Senate Veterans Affairs

Senator Lisa Baker. Chair

& Emergency heparedness Committee

Aaron Shenck, Executive Director
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7 17 -7 87 -7

Senate Box 203020, Harrisburg. Pennsylvania 17 120-3020

428

Senate Veterans Affairs and Emergency Preparedness Hearing September 2712010

Senator Baker: Good moming I'd like to call the recessed meeting of the Senate Veterans' Affairs and Emergency Preparedness Committee to order. We'd like to offer the following opening statement about our public hearing into the Terror List Contract. And we appreciate all of those coming this morning. We certainly appreciate the cooperation of individuals who are appearing before the committee today. We hope this cooperation comes matched by candor, because the subject is unpleasant and the information surfacing daily is unsettling.

At a time when public confidence in state government is already reaching new depths, the controversial matter that prompted this hearing is toxic to public trust. Rarely in my experience has there been so much public push for an investigatory hearing, born of equal parts ofconcern and outrage
The document that revealed the contract was made; it appears that state government was colluding against its citizens. Hard to believe that groups seeking education equity, displaying cultural pride, and advocating water quality were perceived as threats to the Commonwealth. Even harder to believe is that no one in a position of authority redflagged the practice of issuing warnings about groups legitimately exercising their constitutional rights.

This hearing is in no way seeking to discredit the public apology Governor Rendell made when he was alerted to the situation. However, there are questions pertaining to the

explanations and actions of other state officials, which people have found inconsistent, insuffi cient, and unsatisfactory.

If no one was paying attention to the information being conveyed, that is an unnerving revelation, because part of the basic mission of homeland security is to make sure citizens are paying attention.
Conversely, if highly-placed state officials were aware of what was being disseminated, that is scary, because the bulletin information defies common sense, defies any understanding of real risk, and defies any regard for the existence of constitutionally protected rights.

If someone cannot tell the difference between a citizen activist and ofprotection are taxpayers paying for?

terrorist. what sort

How can bulletins be defended as "vital" when they are filled with improper reports? Is there any justification for the "feds made us do it" defense that has 6een proffered? Why was such a contract thought necessary when there is a modern, well-rigarded unit operating under the auspices of the pennsylvania State police?
on concerns that people have expressed, for wiich we are obliged to seek answers and establish accountability. At this time I would offer the minority chair Senator Famese theopportunity to make some opening comments as well. These

ile representative questions, based

Senator Farnese: Thank you madam chair, good moming.

process that produced this contract, the work that was performed, and the intent of the

I am greatly concemed about the situation before us here today. I'm concerned about the

parties involved.

First, this committee and the public deserve an explanation as to how this no-bid contract for $103,000 was awarded and how it escaped scrutiny.
Second, I am equally concerned about the special attention given to legitimate protesters who have 9very right to demonstrate as they did. Not onty did these piotesters pose no threat but the ITRR might have used that time and energy to gather Intelligenceon actual terrorism threats although much of the work was already done by the Pennsylvania State

Police. This no-bid no scrutiny contract seems have been worth little excepi the compilization of publicly accessible information that did not identiff any sirious threats to anyone. I am very concerned about what this means for overall readiness for a real terrorism threat. We could very well have another World Series in city of Philadelphia this year. What is the office of Homeland Security going to do to ensure that we are safe for that type of monumental event? Because simply pasting together news clips is not going to cut it.

Thank you, madam chair.

Senator Baker: Thank you Senator Farnese.

We are joined this morning by members of the Committee, Senator Ward, Senator Mensch, Senator Robbins, Senator Dinniman, Senator Kitchen and we are also joined by two members of the Senate who are not part of the committee who are joining us, Senator Ferlo and Senator Folmer.

community activist who lives in Wyoming County which is part of the 20frSenatorial district. Virginia will you please stand and raise your right h-and for me, we are going to swear in. Do you solemnly swear to tell the truth, the whole truth and nothing but the truth?

At this time I would invite Virginia Cody to come to the microphone. Virginia is a

Virginia Cody:
(inaudible response) Senator Baker: Thank you, you may be seated. Ms. Cody we would ask you to make a very brief statement, obviously many members are here this morning and we would like to provide enough opportuniiy for questions. So if you would like to share some general observations and then allow the members to ask you questions we would appreciate that. Thank you.
Please press,

I apologize, please press the microphone

so that people can hear you.

Virginia Cody:
Is this?

Senator Baker: That's correct.

Virginia Cody: Ah ha. Thank you for giving

me the opportunity to speak here today.

A month ago, I was an average American citizenbegging my govemment to save my air, my drinking water, and my community from the environmental devastation wrougftiUy the natural gas industry across the country. I wrote dozens of letters to my legislators (receiving very few responses I might add). My husband and I sent several letters to the editors of newspapers and many were printed. We started a blog to compile them and to provide information to others who might be interested in the topic. We tried to parlay the success of the Gas Drilling Awareness Coalition, a group of people just like usliuing in

Luzeme county, into a chapter devoted to natural gas issues in wyoming and Lackawanna Counties. I wrote, printed, and handed out informational fly:ers at lakeside communities near my home. And, I posted comments on Facebook and bn the susquehanna county Gas Forum. I admit it, in print, I was very loud. I have been desperate to make my case to you. Apparently, my voice was loud enough to rouse the attention of my government, but not in the way I had hoped. Instead of my legislators paying attention to what I had to tell them, my govemment sicked the FBi, tG Office of Homeland Security and the Institute of Terrorism Research and Response after me. My govemment branded me an extremist, or possibly an eco-terrorist foi writing a balancid truth, for writing opinions that didn't sit well with those in power. And now, for exercising my right to free speech, a dossier on me may now be secreted in the halls of Israeli Intelligence for all I know.

list of names of "dissenters". The FBI is a federal agency, so I ask, is the U.S. Department of Homeland Security now looking at me as a security risk? Do I have to worry that like the peace activists in Minneapolis I'll find the FBiat my door some morning?
a

N9*, on top of it all, I'm told that in concert with these bulletins, the FBI was compiling

For the first time in my life, I do not feel secrue in my home. I worry that what I say on the phone is being recorded, I wonder if my emails are still being mbnitored. I am discomfited. Almost frightened, you might say. And not just because I've been spied on, I feel this way because the very spies hired by my govemment have been so incompetent they saw me as a threat to the security of the state! On the one hand, they were spying on me as an extremist; on the other they depicted me as a drilling advocate in the correspondence I had with Mr. Powers. If they are so incompetent, then I wonder just how deep this incompetence goes. How many people out there have been told to watch out for me, that I'm a "person of interest?" We know that Marian Schweighofer, executive director of the Northern Wayne Property Owners Alliance, had access to th" information in those bulletins. According to one newspaper report, she sent a message to her members telling them "there was reason to believe that the Offrce of Homeland Securitv was tracking the anti-drillers as terrorists". Is this why, when some of us have stopped on the shoulder of a road to take a gander at the construction of or operations going on on a rig, the security patrols have flJwn en masse at us to herd us back into our cars and away from the property? Is this why a small group of drilling opponents were greeted by mounted State Fofice and security guards wearing tazers and bulletproof vests at the Cabot family picnic in Montros., *hin all we wanted to do was talk to people and hand out literature. Is this why Julie Sautner, a Dimock resident whose water has been poisoned by Cabot Oil and Gas, had a jug of that water wrestled away from her amidst accusations of possible terrorism? So thJ question in my mind is not just who was on the distribution tiit for those bulletins; the question is: how far did the information in them travel? How many people who have real or potential control over my life...first responders, local gouernment, state government...My NEIGHBORS...and, of course, the gas companies ....have been put on alert about me? My small town is soon to be surrounded by gas wells....will their security patrols be

alerted every time I get in my car? How are you going to erase the alert in people's minds? This is not an oops you can fix so easily. When I received the email from James Powers, my heart nearly stopped. I asked myself first and foremost had I inadvertently done something illegal. Wheni collected myself and really studied that last line of the email, I was absolutely infuriated. Today I can tell you I am so outraged I don't know what to do with my anger. Here I was, trying desperately to get my govemment to put some controls on the natural gas industry invasion, and my government was admitting it was in catroots with the industry. When I researched the Bravo Group, a lobbyist group cc'd in the email, I found out that it lobbies for Chief Oil and Gas and several other energy companies. So not only was the Office of Homeland Security providing Intelligence to the corporations about Pennsylvania citizens who might object to having their communities overun by them, it was providing "Intelligence" to the very people who lobby YOU, the legislators, on behalf of those companies. To tell you the truth, the incestuous relationJhip bett"een our government, the gas industry, the Bravo Group, the Marcellus Shale Coalition is so clear to me I can't believe it isn't the top story in every paper in this state. I suspect that every decision made by our government with regard to natural gas regulation is tainted by thl industry's deliberate attempts to blur the boundary line between itself and our government. In Pennsylvania, the natural gas companies think they're in charge, and I ask my govemment...ARE THEY?
Senator, I don't know whether hydraulic fracturing horizontally through the Marcellus Shale can be done safely. Nobody does. What I do know is that cunently it ISN'T being done safely. There are hundreds of horror stories of water contamination, animal deaths, air pollution, people sick, many of which you as legislators have been carefully shielded from knowing about by the Bravo Group and the Marcellus Shale Coalition. Your position insulates you from "we the people". You are making decisions about the future of Pennsylvania with only half the story in front of you. Andl hope to God this incident has shown you just how insulated you are. The lobbyists in questi,on have made sure you haven't leamed the truth, just as they have tried to keep alleged "extremists" like m" from telling you that truth. I hope my legislators take a step back and ask tough questions and start reading between the lines when they're presented with Industry spun ficts. Ask just how many non-disclosure agreements Oil and Gas has with individuais in our state, ask

how many massive trucks will play chicken with Pennsylvania's school buses every day, ask whether hunters who come to Pennsylvania will be able to eat what they kill since the well pads aren't fenced and wildlife will &ink from the salty wastewater pits, ask whether the citizens, the majority of the citizens, in many parts of this state want their small towns, town ways, turned upside down?

Baker: Virginia, are you almost finished? Ok. One last comment.

Virginia Cody:
Well, sure, this is about Mr. Powers.

Senator Baker: Well that's where I wouldprefer that you go; this is not drilling Marcellus Shale. I understand your passion...

a hearing about the merits

of gas

Virginia Cody: I'm finished with that.

Senator Baker: We appreciate your thoughts on that. This is to be focused on the situation at hand related to that email communication, so if you could cover that I would appreciate that. Thank you.

Virginia Cody: Now, about James Powers, I've been listening to and reading about how this man should be fired. I even stood with a group on the steps of this building last week where some of the speakers were calling for that firing. I stood there becaur" th. group's opposition to forced pooling - another assault on our constitutional rights -- *"r rnor" imiortant to me than worrying about Mr. Powers'future, but after the rally, I took the leadeiof that group aside and told him I didn't agree with him about what to do about our homeland.r.i.ity director. I tell you now what I tried to tell him I honestly don't know if firing James Powers is the right thing to do. You see, in this country, we have an awful traUit of making a fall guy out of the guy who was just doing his job. I'm reminded of what our nation did to Lt. colonel oliver North during the lran-contra affair.
Mr. Powers is an Army veteran, and since he and I were both commissioned to support and defend the U.S. Constitution,I like to think that maybe Mr. Powers fought bravely to protect our citizens' first amendment rights and argued with the powers that be - the

director of the Pennsylvania Emergency Management Agency and the Governor - about how spying on US citizens exercising their rigtits to freeipeech and assembly was not the way to go. I like to think he was simply ovemrled. As far as I'm concerned, he should be given some benefit of the doubt here. He wasn't necessarily the one with the ultimate authority over hiring ITRR, and I would HATE to give the oil and gas industry another win by sacrificing the due process rights Mr. Poweis deserves as an American citizen. Then again, maybe after all this,I am still hopefully naive.

Finally, let me conclude with this: Throughout history we have seen countries seduced all too easily by slick persuaders who've played on people's economic depression or desperation, excuse me. Nazi Germany, Soviet Russia, pre-World War II lately - there, the hearts and minds of the people were captured by those who painted rosy pictures of the future while concealing a terrible dark side. There they smofhered the people's rights to speak and write freely to expose that dark side. There they destroyed reiutations and shuffled dissenters off to where they couldn't cause the government any trouble - like jail, like Siberia. So, I am very grateful to this investigating body for its rectgnition ofjusi how dangerous Pennsylvania's attempts to suppress diisentirs' rights hal become. The very fact that we are here today tells me our country has not become a fascist state - that

we still live in America. Senator Baker, committee members, I applaud your efforts to get to the bottom of this debacle. Go get'em. Senator Baker: Thank you, Ms. Cody. Thank you for your willingness to come forward. I think you've demonstrated courage, conviction and like you many citizens have emailed me throughout not only my senate district but throughout Pennsylvania with similar concems and questions that youove raised. Did the actions end up putting a name on a list, you want to know that, you want assurances that who was monitoring your group and that's not going to come back and provide consequences to you or any member of your group in the future. I know many people have asked me how do I find out for sure. iVhat was the justification for selecting common ordinary citizens? Who ordered it; it's questions that we all have. How do we go about clearing your name and what would your recommendation be to the Govemor and to this Committee to right this wrong? Because, do you believe the State can give assurances that no further cottsequences will result to any group or any individual because we don't know the extent the information mav have been disseminated.
Senator Dinniman.

Senator Dinniman: (Inaudible) would suggest that you consider as chairman as well as Mr. Fbrnese sending a letter to the appropriate agencies asking that any records be cleared. And I would hope we would do that. You know if you look, go back, Senator Kitchen and I in fact were just talking about this, you go back to the civil.rights movement in this state you go back to the labor movement in the late lgth early 20th century you will see the same use of the State to try to control and to try to diminish descent. So, t would hope madam chairman if I may make a suggestion that we as a committee might do that number one, and number two since any lobbying group that works wittr-us we need to feel comfortable with, I hope also madam chairman you might make some inquiries concerning the Bravo Group so that we can get some clarification because our trusiwith any lobbyiig group is based on them being trustworthy. Senator Baker: Thank you Senator Dinniman. Senator Mensch... Senator Mensch: Ms. Cody, thank you for being here today. I think I heard you say you were requesting whether your emails are still being monitored.

Virginia Cody:
Yes.

Senator Mensch:

Do you know that there were being monitored.

Virginia Cody:
Well they have been monitored on the Susquehanna County Gas Forum. And the way that works is that you email into the forum io that is what iam referring to. However if it goes deeper than that I sure would like to know about it.
Senator Mensch: Ok. Thank you Senator Baker: Senator Ferlo Senator Ferlo: First of all thank you very much for testifying and being here today and more importantly, Lis4 my viewpoint, thank you very much for your leadership on the issue, the Marcellus shale debacle. I would encourage you because I respect ani applaud the Secretary, Senator Baker excuse me, for conducting this hearing Uut I am noi sure it's going to go that far. The debacle is not being addrJssed by thebovernor, who pretty much has written this offas an embarrassment not something that fundamentally strikes to a violation of our constitutional rights and civil liberties. i'm uery upset withthat, I feel like at the point that the Governor is about to leave office and, it least in my view, he has an important legacy in promoting public education and capital infrastructure and building new jobs and industries for this sour note to be left and just kind of in a dismissive attitude oh slap slap so unlike you I've already clearly stated that Mr. powers needs to go and other things need to happen. But I would encourage you as a citizen because despite the importance of this and prominence of this frearing I'm not convinced it's going to go anywhere. I would encourage you to do three thingsihat I'm doing. I'm filing a complaint with the State Ethics Commission; I'm filing a cimplaint with the Pennsylvania Inspector General regarding what I would consiJer a bogus contract. This money should be restored and replenished by this company to the Commonwealth's Treasury as far as I'm concerned, and thirdly I would ettco*age you to file a complaint with the US Justice Department Civil Rights Division. Because i tttint unless you do that as an individual citizen and or as an organized group like I will do as an individual not only as a senator but as someone who also sponsored a forum that was a subject of one of these infamous pdf files that the Senator was kind enough to forward to us. i don,t think we're gonna go that far you're gonna feel very frustrated after this hearing despite the prominence of all the media being here today. And have you now or eveibeen a member of the Republican Party? (Laughter)

Virginia Cody: I've been a Republican my entire life.

Senator Ferlo:

you.

