formula grants, the guarantees, by two-thirds. They went from 0.75 to 0.25 in terms of the guarantee that each State would get. Now, can we assume that the adjustment of the formula is something that we can get your agreement on that the risk-based view of grant-making is the proper way or the best way to do it, as recommended by the 9/11 Commission? Secretary Chertoff. Yes, and I think I have said this now in a number of different places, and I am nothing, if not consistent. I do think we need to be risk-based, and we have within the Department, as we think about a whole host of issues--how we deploy our resources, how we issue grant money, how we develop standards, a strategy which, again, looks at these three pieces. What are the consequences of something happening, what is the vulnerability, and what is the threat. I recognize that to every community there are things that are important. That does not mean that we can fully fund everything that is important to every community. We have an obligation in dealing with terror, in addressing those elements which would have the most serious consequences, as to which there are the most vulnerabilities, and where there is an active threat. And those are going to require judgment calls. What I would like to be able to say, though, as part of this process is that we have a transparent, an analytically sound and disciplined way of making these decisions, and be able to lay that out for the Committee. And I think that is how we get a risk-based funding formula implemented. Senator Lautenberg. Because when we look at the budget proposal and we see that urban area security--I am sorry, State and local grants, Citizen Corps, other grant programs, have been reduced by $425 million in the 2006 proposal. And it is pretty hard to understand how we are going to be able to take care of the obligations that we have with that kind of a substantial reduction in funding. And I hope that between now and the time that the appropriations are finally resolved that we will hear from you, Mr. Secretary, on whether or not there ought to be adjustments made to accommodate these problems. Now, in New Jersey we saw a decrease in homeland security funding by $32 million, overall 34 percent, city of Newark, which was listed as one of the five targeted places by some material that turned up. And the city of Newark saw its homeland security funding cut by 17 percent; Jersey City, right on the Hudson River, a highly vulnerable place, transportation center, a lot of high-risk buildings, cut by 60 percent. And I know that you are aware of the fact that these are high-risk areas. We are still in reverberation from the days of September 11. So I don't know whether you are prepared to say now that there would likely be an increase in those places or whether we can expect to have to get by on the skinny, if I can use the word, without having the appropriate funding for the protections we need. Secretary Chertoff. Let me just say I think that, as part of the process of review I want to undertake, we are going to look at the criteria that was used in making grants, which take account of a number of characteristics. Sometimes we may need to refine the characteristics so we get a better sense of what we ought to give more weight to or less weight to. Sometimes, frankly, circumstances change. You can get differences in vulnerability or you can get differences in threat environment. And so it does not surprise me and it will not surprise me in the future if we wind up seeing that funding levels of particular localities do not remain static. Sometimes they may go up, sometimes they may go down. Again, what I would like to do is be able to be confident and be able to demonstrate that we have a formula that is risk- based, that is transparent, that is analytically sound, and that is disciplined. Then I think that tool will get us close to where we need to be in terms of implementing this philosophy. Senator Lautenberg. Madam Chairman, I will close with a question that has come up in the last couple of days that I have been very involved with, and that is permitting gun permits to be issued to those who are on the terror watchlist. Now, we permit that, even though we would not permit those individuals to get on an airplane if we knew who they were at the moment of their boarding. And I don't know how much jurisdiction Homeland Security is going to have in this area, but I did ask your predecessor, Tom Ridge, when he was here whether he thought that was a necessary thing to permit. And he said he didn't think so. And we had comments from Mr. Mueller yesterday about how questionable he saw this program. They destroy the records of either a purchase or a decline within 24 hours--by mandate destroy those records. Mr. Secretary, you are not only there to prevent a terrorist act from happening, but also to enforce the law in terms of having an information source that can help other agencies to do their jobs in apprehending these people if, heaven forbid, something does happen. So I hope that you will have a chance to look at that, and perhaps we will get a chance to discuss it in the near future. Thank you, Madam Chairman. Chairman Collins. I saved you from answering that question, I want you to know, Mr. Secretary. [Laughter.] Senator Pryor. OPENING STATEMENT OF SENATOR PRYOR Senator Pryor. Thank you, Madam Chairman. Thank you, Secretary Chertoff, for being here, and let me just say that I know you have a big job on your hands, and I appreciate the complexity of it and the difficulty of it. But also at the same time, let me say that I have looked through your budget, and as we understand the budget this year compared to last year, from the fiscal year 2005 to the fiscal year 2006 budget, if we run the numbers as we understand them to be, last year Arkansas, my State, got about $21.4 million. This year it looks like we stand to get about $5.4 million. In other words, we are taking a $16 million hit under this budget. You are cutting the resources to our State back by about 75 percent, and it makes it very difficult for me to support your budget when Arkansas is going to suffer such a drastic cut. I just want you to know that. I guess the way I look at it is in order for America to be safe, all of America has to be safe. And $21.4 million for a State with our geography and our population is not a lot of money. It is not like we are gold-plating what we have down there. We have some critical needs, and I know that some of the smaller States like Maine and Connecticut and others would say the same thing. There are a lot of needs out there, and if we are not strong across the Union, I am just concerned whether the Union can be safe. So do you have any comments on a State like Arkansas taking a $16 million, about a 75-percent cut in homeland security dollars? Secretary Chertoff. I am happy to address that, Senator, because I think it is consistent with what I have been trying to take as a uniform position, which is that we operate as closely as possible to a risk-based analytical approach to everything that we do--funding, operations, etc. Senator Pryor. Well, I don't want to cut you off, but I understand the risk-based. I understand what you are saying. But don't we need to prepare ourselves for the next risk, not the last risk? Secretary Chertoff. Absolutely. That is absolutely right. Senator Pryor. And aren't we assuming that because these happened in urban areas before, it is going to happen in urban areas again? Secretary Chertoff. I agree with you, we should not assume that. And I think the approach to developing risk is not based on simply looking at what happened last time. In fact, I could not be in more agreement with you that it would be a huge mistake for us to spend all our time fighting the last war and not thinking about the next one. So what do I mean by risk-based? I mean that we look at vulnerability and we look at consequence, which is not necessarily related to a State. A particular State may have, for example, a kind of infrastructure, the