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                                                       Calendar No. 519
113th Congress                                                   Report
                                 SENATE
 2d Session                                                     113-233

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

 
          INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 2015

                                _______
                                

                 July 31, 2014.--Ordered to be printed

                                _______
                                

      Mrs. Feinstein, from the Select Committee on Intelligence, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 2741]

    The Select Committee on Intelligence, having considered an 
original bill (S. 2741) to authorize appropriations for fiscal 
year 2015 for intelligence and intelligence-related activities 
of the United States Government, the Community Management 
Account, and the Central Intelligence Agency Retirement and 
Disability System, and for other purposes, reports favorably 
thereon and recommends that the bill do pass.

                Classified Annex to the Committee Report

    On June 30, 2014, acting pursuant to Section 364 of the 
Intelligence Authorization Act for Fiscal Year 2010 (Public Law 
111-259), the Director of National Intelligence (DNI) publicly 
disclosed that the President's aggregate request for the 
National Intelligence Program (NIP) for Fiscal Year 2015 is 
$49.4 billion. Other than for limited unclassified 
appropriations, primarily the Intelligence Community Management 
Account, the classified nature of United States intelligence 
activities precludes any further disclosure, including by the 
Committee, of the details of its budgetary recommendations. 
Accordingly, the Committee has prepared a classified annex to 
this report that contains a classified Schedule of 
Authorizations. The classified Schedule of Authorizations is 
incorporated by reference in the Act and has the legal status 
of public law. The classified annex is made available to the 
Committees on Appropriations of the Senate and the House of 
Representatives and to the President. It is also available for 
review by any Member of the Senate subject to the provisions of 
Senate Resolution 400 of the 94th Congress (1976).

              Section-by-Section Analysis and Explanation

    The following is a section-by-section analysis and 
explanation of the Intelligence Authorization Act for Fiscal 
Year 2015 that is being reported by the Committee.

              Title I--Budget and Personnel Authorizations


Section 101. Authorization of appropriations

    Section 101 lists the United States Government departments, 
agencies, and other elements for which the Act authorizes 
appropriations for intelligence and intelligence-related 
activities for Fiscal Year 2015.

Section 102. Classified Schedule of Authorizations

    Section 102 provides that the details of the amounts 
authorized to be appropriated for intelligence and 
intelligence-related activities and the applicable personnel 
levels by program for Fiscal Year 2015 are contained in the 
classified Schedule of Authorizations and that the classified 
Schedule of Authorizations shall be made available to the 
Committees on Appropriations of the Senate and House of 
Representatives and to the President.

Section 103. Personnel ceiling adjustments

    Section 103 is intended to provide additional flexibility 
to the DNI in managing the civilian personnel of the 
Intelligence Community (IC). Section 103 provides that the DNI 
may authorize employment of civilian personnel in Fiscal Year 
2015 in excess of the number of authorized positions by an 
amount not exceeding three percent of the total limit 
applicable to each IC element under Section 102. The DNI may do 
so only if necessary to the performance of important 
intelligence functions.

Section 104. Intelligence Community Management Account

    Section 104 authorizes appropriations for the Intelligence 
Community Management Account (ICMA) of the DNI and sets the 
authorized personnel levels for the elements within the ICMA 
for Fiscal Year 2015.

 Title II--Central Intelligence Agency Retirement and Disability System


Section 201. Authorization of appropriations

    Section 201 authorizes appropriations in the amount of 
$514,000,000 for Fiscal Year 2015 for the Central Intelligence 
Agency Retirement and Disability Fund.

           TITLE III--General Intelligence Community Matters




                      SUBTITLE A--GENERAL MATTERS

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

    Section 301 provides that funds authorized to be 
appropriated by the Act for salary, pay, retirement, and other 
benefits for federal employees may be increased by such 
additional or supplemental amounts as may be necessary for 
increases in compensation or benefits authorized by law.

Section 302. Restriction on conduct of intelligence activities

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

Section 303. Quadrennial Intelligence Strategic Review

    Section 303 requires the DNI to perform a quadrennial 
intelligence strategic review of the intelligence strategy, 
capabilities, structure, policies, infrastructure, budget 
plans, and other relevant aspects of intelligence programs and 
activities of the United States to meet national security 
objectives for the next ten years and to submit to the 
congressional intelligence committees a report on each such 
review.
    Given the IC's size, scope and complexity, the Committee 
believes that the IC would benefit from a structured strategic 
review effort--similar to the statutory Quadrennial Defense 
Review conducted by the Department of Defense and the statutory 
Quadrennial Homeland Security Review conducted by the 
Department of Homeland Security (DHS)--to ensure that the IC is 
operating in an integrated and effective manner.