I'm just, I'm just joking. I feel this is vaguely reminiscent of the 50's and it,s really a sad commentary on what's happened not only here in our State but also in our Nation. Thank

Senator Baker: Thank you for all of your comments. Obviously my question to you is poised because we would like to take follow up action and we reserve itt".ight as a Committee to make that determination based upon the information that is presentJd today, so any additional recommendations that you may have that you would like to submit to us we would welcome that we zlre gonna hold the record open so thank you for your testimony and we will call our next set of witnesses to.... Senator Dinniman: Madam Chairman I have one question, are you then I take it you're going to make some effort after you hear all this to try to make sure we as a Committee Jlearirp any record? First I would also praise you for holding the hearing but I..... Senator Baker: Absolutely Senator Dinniman, and I don't think you can come into a hearing of this nature predetermining what the outcome may or may not be and we must follow the information, follow-the_evidence and quite frankly iithere are additional questions that have not been asked today we have the ability to iold additional hearings g"t *a additional information so I think as a Committee we certainly should giir the opportunity to present their information and then make a determination based "u.[Uody upon itr" information that's presented. Senator Dinniman: Well that is exactly the_correct way to do it and again even with the Bravo Group I don't know the case, I don't knowwhat's going on so I don't mean to make any prejudgments but that's just another part of what we need to find out. Senator Baker: Thank you. Thank you, Ms. Cody for joining us this moming. I would call upon General Robert French the Director of the Pennsylvania Emergenry M*ug"ment Agency and James Powers, Director of the Pennsylvania Homeland Seturity Office at thls time. Gentlemen could you please stand, I would like to ask you to be swom in to testifr. Raise your right hand, do you solemnly state to tell the truth, the whole truth and nothing but the truth?
I

General French and Colonel powers: I do.

Senator Baker: Thank you.

I know that you have both submitted information for the record to the members of the Committee. I would ask that you keep your brief introductory comments to a very minimum we have a number of people here and I believe the questions will be the most critical component. General French would you like to begin withjust a short statement followed by Mr. Powers? General French:
Yes, ma'am. Thank you Chairwoman Baker, Committee members, thank you for the opportunity to be with you today. As the Director of the Pennsylvania Emlrgency Management Agency one of the primary responsibilities that I have is to proiide for that comprehensive Commonwealth all hazards, natural and manmade, preparedness and response progfttm. That work is under (inaudible)

Ok. Can you hear better now? Senator Baker: your microphone tumed on?

trs

General French: Yes Ma'am.

Senator Baker: Maybe bring it just a little bit closer. Thank vou.

General French:
Thank you, ma'am. As the Director of the pennsylvania Emergency Management Agency, one of the primary responsibilities is that (audio feedback), sorry ibout that, one of my primary responsibilities is a comprehensive Commonwealth all hazards, natural and manmade, preparedness and response program. That work is undertaken through a cooperative effort between the respective governmental agencies, non-governmental agencies, volunteer agencies and the private sector. Thank you for the opportunity to appeiu here today so that we can discuss the Institute of Terror Research-Response contract that was let as one of the tools to help in that overall program. One of the purposes of the contract was to provide emergency services personnel, owner/operators of critical infrastructure and key resources anA nrit responders with instructive-and helpful information pertaining to the four pillars of emirgency managemenr responsibility which are Protect, Prevent, Respond and Ricover. The contract was intended to be tailored to include Pennsylvania-specific applications. please note that the bulletins are no longer being distributed and a task force has been convened to ensure that we have an acceptable means to notify our respective stakeholders where necessary. As a member of the task force I will work to do my best to ensure that we can do that so that we can approach all hazards in the Commonwealth. Thank you.

Colonel Powers:

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Senator Baker, Senator Farnese and Committee members, good morning. On behalf of all the owners/operators and associated public safety stakeliolders of the Commonwealth's critical infrastructure and key resources, I thank you for the opportunity to share with you the statutory basis, references, capabilities assessment and rationale for contracting Intelligence support from the Institute of Tenorism Research and Response.

As the Director of the Pennsylvania Office of Homeland Security, I sincerely apologize to any individual or group, regardless of their views or affrliation, who felt tleir constitutional rights infringed upon because they were listed in the bulletin. That was never the intention. As Director, I accept the responsibility for this error in judgment and communication of the intent of the bulletins to provide situational awat.ness information to all public safety stakeholders. The key reference is pertinent for understanding our concept for implementing the National Infrastructure Protection Plan are contained in mv statement, I will not go over those to save time. The purpose of the subscription was to provide all stakeholders associated with the Common*eulth's critical infrastructure and key resources, which is approximately 4,000 in the Commonwealth, with information that would enhance their situational awareness of potential all-hazards incidents impacting the human, physical and cyber domains, our charter with DHS. When a review of other federal and state agency assessments, those focused on national level issues, geographic regions and broader concerns, indicated that they were not providing the taiioied approaches required, I conducted research which I will go over with you today in detail, to determine what other information producers might offer effective alternatives. That research led me to the Institute of Terrorism, Research and Response, an experienced analytical organization possessing skills requisite to meeting some of our requirements. The Commonwealth protocols for contracting also confirmJd this was indeed the only company at the time that could provide the service we deemed necessary. reviewing information products from DHS agencies and other states' Intelligence fusion centers, my assessment was, that available pioducts did not always focus on issues intended for county/municipality level stakeholders or sector-specific events relevant to our infrastructure protection interests. The more I researched and met with public safety officials, the more I realized that the local stakeholders were being omitted from the process of defining their priority security information requiremenis. Local stakeholders include not only the public sector agencies charged with public safety but also our private-sector business partners, for they own 85% of all of our critical infrastructure. The handout provided to you graphically depicts the information sharing environment I would hope Senator that everyone has a copy. on one page is listing of the DHS eighteen sectors and resource groupings that all of our infrastructure-falls in. Those are provided to us by way of the Patriot Act and Homeland Security Act of 2002 anddefined by the Department of Homeland Security in the National lnfrastructure Protection plan. The other side of the document that you were given is a schematic of all the stakeholders involved when we're trying to protect and inform the owners/operators and all associated people of our critical infrastructure. So that diagram on the back, are a list of all the people that are concerned about a given piece of infrastructure. If you were to place the Capitol in the center of that you'd get a graphic picture of who all has asso"iuted

4ft:t

interest with this. The subscription Statement of Work included these general needs: information relevant to the Commonwealth's critical infrastructure and key resources sectors and associated stakeholders, credible threat alerts, and the protection of the citizenry of Pennsylvania through sharing of this information. The subscription provided for a minimum requirement of tri-weekly periodic reports of distribution to potentiallyimpacted and/or associated stakeholders, 56 hours/week of tri-lingual research and analysis, imminent credible threat notification, plus an on-call analyst available 24tus a day,7 days a week. The subscription was for I year at a cost just under $103,000. The funds used to procure this subscription were appropriated by Congress and allocated to the Department of Homeland Security and further to the state for critical infrastructure protection and Intelligence activities; no Commonwealth general government operations funds were used at any time. The subscription adhered to all DHS Homeland Security Grant Program Guidelines as stipulated by the Department of Homeland Security and Congress. Over the course of the subscription, ITRR met all deliverables. It is neither a provision of the subscription nor did we ever ask for or receive lists of either individuals or groups; we do not maintain a database of either. It was never the focus. One of my primary responsibilities is to implement the National Infrastructure Protection Plan which is National Priority #3. Associated with that task is the full-range of activities associated with the Protect mission stated in the National Response Framework, which Director French just went over, the Prevent, Protect, Respond, Recover phase. Inherent to this mission is the task to provide a relevant, focused information to these public safety stakeholders associated with the Commonwealth's critical infrastructure and key resources. The public/private-sector partnerships forged over the last 4 ll2 years have enabled the Office of Homeland Security to serve as a conduit among the local units of government, the owners/operators of our critical infrastrucfure and key resources, county emergency management coordinators, state agencies and the US Department of Homeland Security in implementing the National Infrastructure Protection Plan.

Again, thank you for the opportunity to testify about this matter. I am happy to answer any questions you may have. Senator Baker: Gentleman thank you, I have a number of questions that I would like to focus on related to the contract and to the bulletins. But I do have several just key questions in the beginning that I'd like to put on record. Do either of you have any member of your family with a personal or financial interest in any private sector critical infrastructure organization that was referred to in these bulletins?

Mr. Powers: No ma'am.

General French: I do not.
Senator Baker:

L2

Mr. Powers can you speak to your role as a consultant with KWG which appeared on your resume, what is that organization?

Mr. Powers:
Yes maoam, following my 30 years of service as a special forces officer, I came in contact with many of the programs that our Department of Defense nrns in regards to special operations. KWG Consulting was a firm owned by Kenneth W. Getty out of Waterford, Virginia, and this particular contract used my expertise from the iast 30 years working on a classified contract with assistant secretary of defense for command control and communications. It had nothing to do with critical infrastructure of Pennsylvania.

Senator Baker: Thank you. And one question to you, to both of you, were you aware that Mr. Pearlman from ITRR was recognized in a Central Pennsylvania business journal article, which I have in front of me, dated June of 2007, thathe does much of his work focusing on potential threats from environmental extremists?

Mr. Powers:
I was not aware of that. No ma'am. General French: I was not.

Senator Baker: That was on the record in the...dated Friday, June 15th 2007. So, as I ask that question I'd like for you to describe then for me how the Institute for Terrorism Research came to the attention of the Administration. The Governor has called it a clever gig; we have quotes in the paper that Mr. Pearlman has said his company does not provide this service to other governmental bodies. How did you in turn and determine that they were the only one capable of doing this work?

Colonel Powers: I can answer that, thanks for the chance to clarify this. I'll go into details about the contract ocause I think you need to understand the background. It started before last year, the basis of the contract resides in two very important factors. Number one, the clear intent of the critical infrastructure protection references that you have in front of you in my statement and that need to inform the information sharing environment of the people involved with those things and number twoo the existing gap we had in dedicated analysts and researchers for potential incidence from all hazards, as Director French mentioned, terrorist attacks, major disasters and other emergencies impacting our critical infrastructure. Our intent throughout all of this was to develop an information sharing environment of all those people in that diagram I gave you. In June 2006 here was the situation, we had an internal analyst officer assigned to my office and the reason for that was at the DHS level to mirror the image that they did. At the Department of Homeland
13

Security the Office of Intelligence and Analysis and the Offrce of Infrastructure Protection are married together undemeath one boss because the influx of information going back and forth between what's relevant for CIKR, the critical information key resources, and Intel have to be married up. The State Police and I spoke in 2006, the Commissioner and the Deputy Commissioner, about possibly giving us focused attention on our critical infrastructure and key resources the National Infrastructure Protection plan !1d1ust been published, we needed to know if they could provide some support to us. The Pennsylvania Criminal Intel Center, which you'll hear about today, was formea wittr 23 troopers and analysts in 2006 -2003,excuse me, but they did not have the compliment to focus on our needs. The Commissioner at thi time, Jeff Miller, told me he understood the rationale, he understood the logic, and he certainly understood the need to do this kind of work but he did not have the people to do that. They were focused totally on

Senator Baker: Do you have that in writing Mr. powers?

Colonel Powers: I do not, I don't but I know that Colonel Palowski understands the same thing and when he testifies today you can ask him the same thing. They did not have nor doihey have now the requisite amount of analysts and researchers to focus on anything potentially impacting our critical infrastructure and key resources.
Senator Baker: But that doesn't get to my question to you, how did this company...

Colonel Powers: Yes ma'am

Senator Baker: Rise to the level that you determine that they were...

Colonel Powers: That's where I'm going 1n2007....

Senator Baker: The most appropriate?

activities. We were granted the money.

Colonel Powers: Yes ma'am. In2007 we submitted an investment justification thought the Homeland Security Grant Program for money for critical infrastructure protection and Intelligence

L4

Senator Baker: How much money was that?

Colonel Powers: At the time it was around $500.000.

Senator Baker: And how many other sole-source contracts or grants are performing homeland security functions currently?

Colonel Powers:
None.

Senator Baker: None? Just this is the only grant that you're aware of that the State is utilizing for
homeland security purposes?

Colonel Powers: The one for critical infrastructure protection. In the spring of 2009,based on the lack state Intelligence analysts and researchers focused on critical infrastructure, I recornmended the creation of a tailored Intelligence bulletin to inform the CIP stakeholders the required DHS funds were available and the task was validated in accordance with the DHS grant guidelines. The Department of Justice and Homeland Security...
Senator Baker: Did you bring a copy of the DHS grant guidelines with you?

of

Colonel Powers: I did not, Jeff, do you have

Senator Baker:

a copy

of those. we can certainly get you a copy of that.

I'd like to see that because the only information that I've seen pertaining to this particular contract is a letter dated l0 September of 2009 that just basically lists what this bulletin would be. There's no detailed documentation and in my experience in State Government when you issue a sole-source contract, I would at least expect to see a budget attached to it and I was quite surprised that this document that single purchase order frbm you, gigned by the purchasing agent at PEMA, does not even have a budget included in it. So if you're following Homeland Security guidelines I'm somewhat surprised that that
would not be a prerequisite or a requirement. Colonel,Powers: Yes Ma'am. I understand. I don't know the administrative details of the purchase order through SAP, through the system here, and I'm sure our administrative office can get that to us.

15

Senator Baker: But you are the one ultimately who requested this as the sole source purchaser?

Colonel Powers: Yes Ma'am.

Senator Baker: So, it would be my expectation that you would know everything about the sole-source contract that you would be requesting.

Colonel Powers: Yes Ma'am. I will get to why it was sole-sourced in just a moment. My research went through the following areas. It was not just about me hearing about this company and writing it a sole-source contract. Internally as I had mentioned we had an Iniel analyst officer assigned to us, but we lost that officer in 2008. Outside my office I went internal to the Governor's office, and to the pennsylvania National Guard. we have approximately thirty to forty Intel analyst across the National Guard, but they're not full time- Although they are trained as Intel analysts and researchers, and they certainly work for the Governor, I could not use these people because they weren't full iime. The ones that are full time are dedicated to a special progftlm at the national level with the state so I couldn't use those. I had already mentioned the Pennsylvania State Police. They do a great job with all crimes....
Senator Baker: Did you consult with the Pennsylvania State Police during this contract review?

Colonel Powers: I wasn't in any kind of contact with them knowing that they did not have the appropriate number of Intel analysts all along.
Senator Baker: That doesn't answer my question. Did you consult with them?

Colonel Powers: No Ma'am I did not.

Senator Baker: No, you did not?

Colonel Powers: I knew from usual dealings with them that they could not provide the focus.
Senator Baker: But, you did not ask them?

Colonel Powers:
15

No Ma'am.
Senator Baker: And oddly enough I recall a quote from the PEMA spokeswoman saying: all options researched and concluded outside of the FBI and the CIA no other service existed. And yet, you did not consult directly with the Pennsylvania State Police on this particular contract. Who in the Administration approved the contract other than you signing off and the individual who is the purchasing agent at PEMA, who else signed off from the Commonwealth?

General French: Ma'am under, under the contracting process, pEMA, my agency, I am the one responsible for the contract itself being approved.
Senator Baker: And can you identify who else in the Administration knew about this contract before it appeared in the newspaper? Anyone in the Governor's office? Anyone in any other State agencies aware of this?

General X'rench: I did not advise anyone else in the Governor's office of the contract. I do not typically advise them on contracts of any, you know, particular issue that we are working with within the Department per say unless it would have, you know, something to do
Senator Baker: so we made the determination. May I ask, have you ever visited the criminal Intelligence Center at the Pennsylvania State police?

General French: I have.

Senator Baker: Have you? How many times?

General French: I've been there once ma'am.

Senator Baker:
Once.

Colonel Powers: Three to four times at the max.

Senator Baker: Three four times and that's somewhat surprising to me. What I'm getting at is, Iom contradicted by your statements that you looked at U.S. Homeland Security Agencies and

t7

other state fusion centers on your assessment that available products didn't focus on the issues needed for county/municipal level stakeholders, that contradicts your other testimony in some regards that you didn't even consult with our fusion center or the people in our criminal Intelligence center, that troubles me.

Colonel Powers: When you use the word consult, Senator Baker, I'm in touch with the Pennsylvania State Police all the time. They get the bulletin; they got the raw bulletin from ITRR at the same time.
Senator Baker: Did they ever raise any concerns with you about this contract?

Colonel Powers: Yes ma'am they did. They were concerned about, in some aspects, on a couple of occasions, they were concerned that some of the information looked like it was of useless value. But I knew from the stakeholders themselves that people we wrote this document for, the people at the lowest level of government, that it was useful to them.
Senator Baker: Obviously I have many many questions and I don't want to monopolize all the Commiffee's time. Your comment about the funds to procure the subscription were appropriated by congress, allocated through DHS to the commonwealth, no Commonwealth funds were used, but aren't the monies that we collect from the Federal government our taxpayer dollars as well?

Colonel Powers: Absolutely, yes ma'am. The money that Congress gives to DHS, 15 percent of that is earmarked for critical infrastructure protection, that's the earmark that we're talking about for so youore absolutely correct, yes.
Senator Baker: We did expend Commonwealth dollars. In my judgment, I believe the Criminal Intelligence Center had the capability and I'm disappointed that they were not vitally a part of this discussion. I have many questions on the bulletin but I will defer for round two and open the questions beginning with Senator Farnese. Senator Farnese: Thank you Madam Chairman.

