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111th Congress 
 2d Session                      SENATE                          Report
                                                                111-200
_______________________________________________________________________
                                                       Calendar No. 413
 
                    REDUCING OVER-CLASSIFICATION ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                H.R. 553

TO REQUIRE THE SECRETARY OF HOMELAND SECURITY TO DEVELOP A STRATEGY TO 
    PREVENT THE OVER-CLASSIFICATION OF HOMELAND SECURITY AND OTHER 
    INFORMATION AND TO PROMOTE THE SHARING OF UNCLASSIFIED HOMELAND 
         SECURITY AND OTHER INFORMATION, AND FOR OTHER PURPOSES




     May 27 (legislative day, May 26), 2010.--Ordered to be printed
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware

                  Michael L. Alexander, Staff Director
                     Kevin J. Landy, Chief Counsel
            Christian J. Beckner, Professional Staff Member
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                    John K. Grant, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk
                                                       Calendar No. 413
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-200

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




                    REDUCING OVER-CLASSIFICATION ACT

                                _______
                                

     May 27 (legislative day, May 26), 2010.--Ordered to be printed

                                _______
                                

Mr. Lieberman, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                        [To accompany H.R. 553]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (H.R. 553) to require 
the Secretary of Homeland Security to develop a strategy to 
prevent the over-classification of homeland security and other 
information and to promote the sharing of unclassified homeland 
security and other information, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I.  Purpose and Summary.............................................1
 II.  Background and Need for Legislation.............................2
III.  Legislative History.............................................4
 IV.  Section-by-Section Analysis of the Legislation..................4
  V.  Regulatory Impact and Evaluation................................8
 VI.  Congressional Budget Office Cost Estimate.......................8
VII.  Changes in Existing Law Made by the Bill, as Reported..........10

                         I. Purpose and Summary

    The purpose of H.R. 553, as amended by the Committee, is to 
prevent federal departments and agencies from unnecessarily 
classifying information or classifying information at a higher 
and more restricted level than is warranted, and by doing so to 
promote information sharing across departments and agencies and 
with State, local, tribal and private sector counterparts, as 
appropriate.

