and one of the operational players of all agencies even happens to be the IRS.

Now, at the same time, the General Accounting Office is admonishing us that: "There is no interagency mechanism to centrally manage funding requirements and requests to ensure an efficient, focused, government-wide application of Federal funds designed to combat terrorism." And that is the end of that quote from GÃO.

The point that I would like to make to my colleagues is that if we don't have anyone managing the counterterrorism programs for the Federal Government, then obviously we can't avoid duplication and redundancy among agencies as they compete for roles and missions and, most importantly, for the money. And if we had that sort of competition without some sort of managing, I don't think our effort is going to be as effective as it ought to be.

One very good example of this would be the FBI's desire for a new HAZMAT lab to analyze biological, chemical, nuclear, and environmental toxins. Meanwhile, the Government already has laboratories that do these types of lab analysis, for instance, DOD, EPA, Department of Energy, CDC, and I could even list others. And most of these have decades of experience in the field, and the FBI is attempting to duplicate their capabilities.

The handling of the anthrax captured in Nevada is a good example of how it is done and how it should be done. The anthrax went to the Army lab in Maryland and was handled to preserve the forensic evidence, like fingerprints, and it is not clear why the FBI then needs to have the same capability.

I raise this point as much for my colleagues as I would for the witnesses because 17 years ago I know that the Congress, with the best of intentions, set out to build our national defense, and did, but we did at the same time spend a lot of money wastefully. And I don't want to see us repeat the mistakes that we made then in the war on terrorism, and particularly, I don't want us to be fighting the war on terrorism with a hollow army.

So, I think that somehow through these hearings and actions we take afterward, not just with this committee but there is more than one committee involved, we need to get a handle on the threat and risk assessments that are facing us, and we need to base our requirements on fundings on those assessments. And then, I think, without a doubt we don't have that yet, and I think the General Accounting Office has credibility and has made that clear. We don't have interagency coordination, and until that happens, we don't know if we have an effective counterterrorism program. And I hope that that will be a concern to all of us.

For the panel, I would ask you that a large part of the Anti-Terrorism Act of 1996 was enacted to help us facilitate the prosecution of terrorists, and so from your very unique experience and long period of time working on this one case and being very successfuland we thank you for it-has the act accomplished our goal? And if not, what else do we need to be doing to assist these prosecutions?

Mr. DEPIPPO. I think, at least in partial answer, it has gone a long way. Keep in mind at the time this case was charged, indicted, and went to trial, there was no criminal statute on the books that directly related to domestic terrorism. We prosecuted these defend

ants under statutes that relates to the destruction of buildings used in interstate commerce, the destruction of automobiles used in interstate commerce, and the like. Those were the statutes that were available to us to prosecute these defendants, and, of course, there was no death penalty at the time.

Obviously, in the wake of the World Trade Center bombing, Congress took action and enacted specific laws, specific criminal laws, that deal with domestic terrorism.

Senator GRASSLEY. Do any of the others want to contribute to the question?

Mr. COLGAN. I would support Mr. DePippo's statement, Senator, and also add that in the Sheik Rahman prosecution, one of the charges was sedition. I don't believe that charge has been brought before a court many times in the last 100 years. So we needed the bill that was subsequently passed by Congress.

If I just may take a moment to address your concerns about cooperation amongst counterterrorism agencies

Senator GRASSLEY. And also the GAO's concern.

Mr. COLGAN. I grant you that, but I just want to offer, as far as my background goes in law enforcement, 27 years, surely when I started one agency would not even speak to another agency. I am talking about law enforcement. And over the course of time, through various very good and supportive positions by managers in law enforcement and various U.S. attorneys and police commissioners, we now have what is at least a great start for a joint investigative community out there. And as I started with my remarks, the World Trade Center case, I believe, and surely the Sheik Rahman case would not have been brought into the U.S. attorney's office or the courts were it not for the joint efforts of law enforcement, not one agency but many.

So I believe the counterterrorism joint effort is coming. Is it perfect? No, of course not. But there is a much more cohesive effort out there today than I had ever seen in my earlier years.

Senator GRASSLEY. But there is not a coordinating group with authority, a coordinating body with authority. That is what the General Accounting Office

Mr. COLGAN. I am not familiar with that report.

Mr. CHILDERS. I think two things, if I may, Senator. First of all, I think that is correct. There is no formalized structure, and that I think is probably what the GAO was getting at. I can assure you, however, while I am no longer with the Government, I was a prosecutor for 16 years, and for the last 5 of those dealt almost exclusively with some of these terrorist issues.

