Federal Support for and Involvement in State and Local Fusion Centers

MAJORITY AND MINORITY STAFF REPORT

PERMANENT SUBCOMMITTEE
ON INVESTIGATIONS
UNITED STATES SENATE

October 3 , 2012

United States Senate
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
Committee on Homeland Security and Governmental Affairs

I. Executive Summary

Sharing terrorism-related information between state, local and Federal officials is crucial to protecting the United States from another terrorist attack. Achieving this objective was the motivation for Congress and the White House to invest hundreds of millions of taxpayer dollars over the last nine years in support of dozens of state and local fusion centers across the United States.¹

The Subcommittee investigation found that DHS-assigned detailees to the fusion centers forwarded “intelligence” of uneven quality – oftentimes shoddy, rarely timely, sometimes endangering citizens’ civil liberties and Privacy Act protections, occasionally taken from already-published public sources, and more often than not unrelated to terrorism. Congress directed the Department of Homeland Security (DHS) to lead this initiative. A bipartisan investigation by the Permanent Subcommittee on Investigations has found, however, that DHS’s work with those state and local fusion centers has not produced useful intelligence to support Federal counterterrorism efforts.

The Subcommittee investigation also found that DHS officials’ public claims about fusion centers were not always accurate. For instance, DHS officials asserted that some fusion centers existed when they did not. At times, DHS officials overstated fusion centers’ “success stories.” At other times, DHS officials failed to disclose or acknowledge non-public evaluations highlighting a host of problems at fusion centers and in DHS’s own operations.

Since 2003, over 70 state and local fusion centers, supported in part with Federal funds, have been created or expanded in part to strengthen U.S. intelligence capabilities, particularly to detect, disrupt, and respond to domestic terrorist activities. DHS’s support for and involvement with these state and local fusion centers has, from the beginning, centered on their professed ability to strengthen Federal counterterrorism efforts.

Under the leadership of Senator Coburn, Ranking Subcommittee Member, the Subcommittee has spent two years examining Federal support of fusion centers and evaluating the resulting counterterrorism intelligence. The Subcommittee’s investigative efforts included interviewing dozens of current and former Federal, state and local officials, reviewing more than a year’s worth of intelligence reporting from centers, conducting a nationwide survey of fusion centers, and examining thousands of pages of financial records and grant documentation. The investigation identified problems with nearly every significant aspect of DHS’s involvement with fusion centers. The Subcommittee investigation also determined that senior DHS officials were aware of the problems hampering effective counterterrorism work by the fusion centers, but did not always inform Congress of the issues, nor ensure the problems were fixed in a timely manner.

Regarding the centers themselves, the Subcommittee investigation learned that a 2010 assessment of state and local fusion centers conducted at the request of DHS found widespread deficiencies in the centers’ basic counterterrorism information-sharing capabilities. DHS did not share that report with Congress or discuss its findings publicly. When the Subcommittee requested the assessment as part of its investigation, DHS at first denied it existed, then disputed whether it could be shared with Congress, before ultimately providing a copy.

In 2011, DHS conducted its own, less rigorous assessment of fusion centers. While its resulting findings were more positive, they too indicated ongoing weaknesses at the fusion centers.

The findings of both the 2010 and 2011 assessments contradict public statements by DHS officials who have described fusion centers as “one of the centerpieces of our counterterrorism strategy,”² and “a major force multiplier in the counterterrorism enterprise.”³ The Subcommittee investigation found that the fusion centers often produced irrelevant, useless or inappropriate intelligence reporting to DHS, and many produced no intelligence reporting whatsoever.

Despite reviewing 13 months’ worth of reporting originating from fusion centers from April 1, 2009 to April 30, 2010, the Subcommittee investigation could identify no reporting which uncovered a terrorist threat, nor could it identify a contribution such fusion center reporting made to disrupt an active terrorist plot. Instead, the investigation found:

• Nearly a third of all reports – 188 out of 610 – were never published for use within DHS and by other members of the intelligence community, often because they lacked any useful information, or potentially violated Department guidelines meant to protect Americans’ civil liberties or Privacy Act protections.

• In 2009, DHS instituted a lengthy privacy and civil liberties review process which kept most of the troubling reports from being released outside of DHS; however, it also slowed reporting down by months, and DHS continued to store troubling intelligence reports from fusion centers on U.S. persons, possibly in violation of the Privacy Act.

• During the period reviewed, DHS intelligence reporting suffered from a significant backlog. At some points, hundreds of draft intelligence reports sat for months before DHS officials made a decision about whether to release them to the intelligence community. DHS published many reports so late – typically months late, but sometimes nearly a year after they were filed – that many were considered “obsolete” by the time they were released.

• Most reporting was not about terrorists or possible terrorist plots, but about criminal activity, largely arrest reports pertaining to drug, cash or human smuggling. • Some terrorism-related “intelligence” reporting was based on older news releases or media accounts.

• Some terrorism-related reporting also appeared to be a slower-moving duplicate of information shared with the National Counter Terrorism Center through a much quicker process run by the Federal Bureau of Investigation’s Terrorist Screening Center.