Section 304. Management and oversight of financial intelligence

    Section 304 requires the DNI to prepare a plan for 
management of the elements of the IC that carry out financial 
intelligence activities.

Section 305. Plan for applying private sector best practices to 
        improving insider threat detection

    Section 305 directs the DNI to submit to the congressional 
intelligence committees a plan for applying private sector best 
practices for employee access and monitoring systems to certain 
positions within the IC.

Section 306. Procedures for the retention of incidentally acquired 
        communications

    Section 306 requires the head of each element of the IC to 
adopt Attorney General-approved procedures that govern the 
retention of nonpublic telephone or electronic communications 
acquired without consent of a person who is a party to the 
communications, including communications in electronic storage.
    The procedures required under this section shall apply to 
any intelligence activity that is reasonably anticipated to 
result in the acquisition of such telephone or electronic 
communications to or from a United States person not otherwise 
authorized by court order, subpoena, or similar legal process, 
regardless of the location where the collection occurs. The 
procedures shall prohibit the retention of such telephone or 
electronic communications for a period in excess of five years, 
unless the communications are determined to fall within one of 
several categories, enumerated in subsection (b)(3)(A), for 
which retention in excess of five years is authorized, to 
include communications that have been affirmatively determined 
to constitute foreign intelligence or counterintelligence, 
communications that are reasonably believed to constitute 
evidence of a crime and are retained by a law enforcement 
agency, and communications that are enciphered or reasonably 
believed to have a secret meaning.
    The Committee recognizes that it may be necessary in 
certain instances for IC elements to retain communications 
covered by this section for a period in excess of five years 
that do not fall into the categories specifically enumerated in 
subsection (b)(3)(A). Therefore, subsection (b)(3)(A)(vii) 
provides flexibility for the head of each element of the 
intelligence community to authorize such extended retention 
where the head of the element determines that it is necessary 
to protect the national security of the United States. In the 
absence of such a determination, the Committee intends Section 
306 to establish a default rule for intelligence collection 
activities, not otherwise authorized by legal process, that 
requires agencies to delete communications covered by this 
section after five years, unless a determination is made that 
the communications constitute foreign intelligence or 
counterintelligence or otherwise meet the retention 
requirements set forth in this section.

Section 307. Feasibility study on consolidating classified cyber threat 
        indicator and malware databases

    Section 307 requires the DNI to conduct a feasibility study 
on consolidating classified cyber threat indicator and malware 
sample databases in the IC and to provide a report to the 
congressional intelligence committees summarizing the 
feasibility study.

Section 308. Sense of Congress on cybersecurity threat and cybercrime 
        cooperation with Ukraine

    Section 308 expresses the sense of Congress concerning 
cybersecurity threat and cybercrime cooperation between the 
United States and Ukraine.

Section 309. Replacement of locally employed staff serving at United 
        States diplomatic facilities in the Russian Federation

    Section 309 requires the Secretary of State to ensure that 
every supervisory position at a U.S. diplomatic facility in the 
Russian Federation is occupied by a citizen of the United 
States who has passed a background check and to provide 
Congress with a plan to further reduce reliance on locally 
employed staff.

Section 310. Inclusion of restricted access spaces in United States 
        diplomatic facilities in the Russian Federation and adjacent 
        countries

    Section 310 requires that each U.S. diplomatic facility 
that is constructed in, or undergoes a construction upgrade in, 
the Russian Federation, any country that shares a land border 
with the Russian Federation, or any country that is a former 
member of the Soviet Union shall be constructed to include 
restricted access spaces. The Secretary of State may waive the 
requirements of this section upon a determination that it is in 
the national security interest of the United States.

                         SUBTITLE B--REPORTING

Section 311. Report on declassification process

    Section 311 requires the DNI to submit a report to Congress 
describing proposals to improve the declassification process 
and steps the IC could take or legislation that may be 
necessary, to enable the National Declassification Center to 
better accomplish the missions assigned to the Center by 
Executive Order 13526.

Section 312. Report on intelligence community efficient spending 
        targets

    Section 312 requires the DNI to submit a report to the 
congressional intelligence committees on the status and 
effectiveness of efforts to reduce administrative costs for the 
IC during the preceding year.