There is a tremendous amount of-I hesitate to even call it "unstructured" formal cooperation, because it is relatively structured although not terribly formalized in any sort of Venn diagram. But the observation of the General Accounting Office is accurate in that respect.

I would offer one more observation, and I don't mean to begin a battle that I was not here to carry forward at all, but I would make one observation, again, as a former prosecutor for 16 years. With respect to the FBI's request for their HAZMAT lab, I think there is, notwithstanding the best efforts of either the any of the military laboratories which are exceptional, or the Centers for Disease

Control or EPA or even the Nuclear Regulatory Agency's laboratories, there is no substitute for the handling of evidence to make sure that it can find its way into a courtroom than by having it handled by people who day in and day out have been trained and live with the constrictions that are required in terms of maintaining a chain of custody of that evidence to get it into a courtroom. As it is, even with the best intentions of law enforcement in any case-be it a huge terrorist prosecution or a simple capture of someone for sale of a small amount of drugs-the criminal justice and the court system put up a number of constitutional barriers, which I am not denigrating, but that make it difficult to get that evidence into trial. And I think if you start to take things that you hope will find their way into evidence in a court of law and put them in the hands of people who are not trained and who do not have to live in that culture, I think you run a greater risk of more evidence being excluded.

Senator GRASSLEY. Thank you all. I will submit my other questions both to this panel and the other panel in writing.

Senator KYL. Thank you, Senator Grassley, and I want to thank all members of the panel. We have had you up here almost 2 hours, so we will let you go. But I think anything else that you would like to submit for the record and certainly in answers to questions, we will look forward to those comments.

Also, Senator Hatch would like to seek unanimous consent to submit a statement for the record and questions for the witnesses, and without objection, they will be received. Unfortunately, he can't be here today, but I appreciate his support for our hearing here today.

[The prepared statement of Senator Hatch follows:]

PREPARED STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE

OF UTAH

I thank Senator Kyl for holding today's hearing on one of the most critical issues facing our nation: the threat of terrorism on our shores. This hearing is focussed on the issue of how foreign terrorists infiltrated, planned, and executed the bombing at the World Trade Center. I hope that this hearing will assist the Committee in improving our oversight of anti-terrorist law enforcement efforts, as well as point out where current federal law is inadequate to combat terrorist operations.

I am proud that, in the 5 years since the World Trade Center incident, the Congress has made progress in the fight against terrorism. In 1996, we enacted the Antiterrorism and Effective Death Penalty Act, which included several significant provisions designed to deter, capture, and punish terrorists threatening our citizens. The 1996 act included a comprehensive plan to prohibit fundraising for foreign terrorist organizations, provisions to remove and exclude foreign terrorists from residing in the United States, and a host of other improvements to our federal response to terrorist threats.

When the Congress considered anti-terrorism legislation in the aftermath of the World Trade Center and Oklahoma City bombings, one area where we discovered one clear weakness was in the law governing biological weapons. At that time, it was a crime to use human pathogens as a biological weapon, but it was not illegal for persons with no legitimate reason to possess these legal agents to do so. I introduced legislation, which was subsequently included in the 1996 antiterrorism bill, making it a crime to attempt or conspire to develop or possess biological agents for use as a weapon.

It appears that the FBI recently utilized this new law enforcement tool given to them by the Congress. I am encouraged to see the FBI is taking preemptive action where there is evidence of a potential use of biological agents.

Law enforcement must be vigilant against potential use of biological agents, and the congress likewise must exercise effective oversight of our nation's capability to

combat the threat of biological terrorism. Today's hearing is a crucial part of that oversight, and I again thank Senator Kyl for his leadership on this issue.

[The questions of Senator Hatch are located in the appendix.] Senator KYL. Thanks to all of you, and, again, congratulations for a job very well done.

Mr. CHILDERS. Thank you.

Mr. DEPIPPO. Thank you.

Mr. COLGAN. Thank you.

Senator KYL. While the first panel is exiting, let me call the second panel to the dais, please: Dale Watson of the Federal Bureau of Investigation, Walter Cadman of the Immigration and Naturalization Service, and Richard Rohde of the Office of Investigations of the U.S. Secret Service.

The focus of our second panel is to provide information about the nature and extent of current foreign terrorist activities in America, with a particular focus on the criminal enterprises in which foreign terrorists engage.