Colonel Powers: Senator Baker, I'm just gonna, if I could just a moment before we go. There were other agencies that I contacted and did research on to determine if there was a viable alternative to provide us the information. I didn't have a chance to cover those, but they scan the breath of our own internal companies in the state, from the Foreign Policy Research Institute in Philadelphia to Penn State College of Information Sciences and Technology
18

to Intel Link U to the Open Source Center to some of the agencies within the director of the national Intelligence. And in every single venue I went to and receiving guidance from DHS, the guidance from DHS in Offrce of Intelligence Analysis is that the state Intel fusion centers that crop up in our establish are designed to take the national strategic level intelligence and focus it more narrowly at the state and county municipal level. We do not have one and that was the State's job, that's where the gap existed so these other agencies I contacted deal with national strategic level intelligence, they don't focus at the county, municipality or state level. Senator Baker: How many individuals were disseminated the information in these bulletins?

Colonel Powers: It depends upon the bulletin itself. The item inside the bulletin, if there was nothing inside the bulletin for the chemical sector, it did not go. It went to a set number of people, of Intelligence people - law enforcement, federal and state law enforcement officials and selected members of the emergency preparedness cabinet every single time.
Senator Baker: Approximately how many were distributed?

Colonel Powers: On the given day, about 800.

Senator Baker: About 800.

Colonel Powers:
800 recipients.

Senator Baker: And I will just offer...

Colonel Powers: That's the law enforcement

(inaudible background conversation) Senator Baker: I will just offer to you that since this transpired I have heard from only one individual who received the bulletin and they didn't really believe it was essential information, you've called it vital information, they appreciate all your work to collaborate with outside groups, but I have not had one person come forward and say they believe these bulletins were vital.

19

Senator Farnese.

Senator Farnese: Thank you Madam Chair. Colonel Powers, just a couple of questions both for you and General French and I know there's numerous individuals here today that have taken time that want to pose questions and I'll be as brief as I possibly can. I do havp some, some questions that I had thotrght about beforehand but just to follow up on the Chair's questioning, there is a part of your testimony when I was reading it that sort ofjumped out at me and I think there was a question that she had posed to you, the Chair, and I don't know if you had actually expanded on it at least I'd like to hear what your response is to it and it reads that you mention in your testimony that "The Commonwealth protocols for contracting confirmed this was indeed the only company at the time that could provide the service we deemed necessary". To what protocols are you referring to and what service did ITRR ever provide, and what did they actually do?

Colonel Powers: Yes sir. The protocols I mention in the statement were that I came up with a proposal for a product, I needed a service performed and I provided this request for services to Department of General Services, and they in turn look at the list of commercial businesses that are registered to do business in the state. If they have somebody that has the service that I need, they allow me to talk to these people. I received the name of ITRR from the Department of Defense from some products that they had received and they told me that was a company that they knew. So, when I went to the Department of General Services I talked to the people in charge and I said I would like to do, I have a requirement for this type of service and they said do you know who has this I said I only know of one company ITRR but I know that you have to perform due diligence in your role as DGS contracting anyway...
Senator Farnese: Colonel, you came up with the protocols correct?

Colonel Powers:
Sir?

Senator Farnese: You were the one that came up with the protocols?

Colonel Powers: No, no it was Department of General Services protocols for contracting. I was simply following their protocols.
Senator Farnese:

Alright so in your statement when you refer to the protocols those are something that the Department came up with, not you?

20

Colonel Powers:
General Services.

Senator Farnese: General Services.

Colonel Powers: Yes sir, in other words, for me to be able to receive services from a company or even talk to them, they have list of companies that provide services and if the companies are registered to do business in the Commonwealth. If I call them and say I would like the following services performed I need a letter contract they would say well here's a list of people that you can talk to because they are registered with the Commonwealth. They didn't have anybody on the list like, with the company with this background. So they said can you suggest somebody, I said yes, I said I'd like to suggest ITRR.
Senator Farnese: Did you suggest any, when you suggested ITRR was there any other company that you suggested besides ITRR?

Colonel Powers: No 'cause I had not found anybody else. After talking to seventeen different agencies both inside and outside the state I did not come up with anybody.
Senator Farnese: Did you perform, do you recall when you performed this search, exactly what did you actually do to perform the search. What tools did you use, who did you speak with, how did you go about actually arriving at this company?

Colonel Powers: I spoke with individuals for the most part, and in some cases, I went online to see if they offered services. There were two entities, the RAN Corporation and The Center for Strategic and International Studies that are both nonprofit organizations as you probably know, but they don't do tailored products such as this one right here. The other ones within the FBI Joint Terrorism Task Forces, they do not focus on this type of level for critical infrastructure protection. At the National Counterterrorism Center in Washington I spoke with people there. The other places I did speak with individuals and asked if they offered those services and thev did not.
Senator Farnese: Colonel when you were reading the bulletins, as they were coming in did you believe that, quite simple, I'll ask it this way, did you think that you were getting what you paid for?

Colonel Powers: I did, when I read the bulletins...

27

Senator Farnese: Ya did. I....

raw data. And to those bulletins I added things that I received from Department of Defense and the other things coming from the Department of Homeland Security; and as I weighted the situational awareness, it was a subjective call. I thought it was important to get the word out to the municipalities and the counties that these incidents might be impact upon their critical infrastructure and key resources.
as

Colonel Powers: I took the bulletins

Senator Farnese: Let me ask you this then, at any time these so-called.,threats,o, and I put that in quotations, these so-called "threats" expressed in the bulletins, Colonel did they require any emergency response action?

Colonel Powers: There were not any threats per say mentioned; if it was an immediate threat it usuallv would have come down through Department of Homeland Security...
Senator Farnese: Did anything, did anything in these bulletins, put it that way, and maybe I wasn't clear with my questions....

Colonel Powers: Was it eminent?

Senator Farnese: was it eminent, did it require any

any emergency response action?

Colonel Powers: There were some instances where we had students overseas, we have many colleges and universities across the Commonwealth that have students participating in ixchange programs, and there were events listed in the bulletin that we thought was important for the security directors and the chancellors of those universities to notifu students and in some cases that's exactly what happened. But....
Senator Farnese: How many cases, do you recall, how many cases there were?

Colonel Powers: There were about three or four cases where I was called by the security director of the colleges about a particular entry in the bulletin. They said do you think we should notiff the students? We have a group going overseas in another couple of weeks or so. I said that's up to you, but here's all the information we have right now.
Senator Farnese:

22

Would you consider that, then Colonel, the extent of the "emergency response action
taken'o?

Colohel Powers: That was certainly one of them. There were other things

as

cases where the county emergency management coordinators and the local municipality police chiefs thanked us for what we gave them because they did not know that

well. There were a couple of

something was going to take place in their area. These were not necessarily threats, they were not, they were not deemed as threats, they were just situational awareness entries in the bulletin to let people aware of what,s happening.

Senator Farnese: I just, Colonel Powers I just, one other question, you know you make the point in your testimony that the $103,000 is not, the no-bid contract was paid for with Flderal grant dollars and not state money but I think we all can agree thatregardless of what pot of money it comes out of the funds were taxpayer dollars, were wasted here. And I think that's clear, would you agree with me in that respect?

Colonel Powers: It is ofcourse taxpayer dollars,

yes.

Senator Farnese: Ok, alright. So could these funds have been used for something else, I mean could we have, I mean we are reading in the papers what we did with theie frrnds, I mean could they have been used on enforcement of other areas of public safety and if so, why weren't they?

Colonel Powers: As-I mentioned, they were earmarked for critical infrastructure protection and associated activities and Intelligence activities to provide situational awareness for that information sharing environment, it was one of those items in the grant guidelines.

Senator Farnese:
Because I mean when I look at this, I mean and again I've noted this and I'll close with this, but I just have serious concems that an exorbitant amount of time was spent sifting

through reports that really, you know, have no real value instead ofjust actual public safety protection. I mean it's, the goal here is the protection of public safety an-d welfare and I just don't, when I look at these reports, I just don't see how. And I know you've told me that you believe you got what you paid for and I believe you, you're under oath and maybe you believe that, but Colonel I would respectfully disagree with you. I don't believe you got what you paid for and I think there'Ja heck of a lot of peopie around the Commonwealth of Pennsylvania right now that would agree that they don't think we got what we paid for. I know that at least one other person on this panel, my very learner colleague, who I have a heck of a lot of respect for, Senator Ferlo is gonna have some

23

questions for you but I'm sure he agrees with me on that point at least. And so, I think that we have to take a step back here and the amount of oversight General French, I know you've talked about that you were responsible for ultimately on this, there was clearly a breakdown here and I think what we need to do is, when we finish beating this dead horse, and I know we will and we'll get, we'll finish getting to the point of this, but we have to take a step back and we have to ensure, one of the most important things is that after people like Ms. Cody are made whole, and that this kind of thing doesn't happen again that we have to take a step back and make sure that the process is in place. For me again, the second most important thing after the testimony of the individual that came forward and the other individuals across the Commonwealth that have expressed very very legitimate concems about their privacy and the very legitimate actions that they've taken being called into question. The process has to be looked at and revamped and I'm sure that in the weeks and months that come as we move forward this Committee will have a say in exactly what that process is and how that process is amended. Thank you, Madam Chair.

Colonel Powers:
Senator Baker, Senator Farnese makes a good point that I'd like to address. The information in this bulletin is subjective depending upon the level of government that you are operating in. For me and for you, does it matter what's happening in Cecil Township? Well it matters to the chief of police who does not have analysts, who does not have researchers and is responsible to the elected leaders there for public safety. It is a subjective call but I made that subjective call and nobody else did on behalf of the guy at the lowest level of government. There are things in there that if I showed my wife she would have said this is useless information to me, but I didn't write it for me. I wrote it and tailored it for the guy on the ground, who has a three person police force, and a volunteer fire force and a mayor who serves as two other capacities as well. It's written for the lowest level of government. And those are the people that provided the input to me on the things that they wanted. As the bulletin changed over time, we began to focus more and more on their priority information needs and that's why, towards the end there right up front the municipality was highlighted, the county was highlighted and what was important to them. As I heard from the police chiefs, I heard from the county coordinators and the emergency management coordinators, so that's why, it is subjective, that is a true statement, it is subjective. But it is situational depended on the level of government. Yes ma'am.

General French: And Senator Baker if I may, just for Senator Famese, | 100% agree that what we have done is, we have stopped the bulletin. But what we have to do is continue to make sure that we can close the gap for those various groups. Wheiher it's the local responders, whether it is the critical infrastructure owners and to do that, we are taking the next step with the task force to makes sure that we can fill that gap.
Senator Baker: Gentlemen I am going to open it up to other members' questions. You're raising a lot questions that I continue to have. So Senator Ward followed by Senator Mensch.
24

of

Senator Ward: Colonel Powers you were just talking about the local municipality, the police giving you the information on who to monitor. Did anyone else, how did you, they wanted something monitored or they wanted something asked. Who determined which groups were monitored? Who determined that for vou?

Colonel Powers:
Senator no groups were monitored. The information sought by the local municipalities was situational awareness in my municipality. What's happening in and around my critical infrastructure? They never asked me for a group, they never asked me for individuals.

Senator Ward: But earlier, what's her name, Ms. Cody was saying they showed up at a family reunion. You know, how did they know to do that?

ok.

Colonel Powers: I can't answer that.

Senator Ward: Ok. You also said that you talked to the State Police and the State Police had let you know that they did have questions about this. Did Federal Homeland Security ever
express any concerns about this?

Colonel Powers: Not to me, no. The Department of Homeland Security received the bulletin. Their three protective security advisors and regional advisor received the bulletin every single time.
Senator Ward: so when you collected the information you, where did it go? Where would an anti-tax issue go? Where would a pro-second amendment issue go? Where did you report this information? Who did you report it to?

Alright,

Colonel Powers: The information that came to me was melded with information from the Department of Homeland Security, the FBI and put in the bulletin, and as I mentioned it went to about 800 law enforcement officers every single time.
Senator Ward: Did it ever go to any private entities?

Colonel Powers:

25

It did. Depending upon the sector it went to, depending upon the sector involved in the bulletin it went to that sector, if it was chemical, if it was Ag, if it was Transportation it went to the transportation entities. In this particular case, the reason for the hearing today obviously is on the anti-drilling Marcellus Shale issue associated with this. It went to the
security directors of the Marcellus Shale companies and DEp.

Senator Ward: So when you give this information to private entities, what would they have to do with actually stopping terrorism agriculture-I don't understand that, is one of the issues with the State Police that they couldn't share that information with private entities? Would that have been one of the reasons you didn't want to, or didn't choose to use the State Police because you said you hadn't, you've been there a few times, but you hadn't really talked to them about whether or not they could handle it, you just assumed that from your relationship with them.

Colonel Powers:
address the first part, the first question. It was not about terrorism, it was about allhazard situation awareness nobody ever called these groups terrorists or threats. The owners and operators of 85oZ of our critical infrastructure, they're the only ones that can do something about our situational awareness. About, I guess it was mid August, the FBI put out a bulletin about environmental extremists - I think was the word that they used because there had been a nexus and they had seen a trend and pattern developing across the Marcellus shale region about incidents and criminal acts of vandalism and so forth associated with the drilling sites. So, we did not put this out as a threat or an indicator it's just situational to awareness that groups were demonstrating/protesting and nobody ever said anything about their first amendment rights being violated it was just about situational awareness. It was not to highlight them in any way. They were no more highlighted, Senator, than the other groups mentioned throughout the bulletins.

If I may

Senator Ward: None of that really makes any sense to me at all - that we would go monitor private citizens and private groups and they're not a threat to us is what you're just saying. It's just for awareness, it makes absolutely no sense and it does make me think where are we

living?

Colonel Powers: If I could...if I could say something in rebuttal, as I mentioned before, we never targeted groups, we never targeted individuals - that was not the goal of the program.
Senator Ward: Did you ever monitor elected offrcials?

Colonel Powers: No, we did not.

26

Senator Ward: Okay, and I just have one question for you General French. You said that you had not talked to the Governor or the Governor's office. Has anyone in your deparlment, did your department ever work with the Governor's office on this-maybe not just you, but
anybody in general. Did they know about any of this before?

General French: Relative to the approval of the contract, which is the question I was answering before Senator Ward, I did not consult with the Governor's offrce or with the Governor himself on the contract per say. Information that was in the bulletin was distributed based upon whatever the focus areas were, in other words whatever critical infrastructure areas that did include the Governor's council for preparedness, the GpIMC.
Senator Ward: Okay, I guess I really wasn't just referring to just the bulletins. I was getting back to when it started, when you began this contract, did anyone from yout offi."s work with anyone from the Governor's offrce in determining whether or not to do this or proceed with this?

General French: No Ma'am, it was done internally based off the investment justifications and the allocations that DHS gives as far as the parameters.
Senator Ward: (whispering) Thank you. Senator Baker: Senator Mensch, before I move on to your question, I have a question about the situational awareness you mentioned with particularly gas driiing companies. To your knowledge any of the information you provided, were any of these activists or citizens potentially arrested or did they conduct themselves in any improper manner by sending that situational information out? I'm not aware of anybody targJting or doing anytftinE inappropriate at asite, do you have any information to the-contraryi

Colonel Powers: No Ma'am, I am not aware of what they did on the site itself. The information went to the Security Directors of the companies....
Senator Baker: But you are not aware that as a result of that bulletin that there was anything to be concerned about in the field? And my one last question, which I would like to get to while we're here; how do you justify your emailto Ms Cody?

Colonel Powers:

27

Ms....that was a good...I thought it was a good email, I was hoping Ms Cody was gonna respond to me. We had had, as I mentioned a week before that I received a FBI bulletin was talking about environmental extremism how the criminal acts of vandalism had ramped up over time. And I was hoping that these demonstrations were gonna be just peaceful, like they should have been, normal activists exerting their first amendment rights. I was hoping it was not gonna go beyond that because we had had these indications. In that particular bulletin, bulletin 13l, that Ms. Cody had mentioned, where they were called environmental extremists that was the FBI threat assesbment that was not our depiction, although what we printed in our bulletin passing on the information the FBI gave us. I didn't want to see it get any worse. trlrs. Cody did not realize that in my personal life, I live on an acreage that requires well water; i'm not on city water. And I was hoping that our conversation could go back and forth and she would understand my plight. I have a right to protect their interests as well and I have a right to protect, in my official capacity, the businesses are legally doing operations in the Marcellus shale. I didn't want to see....
Senator Baker: But you've indicated to this committee that nothing rose to the level of being a problem and as acitizen, you're chastising her about sharing the same kind of information that was routinely distributed in a non-secure manner if I'm correct in how that was done. Obviously if it was done through the Criminal Intelligence Center of State Police, they have protocols with security so, number one, you weren't distributing it in a secgre manner and number two, I don't think it was appropriate to chastise her for sharing that information that came her way.

Colonel Powers: I didn't see it as chastising. I just mentioned to her that we normally disftibute this to the stakeholders and operators and owners of the critical infrastructure. It was not meant for the outside. The caveat on the bulletin that goes out....
Senator Baker: But, if it's not meant for the outside then I think the secure approach was really troubling to me that you didn't have that taken care of. So, that's my comment on that. I'll pass ii on to Senator Mensch. Senator Mensch: Thank you madam chairwoman, gentleman, is the Institute of Terrorism Research and Response an intelligence gathering organization?

Colonel Powers: Yes Sir. As I understand it. it is.