consequences of an attack on which would be catastrophic. In that case, we ought to put the money to do what we have to do to protect the vulnerability there and to do what we have to do to avoid the threat. So that although the budget proposal may reduce the amount of guaranteed state-by-state funding, it does not necessarily tell you how a particular State or locality is going to do because if a locality or State has a real high risk, they are going to get the money to address the risk. So what we do want to do is move away from the assumption that risk is divided along State jurisdictional lines. The terrorists don't look at State jurisdiction. We need to look at where the infrastructure is, where the threat is, and where the most serious consequences and vulnerabilities are. Senator Pryor. I understand in your formula there is a 0.25 percent minimum. Am I understanding that right? Secretary Chertoff. Right. Senator Pryor. Talk to us about that minimum and how that-- I mean, is that a guarantee? Secretary Chertoff. Well, my understanding of the way the budget sets it forth is every State would get its funding under this particular State homeland security program based on the characteristics I have discussed. If a particular State falls below that 0.25 percent using that analysis, they would be raised up to the 0.25 percent minimum. If a particular State exceeded that because on the merits the risk is there, then, of course, the State would get the amount that the merits warrant. Senator Pryor. Well, you are saying the 0.25 is a guarantee. Secretary Chertoff. You would get a minimum of 0.25, but, of course, on the merits, if more were warranted, more would be distributed. Senator Pryor. Right. I understand that. But that is the floor. Secretary Chertoff. That is the proposal, yes. Senator Pryor. I have a concern about that because I have had constituents who have spent their lives and dedicated themselves to homeland security in Arkansas, and they are starting to hear rumors through DHS that the State cannot count on that minimum. I would like for you to comment on those rumors. Secretary Chertoff. Senator, rumors are tough to comment on. I think the proposal is clear that the President's budget contemplates under this particular program, the State homeland security grants, that there be a 0.25 percent minimum, as I have defined it. Rumors abound and I just can't--I have no way of addressing them. Senator Pryor. OK. Madam Chairman, thank you, and I would like to say for the record I do concur with Senator Lieberman's letter of February 28, on this subject matter and others, and thank you for your time on this. Chairman Collins. Thank you. Senator Coleman. OPENING STATEMENT OF SENATOR COLEMAN Senator Coleman. Thank you very much, Madam Chairman. Secretary Chertoff, a great pleasure to have you before us, and we are thrilled that you are doing what you are doing, and hopefully we will move quickly to get you some other folks by your side. We had a good hearing with Under Secretary Jackson the other day, and I know the Chairman and the Ranking Member are moving quickly on that. I had a chance a couple weeks ago to inspect the Port of L.A. and Long Beach Harbor. I think 46 percent of our Nation's container traffic goes through those particular ports. One of the issues of great concern that I have seen some studies on has to do with the threat of nuclear detonation, and the impact that would have in a port area. I think Booz Allen's study found the economic impact of a terrorist attack at $58 billion, spoilage loss, etc. I understand we have not deployed radiation portal monitors at our Nation's largest ports. Can you talk about that issue? Secretary Chertoff. My understanding is that there are 400 portal monitors now deployed at various ports of entry, including obviously seaports. I hesitate to comment publicly as to whether a particular port has a monitor, but the plan is to have these monitors deployed--I think the balance of the monitors deployed this year. But I also want to put it in a larger context. I think the President agrees and we agree that the issue of a potential nuclear or radiological device is a very serious issue we must be concerned about. That is why the budget contemplates this Domestic Nuclear Detection Office (DNDO), this nuclear office that would coordinate across the board and essentially almost create a mini-Manhattan Project to move to the next level technologically. And even as we speak, in addition to deploying the portals that we now have, we are dedicating money to doing the research necessary to get to the next generation of portals that will be more sophisticated and more adept at detecting this material. Senator Coleman. And then I believe there is $125 million in the budget for radiation portal monitors. Secretary Chertoff. Yes. Senator Coleman. So it is there. In terms of what you can tell us about the process for utilizing these dollars, is there a sort of focus on high risk? Can you give me a little better sense of how you use this $125 million? Secretary Chertoff. Well, as I say, we want to complete the deployment of the existing technology as we wait, because obviously we do not want to wait until we get new devices. We are heavily focused, first of all, on getting a technology that will be as effective as possible in detecting this material. And, again, because we are in a public session, I do not want to get too detailed about what some of the challenges are. Once we get that technology, then I think part of the responsibility of this office will be to deploy it, and that, again, I think needs to be, as with everything else, based on risk and vulnerability and consequence. So presumably, once we get that technology, we will roll it out in a way that best meets that analytical test. Senator Coleman. Just following up on the Domestic Nuclear Detection Office--and I appreciate the increased focus--can you help me understand the role of this? Will this supplant CBP as the primary agency involved in deployment of nuclear detection weapons? Is it going to be an advisory role? How is it going to function with the existing entities? Secretary Chertoff. The theory is that this is a matter of great importance that requires an interagency approach, so it will be an interagency office. It will report to the Secretary, which I think is indicative of the priority that we place on this, although it will be tied very closely to the existing research we do at the Science and Technology Directorate. And the idea is not to supplant CBP because CBP is ultimately the operational--or part of the operational element that will make use of this technology. And so CBP will be involved in the process. But what the office will do is not merely advise; it will actually take ownership of the process of identifying, acquiring, evaluating the technology, and then rolling it out and deploying it, although obviously the actual use of the technology will be done in the field by CBP officers. Senator Coleman. Let me, if I can, get perhaps a little parochial, but not really. Minnesota is the home of Northwest Airlines. They, like many of the other legacy carriers, are in a very difficult financial situation for a whole range of reasons. But in the President's proposal, it proposes to increase, to double the airline security fees for passengers traveling on airlines. The airlines say if this cost is transferred back to them, it is going to have a devastating impact on an industry that is already in great difficulty. The airlines--and I raised this issue with Under Secretary Jackson, and I am not proposing we tax train passengers, I am not proposing that we do other taxes on a range of others. I am just concerned about the equity on airline travel, airline passengers, and ultimately on airlines, but it is going to be shifted over to the passengers, this continued increase in fee. I believe passengers ought to pay $2.50 per flight segment and a maximum of $10 on a round trip. I think it is proposed to be doubled, a segment fee to $5.50 and a round