As we all know, President Bush has proposed a new Department of Homeland Security, and this agency would consist of some 22 Federal agencies and a total of 170,000 Federal employees. this would make it one of the very biggest in all of the Federal Government. The department's initial annual budget would be $37.5 billion.

As we consider this proposal, I think it is important that we look at some issues. First, we need to take a good hard look at what agencies the President has proposed to include in the new department and what agencies are left out.

Senator Rudman, in his March 2001 report, recommended that Customs, Coast Guard, Border Patrol and FEMA be included in a single, consolidated agency. But the President's proposal includes much more, including agencies concerned with disease control, eradicating boll weevils from cotton crops, issuing flood insurance, cleaning up oil spills, and trade inspection. Other agencies, including those that specifically protect us from terrorism, are not included. Those, in the main, are the intelligence agencies-CIA, FBI, NSA, and so on. So we need to take a good look at that.

Some questions have been raised about the Coast Guard. The Coast Guard conducts search and rescue. What would happen with that? As part of its mission, the Coast Guard has been very effective in intercepting the go-fast boats which bring narcotics into this country through the Gulf and up the Pacific corridor. What would happen with that?

The Immigration Department, and certainly Border Patrol, is suitable agency for inclusion, but what the service aspects of INS, naturalization and other aspects? Would that create a kind of mixed mission for the department similar to what some of us, including myself, have been critical of Customs about?

Customs is both a law enforcement agency as well as a trade expedition agency, and many of us have said in the past that lax customs on the borders of our country have allowed for more narcotics to come into the country. Part of the problem was because the agency had a mixed mission. You can't stop the trucks from coming in adequately to search them because it creates an economic disadvantage and the economy would suffer. That is the kind of mixed mission I am talking about. So moving agencies out of their current homes into a new department can result in some confusion and some dislocation that could take years to sort out.

We need to take a look at the collection, analysis, and dissemination of intelligence and its impact on homeland security. Does the clearinghouse part of this bill help or hinder data collection and analysis, now done primarily by the CIA?

Some have suggested that the department would be destined for failure if it could not gain access to all relevant raw intelligence and law enforcement data. One of the things I have learned as a member of the Intelligence Committee is that all-source analysis is really critical to the intelligence function; in other words, the ability take the bits and pieces and have very skilled people be able to interpolate, collate, and put those bits and pieces together so that they become meaningful and corroborated pieces of intelligence.

We also know we have major problems with the so-called stovepipe aspects of many agencies, the inability of State, INS, CIA, NSA, and FBI to coordinate their intelligence data so that it gets from one place to another.

We held a very interesting hearing in this subcommittee with Ms. Burns, who is head of the Division of Consular Affairs at the State Department, on the granting of visas to the hijackers. One of the things she pointed out to us was that they didn't have intelligence data on which to really base a denial of the visa applications in Saudi Arabia.

So these are all real questions, and I am delighted that we have people who are seasoned in this area, who have worked with these issues, and who have considered them, and we look forward to their testimony.

I think I will interrupt you, Senator Rudman, because you are going to be first up, when Senator Kyl comes and allow him to make his basic remarks, but let me begin by introducing you.

During his 12 years in the Senate, very accomplished years, Senator Rudman served on a number of committees, including the Senate Select Committee on Intelligence, the Appropriations Committee, and Governmental Affairs.

He has maintained a very active career since leaving the Senate, including serving as the Chairman of the President's Foreign Intelligence Advisory Board and as Vice Chairman of the Commission on Roles and Capabilities of the United States Intelligence Community. He is the recipient of numerous awards in honor of his years of devoted public service, including the Department of Defense' Distinguished Service Medal, which is the agency's highest civilian award.

So if we could begin with you, Senator Warren Rudman, welcome to the subcommittee.

STATEMENT OF HON. WARREN B. RUDMAN, CO-CHAIR, UNITED STATES COMMISSION ON NATIONAL SECURITY IN THE 21ST CENTURY, WASHINGTON, D.C.