Senator Mensch: They have active people seeking information. How many people do they have?

28

Colonel Powers: I don't know exactly. You can ask Mr. Pearlman, I think he's here today. I don't know.
Senator Mensch: But you've let the contract

what was your expectation?

Colonel Powers: I understood from talking with Mr. Pearlman that he had employees in about 72 different countries and that the analysts were in Israel. A lot of researchers were over there. Most
of their stuff was done open source. That was... Senator Mensch: Define Open Source.

Colonel Powers: I didn't know the number of employees.

Senator Mensch: Define Open Source.

Colonel Powers: Excuse Me.

Senator Mensch: Define Open Source.

Colonel Powers: Open source, Sir is the same thing you can find in the public domain. Things available to the public, on the internet research and so forth.
Senator Mensch: So we have, in my mind, something that equates to a news clipping service. Is that right?

Colonel Powers: Not necessarily, sir. It is one thing to take things out of the press, out of the public domain, but you need to analyze it against other known factors as well and that's where the analysis comes in. We did not have the analytical capability, nor did we have the people even to do the basic research.

Senator Mensch: Alright, so they will take some information that's in the media that I could read and I can make certain assumptions as well. Like, one of the things I read is about a Turkish pipeline being threaiened. You know, Islam activity n.* u Turkish pipeline. Well, I think most of us would extend our thought to say, gee if that activity is occurring near a pipeline, wouldn't that pipeline be threatened? Again, I'm questioning the veracity of that
29

respond.

activity takes place, they would be planning for any kind of response within their 99tm*itY through their emergency response plans that they might be able to take that kind of information, look at it from if this wereto happen here, how does my plan for response address that or does it address it. Can I leam something from thati Do I need to modi$ my response plan, or are we in fact prepared for that so that the intent with the non law enforcement information put out is to help those first responders or critical infrastructure folks who don't necessarily, you knbw, have had that kind of experience to say look at your plans and from that do your plans in fact address if you neede-d to

So the intent that we had for the all hazards and sharing of the information is that when you have a first responder who might benefit by knowing that in the past, when some

Senator Mensch: So is there a separate distribution channel then for different types of information? I don't see that. When I look at the actionable intelligence briefing from ITRR it's a composite ofall the things.you have mentioned. I don't see that we are disseminating it any differently to law enforcement that we are to the emergency responders.

General French:
The information in this bulletin is distributed both to law enforcement and that broader group' but it is not law enforcement sensitive information in the context of what PASIC would be doing on a day to day basis.

Senator Mensch: I'm not understanding that point then....go ahead.

Colonel Powers: From the very beginning when we got the information from the Department of Homeland security and adjacent state Intelligence centers and from the DEA and from ICE and CBp and so forth it would have been nice if we could just put out one blurb to one entity at one time and not made it so mundane for everybody else io read, but it wasn't the same paradigm that DHS used. In their bulletins they put out something for everybody and yes, there are lots of pieces of the DHS bulletins that come out to me that are of little use for Pennsylvania. There's lots of stuff for Washington, California, whatever, but rather than.put out many many bulletins they put out onJthat has something for everybody so you just simply go to your particular area. And that was a consciencJdecision on our part rather than put out 18 separate bulletins for each one ofthe sectors and put out other things for the law enforcement community, we've simply used the same paradigm. I thought it was a good idea. One bulletin, sort through that, find out what approitiut" fo, you, use it in context as Director French said this is happening in Ohio, this ii happening in West Virginia to this particular type of entity tftis co-pany. I'm a security director. I took their ideas, their priority of information requirementi. Can I use this for my company? Is this happening in Ohio? Could it happen right here? Well, perhaps it could, I never thought about this in my security plans, and that's how it *as tailotid.
Senator Mensch:

31

timeline?

I would take exception to that only from the point that there is some sensitive, or to me some sensitive information that's getting down to a very low level. So, just one quick last question -2006 you found out you needed this,2007 you found the funding. Is that correct? And we implemented in 2010 - if this was urgent, can you explainthe gap in the

Colonel Powers: I can sir. We were first getting the infrastructure protection plan building. The NIP came out in 2006; we had the charter to start putting things in place. We had the money beginning the grant year of 2007. Remember, the grant year of 2007 does not come out until the following year, so it doesn't come out october the I'tof 2007.
Senator Mensch: I thought it was 2 years.

Colonel Powers: Oh, sometimes it is that far behind, you're right. It just took us that long to put things in place. It's a very small office; we were busy collecting the information on the critical infrastructure sites themselves. Using the DHS criteria and thresholds that they gave us, it was a massive undertaking working through the county emergency management coordinators and the municipality level to determine if what we had was critical. Remember, we are given a set of criteria and the threshold to even determine what's critical, and that took, that's an ongoing process that will be dynamic for a long time that continues right now. And so we were just not in the predicament, we werenot afforded the opportunity to do anything before that, we just were trying to do too much with what we have.

Senator Mensch: And you spent all $500,000?

Colonel Powers: No, sir. We did not.

Senator Baker: Senator Mensch, thank you. Just one question before Senator Ferlo comes on. Was any of the information that you obtained from ITRR about groups being monitored listed into any type of criminal justice information or data system?

Colonel Powers: Not that I'm aware of. I have no access to the clean system here in Pennsylvania. I cannot enter anything into it.
Senator Baker: You can't enter it ? Can you assure us that none of the information collected was in an automated or electronic data system?

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Colonel Powers: We maintain no data system; no database or anything like that. No Ma'am.
Senator Baker: Does ITRR?

Colonel Powers: I do not know.

Senator Baker: We would ask that you provide us with additional information on that as well as a full copy of the distribution list of all those individuals who have received this.
Senator...

Colonel Powers: I think you should have, I sent you already have a copy of the distribution list. I think that's one of the things we passed over earlier.
Senator Baker: I'll have to look and see. I don't believe I've seen that. Senator Ferlo. who will be followed by Senator Robbins. Senator Ferlo: Thank you, Senator. You know Ben Franklin used to say if you have to give up your liberty for a little security, you're not going to have either. And that's how I feel after hearing both of your statements. I find it just absolutely outrageous, Director French, that you would show up at this hearing after knowing all the events that lead up to this debacle as well as the context of which this hearing is being held, and basically not even address the fundamental issues that are of concern for most Pennsylvanians in terms of the fact that this Government has run amuck and this contract represents a reprehensible engaged activity by your department and Director Powers, Colonel Powers and relative to unnecessary infringement on people's rights and civil liberties. I mean you make a very wishy washy statement that really it's almost like gourmet bologna- both of which you have spoke about. You know, you talk about the purpose that this contract was to disseminate information to first responders, and I'm trying to understand, and I'll use an example, I have been chairing an event, it's a non-partisan social networking group called Green Drinks. It's basically a social gathering every month, very public, everybody attends, hundreds ofpeople have attended - thousands have affended in the last 5 years, and it's focused basically on the opportunity for the green community. I know that might be very scary to you, but the independent green community that's involved at all levels of sustainability, the academic community, the research involvement community, the small business entrepreneurs, progressives of various tribes who have various issues involving, you know, our constitutional provisions in Pennsylvania as section?T, you know, we have the right to clean air and water - I would suggest you both go read that constitution, as well as the US Constitution and the Bill of Rights. But the fact of the matter is, that
33

event was listed in this so called ITRR memo. Why, I don't know? I mean as far as myself, I've been elected as President city council fourteen years, won citywide election in Pittsburgh in '87. I've served 8 years now in the Pennsylvania state Senate. I have never hidden my left wing radical leans on any issue, including the outrage I feel right now about this activity and or the actual tenorist activities of the Marcellus shale industry, but setting that issue aside, what I find reprehensible is that you come to this hearing and you don't even address the fundamentals of why people are so upset about what this activity is all about. And you basically just make a pass the buck, the buck stops with me kind of a lukewarm statement without any expression on part of the Department explaining what the position of the department is on the FUC and the appropriateness of this contract. I just find your statements... I'm incredulous over your statement. I don't get it. I mean you sound just like a bureaucrat without understanding the severity of what has gone on here for the last few years. Am I missing something, or am I being too harsh?

General French: Senator, if I may, the point that I tried to make is one that when we deal with training the first responders or trying to provide information. We on a regular basis are providing, not through an ITRR contract, I mean in general part of what, and my statement if it appeared to be wishy washy that was not the intent rather, but that fact that in general it's a very broad scope of issues that our first responders, our critical infrastructure owners and the public themselves expect emergency responders to be able to deal with. And from that...
Senator Ferlo: How would my event of a social networking Green Drinks in any way suggest, and by the way it was listed by the ITRR consultants as you know the homeland security color code system that the Mr. Ridge started - that's a another bunch of bologna, but the current system that you guys have accepted with this bogus group is for a level threat level. So this Green Drinks social networking above a bar, and by the way the guest speaker who is the county executive, Mr. Onorato, and I asked him to address in a nonpartisan fashion what his track record was over the last few years of his Administration on sustainability issues. Now that rose to the level of low to moderate and I don't have the grid in front of me, but if you read low to moderate it's pretty intimidating, it's like eminent threat of god knows what, I mean I'm trying to understand. . .I mean I almost feel like I'm in the twilight zone this morning in terms of some of your statements and I'm engaged in some surreal dream that I keep trying to wake up to this morning and I'm not really hearing all of this stuff. But how does that rise to a low to moderate - no one - that didn't jog anything in anybody's head whether it's Colonel Powers or yourself or others about the appropriateness of this so called contract? I'm missin' something here. This contract did not just materialize from anywhere, I can tell you that much. I've been around too long and too knowledgeable about the way the lobbyists work, about the way contracts and benefits accrue to certain individuals. So something stinks here and I'm not sure I can ever pull that string out long enough to unravel this yarn, but something's not right here and it's alright for you two to show up and kinda keep your head low and a bunker mentality, but something stinks to high heaven and I don't understand the source of this contracts and even its legitimacy. So, getting back to my question, how does this
34

Green Drinks social network event rise to the occasion of being low to moderate security risk /terrorism risk, whatever, and why didn't anybody think about that? Why wouldnot that raise a flag of some kind?

Colonel Powers: Sir, it was an event simply happening in that municipality probably should not have been
included.

Senator X'erlo: But there are hundreds of events like that. When you read the PDF files, first of all the Southern Property Law Center, Morris Dees, has documented over 250 right wing racists, anti-semitic skin heads, punks, neo-nazi, very scary people that have actually involved themselves in xenophobia and criminal activities and violation of peoples civil rights, you name it, I don't see any reference to those types of groups - seems very biased towards pro industries perception or perspective that anybody who's challenging the Marcellus shale industry or even on a more conservative front of taxing, challenging Government from their taxing policy on whether it be more conservative groups somehow are the groups to be threatened.

I mean really, this contract is a joke, it borders on criminality, * far as I'm concerned. I think it's definitely a situation where you two unparticular, if not others including this so called company, have engaged in violation of civil rights of constitutional rights and it should be condemned by the Governor - he has not condemned it, he's laughed it off as like, Oh, you know, tisk tisk we're not, you know, - and even your statement Director

French, you know, you say are no longer being distributed - these bulletins are no longer being distributed. On one hand your spending all this time here defending the ethicacy the appropriateness of having engaged in this contract and now you're just merely saying, okay, because of public exposure now don't worry it's not being disfributed. My question is it still being collected? Are you still somehow in this nefarious government a govemment network of security, are you still actually collecting this information?

General French: Senator we're not...Senator Ferlo: And not just distributing it?

General French: Senator, first of all, the Governor was very clear about being appalled about this contract and gave me very strict guidance about...
Senator Ferlo:

35

I don't think he is, if he was appalled you wouldn't be sitting there and Colonel Powers wouldn't be sitting there. You'd be terminated or asked for a resignation and there'd be a formal investigation by the Administration. And that's not what I see happening. General French: Sitting in the seat, siro that's the way that I felt at that point, but relative to the collection here of the bulletins - are they continuing? The bulletins are not continuing. We continue, we do have a gap. We've suspended with 137 is the last bulletin and that's the one that you have in the packet. That the bulletins aren't being collected, aren't bejng prepared, aren't being assessed by Director Powers.
Senator Ferlo: So you're saying that you terminated the contract with this bogus company? Is that what you're saying, this ITRR group?

General French: The contract itself expires October, and no further, and that contract is broader than just the bulletin information itself- the part about having someone on call 2417 should we need to contact them or should something arise to some nature...
Senator Ferlo: Are you telling me now that in addition to these missives that are sent out by this group, we basically just search the net for all this documented information that's public information? Are you saying that you sill engage with providing information for other types of activities?

General French:
They have not, no sir. But what I am saying is that, in the contract, if we were to look at the subscription contract, there are muttiple deliverables from ITRR and one of them is to be available should we need to call them, which we have not needed to.

Senator Ferlo: Let me ask; now I'm confused again. Other than the information that the Administration has released to the Senate and to the public these PDF files that you sent, right, which are of these reports, one of which I mentioned - the Green Drinks social forum. Are there other activities or documented information that's going to the Administration in the next couple months?

General French:
There are not.

Senator Ferlo: Or everything has ended?

General French:
36

It's done.
Senator Ferlo: So what else what provided to the Administration besides the information that you
released?

General f,'rench: The bulletins af,e the information that were provided, sir.
Senator Ferlo: No other information?

General French: No, what I said, what I was trying to say is that the contract itself provided for an analyst as Mr. Powers said a little bit ago, provided for an analyst on call 2417 shouldthere be a need for us to contact ITRR or if something eminent were to come up.
Senator Ferlo: I may be naiVe, but I presume that if there are serious issues involving the national security or this life and limb and safety of our communities, our infrastructure, our industries, our residents, our citizenry that whether it be the State Police or the Federal agencies or the local police departments, they have the jurisdiction to do appropriate investigation and that's who we should rely on to be concerned.....I'm all for making sure that we address any potential security. I am not for this broad net that's been cait by the department, by Colonel Powers and the contracting of this bogus company it's nothing more than a glorified subscription. They got a good scam going you've got to admit. $100 and some thousand dollars... Senator Baker: Senator Ferlo. Senator Ferlo:
Just for surfing the net....

Senator Baker: Senator, are you Senator Ferlo: And that's pretty good, but... Senator Baker: Additional questions? Senator Ferlo: No, but I'm concerned with the Rendell Administration and you are stating...

37

Senator Baker: I absolutely agree with you when you read the contract it says to include research analysis, writing case officer,24l7 duty officer and overhead charges. Senator Ferlo: Let me just close Madam, Chair. I would ask that the Rendell Adminishation, the Governor in particular, join with me and other citizens in filing a formal complaint with the Justice Department, US Civil Rights Division as well as asking our Pennsylvania Inspector General, not the Attorney General, the Inspector General to review the ethnicity and appropriateness of this contract. Senator Baker: Thank you Senator Senator Ferlo: As far as I'm concerned, you should both be terminated or resign hearing your testimony, Director French. Thank you. Senator Baker: Thank you Senator Ferlo. Senator Folmer.... Senator Folmer: Thank you very much Madam Chairman for allowing ho, I am not on this committee, but it was brought to my attention that an organization that I helped cofound back in 2005, it's a really big tenorist group. We are called the Constitutional OrganizAtionof Liberty. We teach classes on the constitution. Basics, civics, we reintroduce people to their civil liberties, their rights - their inhering and indefeasible rights, and we found out that we were on the list. And we found out that we were identified as being, first of all, I think ITRR...I really.. ..I really have to get going and I wish....these, my questions are really for Mr. Pearlman, but I have to leave.

especially after

I am upset and I will tell you why. First of all the information they gave you was bogus big time. Because we were identified as a group that sponsored a anti-tax rally, although
we aren't opposed to an anti tax rally that meets peacefully and gets their permits and they have a right to express their opinions about their views on taxes, but we were.....in that report you were told that we sponsored that anti-tax rally. We had nothing to do with it. And then, besides that, they go on into going into our website and impedes our integrity as saying: yea sure you're about freedom, sure you're about liberty, this could be a front - this type of stuff. And I'd just like to know, what was the criteria to put an organization that simply just teacher courses on the constitution to be put on thislist?

Colonel Powers: Sir, it was not a list, it was a public gathering. It's one of the things that we use for situation awareness to tell the locals what is happening.
38

Senator X'olmer: You were given the wrong information. We weren't even there, as a matter of fact, as far as I know, none of our members were even at the rally. So, my question is how did ITRR say that who sponsored this anti-tax rally - because we had nothing to do with it? Was it because of me? Was it an attack on me, personally, because I am a founder of it? I'm the one that set up the website.

Colonel Powers: No sir. It was just a gathering that we needed to make a situation of awareness.
Senator Folmer: Oh, well [... Senator Ferlo: You better be careful about the sermon on the mountain every Sunday, because that's pretty radical too. Senator Folmer: Because if we're considered

- if our group is considered....