trip fee at $16. Can you respond to some of the concerns that have been raised? Secretary Chertoff. I would be delighted to. My understanding, Senator, is that, of course, when the original legislation establishing TSA was passed, it was contemplated that eventually it would be largely, if not entirely funded through a user fee. And I think that makes sense because what it does is it matches up the payment of the cost of this fairly extraordinary set of security measures with the beneficiaries. The reality is, speaking as someone who has flown a lot, as everybody else has, I care a lot about security, and I think everybody else does. And to the extent that we pay for things that we care about, I think passengers would understand the need to pay a small amount of money to guarantee their security so they get where they are going. I would point out the amount of money we are talking about, I think if you take it on a one-way ticket, the maximum is raised from $5 to $8, a $3 difference, which basically, as I recall it, is about the price of a Coke and a newspaper at an airport when you are waiting around. So it is not a huge marginal cost. What we should do, and I think it is part of the general philosophy, is we should pay just enough to get us the security we need--in this case, for the airline passenger--not more than we need, because that is wasteful, but not less. We should be able to fund what we do for security. So I think this is an economically sound idea. I think it will ultimately be something passengers, I would think, would fully understand. And to the extent there are issues with respect to the precise details, of course, I would look forward to working with industry on that. Senator Coleman. I anticipate that some Members of this body will have a differing perspective, and I being one of them. Secretary Chertoff. I expect that. I look forward to discussing that. I think it is something worth talking about. Senator Coleman. Thank you, Mr. Secretary. Chairman Collins. Thank you. Senator Levin. OPENING STATEMENT OF SENATOR LEVIN Senator Levin. Thank you, Madam Chairman. Welcome, Mr. Secretary. Secretary Chertoff. Thank you, Senator. Senator Levin. I applaud, first of all, your moving towards a more risk-based grant program. I think it is the only way to go, providing that the grants are determined on a rational basis, and you have laid out the criteria for that rational basis. The 9/11 Commission recommended that funding of these grants be allocated on risk, stating that ``Homeland security assistance should be based strictly on an assessment of risks and vulnerabilities.'' You have moved towards a greater reliance in your budget proposal on that assessment, although you are not strictly on that basis because you still have a minimum 0.25 guarantee. But at least you are moving in that direction, and I commend you for that. My concern is what happens once you get there as to just how rational your system is in terms of allocation. And I look at your buffer zone protection program, and I look at the allocations made to States that are supposed to be made on risk. That program is supposed to be a risk-based allocation program. But when I look at the amount of money that various States are getting, it does not seem at all rational to me. For instance, Arizona on buffer zone protection, which, again, is risk-based, gets six times what Hawaii gets. Does that mean that there are more infrastructures, more facilities in Arizona that are subject to attack, more critical infrastructure sites, six times as many in Arizona as Hawaii; Tennessee, 2.5 times Massachusetts; Kentucky more than Michigan. Can you describe the basis for your buffer zone protection allocations? Secretary Chertoff. I think the rollout of the grant-making process is going on as we speak. I don't know that I can explain how a particular State is scored relative to another because I think, again, the way I understand this should work is it is based on the three characteristics I have described: Consequence, vulnerability, and threat. And that is not something which necessarily is driven by where State lines are drawn. Let me step back and put it in perspective, first by saying that since September 11, including the 2006 budget, there will have been a total of $17 billion in grants. So there is a lot of money that has been given out there and a lot that is going to be given. As part of what I have described as my desire to kind of comprehensively review the Department, I want to look at the grant-making process and see if we have as disciplined and as defensible a process for scoring as possible. And it may very well be that there are things we have done historically in terms of scoring things that need to be corrected. Sometimes we get that through feedback; sometimes we get it through looking analytically on our own. So without specifically being able to tell you as we speak why a particular State in a particular grant got more money than another, I can tell you that the objective and the philosophy, which I think is shared across the Administration, is to have a program that is disciplined in the way I have described. Senator Levin. Well, I agree with the philosophy, but the implementation of that philosophy is critical, or else it is just going to cast a pall on the whole premise. Secretary Chertoff. I agree with that. Senator Levin. And I want to move to a risk-based system, but we have all got to be persuaded that it is a rational risk- based system. And when you look at these States, at least roughly--and I obviously am most familiar with Michigan--it is not a rational allocation from anything that I can see. So as you go through this process, I would like to work with you and your staff on exactly how those criteria are applied. Is that fair enough? Secretary Chertoff. I think it is fair, and I think once I am through this process and my understanding is more detailed, I anticipate and I will insist upon having a formula that will be, I think, transparent and reasonable. Senator Levin. All right. I thank you for that. The Department of Homeland Security intended to open up five Northern border air wing locations, but has apparently opened up none of the additional ones that were stated to be necessary. Can you give us the status of those Northern border air wing additional bases? Secretary Chertoff. I believe, Senator, you are correct that two were opened up. I know one is in New York. I think the other one may be in Washington or further out West. I think the plan is to open an additional one each year to get up to the five, and so we are under way with that. Senator Levin. Is that still the plan? Secretary Chertoff. Yes. Senator Levin. Thank you. We have a lot of issues on the Northern border. We have a very inadequate Border Patrol, and we have made huge efforts here to have folks realize that we have got a much longer Northern border than we do a Southern border. There were supposed to be staff increases in the Border Patrol. There were also supposed to be an assurance that at least 20 percent of the additional Border Patrol agents would be assigned to the Northern border, and, again, we have a far longer border and we have got major issues along that border. Is that staffing, that additional staffing, going to reflect that minimum 20 percent for the Northern border? Secretary Chertoff. I think what happened is it was the Patriot Act that required the movement up to the Northern border. That was accomplished, and I think the 210 Border Patrol agents that will be coming on will essentially be assigned where needed most. I cannot tell you whether that will result in a third based on the original number or a third as you rack it up against the total number that is enhanced. Given the threat on the Northern border, I suspect any significant increase will be beneficial. Senator Levin. Thank you. My time is up. Chairman Collins. Thank you. Senator Dayton. OPENING STATEMENT OF SENATOR DAYTON Senator Dayton. Thank you, Madam Chairman. Mr. Secretary, I just finished a meeting