In interviews, current and former DHS officials involved in the fusion center reporting process stated they were aware that “a lot of [the reporting] was predominantly useless information,” as one DHS official put it.⁴ A former reporting branch chief said that while he was sometimes proud of the intelligence his unit produced, “There were times when it was, ‘what a bunch of crap is coming through.’”⁵

The Subcommittee investigation also examined DHS’s management of the fusion center counterterrorism intelligence reporting process. The investigation discovered:

• DHS required only a week of training for intelligence officials before sending them to state and local fusion centers to report sensitive domestic intelligence, largely concerning U.S. persons.

• Officials who routinely authored useless or potentially illegal fusion center intelligence reports faced no sanction or reprimand.

The Subcommittee investigation also reviewed how the Federal Emergency Management Agency (FEMA), a component of DHS, distributed hundreds of millions of taxpayer dollars to support state and local fusion centers. DHS revealed that it was unable to provide an accurate tally of how much it had granted to states and cities to support fusion centers efforts, instead producing broad estimates of the total amount of Federal dollars spent on fusion center activities from 2003 to 2011, estimates which ranged from $289 million to $1.4 billion.

The Subcommittee investigation also found that DHS failed to adequately police how states and municipalities used the money intended for fusion centers. The investigation found that DHS did not know with any accuracy how much grant money it has spent on specific fusion centers, nor could it say how most of those grant funds were spent, nor has it examined the effectiveness of those grant dollars.

The Subcommittee conducted a more detailed case study review of expenditures of DHS grant funds at five fusion centers, all of which lacked basic, “must-have” intelligence capabilities, according to assessments conducted by and for DHS. The Subcommittee investigation found that the state and local agencies used some of the Federal grant money to purchase:

• dozens of flat-screen TVs;

• Sport Utility Vehicles they then gave away to other local agencies; and

• hidden “shirt button” cameras, cell phone tracking devices, and other surveillance equipment unrelated to the analytical mission of a fusion center.

All of those expenditures were allowed under FEMA’s rules and guidance, DHS officials told the Subcommittee. Yet none of them appeared to have addressed the deficiencies in the centers’ basic information analysis and sharing capabilities, so they could better contribute to Federal counterterrorism efforts.

Every day, tens of thousands of DHS employees go to work dedicated to keeping America safe from terrorism; Federal funding of fusion centers was intended to advance that Federal objective. Fusion centers may provide valuable services in fields other than terrorism, such as contributions to traditional criminal investigations, public safety, or disaster response and recovery efforts. In this investigation, the Subcommittee confined its work to examining the Federal return on its extensive support of state and local fusion centers, using the counterterrorism objectives established by law, Executive strategy, and DHS policy statements and assessments.

The investigation found that top DHS officials consistently made positive public comments about the value and importance of fusion centers’ contributions to Federal counterterrorism efforts, even as internal reviews and non-public assessments highlighted problems at the centers and dysfunction in DHS’s own operations. But DHS and the centers do not shoulder sole responsibility for the fusion centers’ counterterrorism intelligence failures. Congress has played a role, as well. Since Congress created DHS in 2003, dozens of committees and subcommittees in both Houses have claimed jurisdiction over various aspects of the Department. DHS officials annually participate in hundreds of hearings, briefings, and site visits for Members of Congress and their staffs. At Congress’ request, the Department annually produces thousands of pages of updates, assessments and other reports. Yet amid all the Congressional oversight, some of the worst problems plaguing the Department’s fusion center efforts have gone largely undisclosed and unexamined.

At its conclusion, this Report offers several recommendations to clarify DHS’s role with respect to state and local fusion centers. The Report recommends that Congress and DHS revisit the statutory basis for DHS support of fusion centers, in light of the investigation’s findings. It also recommends that DHS improve its oversight of Federal grant funds supporting fusion centers; conduct promised assessments of fusion center information-sharing; and strengthen its protection of civil liberties in fusion center intelligence reporting.

Read the Full Report: Federal Support for and Involvement in State and Local Fusion Centers [PDF]

¹ Congress has defined fusion centers as "a collaborative effort of 2 or more Federal, State, local, or tribal government agencies that combines resources, expertise, or information with the goal of maximizing the ability of such agencies to detect, prevent, investigate, apprehend, and respond to criminal or terrorist activity." Implementing Recommendations of the 9/11 Commission Act of 2007, P.L. 110-53, § 511, 121 Stat. 317, 318-24 (2007). http://www.gpo.gov/fdsys/pkg/PLAW-110publ53/pdf/PLAW-110publ53.pdf.
² Remarks by DHS Secretary Janet Napolitano, National Fusion Center Conference, Denver, Colorado (3/15/2011).
³ Testimony of Caryn Wagner, "Homeland Security Department Intelligence Programs and State and Local Fusion Centers," before the House Subcommittee on Homeland Security of the Committee on Appropriations (3/4/2010).
⁴ Subcommittee interview of former DHS Senior Reports Officer (3/21/2012).
⁵ Subcommittee interview of Harold "Skip" Vandover (3/22/2012).