Senator Baker: Senator, do you have a specific question, or have you made your.. .. Senator Folmer: No, that's it. Senator Baker: Senator Robbins, followed by Senator Dinniman... Senator Robbins: Thank you, madam chairman and I'm just going to ask a couple of specific questions and I hope that we'll come back to this at alater time. Madam Chairman, fir$t, I never received the copy of what this misinformation or information was and I would appreciate getting that. I think it's important for us to have in front of us that which is whaiever the list was, so that we know what's going on. But the one question - the question I want to ask is you talked a couple times about the FBI. Now, did they respond to you because of this list, or were they responding on a couple of issues from their information and having a discussion separate from this memo or list or whatever it's called?

Colonel Powers: Let me see if I understand your question, sir. Discussions I had with the FBI relevant to information they gave me to put in the bulletin. Is that what your question is?
Senator Robbins:

39

Yes, other words separate, cause were here because of this list that was made. And as I understand your discussion, you gathered information from a number of sources including the FBI and included it and that information had nothing to do in effect with the making of the list or what information was on that.

Colonel Powers: I understand, sir. As I mentioned earlier, and didn't have

a chance to go into detail, the

information we received from the contractor, ITRR, was raw data. And I would take that information and I would mill that against the information I received from the Department of Homeland security, FBI bulletins, other federal agencies, other state intelligent centers, the Department of Defense and I would whittle it down to what was germane to Pennsylvania only. And in the case of Bulletin 131, there was a piece in there that the FBI has mentioned - they had sent out a full threat assessment on these environmental activists. I think the term they used was "environmental extremists" because they had highlighted some criminal acts of vandalism in the Marcellus shale region. That was an item that I extracted out of that bulletin because it was relevant because of the number of vandalism cases that we had been experiencing since May. Senator Robbins: And that was totally separate; any action the FBI took or did not take had nothing to do with the contract? It had to do with information they were pursuing and you included that?

Colonel Powers: Yes, sir. The list that people keep referring to, the only list that we have is of critical infrastructure. There are no lists of anything else soo when we do searches for anything around our refineries and so forth what turns up around that area is what goes in the bulletin - and that's the whole point.
Senator Robbins: Yea, that's the. . ...in other words, the bulletin sent out was not just the information from this contract.

Colonel Powers: Right

Senator Robbins: It was the other data that you, including the FBI which has been mentioned, so that's a separate source. Now, do you know, and I think this committee would like to have any knowledge of people that were investigated, followed up on or any other activity that was caused by the FBI...other sources than that list? Because I think that's very important, Madam Chairman, we make that differentiation as to what the real impact is and also the other factors that are out there so that we're not confusing, I think, several issues. Senator Baker: Thank you, Senator Robbins. Senator Dinniman....

Senator Dinniman: My concem is that, and I ask this of General French is, you know there are legitimate terrorist threats and certainly the protection of the infrastructure is most important, but when it's been done in this way, what happens is we actually lessen, it seems to me, the state's ability to focus on with what's important as well as questions of course the civil liberties. So as a person that's ultimately responsible for the protection of Pennsylvania citizens, can you see or do you perceive the concern of the committee? The committee, I don't think, I know this committee and we all are concemed on the legitimate threats. But what happened here was it took away from what we really should be focusing on and instead ended up focusing on the legitimate activities of citizens verses the legitimate threats, and that's troublesome. And what makes this more complicated is that all of us, you know, were in the middle of a huge debate on the Marcellus Shale so when anything appears to be siding with one side and giving information to one side it also becomes a concern because as a legislature we have to look at this fairly. So I guess what I'm asking, do you perceive our concern first, second on Marcellus shale, but first that we really think this diminishes and takes away from our focus and if so, how are you - what are you doing to do now in your final months, and whoever, if you stay or whoever is going to be in charge of security that we focus on what's most importarfi?

General French: Thank you, Senator Dinniman. I am clearly concerned with the broad scope of the information that we were providing - concerned from the standpoint of l.Even as you've highlighted, the perception of watering down any kind of useful information. 2.Thepoint is that we did have those and we still will have future needs and gaps and that's why I our next step, and I am part of the task force that's put together, is to make sure that l.we meet those needs in a more deliberate wav.
Senator Dinniman: Well, I think that's very important because we're all concerned. And maybe the more deliberate way is through our traditional agencies meaning the State Police and if it required, I would rather spend $100,000 giving more money to the State Police who we trust, than go through this process.

General French: I understand, sir.

Senator Baker: Thank you, Senator Dinniman. I know we have a number of questions. we've had testimony submitted from three outside sources and in the interest of time, I believe we will go through them and see what has not been asked and we will provide them to you and ask for written responses in a timely manner. I have a question about when you say this was a sole solrce contract that you had difficulty determining any other organizations in the country or in Pennsylvania that could serve. Let me ask you are you familiar with Total Intelligence Solutions? Have you ever heard of them? Have you ever

4L

heard of the Intel center in Alexandria, Virginia? Or the Homeland Security Studies and

Analysis Institute? I did a quick...

Colonel Powers: I've heard of the last one, yes m 'am.

Senator Baker: And there are three group that could have potentially provided that level of serviceo so when you said sole source I was able to find a number of companies that could have been considered and in terms of our understanding of a sole source contract, I think all of us would prefer to see things competitively bid with budgets, with documentation and with information out there, and in this time when we're challenged with a budget its very troubling that that was a sole source contract.

Colonel Powers: Yes, m 'am. If I could address that...when I mentioned earlier about going through the process through 16 or 17 companies I contacted and agencies to see if they could do the work, when I sent, when I first called DGS and said I'd like to do a contract on this but I don't know of anybody else. And they said, well, you can write it up as sole source if you want to but we still have to pull due diligence on this, and I said I understand totally. Since I didn't have anybody else, I wrote sole source. When it went over there, DGS took about 2-3 weeks to investigate and they said you know of course we must do all of this searching for companies registered with the state and so forth. Periodically, I received a phone call back from the person that was doing this work and that person said, so far they are the only people that can provide this service and this happened 2 or 3 times. The last time, notification wise, this is the only company that can do that....
Senator Baker: I believe they...

Colonel Powers: and that's why it was so

Senator Baker: I believe they based their decision on the information you provided. Is that correct?

Colonel Powers: I don't know. I provided them all that I had.

Senator Baker: That appears to be your information helped them determine that, so I'm not. ...

Colonel Powers: I'm not sure on their side

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Senator Baker: ...clear on that. Gentlemen I would ask you if you would continue to stay here and we will bring the PA State Police up. I do have one question, have either of you had any discussions or negotiations with any private sector companies as you may be ready to leave Commonwealth employment?

General French: I have not. Colonel Powers: I have not.

Senator Baker: Thank you.
We would like to invite to testifu the Commissioner of the PA State Police, Colonel Frank Palowski and Major George Bivins, Director of the Bureau of Criminal Investigation. Gentleman, if you could just stand and I would like to swear you in. Will you raise your right hand? Do you solemnly state to tell the truth, the whole truth, and nothing but the truth?

Colonel Palowski & Major Bivins: I do.

Senator Baker: Thank you. Would you like to provide a very brief opening comment before we get into specific questions?

Colonel Palowski: Yes, I would. Good morning, Madam Chairman.

Senator Baker:

If you could

please turn your microphone on, we would appreciate it.

Colonel Palowski: I think we're good. Good moming, Madam Chairman and members of the committee. I am Colonel Frank Palowski, Commissioner of the State Police. Seated with me is Major George Bivins, our Director of the Bureau of Criminal Investigation. That Bureau oversees the major Intelligence operations for the State Police. Thank you for the opportunity to testi& this morning. At the outset, I want to be clear that the Pennsylvania State Police played no role in contracting with the Institute for Terrorism Research and Response for any type of intelligence information. After the situation was called to the Govemor's attention, the State Police was asked to look into expanding our capabilities
43

to including dissemination of critical information to the general public regarding legitimate security threats without infringing on the rights of citizens. As you probably know, for the last 7 years, the Pennsylvania State Police has operated around the clock Criminal Intelligence Center known as PASIC. PASIC is staffed by a highly trained Intelligence analyst - provide intelligence briefs, alerts, threat assessments, crime trend analysis and other information to local, state and federal law enforcement officers. We work in close partnership with a wide range of agencies including the Federal Bureau of Investigationo the Bureau of Alcohol Tobacco Firearms and Explosives, the Bureau of Immigration and Customs Enforcement, Pennsylvania Department of corrections and the Pennsylvania Office of Attorney General. One component of PASIC is the Departments Watch Center, which provides situational awareness information to the State Police and other agencies across the Commonwealth. We are able to provide timely credible intelligence regarding threats to Pennsylvania's critical infrastructure and strategic assets. Watch officers located at State Police instillations throughout Pennsylvania are responsible for reporting significant events such as road closures, bomb threats, suspicious packages, serious crimes, major weather related issues and other events posing a risk to public safety. In addition, we operate a tip line that allows concerned citizens to report suspicious activity via email or a toll free telephone number. Since PASIC's inception, we have demonstrated a strong commitment to safeguarding the rights of Pennsylvania citizens. I can assure you that PASIC fully complies with all federal and state laws governing the collection, storage and dissemination of criminal Intelligence and investigative information. PASIC is subject to regular audits by the Pennsylvania Office of Attorney General as well as the Federal Department of Justice. Moreover the center operates under a comprehensive privacy policy which is available to the public on our website. In conclusion the State Police is ready, willing and able to work with the Pennsylvania Emergency Management Agency and the Pennsylvania Office of Homeland Security to address the intelligence needs of the private sector. I am confident that we will be able to meet their expectations while providing information and intelligence in accordance with both state and federal law. I am now, we are now available to answer any questions at this time, but I would just like to start, if I may, by responding to some earlier concerns that were voiced both by the witnesses and members of the panel. First, I would like to assure, I hesitate to speak on behalf of the FBI, but I feel compelled to today and I'm confident in what I say, the FBI would be saying the same thing if they were here today. To Miss Cody, I want to assure her, the FBI is not compiling any list of activists or dissenters regarding Marcellus Shale. And they've had no involvement in the ITRR or Office of Homeland Security information sharing issue that weore discussing today. I also want to assure Miss Cody that the Pennsylvania State Police is not, and never has, placed her name in any intelligence database and there is no monitoring of emails by the Pennsylvania state Police or the FBI in activist activity. Senator Baker: Colonel, thank you for your testimony. So the State Police was not involved in any way in the acquisition of the ITRR contract?
44

Colonel Palowski: That's correct.

Senator Baker: Did the State Police have any concerns regarding the ITRR information or the matter in which Homeland Security was using it?

Colonel Palowski:
Yes we did.

Senator Baker: Did you convey these concems to the Office of Homeland Security and PEMA or anvone in the Governor's office?

Colonel Palowski:
Yes we did.

Senator Baker: Would you specifically address what those concerns were, who they were forwarded to and when those concerns were relaved?

Colonel Palowski: Major Bivens did a lot of work addressing concerns as they arose. I'd like to allow him to lay out the concerns, and then I can follow-up with any interaction I had with other individuals regarding this matter.

Major Bivens:
With your permission, I have some notes and
Senator Baker: Major, is your microphone on?
Thank you.
a number

of emails.

Major Bivens:
I have a number of emails and some notes here that, if you will allow me, I would like to go through in chronological order that would really, I believe, lay out what our concems were and how they were addressed with Homeland Security and PEMA. .The first string of emails is dated December 16 through 17 of 2009. It originated with an alert generated by ITRR relative to northeast anarchist network meeting in Philadelphia. There were a number of people in the email, but it also included Director French, he was cc'd on the original distribution and he forwarded it to Colonel Palowski to discuss the information. I had already delt with several previous issues where information was taken out of context and was without being vetted by appropriate law enforcement analysts. So I provided Colonel Palowski with an assessment of the information, as well as an
45

Nsessment of some of the information I had previously seen from ITRR, which in some cases, carried a clear opinion or slant on the issue. The initial part of the email starts out

with some lntelligence information that allowed.....

Senator Baker: Colonel can you shut your microphone off while he is speaking? It gives a little feedback, thank you.

Major Bivens: I redacted a small amount of information that delt specifically with some Intelligence background that I was providing for the Colonel, but I ....I apologize, the blackberry is..... sorry about that. The email begins with: This alert highlights one of the problems with contracting with a private, issue oriented organization to prepare threat reporting
their information may be accurate but out of context or unnecessarily alarming when not viewed in context with other law enforcement intelligence information or without historical knowledge of the group or individual. ITRR is associated with several of the Jewish advocacy groups in Philadelphia and Jerusalem, and at times puts too much emphasis on a particular topic. I would liken it to geffing information from the Southern Property Law Center. Some of their information is accurate, but if you just read their monthly intelligence report, you would believe we were being overrun by massive numbers of armed militia members here in PA, and it should be the first and that that should be the first priority of law enforcement. While we actively work the militias, they certainly take the back seat to the violence of street gangs - to name but one group which poses a threat to citizens. That context doesn't exist in publications such as those distributed by SPLC or by ITRR.
The next email string that it was still all a part of this same strand continues with contact between Colonel Palowski and Director French about what we believed to be, at the time, was just still a proposed contract with ITRR. And the Colonel responded back to me after he had had a conversation with Director French, and indicated, I spoke with Rob, he heard their presentation yesterday at a military sponsored seminar and Jim Powers wants to enter into a contract with them for their report. JP told Rob PASIC loves the report. I suggested our people are very gracious and courteous and that we have sources that far exceed this product. Now, unknown to us at that time there was additional information that Director Powers had disseminated to the Public Utilities Commission relative to the anarchist. A second email string then documents how the dissemination of information by Director Powers caused an issue with the PUC resulting in DHS, TSA, PSP, and the FBI having to address the issue and refute the information put out by ITRR and Director Powers. This led to a follow-up email from the DHS Transportation Security Operation Center indicating it found no credible threat existed. I prepared a summary of the entire series of events for the Commissioner, and basically laid out for him: that Colonel just as a follow up to our earlier email concerning the northeast anarchist, there was more to the story which played out throughout the day today. The information Rob provided to you was only a portion of what Jim Powers had, and had already acted on. I'll spare you reading the below copied email string and another email string I didn't forward and summarize what occurred. State Homeland Security took information supplied by ITRR,

which apparently referenced anarchist having plans to attack Marcellus shale drilling operations in NY - there is no information to substantiate this threat. Jim Powers contacted the state PUC and somewhere in whisper down the line, which occurred, they believed the information originated with the FBI and involved bombings. That led to a notification by the PUC to the Federal Transportation Security Operations Center who notified their chain of command of a threat to gas pipelines in Pennsylvania. DHS then began preparing a listing of all gas lines in PA, and TES advised their chain of command not to be surprised about a notification of a terrorist attack on one of the lines. As this played out we were contacted by Tom Correy, he is with TSA, questioning whether the information was accurate. While we were chasing that fire around, a second string of emails was generated out of DHS to several other DHS entities, as well as PASIC, asking for additional information we had on the threat. It was finally put to rest and DHS has notified everyone we believed received the information - that there is no credible threat information at this time. There has been no reporting at any level of specific plans to act against the pipelines or drilling locations. It is certainly something worth.monitoring as it becomes more prevalent in PA, but hopefully we won't have an ongoing issue with this type of inesponsible reporting.
Then we move forward to January of 2010, and I was contacted by FBI Philadelphia and asked to attend a meeting relative threat reporting in Pennsylvania. At that meeting the FBI questioned why PSP via the Pennsylvania Criminal Intelligence Center was distributing documents which appeared to have inaccurate information and which hadn't been shared with the FBI or vetted for accuracy, as we normally would have done. They provided a couple of examples and showed me a copy of a document titled PENNSYLVANIA ACTIONABLE INTELLIGENCE BULLETIN. The FBI ASAC described, for me, how this document had been widely circulated nation-wide and had cauged an investigation to be initiated relative a possible threat in the King of Prussia Mall. Upon further review I discovered the source of the document and called Director Powers shortly thereafter discuss my concerns and voice objection to production of the bulletin. He was unwilling to stop the distribution of the document. Absent office of homeland security stopping the production of the bulletin, I at least wanted it to be clearly marked as being unvetted by law enforcement and not associated with PASIC. There was an email string then dated January 14,2010 through January 15, which documents that discussion. It read: Jim we fielded several calls, recently, from other Intel Centers as well as from the FBI - relative to information contained in these bulletins. There is apparently confusion among some of the recipients regarding the origin of the document. While it clearly identifies ITRR on the first page, readers were apparently drawn to the titlE Of dOcument PENNSYLVANIA ACTIONABLE IINTELLIGENCE BULLETIN and mistakenly believed it is from PASIC, or at a minimum, has been vetted by law enforcement. This particular document made its way to the west coast and was sent back to the US Attorney's office in Philadelphia and ultimately to the FBI for follow-up to a possible threat to the King of Prussia Mall. We were contacted and questioned why we thought there was a threat at the Mall and what prompted PASIC to send out a notice nationwide. Needless to say, we were unaware of the information that had to explain that PASIC did not produce or distribute the information. I'm told this isn't the first time there was confusion resulting in a preliminary investigation, and because it had happened a
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couple of times, the authorities were compelled to call us. Regardless, of the cause of the confusion, would it be possible to include a notice directly below the title of the document to include a statement such as: "this document is prepared by a non-law enforcement organization using open source information at the requesf of the Pennsylvania Office of Homeland security. It has not been vetted or investigated by law enforcement and should be considered in context with other known informJtion."