Section 313. Annual report on violations of law or executive order

    Section 313 requires the DNI to report annually to the 
congressional intelligence committees on violations of law or 
Executive order by personnel of an element of the IC that were 
identified during the previous calendar year. Under the 
National Security Act, the President is required to keep the 
congressional intelligence committees fully and currently 
informed of the intelligence activities of the United States 
government. Nonetheless, the Committee has determined that this 
annual reporting requirement is necessary to better ensure that 
the intelligence oversight committees of the House and Senate 
are made aware of violations of law or Executive order, 
including, in particular, violations of Executive order 12333 
for activities not otherwise subject to the Foreign 
Intelligence Surveillance Act.

Section 314. Annual report on intelligence activities of the Department 
        of Homeland Security

    Section 314 requires the Under Secretary for Intelligence 
and Analysis of the DHS to provide the congressional 
intelligence committees with a report on each intelligence 
activity of each intelligence component of the Department that 
includes, among other things, the amount of funding requested, 
the number of full-time employees, and the number of full-time 
contractor employees. In addition, Section 314 requires the 
Secretary of Homeland Security, to submit to the congressional 
intelligence committees a report that examines the feasibility 
and advisability of consolidating the planning, programming, 
and resourcing of such activities within the Homeland Security 
Intelligence Program (HSIP).
    The HSIP budget was established to fund those intelligence 
activities that principally support missions of the DHS 
separately from those of the NIP. To date, however, this 
mechanism has only been used to supplement the budget for the 
office of Intelligence and Analysis. It has not been used to 
fund the activities of the non-IC components in the DHS that 
conduct intelligence-related activities. As a result, there is 
no comprehensive reporting to Congress regarding the overall 
resources and personnel required in support of the Department's 
intelligence activities.

Section 315. Report on intelligence sharing with Ukraine

    Section 315 expresses the sense of Congress that the 
President should provide the Government and armed forces of 
Ukraine with appropriate intelligence sharing support. Section 
315 also requires the DNI and the Secretary of Defense to 
conduct an assessment of U.S. intelligence sharing with the 
Government of Ukraine and to submit a report on the assessment 
to the congressional intelligence committees.

Section 316. Report on political prison camps in North Korea

    Section 316 requires the DNI to submit a report on 
political prison camps in North Korea to the congressional 
intelligence committees.

                           Committee Comments


Preventing surprise

    In the last several years, the Nation has been caught off 
guard by ``surprises''--the Arab Spring, Russia's incursion in 
Crimea, and the implosion of Iraq. None are of the scale of 
attacks on September 11, 2001, but suggest that the IC can 
improve performance of a core function of warning policymakers 
of important shifts in the security environment.
    After every perceived intelligence ``failure,'' there are 
calls to instill greater ``imagination'' in analytic thinking--
to surface the low-risk, high-impact contingencies that 
intelligence analysts may overlook. The IC has pursued this 
agenda over the decades through dedicated ``warning'' offices, 
tradecraft requirements to employ certain structured analytic 
techniques, and alternative methodologies. The latest effort in 
this vein is described as ``anticipatory intelligence.''
    Given the dynamism of the security environment and the new 
analytic tools available to the IC, the Committee believes 
greater IC-wide focus to this indispensable intelligence 
function is required.
    Therefore, the Committee directs the DNI, in coordination 
with the heads of analysis of several IC elements, to develop a 
plan for implementing the IC-wide adoption of alternative 
analysis methodologies. While conceived through DNI leadership, 
the Committee envisions this plan may be executed through 
multiple IC elements as executive agents. This plan shall be 
provided to the committees within 90 days of enactment of this 
act.

Evaluation of demonstration programs

    Various elements across the IC develop and acquire 
demonstration programs to evaluate and test new technologies. 
These experimental efforts may have multiple outcomes, such as 
deployment as a new stand-alone system, integration into 
another IC program of record, extension into another test 
phase, or termination. To support these decisions, it is 
critical to have an objective, data-driven assessment of the 
programs' demonstrated capabilities, benefits to users, cost 
and risk. The Committee believes the IC would benefit from a 
more structured, rigorous and transparent process to support 
this goal.
    Therefore, the Committee directs the DNI to brief the 
Committee within 90 days of enactment of this Act on a more 
effective process to evaluate demonstration programs and 
provide recommendations for future acquisition decisions.