in my office and I turned on the television and saw Senator Lautenberg trying to hijack money from Minnesota, so I had to rush over here. And I am glad that Senator Coleman is here, too. Some of these words--and I respect you are just getting started in this. I am not questioning your sincerity at all, but ``transparency'' and ``rationality'' and the like--they sound good in generalities. But when they are applied, at least what happened in Minnesota this last time where you got eastern metro counties being eliminated entirely and western metro counties being cut back significantly, it does not appear rational. It may be transparent in retrospect that we could look back and see that there was a process involved, but there was no forewarning, and with such a drastic reversal of what has been the message from the Administration, from Congress, to local governments, first responders, take these initiatives, do all this, take all these steps, often at their expense, put hundreds and thousands of hours in preparedness, and then someone is going to turn around and say, well, we have done the risk assessment and you get no money. Someone from your Department needs to tell the local officials why it is that they do not need to be concerned anymore and why it is that for the last 3 years they have been told that they should be mounting all these initiatives and making all this effort, and then somebody has decided, for whatever reason, that if they are being eliminated from funding that there is no risk to them whatsoever and justify that. That is the real nitty-gritty of this. And what I don't see in this budget here, I can look at the general numbers here about the Urban Area Security Initiative, a $135 million increase over the requested funding for 2005, but a $180 million decrease from the actual appropriation, the FIRE Act grants equal to last year's request, but $250 million less than 2005 appropriated funding. If I look at these aggregate numbers, it says to me that when this gets translated into whatever rational and transparent process, it is still going to come out with less or no money for certain areas. And then the statement from the Administration is that there are no risks there. If that is not an accurate reflection of the view, then there is not enough money in here in order to fund all these projects in areas that may not be as high risk as New Jersey or other areas, but where there is still risk and where they need to be continuing these first-responder kinds of preparations, training, and the like. So I need to know, before I can decide whether to support the budget or not, how these aggregate numbers are going to translate through your process into those decisions. Secretary Chertoff. I agree, first of all, that we ought to make sure we are always communicating with our State and local partners about these issues. I don't like to hear unpleasant surprises suddenly, and I think very few people do. And I think we need to commit ourselves, and as I have indicated, I have instructed people that I want to make sure we do not have this happen in the future. Senator Dayton. Even if they are not surprised, I don't want them to be eliminated. Secretary Chertoff. Well, on the larger question, what we need to do is to--there is risk everywhere. Risk is a part of life. And I think one thing I have tried to be clear in saying is we will not eliminate every risk. First of all, some risks are risks which State and local governments traditionally bear and have to continue to bear. We can help them with standards and advice, but to take an example, there was an incident I guess a few weeks ago in California with a train derailment. I don't want to talk about it too specifically because I guess there is a pending case. But that was not a terrorist-related incident. That kind of thing has always happened. The appropriate authorities have to take steps to prevent those risks and protect against them. They have not all become Federal matters simply because a terrorist could also choose to do the same thing. So we have to say, look, the risks we are most concerned about are those which are highest on our analytical scale. Others certainly we will be helping out in terms of standards and advice and the whole panoply of traditional things we can do with our partners, including information sharing. And we have to be nimble enough when something changes to be able to respond to it. But the message is not that if we do not give a substantial amount of Federal funding there is no risk. The message is that in the hierarchy of risks, we have to put the resources where the highest risks are. And I know that is a very tough statement, and in coming up and speaking to the Committee and speaking generally, I guess I have had it in my mind, that we owe pretty blunt talk to people about what the limitations are of what we can do and how important it is that what the public expects is that we put our resources to work in a way that most closely approximates the most serious risks with the worst consequences and the greatest vulnerabilities. Senator Dayton. The candor would be welcome, but the consistency is also important. And what you are saying here is going to be a 180-degree reversal of what your Department, prior to your coming, and the Administration and the Congress have been saying to these local governments. They are not expecting the Federal Government to fund all of their first- responder activities, but they are expecting the Federal Government to be consistent in providing the resources for those additional efforts--training and preparation and equipment and the like--that they have been told that they should undertake in order to fulfill their responsibilities for these attacks. And nobody knows where they are going to come, what form they are going to take. Again, this is a total reversal, and if this is going to be the consequence of this budget, I would like to ask if you could respond in writing to what level of funding for these first-responder grants and awards, based on whatever new formula or the like, is going to be necessary to fund every State and local government at the level that it was heretofore. And then we can assess whether or not the amount of money that is being requested is sufficient or not. But if the outcome of this is going to be that a whole bunch of local efforts are going to be zeroed out from any Federal support, I respectfully disagree with that approach. Secretary Chertoff. Well, we will be happy to respond in writing. Let me just add this: There is, I think, in the budget a total of about $3.5 billion which could be available to fund things like local first responders, including the homeland grants, which do have this built-in minimum, the UASI grants. We do still have fire assistance, I think $500 million. So there will be money there. Some of the hard decisions will have to be made at the State and local level. One thing, for example, that I think is important is sharing of resources. It may not make sense for every single town in a particular geographic area to have the full capability to do hazmat if we can centralize the hazmat response capability in a place that can cover a number of areas, and thereby really put a meaningful level of resource and training into that place. So this is going to require everybody to think--and, frankly, if a State wants grants and if a locality wants grants, the more able they are to demonstrate effective use of resources, it seems to me we ought to score that higher in the grant-making process. So I think we want the same things. I do believe consistency is important, and that is what we are going to work to achieve. Senator Dayton. Thank you, Madam Chairman. Chairman Collins. Thank you. Mr. Secretary, my next question actually follows up well on the discussion that you just had, and I think you can see that many Members of this Committee have a great deal of concern about the Administration's budget and its adequacy for homeland security grant programs. But one issue that ought to unite