                II. Background and Need for Legislation

    U.S. government policies and procedures related to 
classification are intended to protect information, the 
unauthorized disclosure of which could cause damage to the 
national security of the United States. These policies and 
procedures have been prescribed primarily by a series of 
Executive Orders, beginning with E.O. 8381, issued in 1940, and 
updated most recently with E.O. 13526, issued in December 2009. 
E.O. 13526 and its predecessors describe the types of 
information that should be classified, establish procedures for 
access to classified information, and provide guidelines and 
requirements for the implementation of classification systems, 
including declassification procedures.
    The classification system that developed during the Cold 
War was focused primarily on protecting sensitive information 
from the Soviet Union and other traditional nation-state 
adversaries. But since the fall of the Berlin Wall in 1989, 
threats to U.S. national security have increasingly come from 
non-state actors, including terrorist groups, organized 
criminal networks, and drug trafficking organizations.
    Efforts to counter Cold War nation-state threats were 
handled primarily by the U.S. military and by federal 
Departments and agencies responsible for diplomacy, 
intelligence, and law enforcement. Efforts to counter post-Cold 
War threats involve a broader group of participants, including 
State, local and tribal governments and law enforcement 
agencies, as well as private sector entities.
    The changing threats to U.S. national security have 
required our nation's current classification system to take 
into account factors unknown to its Cold War predecessors. 
Without doubt, the primary consideration for those making 
classification decisions must remain whether unauthorized 
disclosure would damage national security, consistent with the 
framework established in E.O. 13526 and prior executive orders. 
But decisions also need to factor in the potential benefits to 
national security that could result from sharing particular 
information with the broader group of participants in the 
national security system. In other words, today's classifiers 
must weigh not only the harm flowing from unauthorized 
disclosure, but also the detriment caused by denying critical 
non-federal actors access to information that could assist 
their efforts to combat terrorism and other non-state national 
security threats.
    Today's classification system, however, provides 
insufficient guidance and support to individuals who are making 
classification decisions, and often leads them to err on the 
side of over-classifying information. This Act is intended to 
create a framework by which individuals within the Executive 
Branch can make more balanced and informed classification 
decisions, in a way that will strengthen efforts by the United 
States to address both state-based and non-state threats to 
national security.
    Over-classification of information is particularly 
problematic with respect to the threat of terrorist attacks 
against the United States. In its examination of the terrorist 
attacks of September 11, 2001, the 9/11 Commission found that 
existing classification policies and procedures nurtured over-
classification and excessive compartmentalization of 
information among agencies in several respects: (1) Each 
agency's incentive structure opposed sharing, with clear risks 
but few rewards for information sharing; (2) no agencies had to 
pay the substantial long-term costs of over-classifying 
information; (3) there were no punishments for not sharing 
information; and (4) agencies cultivated a ``need-to-know'' 
culture of information protection rather than promoting a 
``need-to-share'' culture of integration.\1\
---------------------------------------------------------------------------
    \1\Final Report of the National Commission on Terrorist Attacks 
upon the United States, Official Government Edition, Page 417. 2004.
---------------------------------------------------------------------------
    Recent terrorist plots and attacks against the United 
States have highlighted the important role of state, local and 
tribal law enforcement agencies, as well as entities in the 
private sector, in detecting, preventing and responding to 
terrorist attacks. In 2005, for example, police officers in 
Torrance, California investigating a string of gas station 
robberies uncovered a terrorist plot to attack military 
facilities and synagogues in southern California. In 2007, a 
plot to attack Fort Dix in New Jersey was disrupted in part due 
to an electronics store employee who contacted local police 
about a suspicious videotape that one of the conspirators had 
taken to the store to get converted to DVD format.
    The current classification system, however, limits the 
federal government's ability to share information about 
potential threats with state, local and tribal governments and 
law enforcement agencies, and with the private sector. Very few 
officials in state, local and tribal governments and law 
enforcement agencies have security clearances, and as a result, 
they often face significant limits to their ability to work as 
partners with the federal government in terrorism prevention 
efforts and to receive information about threats that enable 
them to better protect their communities from the threat of 
terrorist attacks. In testimony before the House Committee on 
Homeland Security in 2007, numerous state and local government 
officials and senior law enforcement officers spoke of the ways 
in which the classification system inhibited their ability to 
work in partnership with the federal government on homeland 
security and terrorism prevention activities.\2\
---------------------------------------------------------------------------
    \2\See House Committee on Homeland Security print of hearings on 
Over-classification and Pseudo-Classification. Available at http://
www.gpo.gov/fdsys/pkg/CHRG-110hhrg11035279/pdf/CHRG-
110hhrg11035279.pdf.
---------------------------------------------------------------------------

  LEGISLATION PASSED BY THE HOUSE OF REPRESENTATIVES AND SENATE ACTION

    The concerns articulated in these House Committee on 
Homeland Security hearings led Representative Jane Harman, with 
13 co-sponsors, to introduce the Reducing Over-Classification 
Act, first in the 110th Congress and then again this Congress. 
The House bill--H.R. 553 this Congress--focused on reducing the 
over-classification of information at the Department of 
Homeland Security (DHS) and enhancing understanding of the 
classification system by State, local, tribal and private 
sector entities by establishing an over-classification 
prevention program at DHS.
    As amended by this Committee, H.R. 553 would have a broader 
scope. It would address the issue of over-classification on a 
government-wide basis, recognizing that the Department of 
Homeland Security makes only a very small percentage of 
original classification decisions each year. The bill would 
apply many of the House's provisions government-wide and would 
strengthen the responsibilities of the Director of National 
Intelligence with respect to information sharing. It would 
strengthen the process whereby the Interagency Threat 
Assessment Coordination Group can request that intelligence 
reports be produced at a lower level of classification. And it 
would establish new government-wide employee incentives, 
oversight provisions, and training requirements.
    The Committee wishes to emphasize that none of the 
provisions in this Act is intended to supplant the Executive 
Branch's long-standing authority to determine what information 
should be appropriately classified within the framework 
established in Executive Order 13526 and its predecessors.\3\ 
Indeed, the Committee believes that the provisions of the Act 
complement and do not conflict with Executive Order 13526, and 
that both the Order and the Act will promote the goals of 
increased transparency, information sharing, and security. H.R. 
553 is merely intended to ensure that this existing framework 
appropriately considers the information requirements of 
entities that are playing a critical role in the nation's 
efforts to combat terrorism and address other non-traditional 
threats to national security.
---------------------------------------------------------------------------
    \3\The Committee believes that Executive Order 13526 meets the 
definition of a ``subsequent corresponding executive order'' to 
Executive Order 12958 (as modified by Executive Order 13292) as defined 
in the Act.
---------------------------------------------------------------------------