We begin our second panel with Dale Watson, chief of the International Terrorism Operations Section of the FBI. In this capacity, he is responsible for the direction and support of all of the FBI and joint terrorism task force international counterterrorism investigations and planning. Mr. Watson will begin his testimony of an overview of the last of the World Trade Center-related cases, often referred to as the Manila airliner case, one of the most fascinating aspects of this entire episode, I might note. Mr. Watson will then discuss the FBI's assessment of the current activities of foreign terrorist organizations operating here, the threats that these organizations pose to the United States, and the legal difficulties in pursuing these cases.

I think as we did with the first panel, we will have each of the panelists make their comments and then open the floor to questions from the members of the committee unless either of you feel constrained to interrupt any of the individual witnesses. Mr. Watson, thank you very much for being here.

PANEL CONSISTING OF DALE L. WATSON, SECTION CHIEF, INTERNATIONAL TERRORISM OPERATIONS SECTION, FEDERAL BUREAU OF INVESTIGATION, WASHINGTON, DC; WALTER D. CADMAN, COUNTERTERRORISM COORDINATOR, OFFICE OF FIELD OPERATIONS, IMMIGRATION AND NATURALIZATION SERVICE, WASHINGTON, DC; AND RICHARD A. ROHDE, DEPUTY ASSISTANT DIRECTOR, OFFICE OF INVESTIGATIONS, U.S. SECRET SERVICE, WASHINGTON, DC

STATEMENT OF DALE L. WATSON

Mr. WATSON. Thank you, Senator Kyl. Thank you for this opportunity to come up and discuss the terrorism issue today.

I have submitted for the record an opening statement that I will try to summarize here in just a few minutes to be brief and highlight the comments that are submitted for the record.

As we all know, in 2 days is the fifth anniversary of the World Trade Center. That threat clearly brought home to the American public that an international terrorism event could occur in the United States on U.S. soil. In addition to that, the Oklahoma City

bombing in April 1995 also reinforced that and helped the U.S. Government, especially law enforcement agencies, to adopt an aggressive and enhanced effort against the terrorism threat.

Senator KYL. Bring your mike down just a bit, please. Thanks. Mr. WATSON. How is that?

Senator KYL. Get it pretty close to you. That will help us. Thank

you.

Mr. WATSON. I am happy to say that our No. 1 priority obviously is the prevention of a terrorist act in the United States or against U.S. citizens overseas, but I am happy to reveal that since the World Trade Center there have been no significant international terrorist event occurring in the United States since the 5-year plan. What I briefly want to talk about this morning is I want to cover four areas: first of all, the lessons we have learned since the World Trade Center, particularly with a short briefing on the Manila air case; the second area is the threat posed today on terrorism within the United States; the third is the FBI response since the World Trade Center, what we are doing and what we have done since the World Trade Center occurred and the Oklahoma City bombing; and then, last, the fourth area will be the steps that we need in the future to enhance us and to continue on this path of counterterrorism in the United States. So let me go forward from here.

First of all, I would like to discuss what we view as basically the three lessons that were learned since the World Trade Center from the law enforcement FBI perspective. First of all-and I think it has been discussed here this morning—is the danger posed by loosely affiliated groups, not necessarily as you said, Senator-and I agree with you 100 percent-not state-sponsored, not organized groups in the traditional Hizbollah-type Egyptian Al-G process, but loosely affiliated groups. And certainly you can see that in the Ramzi Yousef type organization, the blind sheik organization. These were people cross-cultural, brought together, came together for one common purpose, and that was to attack the United States and its citizens. So we have learned a lot. And we also learned from that process about the loosely affiliated groups. We learned the difficulty they are for law enforcement-very difficult to penetrate, very difficult to get a handle on how many loosely affiliated groups are in the United States, because they are loosely affiliated and do not talk generally outside the small knit groups that have been formed up. So that is the first lesson learned of the danger posed by the loosely affiliated group.

The second lesson learned is that terrorists use technology in the advancement of their programs and their events. We see this today in the United States through the efforts by terrorist organizations, and particularly in the Internet, to raise funds, to proselytize, to recruit. We even see Hizbollah and Hamas who have home pages on the Internet. We also saw during the blind sheik's trial the solicitation of funds on the Internet for his defense legal fees that were occurring.

Certainly, probably the one that drove it home the most was Ramzi Yousef's use of technology, and I will talk about that in the Manila air case, and how we were able to obtain his laptop computer and decrypt what he had on that and figure out exactly what his plans were for American airliners.