us is making sure that money is wisely spent, and unfortunately there have been some cases cited by the Inspector General and the Government Accountability Office that suggest that the money is not always wisely spent. I think it is important to clarify that the vast majority of the money has been well spent and has been very necessary. But the legislation which this Committee unanimously approved last year and which many of us reintroduced last month had three provisions to help put in better controls to prevent wasteful and potentially fraudulent spending: First is a requirement for an independent audit, an annual GAO audit and report on DHS grants to the States. Second is a provision tying spending to standards. This would be a requirement that States distribute the homeland security funding only in ways that measurably help them to meet the preparedness standards to be set by the Department. In other words, to cite one egregious case, you cannot spend the funds on leather jackets unless you can somehow show that leather jackets increase preparedness, which seems to me to be unlikely. A third provision would be remedies for noncompliance. This would authorize the Secretary to terminate or reduce grant payments if a State or locality failed to comply with these requirements. What is your position on putting in specific legislative controls to help ensure that the money is well spent? Secretary Chertoff. Well, I think that, as I understand it, HSPD-8 actually imposes on us a requirement to get out--and I think we need to do it this year--a series of metrics that we can use to set a baseline of preparedness for all of our State and local partners. And I think that is an important device to use in order to impose this kind of discipline. What it would do is, first of all, enable us to give clear direction; and, second, if people were not following the direction, at a minimum that would have a seriously negative impact on their ability to get funding in a succeeding year. Whether there is a need for additional sanction beyond that, I don't know. I think we ought to be able to make ourselves very clear. Money is tight. Everybody wants it. And the surest way to take yourself out of the running for a grant is to buy leather jackets, unless we are missing something on the leather jacket front. Chairman Collins. Thank you. Because money is tight, the Committee has scoured the budget request not only to identify areas that have been underfunded, in my view, such as homeland security grants, but also to look for opportunities to save money. And I want to bring up one such example. Clearly, the Department needs a center that is open 24 hours a day, 7 days a week, to address threats and to respond to incidents. But from our review of the budget, it appears that you have three such centers. The budget justification describes the Homeland Security Operations Center, which is proposed to receive $61 million in fiscal year 2006, as ``the primary national level hub for operational communications, information sharing, and situational awareness. It receives and integrates threat information. It maps the Nation's critical infrastructure. And it enables information sharing and collaboration among Federal, State, tribal, local, and private sector entities.'' In other words, that sounds to me like exactly the kind of around-the-clock center that the Department should have. But if you look further into your budget, you also have two other around-the-clock centers. The second called the National Infrastructure Coordination Center. That is proposed to receive $10 million. And the third is a Cyberwatch Center, which is slated to receive $11 million. From our review, it appears that each of these three 24/7 centers is monitoring critical infrastructure, communicating with State and local officials and the public, and responding to incidents. So when you add that up, that is $82 million--$61 million, $10 million, and $11 million. Do we really need three separate around-the-clock centers? Wouldn't it be more efficient and save scarce dollars for us to have one consolidated center? Secretary Chertoff. I appreciate the opportunity to answer that, Madam Chairman. First of all, any cost saving that can be identified to me, I am going to do my level best to exploit because we are tight on money, and if we are wasting money or we are duplicating effort, I want to put the money on the ground somewhere. In this instance, though, I think there are three separate roles that are played, and, frankly, they have to be played-- and they are distinct. They would have to be played--even if we moved all the centers into one building, we would have to triple the size of the building, and there are reasons, by the way, not ever to do that because you never want to put all of your eggs in one basket so if you have a power problem or something like that, you have totally shut down. The Cyberwatch Center looks at cyber intrusions, obviously a very important issue and increasingly important, and makes sure that we are interconnected with the private sector in terms of warning and response. That is a function which is very sophisticated and requires a great deal of specific information and interaction with people who work in the cyber world. So that is quite a specific and detailed effort. Likewise, the Infrastructure Coordination Center deals with essentially connecting up different parts of the national infrastructure to allow communication across the board in the case of an emergency, such as, for example, a power failure that could then cascade into communications and refineries. The HSOC, or the Operations Center, does not deal at that level of granularity with information. It is designed to stand back and take a more comprehensive view and coordinate between incidents that might involve infrastructure, that might involve cyber, and that might involve a whole host of other things, all happening at the same time. And the customer for that is, frankly, me and the people in the leadership of the Department and in the leadership of the other departments. So that in order to make HSOC capable of doing the robust cyber piece that we want and the robust infrastructure piece, we would essentially have to triple it. And I think if I were given the choice between putting everything in one place and having them in three separate places but connected, I think probably it is prudent to keep them in separate places because if something happens and you get a power failure or a computer crash, at least you have not taken down your entire management structure. You have got a certain amount of redundancy built in. Chairman Collins. Before I yield to my colleague, let me just respond to that by saying if I were the local police chief in Portland, Maine, and there were an incident that involved the technology infrastructure of a local chemical plant, I would be baffled which one of the three centers to call. Secretary Chertoff. I can answer that, and I want to because the point of the Operations Center, the HSOC, is precisely to be the place when you don't know, that is where you go. We might eventually connect you to something more specific elsewhere, but we are very much into the one-stop shop. And that is the central one-stop shop for Homeland Security. Chairman Collins. Thank you. Senator Lieberman. Senator Lieberman. Thanks, Madam Chairman. I would just share with you an unusual coincidence. I went out to take a call from my Governor, Jodi Rell, and I had something I wanted to talk to her about. And she said, ``While I have got you, if you run into Secretary Chertoff, would you please make an appeal for restoration of homeland security funding for Connecticut?'' And she specifically asked about New Haven, which is under the urban areas threshold of 225,000. So I now make this as a bipartisan request from Connecticut. I have a few questions I wanted to ask. One is about Coast Guard research and development. The fiscal year 2006 budget of the Department reflects plans to consolidate all of the Department's research