                        III. Legislative History

    In the 110th Congress, the House of Representatives passed 
H.R. 4806, sponsored by Representative Jane Harman and thirteen 
co-sponsors, by voice vote. Representative Harman reintroduced 
the bill in the 111th Congress, on January 15, 2009, as H.R. 
553. The House passed the bill by a voice vote on February 3, 
2009. The bill was received in the Senate on February 4, 2009, 
and referred to the Homeland Security and Governmental Affairs 
Committee.
    The Committee considered the bill on November 4, 2009. 
Chairman Lieberman and Ranking Minority Member Collins offered 
an amendment in the nature of the substitute, which made 
significant changes to the bill by adding new provisions to 
expand the bill's scope to cover all executive branch agencies, 
not just at the Department of Homeland Security, by 
strengthening the responsibilities of the Director of National 
Intelligence with respect to information sharing; by 
strengthening the process whereby the Interagency Threat 
Assessment Coordination Group can request that intelligence 
reports be produced at a lower level of classification; and by 
establishing new government-wide employee incentives, oversight 
provisions, and training requirements.
    The Committee adopted the substitute and then voted to 
report the bill, as amended, both by voice vote. Senators 
Lieberman, Levin, Akaka, Carper, Pryor, Landrieu, Burris, 
Collins, and Bennett were present for both votes.

           IV. Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section states that that this measure may be cited as 
the ``Reducing Over-Classification Act.''

Section 2. Findings

    This section outlines a series of Congressional findings, 
including: (1) The 9/11 Commission concluded that there is a 
need to prevent over-classification of information by the 
Federal Government; (2) The 9/11 Commission and others have 
observed that the over-classification of information interferes 
with accurate, actionable, and timely information sharing; (3) 
Over-classification of information causes considerable 
confusion about what information may be shared with whom, and 
negatively affects the dissemination of information within the 
Federal Government and with State, local, and tribal entities, 
and the private sector; and (4) Excessive government secrecy 
stands in the way of a safer and more secure homeland.

Section 3. Classified Information Advisory Officer

    This section modifies subsection (d) of section 201 of the 
Homeland Security Act of 2002 (6 U.S.C. 121) to designate a 
Classified Information Advisory Officer in the Department of 
Homeland Security to assist State, local, tribal, and private 
sector entities that have responsibility for the security of 
critical infrastructure, in matters related to classified 
materials. This Officer will be responsible for developing and 
disseminating training programs and materials to educate these 
entities on procedures for challenging improper classification 
and applying for security clearances. This Officer will also 
assist State, local and tribal entities with developing plans 
and policies for the use of classified information, including 
ways to communicate those plans and policies to non-cleared 
personnel without disclosing classified information. The 
Officer will also advise the Department of Homeland Security's 
Under Secretary for Intelligence and Analysis on policies and 
procedures to facilitate information sharing. The Committee 
intends that this Officer would serve as both a valuable 
resource for information and an advocate for these non-federal 
entities. This office is not intended to process or facilitate 
individual security clearance applications.
    Section 3 of the Act includes references to ``State, local, 
tribal and private sector entities with responsibility [or 
``that have responsibility''] related to the security of 
critical infrastructure.'' In these sections, the language 
``responsibility related to the security of critical 
infrastructure'' is only intended to modify the term ``private 
sector entity'' (or entities) and does not modify State, local 
or tribal entities.