Financial Exchange and Intelligence Integration (FIX-IIT)

    The Committee commends the Office of the DNI for its recent 
efforts to enhance coordination and integration in the 
collection and analysis of financial intelligence across the 
IC. In particular, the Committee applauds the recent initiative 
by the National Intelligence Manager for Threat Finance and 
Transnational Organized Crime known as Financial Exchange and 
Intelligence Integration (FIX-IIT).
    Successful cross-community collaboration on financial 
intelligence holds significant promise as a force multiplier in 
the government's efforts to understand, map, and disrupt 
terrorist organizations, narco-trafficking networks, 
proliferation networks, organized crime, and other threats. 
However, FIX-ITT will only be as valuable as the information 
and intelligence shared through it by members of the IC. To 
support that objective, the Committee expects members of the 
Intelligence and Law Enforcement Communities to share 
intelligence through FIX-IIT to the greatest extent possible, 
under existing laws and regulations.
    The Committee understands that FIX-ITT will be deployed in 
July 2014 and that its success over time will be contingent on 
properly assessing its performance against stated objectives. 
Therefore, the Committee directs the DNI to provide an 
assessment to the Committee of FIX-ITT's performance against 
key performance metrics, to include the degree to which 
relevant stakeholders are participating, within six months of 
its deployment. This assessment should include recommendations 
for any changes in authorities, funding, policy, or personnel 
to ensure the success of FIX-ITT.

Space launch range services and capability

    The Committee believes it is critical to preserve a variety 
of launch range capabilities to support national security space 
missions. Spaceports or launch and range complexes may provide 
capabilities to reach mid-to-low inclination orbits or polar-
to-high inclination orbits. The Committee believes an important 
component of this effort may be spaceports and launch and range 
complexes that are commercially licensed by the Federal 
Aviation Administration and operate in partnership with a local 
or state government. Therefore, the Committee encourages the 
IC, in partnership with the U.S. Air Force, to brief the 
Committee on the relative role and contribution of spaceports 
or launch and range complexes to our national security space 
launch capacity.

                            Committee Action

    On July 29, 2014, a quorum being present, the Committee met 
to consider the bill and amendments. The Committee took the 
following actions:

Votes on amendments to committee bill, this report and the classified 
        annex

    By unanimous consent, the Committee made the Chairman and 
Vice Chairman's bill the base text for purposes of amendment.
    The Committee moved to consideration of a manager's 
amendment by the Chairman that made changes throughout the bill 
and this report. By unanimous consent, the Committee agreed to 
a second degree amendment to the manager's amendment to require 
that every supervisory position at a United States diplomatic 
facility in the Russian Federation be occupied by a citizen of 
the United States who has passed a background check and to 
require that any diplomatic facility that undergoes 
construction in the Russian Federation, or an adjacent country, 
includes a restricted access space. By unanimous consent, the 
Committee agreed to the manager's amendment.
    The Committee moved to consideration en bloc of an 
amendment by Senator Udall that made changes to the classified 
annex, an amendment by Senator Warner that made changes to the 
classified annex, an amendment by Senator King that required a 
report on intelligence community spending, an amendment by 
Senator King that made changes to the classified annex, an 
amendment by Senator Risch that made changes to the classified 
annex, an amendment by Senator Rubio that required a report on 
intelligence sharing with Ukraine, an amendment by Senator 
Rubio that made changes to the classified annex, and an 
amendment by Senator Wyden that made changes to the classified 
annex. By unanimous consent, the Committee agreed en bloc to 
second degree amendments that made modifications to each of 
these amendments. By unanimous consent, the Committee agreed en 
bloc to the amendments, as modified.
    The Committee moved to consideration of an amendment by 
Senator Rubio that required a report on political prison camps 
in North Korea. By unanimous consent, the Committee agreed to 
the amendment.
    The Committee moved to consideration of an amendment by 
Senator Warner that made changes to the classified annex. By 
unanimous consent, the Committee agreed to a second degree 
amendments that made modifications to the amendment. By 
unanimous consent, the Committee agreed to the amendment.
    The Committee moved to consideration of an amendment by 
Senator Warner that made changes to the classified annex. By 
unanimous consent, the Committee agreed to a second degree 
amendments that made modifications the amendment. By unanimous 
consent, the Committee agreed to the amendment.
    The Committee authorized the staff to make technical and 
conforming changes in the bill, report, and classified annex, 
following the completion of the mark-up.

Vote to report the committee bill

    The Committee voted to report the bill, as amended, by a 
vote of 15 ayes to 0 noes. The votes in person or by proxy were 
as follows: Chairman Feinstein--aye; Senator Rockefeller--aye; 
Senator Wyden--aye; Senator Mikulski--aye; Senator Udall--aye; 
Senator Warner--aye; Senator Heinrich--aye; Senator King--aye; 
Vice Chairman Chambliss--aye; Senator Burr--aye; Senator 
Risch--aye; Senator Coats--aye; Senator Rubio--aye; Senator 
Collins-- aye; Senator Coburn--aye.