and development activities in the Science and Technology Directorate. There is no reason for you to know this, Mr. Secretary, but last session Congress rejected a similar proposal because of concerns that the Coast Guard's research and development activities in support of its traditional missions would be jeopardized under such an arrangement. And I share that concern. There is a model, I gather, within the Department that the Secret Service is a distinct entity and has its own research and development programs, but is called on to coordinate closely with the S&T Directorate. I don't know if you have had a chance to look at that and want to comment on it. If not, I will go on to another question, but I wanted to draw that history to your attention. Secretary Chertoff. I am aware of that, and I actually anticipate that I will be looking at that particular issue. Senator Lieberman. OK. Second is the information-sharing environment, which is a real focus of the 9/11 Commission. In fact, the Commission concluded that the biggest impediment to all-source analysis and to a greater likelihood of connecting the dots was the resistance they found to information sharing. As a result, they urged a new governmentwide approach be developed. Placing a really high priority on a different kind of ``ISE'' here, information-sharing environment, that the budget, as I read it, does not seem to me to emphasize creating that information-sharing environment, and I wanted to ask you generally what priority you put on it and how you plan to proceed to implement that particular recommendation of the 9/11 Commission and of Congress in our legislation. Secretary Chertoff. I think, Senator, that is one of the most important tasks of the Department, and in the 3 weeks I have been on the job, I have met with State and local partners, and they have all emphasized the importance of that in terms of their own work. We have stood up this Homeland Security Information Network, which now essentially connects us to 50 State homeland security headquarters so that we can get information out quickly and make sure we are all connected in that respect. One of the things I want to continue and, frankly, expand is the use of our analytical abilities to share with State and local partners maybe more in-depth and detailed information about the threat that we face, including lessons learned from what we have seen in past experiences where there have been terrorist incidents. It should not only be about here is a little tidbit of information, let's get it out to everybody. It should be trying to provide a context within which State and local governments can have a better understanding for their own purposes of the nature of the threat that we face. Senator Lieberman. Good. Thank you. Earlier in February, the U.S. Commission on International Religious Freedom released a study authorized by Congress on asylum seekers and expedited removal. In some sense, this goes back to the conversation we had at your confirmation hearing about my concern about immigration laws and due process. This is uniquely for those seeking asylum. And, of course, the Commission is concerned about people seeking asylum for reasons of religious discrimination and, worse than discrimination, real danger back home. The study found that the DHS had procedures to ensure that legitimate asylum seekers were not erroneously sent back to the countries where they might well face persecution, but that implementation of the procedures varied widely. In fact, in some ports of entry, they found that procedures designed to protect asylum seekers were being followed by DHS employees only half of the time; also that these asylum seekers who, in my understanding, are rarely criminal, are being too often detained in maximum security correctional facilities, often in the same cell blocks as convicted criminals who are serving time. I don't know whether you have been briefed on this report at all. If not, I wanted to draw it to your attention and urge you to take steps to make sure that the procedures of the Department are implemented in a way that the promise at the base of the Statue of Liberty is actually implemented every day. Secretary Chertoff. I will do that, Senator. Senator Lieberman. Are you aware of the report? Secretary Chertoff. I have read the report. I think I had read actually news accounts of the report, so I am familiar with it. And I remember we talked about it. I have not yet been briefed on it. I do agree these procedures ought to be followed. We have them for a reason. Senator Lieberman. Let me just say finally on this matter that one of the conclusions of the 9/11 Commission was that the existing DHS organizational structure does not allow problems of asylum seekers to be addressed anywhere other than the Office of the Secretary, because it is the only place with the line of authority down to all three DHS agencies involved in expedited removal: USCIS, ICE, and CBP. Obviously you cannot answer it now, but they recommend the appointment of a refugee coordinator to whom you would delegate your authority in this area. And I just wanted to draw that to your attention and ask you to consider it. Secretary Chertoff. I will do that. Senator Lieberman. Thank you. Thanks, Madam Chairman. Chairman Collins. Thank you. Senator Coleman. Senator Coleman. Thank you, Madam Chairman. I want to just follow up on the grant allocation question my colleague Senator Dayton raised. I try to pose this not solely in a--just kind of looking at Minnesota, although I represent Minnesota, and that is the reality. But I am trying to understand the system. One of the problems we have that we faced--again, decisions made before your confirmation--is the large fluctuations in the amount of money. You get in St. Paul a $7 million grant 1 year, and then zeroed out the next year, without any notice until the announcement of the overall grants. So I would just urge you to take a look at this issue. If we are consistently wrong, I could understand that. But there is this sense in working with folks at the local level of clearly not surprise, but I think to be a greater sensitivity about the impact of that kind of action, where all of a sudden you have been given a message and you have acted upon it, you have put in place systems, and then, boom, like that. In addition, as we deal with this issue of risk--and, clearly, we saw the risk on September 11, but there are other risks. Secretary Chertoff. Sure. Senator Coleman. And God forbid something else happens. We are all going to be talking about other risks. There are three of us up here right now who are Northern border communities. Minnesota has an international border with Canada, a major port of entry for cargo and vehicle traffic in the city of International Falls; two major cities, Minneapolis and St. Paul; two nuclear reactors, one on the Mississippi River; a major port in the city of Duluth. I am not sure I can get it now, but I hope that we have an ongoing discussion about this question of risk and that it is not just population numbers, but it is--we have the Mall of America, which was at one point the first or second largest tourist attraction in the country. So I just want to encourage an ongoing conversation rather than kind of by-the-book allocation of numbers based on number of people, etc., I think there are other things that need to be considered. Secretary Chertoff. I would like to do that. I agree with you. I think it has got to be much more subtle and adapted to reality than just a cookie cutter. Senator Coleman. The other issue that I want to raise has to do with the Customs Border Patrol seeking a substantial increase in the C-TPAT program, Customs-Trade Partnership Against Terrorism. A good concept, a good program, and I am not sure how much you have looked at it, but the idea being that companies that submit--that work with the agency in the end have a decrease in certain fees because they have submitted a plan, etc. The increase is, I think, $20 million, bringing total funding of the