Section 4. Promotion of appropriate access to information

    The Intelligence Reform and Terrorism Prevention Act 
(IRTPA) of 2004 established a Director of National Intelligence 
(DNI) charged with, among other duties, breaking down barriers 
to information sharing. IRTPA provides the DNI with access to 
all national intelligence.\4\ This section modifies subsection 
(b) of section 102A of the National Security Act of 1947 (50 
U.S.C. 403-1) to reinforce the authority of the Director of 
National Intelligence to have maximum access to all information 
within the intelligence community, including intelligence 
reports and operational data, and require that the DNI then 
ensure maximum access to all such information, consistent with 
the protection of intelligence sources and methods, to 
appropriately-cleared individuals in federal, State, local and 
tribal governments. It also requires that the DNI establish a 
mechanism to provide individuals from such entities with access 
to this information (for example, through the establishment or 
enhancement of information technology systems and networks). 
This mechanism is not intended to supplant the existing 
classification challenge procedures but rather to provide an 
alternative to the challenge process when it has been exhausted 
or when exigent circumstances require swift action.
---------------------------------------------------------------------------
    \4\50 U.S.C. Sec. 403-1(b).
---------------------------------------------------------------------------

Section 5. Intelligence information sharing

    This section of the Act includes three distinct provisions 
intended to improve the sharing of intelligence information 
with State, local and tribal governments and law enforcement 
agencies.

a. Standardized formats for intelligence products

    This provision modifies paragraph (1) of section 102A(g) of 
the National Security Act of 1947 (50 U.S.C. 4031(g)) to 
require the Director of National Intelligence to establish 
guidance to standardize formats for classified and unclassified 
finished intelligence products created by elements of the 
intelligence community for purposes of promoting the sharing of 
intelligence products.
    The formatting of intelligence products can vary depending 
on which entity within the Intelligence Community created it. 
Variations in formatting can make it difficult for intelligence 
products to be easily entered into electronic databases and 
therefore sorted, searched, and electronically disseminated. 
The Act requires the DNI to develop guidance to standardize the 
formats for intelligence products in order to better facilitate 
information sharing.

b. Portion marking of intelligence products

    This provision also directs the DNI to promulgate guidance 
to require the increased use of portion markings, by which 
individual sections of a product are marked with their 
classification level, allowing them to be easily redacted when 
necessary and thereby allowing sections of the product to be 
disseminated at a lower classification level when appropriate. 
It seeks to address a common situation in which intelligence 
products that contain unclassified information as well as 
information classified at varied levels end up classified at 
the highest level, unnecessarily restricting less sensitive 
information within it to broader audiences for whom such 
information could be useful.

c. Interagency Threat Assessment and Coordination Group dissemination 
        process

    This section gives a new role to the Interagency Threat 
Assessment and Coordination Group (ITACG), an entity created by 
Congress in 2007. The ITACG, which is housed at the National 
Counterterrorism Center, is composed of state, local, and 
tribal law enforcement and homeland security officers detailed 
to the group for the purpose of ``integrating, analyzing, and 
assisting in the dissemination of federally-coordinated 
information.''\5\
---------------------------------------------------------------------------
    \5\Section 521 of the Implementing the Recommendations of the 9/11 
Commission Act, Public Law 110-53.
---------------------------------------------------------------------------
    Section 5 of the bill requires the head of each federal 
Department or agency with classification authority, or his or 
her designee, to share an intelligence product with ITACG if he 
or she determines that it could benefit a state, local, or 
tribal government, law enforcement agency, or private sector 
entity. The ITACG can then recommend that the DHS 
Undersecretary for Intelligence and Analysis produce a product 
at the lowest possible classification level that can be 
provided to appropriate entities. The Committee believes that 
the ITACG can thus use its understanding of the needs of State, 
local, and tribal first responders to help direct useful 
intelligence into the hands of those who most need it. The 
Under Secretary retains the authority to determine whether or 
not a useful product can be produced at a lower classification 
level without risking the disclosure of sources and methods or 
other sensitive information.
    The section also directs the ITACG to report to 
Congressional committees on the intelligence products shared by 
the heads of each federal Department or agency with 
classification authority that could benefit State, local and 
tribal law enforcement. The report must describe each 
recommendation made to the ITACG, each recommendation carried 
out by the Under Secretary of Intelligence and Analysis and 
each recommendation not carried out.