I then went on, there's another email string dated January 14 through the22"d in which Director Powers responded to a request for information received through the Governor's office relative of an alleged Muslims of America training camp in Pennsylvania. He followed up that response with an email to numerous individuals around the state touting the great information he received from ITRR over local over and above local, state and federal law enforcement agencies. And the email that he sent out for wide distribution was: Colleagues recently the Governor's office received correspondence from acitizen indicating a concern over potential training c.rmp in or around Sherman, PA in Wayne County. Before responding, I'm sorry, before providing the response, we queried all pertinent law enforcement agencies. (Eg: pSp, phily pD, pittsburgh, FBI, Attoroey General etc.) potentially having such information. We received no initial indications of such a facility. My email, addressed to Director Powers and cc'd to both Direct French and Colonel Palowski detailed a number of concerns that I had with the documents supplied by ITRR as well as the dissemination practices of the Offrce of Homeland Security. I stressed concerns about using uncorroborated information and the unnecessary concern of diversion of resources the documents were reading. The email I provided, again it went to Director Powers with a cc to Direct French and the Commissioner was: Jim, the below email was forwarded to me after it was extensively circulated. While I have no doubt that you intent was not to disparage PSP or the fgi, it causes me some concern in that it would appear to a reader that PSP and the FBI were either not aware of the Muslims of America at a training camp in PA or failed to cooperate in your search for information while ITRR had some tremendous insight into the group and their activities in Pennsylvania. Both your email and the information from ITRR are misleading, and in the case of ITRR, simply dead wrong. I would remind you that on at least two occasions, early in your tenure as Homeland Sicurity Director, I personally briefed you along with several others at your invitation on threats within PA. Included in those briefings was information on the MOA including a map and photos of some vacant property they own in the northeast. There is a reason that you did not receive any indication of a training camp in or around Sherman, PA at the time of your query at PSP - it's because it does not exist. There was not then, nor is there today, and type of MOA training facility being constructed in Wayne County. ITRR is wrong in their assertion that there is. With regard to the response you were provided when you inquired about MOA activity in Pennsylvania, you called me a few months ago and advised that an individual had written a letter to the Governor's office claiming to have some knowledge of Islamic terrorist training activity in PA. I took the informition from you and advised that we would have an intelligence investigator contact him and follow it up as a terror tip in the same manor we would for anyone providing such information. We discussed how you should respond to the lettero and my suggestion was for you to simply indicate that the matter had been referred to the State Police for investigation and
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that by the time he received the response, someone would have already contacted him. Further, if he had any questions or additional information he should re-contact you or us. It would have been entirely inappropriate for me to have provided you with any type of information on the MOA for inclusion in your response to the writer. Based on the previous briefings, I knew you were aware that we were on top of the MOA situation.

Finally, you and I conesponded recently about another issue with the ITRR bulletin in regard to there being confusion about whether PASIC was involved in its preparation. The issue in that case revolved around ITRR publishing information which was not substantiated and which caused the US Attorney and FBI to initiate an inVestigation believing Pennsylvania authorities were putting out information about possibl- threats in the King of Prussia Mall. I am advised by the FBI that it wasn't the first time something got spun up since the ITRR bulletin started. While I appreciate the fact that you went back to ITRR and having a notice added to the bulletin which should help clarifu that PASIC did not prepare it, I remain concerned with the numerous assumptions and conclusions that they jumped to in every one of their documents I have seen. In many cases, ITRR makes a claim and then indicates it is quote "uncorroborated" or "unconfirmed" and qualifies conclusions with "may" or "possibly". If the documents were only being circulated among a few agencies in Pennsylvania that are familiar with ITRR, there would likely not be much of a reaction. Unfortunately,it is being added to numerous email distribution lists and forwarded by people who are not confirming anything but instead sending it on as though it is some kind of validated Intelligence bulletin. In my opinion, it is not. We have received the bulletins from ITRR for several years. I would liken it to reading the National Inquirer. Every so often they have something right, much of the time it is unsubstantiated gossip. Please give me a call you'd like to discuss any of this further. Why I agree it is important to get information out to our partners, it is equally important that the information is appropriate for the intended audience, accurate and properly vetted so as not to cause unnecessarily, unnecessary alarm.

if

There's then an email string that is dated February 18,2010 through February 22,wInch documents concerns which verbally express to Lieutenant Shannon, our Domestic Security Division, via calls he received relative an issue caused within a nuclear industry as a result of an item published in the ITRR Bulletin. The issue had to do with planned protest at nuclear facilities and was discounted by both PSP and the FBI. The FIB writes to a number of people including Lieutenant Shannon: The information I received is that this information was probably received via an internet search and past experience with these events. At this point we are not aware of any specific information that there will be protests at any of the facilities listed in paragraph three. We will let you know if we receive any specific intel related to (inaudible). Any questions, please give me a call.

Lieutenant Shannon wrote after fielding a number of these phone calls to Captain Ashmar, the Director of our Intelligence Division: Captain, follow up to ouriarlier discussion, please see below Steve Gray is FBI out of Philly obviously now all of the nuke plants are spun up into "the sky is falling mode" similar to what happen with the Mall several weeks ago as a result of an item published by the same source.
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The next is an email dated June I1,2010 from me with an attached email from the Allegheny County Police documenting a situation in which information from a terrorist screening center watch list hit was shared with Director Powers and then to ITRR. I addressed this with the Commissioner and requested this be addressed with Director French. My email to the Commissioner read: Colonel there was yet another recent incident involving Jim Powers and the improper dissemination of information. In this instance a port authority police officer in Allegheny County received a hit from the terrorist screening center. Relative a subject he had stopped. The officer was provided handling instructions, which included simply collecting certain pieces of information and not notifring the subject of his status. The stop concluded and unfortunately the officer chose to reach out to Jim Powers out of curiosity relative this subject. Jim took the information and forwarded it to the ITRR, the private group he is contracted with to do threat analysis. ITRR was provided the subject's identity and the fact he is on the TSC watch list. ITRR put together some open source information which the officer found interesting, although he has no investigation ongoing; this was all strictly for curiosity purposes. Ifthere were any concerns about the proper avenue for the officer to pursue would have been to go to the investing agency who listed the subject in the watch list. The port authority officer then discussed with his chief and decided to go back to a stop that had been conducted a few years back in which another TSC hit had been received. They prqvided that information to Powers, who in turn, again provided it to ITRR. At some point in this process, Powers forwarded all of this information to a list serve PEMA maintained, which goes to a multitude of law enforcement and non law enforcement entities including private sector security. FBI Pittsburgh is not happy with how this was handled as it is in clear violation of TSC information handling agreements. FBI Assistant Special Agent in charge, John Jackalone is meeting with the port authority police this moming. They would like to meet with us, Rob French, and Jim Powers to discuss this incident as well as concerns over the use of ITRR. He has proposed a meeting on the morning of July 21,2010, Andy Ashmar and I can certainly handle this but I wanted to make you and the Commissioner aware in the event you wanted to participate and/or arange the meeting with Rob French - and this was going to Lieutenant Colonel Bandy and Commissioner Palowski. Based on that, and as I indicated to yq the ASAC FBI Pittsburgh office requested a meeting to address this issue with Director French, in the interim, and other issue occurred in which a PEMA employee disseminated completely elroneous information about a PSP investigation of bottle bombs that the PEMA employee found on the internet and forwarded to a wide range of individuals including schools, first responders, etc. causing numerous inquiries with PSP relative any possible threat which might exist to their facilities. Having goffen nowhere previously with Director Powers, I emailed Director French on June 15,2010 and requested a meeting. It went: Director French, an issue recently surfaced in Western PA which information developed, or in which information developed from a traffrc stop related to an individual listed on a terrorist screening center's watch list was provided to Jim Powers and ultimately to the ITRR for their review and analysis. Needless to say, this is not in keeping with the proper handling of the information contained on the TSC's watch list. The second issue also occurred in Eastern PA in which erroneous information attributed to law enforcement was widely distributed by a PEMA employee without veriffing the

information. It continues to generate inquiries nationwide. The Assistant Special Agent in charge of the Pittsburg FBI office, met with local law enforcement agency and has requested a meeting with you and I to discuss the matter and ensure there are no further issues with state or local law enforcement access to the information. He has proposed Monday, March, or I'm soffy, Monday June 2l at I I hundred hours in Harrisburg if you would be available. We could either meet at PEMA or PSP whichever you prefei. We did in fact have that meeting on June 21. ASAC Jack Giacalone and I went to PEMA, met with Director French. He listened to our concems, thanked us for coming and gave us no indication of addressing the matter any further and candidly both ASAC Jack Giacalone and I walked out of that meeting and both comment that we had just wasted our time with that discussion.

It takes me to the next incident, which is an email, and I apologize it's lengthy, but I think this gives you a true flavor for all of the concems that have been voiced and these are all different types of issues. There is an email chain dated July 6, 2010 which includes information from ITRR to Director Powers relative of planned militia meeting in Schuylkill County. The summary at the end of the document written by ITRR is as follows: Analysts of the Institute of Terrorism Research and Response expect a gathering of individuals and or families in the area of Ashland, PA who may have the orientation to question the authority of Government and law enforcement personnel. The groups have a very strong orientation toward the protection of the second amendment. The groups state that they are not offensive militia, they will only use their weapons in self defettr"; however, there is no clear definition of self defense. It appeari to be an individual decision. The haining regiment suggested by their schedule indicates that some if not all of the attendees will be carrying weapons and ammunition. That led to an email string dated July 9, 2010 in which Director Powers discusses the matter with thd Schuylkill County Emergency Management Coordinator and involves the Ashland PD, the Butler Township PD, the State Police Frackville Station, Schuylkill County Sherifl and Schuylkill County District Attorney's office. Director French was also cc'd on these emails. I don't have copies of some additional emails but had also seen other discussions in which it was clear that Mr. Powers had become somewhat operational and was working with the Sheriffto direct law enforcement activities. During the week of July 12,2010, when I became aware of this situation, I directed PASIC to contact Office of Homeland Security and advise them this group pose no threat. We also contacted PSP Frackville and True Pell or Reading headquarters to speak with the command staff there and advise them not to commit resources to this event; and also told them to share that information with the other involved agencies in Schuylkill County. Most of those agencies accepted the advice, with the exception of the sheriff. Then there was another email string that contained an assessment that was prepared by ITRR dated July 15, 2010 that responded to Director Powers request for priority intelligence requirements. By their owlr assessment, there was no articulable threat. In fact it was built as an event for families. And one of the questions was, the name of the militia was going by was2 4 Moxa. Does 2 4 Moxa have a record of violence, and if so what were the identifiable trigger points? That was the question posed to ITRR. Their answer TAMCEE analyst believes that as a unit this organization does not have a history of violence however, at this time the record for individual members is unknown.
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Then there was an email string dated July 15,2010 through July 16 documenting the delivery the ITRR intel assessment to the Pennsylvania State Police Bureau of Emergency and Special Operations. I advised Major Waugh, he's the director of BESO, not to committee either our CERT Team or our aviation assets to this event as he indicated had been requested of him. Again, advising him that there was no reason to believe that this group was a treat and that those resources should not be on sight. Then that led to an email dated July 19,2010 from Director Powers to SheriffRudyln Schuylkill County requesting information about the weekend to pass on to quote "our analysts". SheriffRudy provided information about approaching the landowner in advance aggressively patrolling the area and mentioned that word had spread pretty quickly about the possible incident taking place. Aside from our concerns of the Office of Homeland Security and PEMA have tried to direct the law enforcement response against a group known to pose no threat, it highlighted a real concern about PEMA and OHS's approach to intelligence dissemination. Incidentally, the spouse of one of the attendees at that event was receiving the emails and the ITRR documents. Had it been a group which did pose a threat the ability of PSP and the FBI to deal with the situation would have been severely compromised.

There's an email string dated August 26,2010 through August 27 rclativeprotest activities planned for speech to be delivered by Governor Rendell in Tioga County. And that starts out with, Director Powers sending it to the State EOC with thqinstructibn please disseminate to Tioga County EMC. Colleagues the following assessment is provided by analysts, researchers contracted by the PA Offrce of Homeland Security. Demonstrations expected at the Governor's event tomorrow. Researchers have identified communications from anti-natural gas drilling activists regarding a speech by Governor Rendell in Tioga County, PA. The speech is set for Friday the276. Analysts believe that this event carries the potential for environmentally motivated protests, outbursts and/or disruptions. Protestors are preparing for Governor Rendell's speech which will focus on the need to enact a severance tax on the natural gas exploration industry, everyone really, I'm sorry - specifically at25, August 2010 communication made an anti-gas activist stated everyone really needs to be there with signs and bull horns, tables, flyers, information and your photos, get some chants ready, make them see and hear a big crowd out front and in the hall. This prompted the Governor's protection detail to communicate with PASIC and receive notice that there was no known threat. That led to an email from Chief of Staff, Steven Crawford, to Director Powers and the state EOC and Deputy Chief of staff McDaniel and Director French and some others in Tioga County and the Commissioner. We are well aware of this and we do not expect trouble, we have been in contact with the group the Governor will be speaking with them Bruce George and the executive detail had been handling this from our end. The PSP Commissioner was already briefed by me on the matter and provided a comment back to Chief of Staff, Crawford. And it went from Colonel Palowski back to the Chief of Staffand the Deputy: Thanks, Steve. This is one of the problems you have when you contract Intel work to amateurs. PSP continues to monitor the situation.

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And finally, I have a series of emails dated September 2,2010 through September 3, 2010 detailing information passed from Office of Homeland Security to the Wayne County Emergency Management relative anti-gas drilling activity, activists rather, attending a hearing on september 20 at the Damascus Township Building. pSp Supervisor conveyed information provided to him from the Wayne County Emergency Management Coordinator and here's what he wrote: On Today's date he was writing to his chain of command - on today's date I wrote with, or I spoke with, Wayne county EMA coordinatoro Steve Price, he related there is a hearing scheduled for 9 20 2010 at the Damascus Township Building as indicated in the letter attached to the original email. Then he goes on...information provided in the letter indicated that the Ruckess Society held training in New York this past December and will be holding a boot came during this time frame albeit in Minnesota. Members unable to travel to Minnesota could use this meeting as a rally point due to its close proximity to New York City. I will continue to coordinate with Price and prepare a plan of action, which may include items such as a regulatory traffic checkpoint on state route 371 on the 20th beginning at 18 hundred hours. Additional members may be needed to be scheduled for this shift. Price relayed that he has not been made aware of any acts of violence in similar meetings in the past. That caused additional recommendation within the troop in preparation for this me-eting. And again, somewhere higher in the chain, we had a recommendation to the Captain: FYI if we can verify that an organized effort is underway to subvert this meeting then I will be recommendation that the troop is elevated to alert level I on this date - signed one of the corporals. Organize our security concerns and recommend a possible response for this scheduled meeting of possible anarchy activity and signed other officers. Please see if you have any additional information on this subject matter and subject group. Our Intelligence Division learned of the issue and quickly advised our troop to dlscontinue diverting resources or scheduling additional troopers and the Captain, Andrew Ashmar, as I said, runs our Intelligence Division delt with it and then emailed me: Major I put out the fire with Captain Avanchick and I informed him an email will be comingout at some point advising the troops not to put too much stock in the ITRR reports. I included this last string because I thought it was important to see, even within our own agency how this information was put out there and got spun up and caused one issue after another after another and in spite of our protest our pointing out the issues that was causing the document continued to be produced and circulated and caused tremendous concern for both the State Police and the FBI, neither of whom would condone this kind of collection of information.
Senator Baker: Major, Colonel, I am stunned by the revelations in your email chains. We have had
numerous questions, but the fact that you have been asking specific questions since this contract was issued on October 26,inless than 6 weeks, you determined a problem with the contract, you determined that there were questions that could have potentially impacted law enforcement in the field, that could have....I just,I am absolutely stunned. I would like to have at the conclusion of this hearing, copies of all the documents that you have indicated all the concerns that you and other law enforcement entities raised. We heard from Mr. Powers that, "No questions or concerns were raised by the Department of Homeland security and others." That doesn't appear to be the case based on your

testimony. I mean this to me is as troubling a discussion.. ...I just, I am speechless! I am absolutely speechless that number l.when asked on the record why you weren't consulted they said you didn't have the capability to handle this. Can you address that for me,
please?

Colonel Palowski: Ma'am ...Madam Chairman. I understand what Mr. Powers was saying about outreach to the private sector and capabilities. Since September of 2001 right afteithat tragedy, the FBI, the CIA, all law enforcement has been painted as agencies that have not been able to share information or have been unwilling to share information. That has changed over the years in Pennsylvania and I'm proud to say our relationship with the FBI, with NYPD with a host of other Federal agencies is among the best in the country, we are sharing information. When Jim Powers spoke with JeffMiller about the ability to reach out to the private sector - the critical infrastructure, he was right there that we did not have the resources to engage these people day in and day out to brief them on intelligence threats to work with them. We were working at that time on our outreach to law
enforcement.