program to over $54 million. It is one of the highest percentage increases. I know the GAO--we have submitted--we are looking at this program. In fact, the Permanent Subcommittee will have a hearing on this issue in early April. My Committee has substantial serious concerns about the implementation of the program. I know that we have requested GAO to do a report, and that report will be finalized and we will have our hearing in conjunction with that. But I think it is fair to say that there are serious concerns about the implementation of the program, that companies are submitting documents with cursory reviews, getting these significant cutbacks in fees, but that there has not been the kind of review and investigation that is needed. Can you talk a little bit about the increase in funding in a program whose fundamental effectiveness has certainly been called into question? Secretary Chertoff. First of all, I think the program is a very good program, and I think it is, again, part of a general sense that as we deal with an enormous influx of trade, both people moving and goods moving from overseas, we want to balance two things. We want to encourage free trade, prosperity, business, and we also want to keep out bad people and bad stuff. And they work together because the more confidence we have in the reliable trade partners, the more we can focus our resources on the people who are not necessarily reliable. So that all makes sense, but you are completely correct that from the theory to the practice is the implementation, and let me say first I look forward to seeing the result of the report. Perhaps unusually for someone in Washington, I actually think getting criticism can be helpful because we learn something from it. In terms of the increase in funding, I think we need to make sure that if this program is to work, we have the resources in place to validate and check these things. The worst thing would be this: To have a program for reliable travel or reliable cargo that was insufficiently robust so that people could sneak in and use it as a Trojan horse. That would be the worst of all worlds. And so I think part of the deal with our going to this model has to be very careful to make sure we are really being stringent. Senator Coleman. I appreciate your openness to review, and certainly the concept is the right concept. And our concern is to make sure that it works well, that it is doing what we are funding it to do. Secretary Chertoff. Mine, as well. Senator Coleman. Thank you, Madam Chairman. Chairman Collins. Thank you. Before I yield to Senator Levin, let me announce that we obviously were not able to have a quorum of Senators here at the same time to report Michael Jackson's nomination. So we are moving the markup to off the floor during the stacked votes at noon in S-219, which I am told is the Ceremonial Room on the Democratic side. Senator Lieberman. It is a bipartisan room. Chairman Collins. I hope so. That information did worry me. Senator Lieberman. It is only on our side. It is not our room. Chairman Collins. OK. So we do hope to report Michael Jackson at that time. I know that you are very eager to have him join you. The vote has started, but we do have time for Senator Levin's questions. Senator Levin. Thank you, Madam Chairman. Mr. Jackson did very well at his hearing, by the way. Secretary Chertoff. He is terrific, and if confirmed, I think he is going to be a great Deputy. Senator Levin. Mr. Secretary, we have about 17 million containers that come into the United States each year. About half come in by ship at seaports; about half come in by train or truck at land border entries. We have a program inside your budget for the seaports. I am just wondering whether or not that covers land ports of entry as well, and if not, why not? Secretary Chertoff. Well, I think, again, and this is going to be part of the process I hope to undertake in the next 60 to 90 days. The problem of cargo is really a single problem with unique dimensions for sea, air, and land. Through the National Targeting Center, we do have a program for identifying high-risk cargo, and I guess it is probably most often discussed in the seaport context, but I believe it applies to land ports as well. Where I would like to see us move again across the board, this is some variation on what I said previously about a combination of trusted cargo shippers and fast tracking where we can make sure we have properly vetted the cargo, whether it be air, sea, or land, and then that gives us the resources to do a more robust inspection with respect to people who are not in that program. So that is where we are with that, and once I have finished this process of evaluating across the board, I think we will have some opportunity to make some adjustments perhaps to align the structure with the mission. Senator Levin. And that would include the land ports of entry. Secretary Chertoff. Yes. Senator Levin. The largest port of entry in the world, the largest trade link that we have with the world, is the Ambassador Bridge between Detroit and Windsor, Ontario. Seven thousand trucks a day cross that bridge, and it seems to me to leave out the land entry ports of entry is not a particularly rational system. We have also asked you to look at a specific problem because a large number of trucks come in each day that are not subject to inspection in an effective way, and those are the garbage trucks that Toronto has decided to bury in Michigan at our landfills, and that is a separate problem. It is part of the larger one. We have asked you to look into that, and we look forward to your response to that issue. Secretary Chertoff. I will. Senator Levin. Mr. Secretary, just two other quick questions. One is on the authorization by Congress last year of not less than 800 additional Immigration and Customs Enforcement investigators, the ICE investigators that are looking at violations of immigration laws. Do you know whether or not the budget request includes those additional inspectors? Secretary Chertoff. I think it includes not the full amount, some number, and I have to say as I am sitting here, I am blanking on what the exact number is. Senator Levin. OK. If you could provide us---- Secretary Chertoff. One hundred and thirty-five. Senator Levin. Of the 210, OK. We had a hearing at the Permanent Subcommittee on Investigations regarding a very troubling Border Patrol and INS policy back in November 2001. This came right after September 11, and what we discovered was that people who were arrested by Border Patrol attempting to enter into the country illegally, outside of the ports of entry, crossing borders at non-ports, so obviously illegal by definition, were nonetheless released on their own recognizance and without criminal background checks. It was astounding to us that was true since that person by definition is entering the country illegally. There is no doubt about it because they are not coming through a port of entry. And we at that point insisted that we be given studies as to how many of those people show up for their hearings, released on their own recognizance. Obviously if they are trying to get into the country, it is not a very reliable act to say you can just go out on the streets, show up at a hearing someday, and we will give you notice if we can have an address, thank you. Do you have any idea yet what percentage of people arrested for illegal entry and released on their own recognizance show up at the hearing on their removal? Secretary Chertoff. I don't have the statistics. I remember from my prior life that there were statistics some years back of hundreds of thousands of absconders. We do, however, now have a program which we have increasingly ramped up on compliance enforcement, where people do abscond going out and tracking them down and bringing them back. So we are trying to address that problem. Another piece of this is we have a program to try to fast- track people to get them to agree basically to be fast-tracked into deportation, for example, when they clear out