Mr. RUDMAN. Senator Feinstein, thank you very much. I am very pleased to be here again and pleased to be here with the gentlemen sitting to my right. I have great respect for what they have both done. In particular, I have been a student of what the Gilmore Commission did.

All of these efforts came coincidentally at the right time. They were conceived of some time ago. In our case, the idea was to replicate Truman's Marshall Commission of 1947, which totally reorganized the U.S. Government and created DOD, the Joint Chiefs of Staff, the CIA, and the United States Air Force. It was a major undertaking to look at the security challenges of the last half of the 20th century.

This was precisely our charge, to look at the first 25 years of the 21st century. Congress mandated that we do this. The reports started in 1998. This report is the third of three, one in 1999, one in 2000, and one in 2001.

The Commission, as some of you may know, was blessed with an extraordinary array of people including Jim Schlesinger, Norm Ornstein, Don Rice, Les Gelb; people from the media; people from

Congress, Newt Gingrich, Lee Hamilton, Gary Hart, and myself; two former CINCS, Jack Galvin from NATO, and Harry Trane. So, we had a pretty experienced group of folks.

The most striking thing we did was at the end of about a yearand-a-half. We came to the conclusion that of all the security challenges to the United States, the most serious security challenge is precisely what happened on September 11. In fact, we laid out a scenario similar to what occured on Sept. 11 in some detail. We believed that thousands of Americans would be killed on American soil by acts of terrorism. Unfortunately, our prediction came true too soon.

Thus, our report contains 50 recommendations covering the entire Government. Seven of those recommendations pertain to the subject of your hearing this morning, and one in particular. We said that the President should propose to Congress that the Customs Service, the Border Patrol, the Coast Guard, and FEMA be transfered to the National Homeland Security Agency, while also being preserved as distinct entities.

I want to pause there because I think there is some confusion, and this is the third hearing at which I have testified. Although the stovepipe nature of these agencies has to be changed, the Coast Guard will remain the United States Coast Guard, the Customs Service the Customs Service, et cetera.

The difference is that right now, as we discovered in our threeand-a-half years these agencies in many ways will take umbrage at this, and did during our hearings. But, I will be blunt with you; they are orphans where they are. They don't get the kind of attention that they should.

For instance, all of a sudden earlier this year we discovered that the United States Coast Guard, one of the most extraordinary and able parts of our Government, has been underfunded and undercapitalized for years. It shouldn't have taken September 11 to prove that, but it did. We believe that in a department devoted to border security and homeland security, the Coast Guard will be getting the attention it needs. The same goes for Customs in Treasury, the Border Patrol and INS in Justice.

The difference between our proposal and the President's proposal, which includes additional agencies, is that we determined whether the overwhelming task of the agency was border security. If that was their task, then they belonged there.

We also thought that in addition to prevention, we had to have response as well as protection. Therefore, FEMA, an extraordinarily able Government agency, small, but very good-and most people who have dealt with them will tell you they do a good job in natural disasters-was the proper response team. We saw Joe Albaugh bring his agency to bear and be of tremendous help during the Sept. 11 crisis, particularly in the area of the World Trade Center. So, that was what we proposed.

Now, how do we feel about this proposal? We support it. I think your opening statement reveals a few just concerns, and you are going to have to sort those things out. For instance, we had said in our report that you might retain the so-called trade and revenue aspects of the Customs Department at Treasury and move the law enforcement sector over.

We are told by many people now that that probably would not work as well, that there is a lot of connectivity there as well as in Border Patrol and INS. That is why the President decided to go the way he went. They are probably right. They probably deserve to be brought in toto, preserving their identity. The one big difference from where they are now is that they will have a common mission. They will have a common command and control and a common chain of command. That is very important.

In terms of information exchange, it is no wonder that an agency in Transportation, Coast Guard

Chairperson FEINSTEIN. Excuse me. I see this light blinking and I neglected to say that if it is possible to get the bulk of what you would like to say in 5 minutes said, that is great. I am going to be very liberal with this, so don't worry about it.

Mr. RUDMAN. Well, I only need a couple more, actually.