Senator Baker: But that doesn't mean that you couldn't have prepared something that easily could have been didacted with the critical law enforcement information and provided to Homeland Security to disseminate, is that correct?

Colonel Palowski: That's my point that I'm getting to here is that I assured the Governor's office, all the Chiefs of Staff that I've worked with over the years, that the Pennsylvania State police were on top of all threats in the Commonwealth of Pennsylvania as a result of these relationships that we built. But I said that if there was a threat, if anybody was in danger in the Commonwealth of Pennsylvania and we knew about it or our partners knew about it, the Governor's office would know and we would automatically reach out to the parties that were at risk. So we had the capabilities. Where we did not have the capability was to engage them in a large bureaucracy of meeting with them day in and day out, and to be honest with you, the whole idea of Homeland Security and outreach to the private sector is still developing around the country. We're still trying to determine the amount of information they need and when they need it. Bulletins on a regular basis, in my opinion, cause problems because when you enter into a contract that demands three bulletins a week and there's nothing to report, you begin to make stuffup. We face the same problem, we put out daily...
Senator Baker: But could you....

Colonel Palowski: ...intelligence bulletins but we work very, very hard to vet the information and make it
relevant.

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Senator Baker: And could you address the issue of how you disseminate that information because, clearly, it wasn't done in a secure manner and I just, I am stunned at what you said, I'm stunned at who knew. I'm stunned that this has been going on since 6 weeks after this contract was issued that questions and concerns have been raised, notjust 3 weeks ago, not just this past summer but for months and months and months. And I just am troubled that the people you reached out to didn't listen or didn't pay attention.

Colonel Palowski:
When we disseminate information, we keep it to vetted partners, people that understand the rules, that they have the policies and procedures in place to protect this information and the idea of secondary dissemination of information taking an email and shooting it out to everybody and anybody its basically it is frowned upon, it is prohibited. So we follow rules and regulations with regarding the handling of Intelligence information that are very structured and that's why sometimes some people think that we don't share enough - that's just because we're following the rules. There has to be a need to know and a right to know, and we follow those two precepts very closely.

Senator Baker: colonel, thank you. senator ward followed by senator Dinniman. Senator Ward: I have a couple of comments. Thank you so much for that enlightening testimony; I will take your word any time. In what you've stated, Major Bivens, is in direct conflict to what earlier testimony that we heard that, you know, they didn't have any of these entities, they didn't have specific entities targeted and they didn't have them on any kind of terror list, or I guess maybe that's a broader term, that they were just doing sifuational awareness and that does, is in direct conflict of what you just said and I will take your word any day of the week. Also, just one comment, $500,000 is that right? The contract how much was that contract?

Major Bivens:
$103,000.

Senator Ward: $103,000. oh that was the contract, I lost my train-l'm sorry, but thank you very much for your testimony.

Colonel Palowski: senator, if I can add something? The problem with going to getting outsource information is....is that there is no context. Major Bivens mentioned that, very eloquently, in his talk you just don't take a piece of information open source information and shoot it around. When it comes into our intelligence center, it goes to trained analysts - they put it in context. We have sources out there, both federal sources as well as our own sources. You have people that have contributed to the entire picture. We
55

have the benefit of seeing the entire picture and then we can send something out. As opposed to a blog, a clipping or something that just would...what frustrates the State

Police sometimes and this is typical across the country, people that are not trained and don't understand get ahold of something and spin it up and it causes a lot of work to put fires out. I mean, over the years, I've been responding to emails in Denmark over alleged threats in Pennsylvania that just are the product of the intemet. I mean it's a wonderful thing, but when something gets going you can't get it back and we spend an awful lot of time trying to run things down, correct the record and try to keep our credibility in place here. Senator Ward: Yea, I just want to clarify; I wasn't talking about the contract I was talking about the Federal grant money. $100.000, sorry. Senator Baker: How much does it cost for an analyst? And if you had that $102,000 how many people could you have added to your complement?

Colonel Palowski: I think analysts command a little over $40,000.00, plus change so the math is pretty straight forward there. And I have to say that after this situation broke, the Govemor ordered the task force and we met with Steve Crawford and we have presented a plan in order for the Pennsylvania State Police to control the flow of Intelligence information in Pennsylvania. And it has been, at least accepted in concept, by the Gover.nor and Steve Crawford and we're gonna work together with Office Homeland Security and PEMA to
advance this concept.

Senator Baker: Mr. Crawford did mention that to me in my office last week, but he did not provide the level of detail. But I'll go back to my original point that we had an organizaiion highly skilled, highly trained and highly capable of doing this job just stunned that you are not really engaged or part of it. on that I'll ask Senator Dinniman...do you have any
comments?

Senator Dinniman: Yes, actually you just answered my main question is, where do we go from here Colonel Palowski? And it's important that we do this the right way and I'm happy that the Governor's office is proceeding in that way. I think you've also reassured the legislature, we have great confidence in the State Police in this state especially under your leadership and your statements, your honesty, your candor has reinforced that confidence. I suppose what concerned us, and I want to know, well two questions for you, quick questions for you - one, during this period of time, the Administration, others in the law enforcement community, why did it take so long for this whole thing to reach where we are now? And you are wasting a lot of valuable assets in trying to keep it under control. . Someone had to be protecting this. Or was it just the way the bureaucracy works,I mean, why did it take so long?

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Colonel Palowski:
We first became, or at least I first became and Major Bivens first became aware of the contract in December and it's always in the context of a problem. I received these bulletins as a member of the Governor's Preparedness Commission. PASIC itself as an entity does not receive the bulletin; it went to one individual analyst, a member in the State Police somewhere else in the state. If you showed up at a meeting somewhere in the state with some of the people involved in private infrastructure, *d you signed up as a participant in that meeting, you may end up on that list of people. So I receivid them and as I told the Governor's offrce and others that...I'm clearedat the highest levels. I have all the resources of PASIC right across the hall from me. I'm briefed on threats in Pennsylvania. So when I started receiving those, I quickly went to delete mode. After speaking with Major Bivens, he assured me that there was nothing in there that we didn't have from other competent sources. So I received so many emailJduring the day it's quick to go to the delete mode and that's what I did.

Senator Dinniman: We appreciate that. A final question is the key here ,and one reason it's all coming to a head is, there is legitimate dissent, you know, on the Marcellus shale issue-it's a controversial issue and that's why I was happy to hear you say that you are very careful what you share with the private sector, with businesses or lobbying groups or anything else because the sharing of information has to be in such a way to ao tegitimate concerns and certainly there are times to share that information but at the same time we have to protect the rights of the citizens of the Commonwealth to protest peacefully. Are you comfortable with the level of sharing and the procedures that you have in the State police and in any planning? Is that level going to be in such a balance as we take care of legitimate threats by telling people things whether public or private, but at the same time protect the rights of individuals to just raise their voice and their protest?

Colonel Palowski: That's exactly right; I'm very, very comfortable at the people involved in the true intelligence gathering and the dissemination. We're doing a good job in the law enforcement side and the private sector has to understand that, although they may not be hearing from us day in and day out, that they're protected. And if I coutAiust foliow up on your earlier question about why it took so long and I mentioned the fact that the way I personally handled the receipt of that email is, is that you saw from the emails and interaction with Major Bivens and Mr. Powers....there are always, in any organization, there's gonna be flare-ups, there's gonna be dispute and there's give n take. So, as you can see, I sent one of the State Police most articulate and thoughtful individuals to start addressing the problem and he did over the months. And it basically came to critical mass - just with this scenario. Nowo so if you're looking for sunshine as a result of this, I think there is some because I hope the message is clear to everybody that the solution is here in the state of Pennsylvania. And as we move forward and as fusion centers grow in Philadelphia and Pittsburgh the Pennsylvania State Police will be position to oversee and coordinate the sharing of Intelligence information and we'll do it by the rules, and not by contracting with outside contractors with our partners that are fully vetted?
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Senator Dinniman: Maybe one of the things Madam Chairman, finally, is that if there's going to be any future contracts in this way that you will insist that you be notified as Chiirman of this committee because I do believe the State Police are quite competent to take care of this first.

Colonel Palowski: If I can also add to that the only people that aren't on the distribution list is your committee. And I'd like to make that commitment right now that you'll be the first on our distribution list because we see no reason not to keep you in the dark.
Senator Dinniman: Thank you. Senator Baker: Thank you Colonel. Senator Ferlo... Senator Ferlo: First of all I'd like to thank both of you for your leadership, but more importantly, the context of today's commentary and testimony. Just thank you for the specificity and really explaining, you know, what the real predicaments are in terms of what's unraveling here. And I guess I'm even more horrified than the Chairlady in terms of what I've just heard. But I want to clariff just the issue earlier I raised with the Southern Propertllaw Center. I made a comment that I've been a long time contributor financially, personal donations to that group; and they're a great group. They've been involved foi many decades in working with law enforcement on all levels to identiff threats and violations of civil rights. And they are, as the Major rightfully stated, an issue rated organization. And I would expect that if they have a specific incident of a skin-head groupor anazi group or an anti-semitic group, whatever, that basically what would happen is, they would convey that information to you, or witness or some knowledge of something that may have happened in the past or might happen. And then you being the Police law enforcement agency would vet that. And you, as the Police, would decide what's appropriate.
Just to be clear, I have no problem, and this has nothing to do with philosophy or ideology. We would expect, and I have every confidence that you'ie Department, the State Police, where I come from a 3 County area all of the local police including Chief Harper from the City of Pittsburgh. I put my life on the line for any of thbse folks in terms of being trustful about their good judgment as to what really is a security threat. And I would hope, and I'm sure this is the case, that if there's some bonafide, credible information on somebody at a new plant or'a gas line or anything else that you will, as you always have done before, do the appropriate investigation and if it leads to some appropriate prosecution, so be it. I would hope that you would continue to do that. I hope we're not putting any message out today to anybody regardless of philosophy or ideology that the Department is not competent or capable of doing what it has done well

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over many years. So I just want to clarify that because I'm very upset about this contract. And it just seems like the chronologically that you outline, especially Major Bivins, would suggest that somebody up above, especially with all due respect, Director French should have. ...a significant red flag was raised about Major Bivins testimony and outline. It's very scary actually, and I don't see any need for any such subscription service at all. I mean if you.....we obviously have limited budgetary constraints and you are aware of that first and foremost and we'd like to see more State Police obviously and I'd like to see Senator Ward's district kick in and pay for local police protection from the State Police. But setting that issue aside, we would never shortchange the department. We rely on your leadership, Colonel, if you need an outside service or something....but it will all be within your domaino and not just some road bogus group that gets a $100,000 contract in which, you know, I'm still perplexed about. There's a lot more to this story that's not going to come out at this hearing - I'm convinced about that. But I just want to be clear, we're not in any way challenging, diminishing or limiting.....we're all here to support you 100% in whatever inappropriate activity regardless what the nature of the issue is, you know, we would expect you to do what you do best and prosecute, investigate or whatever. So I just hope we're clear on that; regardless to this conflict.

I'm just very concerned that it seems that you, being the official State Police, raise a lot of significant issues to the Administration about problems associated with this rogue organization that's been receiving $100,000, and no one responded. And even today the Homeland Security Chief comes up here and just totally ignores the issue. I think the people of Peruisylvania just find this incredulous.
Senator Ward: I'm going to count on your vote

Sen. Ferlo.

Senator Ferlo: My only question is - I hope this ends here...not the investigation. These folks should be prosecuted because they violated the law and people's civil rights. I'm going to sue. I'm gonna take the case to other levels of government. But the fact of the matter is I would
hope that this would cease and assist and that whatever resources you would need to do appropriate investigation, you know, that you would come back to the committee or go to the Administration and execute whatever contracts vou would need.

Senator Ward: I'm counting on your vote to get my State Police bill out of committee now. Thank you. Senator Baker: Gentlemen, thank you for your candor, thank you for your testimony. We'll ask for copies of that information. It's troubling that your concerns seem to fall on deaf ears. But in the long run, we know that we need to move forward. We need to have highly trained, highly skilled 2417 watch and we know that you are capable of doing that and we thank you for your service. Thank you very much.

Colonel Palowski & Major Bivins:

59

Thank you.

Senator Baker: And our final individual to come before the committee this morning, or actually this afternoon, is Michael Pearlman, the Co-Director of the Institute of Terrorism Research
and Response.

Gentlemen, would you raise your right hand? Do you solemnly swear to state the truth, the whole truth and nothing but the truth?

Mr. Pearlman:
I do.
Senator Baker: Thank you. Senator Ferlo: are you legal counsel, I couldn't hear you?

I'm sorry,

Jeffrey Miller: I don't intend to testifr. I'm not a witness.

No,I

Senator Ferlo: asked you, were you legal counsel?

Senator Baker: Yes he is legal counsel to Mr. Pearlman. Senator Ferlo: Thank you, sir. Senator Baker: Your microphone was off, and we couldn't hear you when you introduced yourself.

Mr. Pearlman would you like to press the green button and offer your opening com....

Mr. Pearlman:
Thank you very much. The Institute of Terrorism Research and Response hereafter referred to "ITRR" is a Pennsylvania corporation with a physical office in Jerusalem, Israel. ITRR provides training, research and analysis services to our clients. ITRR's research and analysis center known as the "Targeted Actionable Monitoring Center" is in the office located in Israel. The Targeted Actionable Monitoring Center is staffed with former law enforcement military and intelligence professionals experienced in the production and utilization of intelligence products. Our researchers and analysts are located throughout the world ranging from Pakistan to Boston. The languages used by ITRR's research professionals include Arabic, Spanish, Urdu and a number of others. In
60

each case, ITRR uses only researchers whose mother tongue is the language in which she or he is researching. Because ITRR's researchers and analysts have learned these languages as they were raised from childhood, they have the cultural literacy to understand context of phrasing, an intent that cannot be learned when a language is acquired later in life, such as in a university setting.

of September 22 of thrs year that the Senate Committee on Homeland Security and governmental affairs that at the federal government level there still remains significant issues with recruitment of researchers and analysts with the necessary language skills. Our analysts are familiar with terrorist groups, separatist movements', criminal gangs and cartels all groups that would encourage or attempt an attack on locations within the United States or on American citizens and assets overseas. Our analysts are familiar with the concerns of intemational and national animal rights organizations that would attempt to use physical means to close research laboratories, environmental organizations that would attempt to close power stations and anarchist groups that would attempt to put an end to government at all levels. ITRR's current clients range from international fortune 100 companies to small security companies. Our products are used by the power industry, companies with international maritime assets, companies owning parts of America's critical infrastructure, law enforcement agencies, a company charged with protecting foreign oil facilities, organizations supporting missionaries in the field, the pharmaceutical industry and organizations tasked with security for intemational sports events. We have completed special projects for the United Nations, the European Union and NATO. We are honored to have served the Commonwealth of Pennsylvania. In fact, as recently as September 20 of this year the Targeted Actionable Monitoring Center, out of our Jerusalem, offrce provided information to the Pennsylvania State Police Intelligence division dealing with an international terrorism that includes the targeting of at least four Americans and having a nexus in Pennsylvania. The mission of ITRR is to identiff and analyze information that can be leveraged to prevent injury, loss of life and destruction of property. When in the course of our work for the Pennsylvania Office of Homeland Security, we have identified the risk of public safety; we felt an obligation to provide that information. An example of that is when our researchers and analysts identified a threat of anti-gay violence at gay pride events. Similarly when identifying the risk of opposing groups coming into conflict, we provided guidance on the need for sufficient law enforcement staffing to deal with crowd control issues. I appreciate having this opportunity to explain to you about the Institute of Terrorism Research and Response and I'll be glad to take questions from the committee.
Senator Baker: Thank you, Mr. Pearlman. How many years has your company been in operation?

It is noteworthy that we have

seen in recent testimony

Mr. Pearlman:
The paperwork was signed bringing the company into a legal position in2004,July 2004.

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Senator Baker: 2004. And how are you assembled? Are you a non-profit organization? Is that correct?

Mr. Pearlman: Are you asking are we a 50lC?

Senator Baker: Are you a 501c3? You're not a 501c3, you're not, you are a for profit entity?

Mr. Pearlman:
We ate, we started as a....initially when our organization was formed we thought it would be a non-profit. As events changed, as the company grew, we decided that it should be a for profit company it's a subchapter C corporation.

Senator Baker: So that's why I did not find your 990 on file under Guidestar as a non-profit.

Mr. Pearlman:
Noo no

Senator Baker: You changed that?

Mr. Pearlman:
We don't file 990's. We just...

Senator Baker: You are a for profit entity then. It was my understanding that you were not for profit entity, but you have clarified that. How many other employees work for ITRR? I don't know if I heard you indicate the number of employees.

Mr. Pearlman:
We have employees in 70 some countries. By employees, that doesn't mean full time employees and so I find it difficult to respond to you in a meaningful fashion. So how do you want that answered?