Section 6. Promotion of accurate classification of intelligence

    The section directs Departments and agencies, when making 
personnel decisions, to consider whether employees are 
classifying information properly. In his responses to questions 
from the Senate Select Committee on Intelligence, Admiral 
Dennis Blair, then-nominee for the position of Director of 
National Intelligence, noted that ``there are many penalties 
for those who disclose classified information and few rewards 
for those who take the additional effort to write at lower 
levels of classification.''\6\ In an effort to counterbalance 
the apparent incentives to over-classify information, the Act 
requires that the consistent and proper classification of 
information be a consideration in awarding personnel 
incentives.
---------------------------------------------------------------------------
    \6\Responses of Admiral Dennis C. Blair to Additional Prehearing 
Questions, p. 54. January 2009. Available at http://
intelligence.senate.gov/090122/blairresponses.pdf.
---------------------------------------------------------------------------
    The section also requires Inspectors General each year 
through 2014 to assess whether their agencies are appropriately 
following and administering applicable classification policies, 
procedures, rules, and regulations. This provision is intended 
to supplement, not supplant, the National Archives and Records 
Administration's (NARA's) role as the lead agency for the 
oversight of the security classification process.
    The Committee recognizes the substantial workload already 
shouldered by the Inspectors General and emphasizes that these 
evaluations do not necessarily need to examine entire 
departments and agencies but can be spot-checks of particular 
offices or components with classification authorities.

Section 7. Classification training program

    This section requires annual training for each employee or 
contractor who has classification authority or is responsible 
for analysis, dissemination, preparation, production, 
receiving, publishing or otherwise communicating written 
classified information. It requires that this training instruct 
on the proper use of classification markings, including portion 
marking. This section makes this training a prerequisite for 
obtaining and renewing classification authority. The Committee 
expects that, to the greatest extent possible, this new 
training will be integrated into existing classification 
training or other appropriate and pre-existing programs.

                  V. Regulatory Impact and Evaluation

    Pursuant to the requirement of paragraph 11(b)(1) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. CBO states that 
the bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 26, 2010.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 553, the Reducing 
Over-Classification Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jason 
Wheelock.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 553--Reducing Over-Classification Act

    Summary: H.R. 553 would make several changes to current law 
designed to promote the sharing of homeland security 
information with state, local, tribal, and private-sector 
entities. CBO estimates that implementing the bill would cost 
$22 million over the 2011-2015 period, assuming the 
appropriation of the estimated amounts.
    Enacting this legislation would not affect direct spending 
or revenues; therefore, pay-as-you-go procedures would not 
apply.
    H.R. 553 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 553 is shown in the following table. 
The costs of this legislation fall within budget functions 050 
(national defense) and 800 (general government).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                    ------------------------------------------------------------
                                                       2011      2012      2013      2014      2015    2011-2015
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Classified Information Advisory Officer:
    Estimated Authorization Level..................         2         2         2         2         2         10
    Estimated Outlays..............................         1         2         2         2         2          9
Inspectors General Evaluations:
    Estimated Authorization Level..................         3         3         3         3         1         13
    Estimated Outlays..............................         3         3         3         3         1         13
    Total Changes:
        Estimated Authorization Level..............         5         5         5         5         3         23
        Estimated Outlays..........................         4         5         5         5         3         22
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes the 
legislation will be enacted near the beginning of fiscal year 
2011, that the estimated amounts will be provided annually near 
the start each fiscal year, and that outlays will follow 
historical patterns for similar and existing programs.

Classified Information Advisory Officer

    Section 3 would establish the position of Classified 
Information Advisory Officer within the Department of Homeland 
Security (DHS). The new position would be tasked with 
developing a program to train the personnel of state, local, 
tribal, and private-sector entities in the appropriate use of 
classified information. The training program also would cover 
the procedures that such entities can use to challenge the 
classification designation of certain information and the means 
by which their employees may apply for security clearances.
    DHS operates a similar outreach program dealing with cyber 
security. Based on the amounts requested for that program for 
2011, CBO estimates that implementing this section would cost 
$9 million over the 2011-2015 period, assuming appropriation of 
the necessary amounts.