In terms of Customs and the other agencies, they don't belong where they are. They are there for historic reasons. They have a common border security function, that is where they belong.

Now, just two other comments. Madam Chairman, this is not going to solve the intelligence problem. I can tell you from being on the committee you now serve on and having chaired the PFIAB for four years and been on it for 8 years, this will not solve the intelligence problem. That is a separate problem. It is being addressed by the Select Committee and hopefully they will come up with answers.

What is proposed for this agency is not a collection, but an analysis unit. That is probably a good idea, but let me say at the outset that it will be several years before that unit will be up to speed. It takes time to get people.

Second, on the FBI, people say, well, maybe the FBI should be here. Well, that would be a terrible mistake. The FBI has literally hundreds, if not thousands, of congressionally mandated responsibilities to enforce the United States Code. Homeland security is now a major part of that, but you could not take that away from Justice, in my view, and have anything but chaos.

Some have proposed creating an MI5, a British type of a unit, and separating that from the Bureau. But, that will take a lot of study. I would not be ready to endorse that this morning.

So by and large-and I am happy to take your questions. We believe that this is a sound proposal. It has a common thread of homeland security and border security. It ought to be enacted, but obviously it can be improved by the Congress and it probably will be.

Chairperson FEINSTEIN. Thank you very much, Senator. I appreciate it.

Mr. Gilmore, let me make a little formal introduction here.

James Gilmore, III, is the former Governor of Virginia. As Governor, he created the Nation's first Secretariat of Technology, established a statewide technology commission, and signed into law the Nation's first comprehensive State Internet policy.

Governor Gilmore is also the Chairman of the Congressional Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction. This national panel was established by Congress in 1999, and its purpose was to assess

Federal, State and local governments' capability to respond to the consequences of a terrorist act, and this was essential in developing the Office of Homeland Security.

We are delighted to welcome you, Governor Gilmore.

STATEMENT OF HON. JAMES S. GILMORE, III, FORMER GOVERNOR OF THE COMMONWEALTH OF VIRGINIA, AND CHAIRMAN, ADVISORY PANEL TO ASSESS DOMESTIC RESPONSE CAPABILITIES FOR TERRORISM INVOLVING WEAPONS OF MASS DESTRUCTION, RICHMOND, VIRGINIA

Mr. GILMORE. Madam Chairman, I want to thank you for the chance to be here today in my capacity as Chairman of the Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction. I have submitted a written submission which is quite comprehensive. Let me give you some summary remarks, hopefully as close to the 5-minutes as possible. Congress created this Panel in 1999 as part of the National Defense Authorization Act. It was clear then, and remains so today, that our national efforts to deter and prevent and respond and recover from terrorist acts, while up to this point have been considerable and laudable and well-meaning, we still need a cogent focus to ensure a higher level of safety and security for our citizens. That is still true today. In the aftermath of the September 11 attacks, Congress extended the work of our Panel for an additional 2 years. Senator this past week we met in Indianapolis and spent the majority of our meeting time hearing from a lot of the key stakeholder groups representing State and local officials who are working around the clock in partnership with Federal agencies to make the Nation more secure.

Our Panel has benefited from a unique composition. The same disciplines at the local, State and Federal levels that are now wrestling with homeland security issues have been represented around our table for the past three-and-a-half years. I think this is critical in terms of input and the reports themselves.

The challenges that we face are not Federal issues, simply. Beginning with the first annual report that we did in 1999, the Panel noted that the nature of the threat we faced and how it would be manifested against our citizens and how as a Nation would respond required a national approach. And by "national," we mean the combined efforts of local, State, Federal and private sector organizations working toward this common end.

So the perspective of our members, I think, is even more salient today, as many of us are directly engaged with actions in communities, States, and businesses. So the perspective of what is happening on the front lines, combined with the 3-year experience of our Panel, I think, is going to give us some insight that will be of benefit to the Senate.

As you have stated, you have invited me to address this issue of the Department of Homeland Security. This type of major restructuring was not what our Panel recommended. We recognize the issue that you raised in your opening remarks regarding mixed missions of all the different agencies, which is why we did not adopt this model.