Senator Baker: How many administrative personnel? You indicate you have offices in Philadelphia, Washington and Jerusalem...how many?

Mr. Pearlman: I didn't say Washington, I'm sorry.

Senator Baker:

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It's on your website it lists that you have offices in both Philadelphia Washington DC and Jerusalem but their only offices with Post Office Boxes, so I wasn't clear if you had operational offices orjust presence in those locations.

Mr. Pearlman:
In Jerusalem, we have an operational offrce that's staffed. In America we have employees ranging from Dayton, OH to Phoenix to Los Angeles to Boston all over and so we are incapable of having a physical office in the US. Senator Baker: I see' Other than the Pennsylvania Office of Homeland Security, do you have any other state or federal contracts or grants or other public dollars; I believe I read you were quoted in one of the newspapers saying your company doesn't provide similar services to governmental bodies. Is that correct?

Mr. Pearlman:
That's correct. This was the first state contract. Senator Baker: Have you ever been contacted by the Commonwealth for any other services prior to the contract that was issued on October 26?

Mr. Pearlman:
No
Senator Baker: No you haven't. How did you come to the attention of the Office of Homeland Security? I do have a copy of the letter dated l0 September that you sent to James Powers indicating that you could provide a subscription service detailing what you would incorporate into that. And a very short time later you were issued a contract, although I don't see a budget listed with it, so can you tell me how you came to the attention of the Office of Homeland Securiw?

Mr. Pearlman: It was in June of 2009, we were contacted.

Senator Baker: You were contacted by the offrce, you didn't....

Mr. Pearlman:
By the Office of Homeland Security, yes. Senator Baker: And how did they come to know who you were and ...

Mr. Pearlman:
53

Reputation.

Senator Baker: Was there someone who recommended to the Office of Homeland Security that you knew in the Administration that suggested that you would be the right fit for this type work?

of

Mr. Pearlman:
No.

No.

to.....

Senator Baker: So, just based on what they found on the internet, you believe that's how thgy came

Mr. Pearlman:
Oh, I don't think it was based on the internet ma'am. I honestly think it; I honestly think it's our reputation of providing good intelligence services.

Senator Baker: Okay. You're Central Pennsylvania Business Journal article about you indicated that you look at gas drilling compliance. can you talk to me about that, that you....

Mr. Pearlman:
Could you read that to me, I don't. .... Senator Baker: Would you?

It's

a Central Pennsylvania Business Journal article dated June 15, 2007 about Michael

Pearlman that you used to patrol the streets of York, keeping an eye out for drug dealers and other criminals. You have a track record on domestic terrorism. Much of ybur work now focuses on potential threats from environmental extremists. Would that include gas drilling companies as well?

Mr. Pearlman: No, there is...No; I didn't say that...that was an accurate statement that you just read. Environmental extremists or rather animal right extremists I think it said.
Senator Baker: So you don't work with any power industries, natural gas drilling companies or any of the like?

Mr. Pearlman:
I told you. Our list of clients includes power industries it is in the power industry, yes.

Senator Baker: Biggest question I think every citizenwho has looked at your bulletins want to know, did you monitor, watch, investigate catalogue individual residence of the Commonwealth?

Mr. Pearlman:
difficult for us to prove a negative, but the answer is we didn't track individuals; we didn't track groups, we...no. There is no list.
so

It's

Senator Baker: So when you collected the data, analyzedit,looked at it, how did you assure that that information was accurate?

can assure any...I'm confused by the question. We would identi$ information....no we're dealing specifically with domestic, we would identi$ information.

Mr. Pearlman: I'm not sure how you

Senator Baker: I guess my question, and I'll rephrase it, what did you do to make sure the information that you forwarded to the Office of Homeland Security that they were legitimate threats against the Commonwealth and not just public advocacy organizations oi protected
speech and assembly?

Mr. Pearlman:
The issue that we saw was the potential of conflict between organizations. Even in protected speech, if we have one group "x" attd another group "y" and they're in total disagreement and they're going to be at the same location, pro.toiding a head's up to law enforcement is a benefrt to law enforcement to be able to provide a iafe environment for all parties.

Senator Baker: You heard the discussion earlier about how the information was disseminated and there seems to be a concem that what you sent out was not as secure as it potentially should have been. How did you ensure the security of the information you were disslminating?

Mr. Pearlman: Ma'am we didn't disseminate

Security.

it. We provided information

to the Office of Homeland

Senator Baker: So you had no role in any of the dissemination of the information that you complied?

Mr. Pearlman:
That's an accurate statement.

55

Senator Baker: And I guess, just one final question I would have, did the Oflice of Homeland Security, PEMA, the Governor's office, did anyone express concerns to you about the information you were providing to the Commonwealth during the course of your contract?

Mr. Miller: I'm not sure if he understands. . . .if when you concern if you don't mind.

say express concern

what do you mean by

Senator Baker: Obviously we heard from the Pennsylvania State Police that they elevated a number of questions about information that they believed potentially impacted law ehforcement and others and they communicated them to individuals in the Administration. Was that information ever transferred back to you indicating that law enforcement and others had some concems about what was contained in your bulletins?

Mr. Pearlman:
Specifically, no. Generally, there are always questions as to whether one side or, one intelligence group or another intelligence group has more of a pipeline to the truth and occasionally there would be discussions of that. I heard discussions of things like... just while siuing here, discussions of which mall is it near King of Prussia Mall. It seems to me that there was no indication that ITRR suggested that there was a threat. If I remember that way back when, it was merely indicating that people had access to areas that should be secure and that ability to access those arias could iesult in either a criminal or other act. In fact when I heard discussion of our assessment of the group that was....the militia group having a place upstate, I heard nothing but inaccurate assessment
there.

Senator Baker: When the Governor canceled your contract and indicated your services were no longer necessary, have you been continuing to compile any information or are yqu still assiiting in any way after that announcement or has the contract terminated, and irave you been paid the full amount of the contract?

Mr. Pearlman:
We've been paid the full amount of the contract. We continue to scan the horizons for potential threats against Pennsylvania's infrastructure. Even as I said, even last week we observed a threat to Amerieans probably outside the US, but having a nexus in the state of Pennsylvania we turned that information over to the state police.
Senator Baker: Thank you Mr. Pearlman. Senator Ward... Senator Ward: Do you, this job; this contract was, I know, a big contract. Is that how you usually get your work? Do you usually have to bid for work or...
65

Mr. Pearlman: Let's separate it out please, if we may, from Governmental agencies to private agencies. This is our only governmental agency that we had a contract with and so thir particular one was in fact not a bid, but it's because of our unique capabilities. With other contracts in the private sector, no, almost all of them is based on the fact that we have a strong reputation for providing good intelligence and people come to us.
Senator Ward: And, the people that work for you, or with your firm here in the Government?

are any of them related to anyone

Mr. Pearlman: Not that I'm aware of.

Senator Ward: State Government

Mr. Pearlman: Not that I'm aware of.

Senator Ward: just want to address one more issue, that situational awareness phrase words that were used so heavily earlier. Could what you do, could almost everything you do from, you know, homeland security threats to domestic threats, could they all be classified as situational awareness in one way or another?
I

Mr. Pearlman:
Not all, but many do have to deal with that. An example being and unfortunately it's, it's now a public document, for example, smuggling....during the pHEFA world cup we put out information specifically.... specific communications internal ghazis communicatibns that dealt with how to smuggle explosives into a soccer venue in South Africa. The exactly the same tactic could be used to smuggle explosives into Beaver Stadium, or a Pittsburg football game or a Philadelphia football game. And so you can call that situational awareness, it's leffing people know what tactics are being discussed and advising them to take steps to reduce the threat of those tactics.
Senator Ward: Thank you. Senator Ferlo: (SIGH) The Senate's beginning and I don't even know where to begin. I wish I could be here for the next couple hours with you but, and I mean this question respectfully, but are you an American citizen or an Israeli citizen? Do you have dual citizenship or.... what's the...

67

Mr. Pearlman: I'm an American citizen.

Senator Ferlo: Okay, so you're just an American citizen?

Mr. Pearlman: I'm an American citizen.

Senator Ferlo: You're aware of the constitution and the bill of rights presumably? Just to clarify, the Governor hasn't really canceled anything. If I understand basically he had a year contract that ends in a few weeks or months and basically there won't be a continuation of the contract. I don't know that anything was specifically terminated seems like they're gonna let the remainder of the contract expire and then not renew the contract. Isn't that
the case?

Mr. Pearlman:
The contract....the work that we started for the state of Pennsylvania started pardon me - late in the month of October and we will fulfill our mission to the date that wi.....

Senator Ferlo: There's really no termination of contract. Basically you were hired for ayear to year you were hired for the year and you have some invoicing process in which you bill the department presumably, and that's going to end anyways, so the Governor's letting you finish out that term if I understand the dates correctly. So it's nothing really cattceGd, it's just that everybody's caught with their pants down and now we're just going to let the contract finish out and we're not, "oh by the way we don't like you" and we're not going to renew the contract - that's what I see.

Mr. Pearlman:
We're fuII...
Senator Ferlo: You haven't lost any value though, $103,000 contract have you?

Mr. Miller: senator, if you could, I'm not sure what your question is, if you

could

just...

Senator Ferlo: The Govemor...everybody's making a big deal about, "oh we're so upset and your contract's terminated", but in fact you have a term and the department is continuing, and you're continuing to invoice and the department is presumably continuing to pay for the term of that contract. I assume because of legal issues they don't want to go to court and argue the contract law which has the upper hand, so is that the reality?

Mr. Miller:
I think the answer is, he doesn't know the answer....there is a
Senator Ferlo: well he didn't even know the answer to how many employees he has either so.....

Mr. Miller:
But there is a pending contract whether it has been terminated or that as of the end of the contract. or.. Senator Ferlo: ['m just making a point. . ..

it'll

be terminated

Mr. Miller:
..that it's been unilateral canceled or not - it's really a legal question. We've been in touch with the Governor's office recently, we haven't heard back yet. He doesn't really have the facts...

Senator Ferlo: (Inaudible) I think it's a little bit disingenuous for the department of the Administration to say this contract was terminated, when in fact I don't think it was terminated it was basically being ridden out - let it ride out till the end of the term and presumably, you can argue legally, at some point if you ever did go to court, that you have a proved signed contract and you want full payment; you're not losing anything. So we'll leave that for lawyers to ague later on, but I just take exception to the notion that somehow it's being portrayed that decisive action was taken and a contract was terminated. That's a bunch of bologna, from what I can see, in terms of the chronological dates that are here.

Mr. Miller:
But that bologna didn't come from him. (chuckling/laughing) Senator Ferlo: The other thing is, you know, this big hubabaloo you raised about excess and incisive work you did. You know the state department issues bulletins every 20 minutes relative to students being in danger or embassies being, I mean, the scam that you calling basically is you served to Nat and you get all this public information and you have this elaborate 4 part gradation system. So I'd like to ask you, for my event, which was a social Green Drinks social forum, non partisan, non threatening and going on for 5 years its free speech, right of assembly how would you put that in a bulletin and describe that as a low to moderate threat? And by the way would you clari$ to the public what you, what the gradation system is that you have that you describe as low to moderate? Sounds pretty scary to me, if I got your memo I'd want the State Police to show up there and everybody

69

in the US army too. I mean, I would be very afraid based on the gradation system you have of what was a couple people having a beer and listening to the county executive talk about sustainability principals. You know, obviously me running against Marcellus Shale industry, so how is that a low to moderate threat?

Mr. Pearlman:
Sir, I'll answer your first question first. You talked about information being available to everyone - we have the native language speakers who identiff information in various languages including communications that would threaten the United States and or personnel of the United States and that includes people from Pennsylvania. An example would be when Qur researchers identified information and our analysts accurately analyzedthe information indicating a threat in Denmark. The threat was identified on August 22,lbelieve. The communications indicated the intent to target in Denmark. We provided that advice on August 22. OnSeptember 10 there was an attempted bombing in Copenhagen Denmark. Subsequent to that there was additional communications indicating the intent to carry out further attacks. That information was provided to Pennsylvania citizens through the Pennsylvania intelligence bulletin so that students who were in Denmark would be made aware of it. And you can call that situational awareness because we can't give you an exact time and minute location but we can tell you that they are targeting that Country, and I can tell you that our students are at direct threat in that direct country. That's called analysis. Senator Ferlo: (Sigh) Unbelievable! You didn't answer the earlier question about your payroll. What is your actual payroll number? Senator asked you how many employees you had.

Mr. Pearlman: I told you, we have employees all over.

Senator Ferlo: You are the CEO, Executive Director of this cor....

Mr. Pearlman: I'm sorry.

Senator Ferlo: Are you the CEO, Executive Director of this for-profit company, right?

Mr. Pearlman:
Yes

Senator Ferlo: Presumably you said you're a US citizen, US Corporation, you have an EIN number and you make a payroll every two weeks or a month. So what is your payroll? What is your employee payroll? Is it 3 is it 100 what is it? I'm just curious.

70

Mr. Pearlman: It's more than 3, and less than 100.

Senator Ferlo: You know, you're very creepy by way. You're very scary.

Mr. Pearlman: Noo I'm trying to be honest with you.

Senator Ferlo: I don't know if you're bipolar or you have issues. I mean you're a very scary individual. Senator Baker: Senator Ferlo, please... Senator Ferlo: No, I mean I can't believe some of these questions. Senator Baker: We, I understand... Senator tr'erlo: The State Police should be investigating you. Not the green Senator Baker: I understand your frustration; this is not for us... Senator Ferlo: Okay well let me ask a specific question Senator Baker: ...to make comments about individuals, personally. Senator Ferlo: I have 12 staff people. I can tell you the names, what their salaries are and you know, prerogative I've been given by the taxpayers in the Senate. So I'm just asking, how many
employees do you have?

Mr. Pearlman:
We have about l5 employees and that doesn't include the 70 some additional employees

that...
Senator X'erlo: Operatives or whatever you call them...employees?

Mr. Pearlman:
7t

People who....

Senator Ferlo: Let me ask you, just to close, because this is just too unbelievable too surreal, this hearing. You don't really do anything. If there's something going on in Denmark, presumably Homeland Security, the police, the security, the (inaudible), the state, I mean, the legitimate law enforcement agencies would be involved. I would hope and pray that they are, okay? I mean, what you do is you just find out this information that's basically out there, and you package it. And what I'm most upset about, and I think the State Police as well and any legitimate law enforcement, you use the impromoder of your letterhead connected with state government to give this impression that you're a legitimate law enforcement bonafied organization. And as far as I'm concerned, you're just running a scam. You are recruiting corporate clients to basically put this information out in hoping that that credibility of being law enforcement and Homeland Security and the big scare that's out there will get you money and presumably you schnookered enough French and Powers here to get over on them, and that's basically what you do. You don't do any legitimate investigations or police or criminal work. Senator Baker: Senator Ferlo.... Senator Ferlo: From what I can see.... Senator Baker: Senator Ferlo, I don't believe you've asked a specific question of Mr. Pearlman. I understand your frustration. I don't think we can speculate about his intent at this point. think we've asked a number of questions. We.....

Senator Ferlo: I asked the question earlier. Going back to the Green Drinks social forum, how did you decide that that was a low to moderate threat? Iove been a public official for 22 years, no secrets about my, I've been arrested 20 times in social protests I'm proud of that. So, what's the...I'm not sure how you'd describe that as a threat to national security cause I'm talking about sustainability principals.

Mr. Pearlman:
I don't have the exact citation in front of me to indicate that it was a.. ..
Senator Ferlo: It was a reiteration of what was a public announcement about forum and then you listed in your gradation system, do you remember that?

a Green Drinks social you know that forward level gradation

Mr. Pearlman:
I remember that.
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Senator Ferlo: The first two is low and then low to moderate. And your descriptions are pretty scary, they scare me. I mean if somebody was low to moderate based on your description, I mean I'd want the FBI there the police and the State Police, friends and everybody else.

Mr. Pearlman: Sir, ifthis.....

Senator Ferlo: I mean, how did you decide that that was a low to moderate?

Mr. Pearlman: If there is concern for confrontation

public safety issue.
Senator Ferlo: You're very scary.

between groups

- that's obviously an issue. It's a

Senator Baker: Thank you Senator Ferlo. Clearly, your testimony raises... Senator Ferlo: And our Government is very scary. Senator Baker: Senator Ferlo ,thank you.

...clearly, raises a number of questions - questions about overall how Homeland Security operated in the Commonwealth. We, and I would say, the Pennsylvania State Police testimony was shocking. I'm glad to see they're finally being called upon to participate. There has been a lot of new information - a number of things we need to consider as a committee and will continue to look at it. For the record, I would also like to announce that the ACLU, the Constitutional Organizationof Lebanon, and Scott Portzline and a community activist have also submitted testimony. So hearing that all of our witnesses have testified, this will conclude the hearing and we will recess to the call of the chair. Thank you very much.

Mr. Miller:
Thank you very much.

Mr. Pearlman:
Thank you

Mr. Miller:
(very faint into microphone)

Let's get out of here and don't say a word.

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