Inspectors General evaluations

    Section 6 of the bill would require that at least annually 
until December 31, 2014, the inspectors general of those 
federal departments or agencies of the United States that 
originate classified information conduct an evaluation of their 
agencies' implementation of the applicable classification 
guidelines. According to information from the Information 
Security Oversight Office, this provision could require up to 
50 evaluations annually.
    Under Executive Order 13526, signed by the President on 
December 29, 2009, agencies that originate or handle classified 
information are required to establish and maintain self-
inspection programs. Integrating the requirements of the bill 
with the programs established pursuant to Executive Order 13526 
could help to reduce the costs of complying with the 
requirements of this provision. However, since this provision 
also would require that the inspectors general report on each 
evaluation conducted, implementing it would most likely require 
additional staff across the federal government. Based on the 
number of federal entities that originate classified 
information, and after adjusting for the potential that some 
inspectors general represent multiple federal entities, CBO 
estimates that implementing this provision would cost $13 
million over the 2011-2015 period, assuming appropriation of 
the necessary amounts.

Unclassified intelligence products for state, local, and tribal 
        governments

    Section 5 would require the Interagency Threat Assessment 
and Coordination Group (ITACG), when it determines that certain 
nonfederal entities could benefit from an intelligence product, 
to recommend that DHS provide a version of that product, 
classified at the lowest level possible, to such entities. In 
addition, this section also would require DHS to report 
annually on the instances in which ITACG recommended the 
creation of an intelligence product and the DHS response to 
such recommendation.
    Although the bill would create a new mechanism for ITACG to 
make recommendations to DHS on intelligence products that would 
benefit nonfederal entities, the ITACG currently works with DHS 
to produce intelligence products, such as the Roll Call 
Release, which is distributed to ``street level'' law 
enforcement officers. In addition, DHS is currently tasked with 
providing homeland security and terrorism information to 
nonfederal entities. For that purpose, DHS has installed the 
Homeland Secure Data Network--which allows DHS to share 
classified information with state and local governments--at 33 
intelligence fusion centers nationwide. Based on those factors 
and input from the staff of the Program Manager of the 
Information Sharing Environment at DHS, CBO estimates that the 
cost of implementing this provision would not be significant in 
any year and would be primarily related to the reporting 
requirements imposed by the bill.
    Pay-As-You-Go considerations: None.
    Intergovernmental and private-sector impact: H.R. 553 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal costs: Jason Wheelock; Impact 
on state, local, and tribal governments: Melissa Merrell; 
Impact on the private sector: Paige Piper/Bach.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause x(x) of rule XIII of the Rules of 
the Senate, changes in existing law made by the bill, as 
reported, are shown as follows (new matter is printed in italic 
and existing law in which no change is proposed is shown in 
roman):

                     HOMELAND SECURITY ACT OF 2002


SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) * * *
    (b) Table of Contents.--The table of contents for this Act 
is as follows:
     * * * * * * *

      TITLE II--INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION

  Subtitle A--Information and Analysis and Infrastructure Protection; 
                          Access to Information

     * * * * * * *
Sec. 210F. Classified Information Advisory Officer
     * * * * * * *

           *       *       *       *       *       *       *


      TITLE II--INFORMATION ANALYSIS AND INFRASTRUCTURE PROTECTION

  Subtitle A--Information and Analysis and Infrastructure Protection; 
                         Access to Information

SECTION 201. [6 U.S.C. 121] INFORMATION AND ANALYSIS AND INFRASTRUCTURE 
                    PROTECTION.

           *       *       *       *       *       *       *


    (d) Responsibilities of Secretary Relating to Intelligence 
and Analysis and Infrastructure Protection.--The 
responsibilities of the Secretary relating to intelligence and 
analysis and infrastructure protection shall be as follows:

           *       *       *       *       *       *       *

          (26) To identify and designate, acting through the 
        Under Secretary for Intelligence and Analysis, a 
        Classified Information Advisory Officer to assist 
        State, local, tribal and private sector entities that 
        have responsibility for the security of critical 
        infrastructure, in matters related to classified 
        materials, as described in Section 210F.