                       Compliance With Rule XLIV

    Rule XLIV of the Standing Rules of the Senate requires 
publication of a list of any ``congressionally directed 
spending item, limited tax benefit, and limited tariff 
benefit'' that is included in the bill or the committee report 
accompanying the bill. Consistent with the determination of the 
Committee not to create any congressionally directed spending 
items or earmarks, none have been included in the bill, the 
report to accompany it, or the classified schedule of 
authorizations. The bill, report, and classified schedule also 
contain no limited tax benefits or limited tariff benefits.

                           Estimate of Costs

    Pursuant to paragraph 11(a)(3) of rule XXVI of the Standing 
Rules of the Senate, the Committee deems it impractical to 
include an estimate of the costs incurred in carrying out the 
provisions of this report due to the classified nature of the 
operations conducted pursuant to this legislation. On July 31, 
2014, the Committee transmitted this bill to the Congressional 
Budget Office and requested an estimate of the costs incurred 
in carrying out the unclassified provisions.

                    Evaluation of Regulatory Impact

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

                   ADDITIONAL VIEWS OF SENATOR WARNER

    I strongly believe that America's intelligence agencies 
must be second-to-none. We live in an increasingly complex 
world and rely upon our intelligence community to provide our 
policymakers and military leaders with ample warning--so the 
United States can make smart decisions and avoid strategic 
surprise. Our intelligence professionals need the tools and 
resources to keep the country secure. This bill provides for 
these resources. But we must also be second-to-none in ensuring 
that Americans' civil liberties and constitutional freedoms are 
strongly protected. This bill provides improvements to 
protecting civil liberties as well. And it is my intention to 
ensure that the Senate Intelligence Committee continues to 
provide robust oversight of the nation's intelligence 
activities.
    In this year's bill--as in previous years'--I have been a 
strong advocate of ensuring that America's space architecture, 
systems and technology remain second-to-none. As computing 
power increases and technology becomes more powerful and more 
sophisticated, it is vital that our nation's reconnaissance 
systems maintain their technical edge. At a time when 
commercial satellite companies and foreign nations are 
launching smaller and more powerful satellites--including so-
called ``small-sats''--I want to ensure that the innovation and 
revolution we see in the commercial sector does not leave our 
intelligence agencies behind.
    As potential adversaries rush to blunt our advantage in 
space by developing ever more sophisticated practices and 
countermeasures, I want to ensure our intelligence agencies can 
embrace the advantages, efficiencies, cost-savings, innovative 
acquisition practices, resiliency and burden- and risk-sharing 
of working more closely with the commercial sector. As we make 
serious decisions about investment priorities that will be felt 
decades in the future, I firmly believe the intelligence 
community cannot afford to ignore the innovation and cost-
savings that adopting successful commercial-like practices can 
bring. As intelligence budgets decline due to budgetary 
constraints, it is critical that strong oversight and 
persistence on the part of this Committee guarantee that these 
expensive systems are the best they can be, and provide the 
best deal to the taxpayer. I will continue to work hard to 
ensure that this is so.
    I am proud to say that several amendments I offered on this 
issue--with help from my colleagues--especially Senators Udall, 
Mikulski and King, as well as the Chairman and Vice Chairman--
were accepted into the bill. While most of these amendments are 
classified, I am also pleased to note that my unclassified 
amendment supporting commercial space launch facilities that 
operate in partnership with state and local government was 
agreed to. Such facilities provide the promise of cost savings, 
innovation, and flexibility in space launch--an area that has 
otherwise become increasingly expensive.
    While we sometimes hear about intelligence failures in the 
press, we seldom hear of their successes--of which there are 
many--and even more rarely do we say ``thank you'' to the men 
and women who, often at great personal sacrifice to themselves 
and their families, work tirelessly every day to keep us safe. 
That is why I have worked with Senators Mikulski, Chambliss, 
Feinstein, Burr, Udall, King and many others to give a small 
token of thanks to the thousands of men and women of the 
Intelligence Community who give their best to the nation--but 
who do so in secrecy. We have designated July 26 as 
Intelligence Professionals Day, and I am proud to note that for 
the second year in a row the United States Senate has 
unanimously approved my resolution to designate this day and 
say thank you to these professionals. I note with pride that 
Virginia is the home to thousands of these men and women, and 
is also home to the headquarters of the Director of National 
Intelligence, the Department of Defense, the Central 
Intelligence Agency, the National Geospatial-Intelligence 
Agency, the National Reconnaissance Office, the Federal Bureau 
of Investigation's Academy, as well as elements of every other 
civilian and military intelligence agency.
                                                    Mark R. Warner.

                        Changes in Existing Laws

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