in terms of finishing a criminal sentence. So we are trying a variety of methods basically to turn beds around in detention centers more quickly. The most important piece of this, of course, is who we choose to release, because it is one thing to put someone out on bail who is not a danger to the community; it is something else again if they are. And so one thing I have asked about and I am looking into is making sure that we have a good system in place when we make decisions about who should be released so that at least people of special interest are not the ones being released. Senator Levin. Do we do criminal background checks for anyone before they are released? Secretary Chertoff. I do not know the answer to that, but I will find out. Senator Levin. If you could give us that for the record, but also tell us for the record what is the most recent number, percentage of people released on their own recognizance who do not show up for their hearing. Secretary Chertoff. I will do that. Senator Levin. Thank you. Thank you, Madam Chairman. Chairman Collins. Thank you. Senator Carper, I have never missed a vote, so don't make me miss my first one in my Senate career. We are glad to have you here. OPENING STATEMENT OF SENATOR CARPER Senator Carper. Thanks. Madam Chairman, you are not going to miss a vote today. Let me say to the Secretary welcome. I think it is the first time we have had a chance to welcome you as Secretary. We are delighted that you are here, and thank you for your stewardship and your willingness to serve. Madam Chairman, I have a statement for the record. We have been at a markup on the Clear Skies proposal, another important issue, so I have been distracted, as Senator Lieberman knows. And I have a statement I would like to offer, Madam Chairman, and some questions for the record for our witness. [The prepared statement of Senator Carper follows:] PREPARED STATEMENT OF SENATOR CARPER Thank you, Madam Chairman, for convening this hearing today on the President's proposed budget for fiscal year 2006 at the Department of Homeland Security. It's vitally important that we examine this budget proposal closely because, as I read it, it would have a devastating impact on States like mine. By my calculation, this budget would cut the amount of first responder aid granted to Delaware and all small and medium-sized States by more than 80 percent. It proposes cutting funding for the State Homeland Security Grant Program by about $500 million. At the same time, it would increase the amount of money set aside for the largest urban areas in the country while cutting the baseline allocation used to ensure that every State receives sufficient first responder funding by two thirds. I agree with the President that more first responder funding should be distributed based on risk and threat. It probably also makes sense to begin distributing more of this funding directly to urban areas, particularly the large urban areas such as New York, Washington, Los Angeles, and Chicago that are probably most at risk. I would draw the line, however, at reducing the baseline in the State grant program so dramatically. Doing so at this point could put some States in great danger. I admit that the current State grant formula could be improved. After each State receives its baseline allocation, the current formula distributes all remaining funds to each State based on population. While population is one part of what puts a State at risk of attack, this formula ignores other important risk factors such as population density and the location of critical infrastructure. I've also argued in the past that it probably also shortchanges States like Delaware that have smaller populations but potentially significant risk factors. Chairman Collins and I and a number of our colleagues on this Committee have worked over the years to make our first responder aid programs work better. Our proposed, featured in S. 21, legislation we introduced earlier this year, mandates a State grant formula that would distribute about 60 percent of State grant funding based on risk. It also allows the Department of Homeland Security to award up to 25 percent of State funding to high-risk urban areas. However, it maintains the current baseline allocation so that States like Delaware will continue to receive the resources necessary to protect their population and respond to potential terrorist attacks and natural disasters even if they aren't home to a large city and aren't deemed eligible for a risk-based allocation. If the President's proposal were enacted, Delaware would lose a significant amount of money. We were allocated $15 million in the current fiscal year. Under the President's proposal, we would likely only receive just over $2.5 million. This is unacceptable and dangerous because my State emergency management agency tells me that they don't have the resources and personnel necessary to handle certain attacks that the Department of Homeland Security has told them have a very real chance of occurring right now in Delaware. They also tell me that, if our State's allocation were to be cut as dramatically as the President's budget proposes, they might need to cut or eliminate funding for other important non-homeland security programs, including disaster mitigation efforts. Compare this with the fact that, under the President's proposal, large States with large cities will likely receive three layers of funds--a baseline allocation, a threat-based allocation and urban area grants. I also believe the President's proposal is dangerous because I haven't yet been convinced that the Department of Homeland Security can truly know what level of funding should be allocated to large States, small States or urban areas. This Committee recently heard testimony from one of the authors of a report published by the Heritage Foundation and the Center for Strategic and International Studies stating that the Department hasn't completed a comprehensive national risk assessment and doesn't plan to have one completed until 2008. I'd urge you, then, Mr. Secretary, to work with us to develop a SHSGP formula that treats all States fairly and doesn't run the risk of putting some at tremendous risk of being ill-prepared for an emergency. Senator Carper. Secretary Chertoff, again, it is good to see you. Secretary Chertoff. Thank you very much. Senator Carper. Thank you, Madam Chairman. How is that? Chairman Collins. That was good. Seriously, if you would like to ask further questions--I guess that did work. Senator Lieberman. Senator Collins and I have an ongoing discussion about the effectiveness of guilt induction. [Laughter.] Apparently it worked with Senator Carper. Chairman Collins. Mr. Secretary, thank you so much for being here today. We obviously had a great deal of discussion on the best way to allocate homeland security grant funding, and I want to leave you with some sound advice from the RAND Corporation report on this issue. It says, ``Homeland security experts and first responders have cautioned against an overemphasis on improving the preparedness of large cities to the exclusion of smaller communities or rural areas, noting that much of our critical infrastructure and some potential high-value targets--nuclear power plants, military installations, agricultural facilities, etc.--are located in less populated areas.'' I think that is good advice for the Department, and I hope you will heed it. We appreciate the opportunity to question you today. The hearing record will remain open for additional comments for 15 days. Secretary Chertoff. I appreciate that, Chairman Collins, and I look forward to working with the Committee. I have one slight correction, if I can have a second. The 2006 budget contemplates 143 ICE agents, not 135. Chairman Collins. You were very close. Secretary Chertoff. I was close. Chairman Collins. Thank you. Secretary Chertoff. I look forward to working with you. Thank you very much. Chairman Collins. This hearing is now adjourned. 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