           *       *       *       *       *       *       *


SECTION 210D. [6 U.S.C. 124K] INTERAGENCY THREAT ASSESSMENT AND 
                    COORDINATION GROUP.

           *       *       *       *       *       *       *


    (c) Responsibilities of Program Manager.--The program 
manager, in consultation with the Information Sharing Council, 
shall--
          (1) monitor and assess the efficacy of the ITACG; 
        [and]
          (2) not later than 180 days after the date of 
        enactment of the Implementing Recommendations of the 9/
        11 Commission Act of 2007, and at least annually 
        thereafter, submit to the Secretary, the Attorney 
        General, the Director of National Intelligence, the 
        Committee on Homeland Security and Governmental Affairs 
        of the Senate and the Committee on Homeland Security of 
        the House of Representatives a report on the progress 
        of the ITACG; and
          (3) in each report required by paragraph (2) 
        submitted after the date of enactment of the Reducing 
        Over-Classification Act, include a description of the 
        progress made by the head of each Federal department 
        and agency to share information with the ITACG pursuant 
        to section 102A(g)(3)(A) of the National Security Act 
        of 1947 (50 U.S.C. 403-1(g)(3)(A)).

           *       *       *       *       *       *       *


SECTION 210F. CLASSIFIED INFORMATION ADVISORY OFFICER.

    (a) Requirements To Establish.--The Secretary, acting 
through the Under Secretary for Intelligence and Analysis, 
shall identify and designate within the Department a Classified 
Information Advisory Officer, as described in this section.
    (b) Responsibilities.--The responsibilities of the 
Classified Information Advisory Officer shall be as follows:
          (1) To develop and disseminate educational materials 
        and to develop and administer training programs to 
        assist State, local, tribal and private sector entities 
        with responsibility related to the security of critical 
        infrastructure--
                  (A) in developing plans and policies to 
                respond to requests related to classified 
                information without communicating such 
                information to individuals who lack appropriate 
                security clearances;
                  (B) regarding the appropriate procedures for 
                challenging classification designations of 
                information received by personnel of such 
                entities; and
                  (C) on the means by which such personnel may 
                apply for security clearances.
          (2) To inform the Under Secretary for Intelligence 
        and Analysis on policies and procedures that could 
        facilitate the sharing of classified information with 
        such personnel, as appropriate.

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                     NATIONAL SECURITY ACT OF 1947

TITLE I--COORDINATION FOR NATIONAL SECURITY

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SECTION 102A. RESPONSIBILITIES AND AUTHORITIES OF THE DIRECTOR OF 
                    NATIONAL INTELLIGENCE.

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    (b) Access to Intelligence.--
          (1) Unless otherwise directed by the President, the 
        Director of National Intelligence shall have access to 
        all national intelligence and intelligence related to 
        the national security which is collected by any Federal 
        department, agency, or other entity, except as 
        otherwise provided by law or, as appropriate, under 
        guidelines agreed upon by the Attorney General and the 
        Director of National Intelligence.
          (2) The Director of National Intelligence shall--
                  (A) consistent with paragraph (1), have 
                access to all intelligence information, 
                including intelligence reports, operational 
                data, and other associated information, 
                produced by any element of the intelligence 
                community; and
                  (B) consistent with the protection of 
                intelligence sources and methods, as determined 
                by the Director--
                          (i) ensure maximum access to the 
                        intelligence information referenced in 
                        subparagraph (A) for an employee of a 
                        department, agency, or other entity of 
                        the Federal Government or of a State, 
                        local or tribal government who has an 
                        appropriate security clearance; and
                          (ii) provide a mechanism within the 
                        Office of the Director of National 
                        Intelligence for the Director to direct 
                        access to the information referenced in 
                        subparagraph (A) for an employee 
                        referred to in clause (i).

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    (g) Intelligence Information Sharing.--
          (1) The Director of National Intelligence shall have 
        principal authority to ensure maximum availability of 
        and access to intelligence information within the 
        intelligence community consistent with national 
        security requirements. The Director of National 
        Intelligence shall--

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                  (E) develop an enterprise architecture for 
                the intelligence community and ensure that 
                elements of the intelligence community comply 
                with such architecture; [and]
                  (F) have procurement approval authority over 
                all enterprise architecture-related information 
                technology items funded in the National 
                Intelligence Program; and
                  (G) in accordance with Executive Order No. 
                12958, as amended by Executive Order No. 13292 
                (68 Fed. Reg. 15315; relating to classification 
                of national security information) (or any 
                subsequent corresponding executive order), and 
                parts 2001 and 2004 of title 32, Code of 
                Federal Regulations (or any subsequent 
                corresponding regulation), establish--
                          (i) guidance to standardize, in 
                        appropriate cases, the formats for 
                        classified and unclassified 
                        intelligence products created by 
                        elements of the intelligence community 
                        for purposes of promoting the sharing 
                        of intelligence products; and
                          (ii) policies and procedures 
                        requiring the increased use, in 
                        appropriate cases, and including 
                        portion markings, of the classification 
                        of portions of information within one 
                        intelligence product.
          (2) The President shall ensure that the Director of 
        National Intelligence has all necessary support and 
        authorities to fully and effectively implement 
        paragraph (1).
          (3)(A) If the head of a Federal department or agency 
        determines that an intelligence product which includes 
        homeland security information, as defined in section 
        892(f) of the Homeland Security Information Sharing Act 
        (6 U.S.C. 482(f)), or terrorism information, as defined 
        in section 1016(a) of the Intelligence Reform and 
        Terrorism Prevention Act of 2004 (6 U.S.C. 485(a)), 
        could likely benefit a State, local, or tribal 
        government, a law enforcement agency, or a private 
        sector entity with responsibility for the security of 
        critical infrastructure, such head shall share that 
        intelligence product with the Interagency Threat 
        Assessment and Coordination Group established in 
        Section 210D(a) of the Homeland Security Act of 2002 (6 
        U.S.C. 124k(a)).
          (B) If the Interagency Threat Assessment and 
        Coordination Group determines that an intelligence 
        product referred to in subparagraph (A), or any other 
        intelligence product that such Group has access to, 
        could likely benefit a State, local or tribal 
        government, a law enforcement agency, or a private 
        sector entity, the Group shall recommend to the Under 
        Secretary for Intelligence and Analysis of the 
        Department of Homeland Security that the Under 
        Secretary produce an intelligence product that is 
        unclassified or that is classified at the lowest 
        possible level--
                  (i) based on the intelligence product 
                referred to in subparagraph (a), in a manner 
                consistent with the guidance established under 
                paragraph (1)(G)(i); and
                  (ii) provide such product to the appropriate 
                entity or agency.
          (C)(i) The Secretary of Homeland Security shall 
        submit to the congressional intelligence committees, 
        the Committee on Homeland Security and Governmental 
        Affairs of the Senate, and the Committee on Homeland 
        Security of the House of Representatives an annual 
        report on activities carried out under this paragraph. 
        Each report shall include a description of--
                  (I) each recommendation made to the Under 
                Secretary for Intelligence and Analysis under 
                subparagraph (B);
                  (II) each such recommendation that was 
                carried out by the Under Secretary; and
                  (III) each such recommendation that was not 
                carried out by the Under Secretary.
          (ii) The initial report required under clause (i) 
        shall be submitted not later than 270 days after the 
        date of the enactment of the Reducing Over-
        Classification Act and no reports shall be required 
        under clause (i) after December 31, 2014.
          (4) Except as otherwise directed by the President or 
        with the specific written agreement of the head of the 
        department or agency in question, a Federal agency 
        shall not be considered to have met any obligation to 
        provide any information, report, assessment or other 
        material (including unevaluated intelligence 
        information) to that department or agency solely by 
        virtue of having provided that information, report, 
        assessment or other material to the Director of 
        National Intelligence or the National Counterterrorism 
        Center.
          (5) Not later than February 1 of each year, the 
        Director of National Intelligence shall submit to the 
        President and to the Congress an annual report that 
        identifies any statute, regulation, policy or practice 
        that the Director believes impedes the ability of the 
        Director to fully and effectively implement paragraph 
        (1).

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