The legislation, introduced by Goss on June 16 and touted as an “intelligence reform” bill, would  substantially restructure the U.S. intelligence community by giving the director of Central Intelligence (DCI) broad new powers to oversee its various components scattered throughout the government.

But in language that until now has not gotten any  public attention, the Goss bill would also redefine the authority of the DCI in such a way as to substantially alter—if not overturn—a 57-year-old ban on the CIA conducting operations inside the United States.

The language contained in the Goss bill has alarmed civil-liberties advocates. It also today prompted one former top CIA official to describe it as a potentially “dramatic” change in the guidelines that have governed U.S. intelligence operations for more than a half century.

“This language on its face would have allowed President Nixon to authorize the CIA to bug the Democratic National Committee headquarters,”  Jeffrey H. Smith, who served as general counsel of the CIA between 1995 and 1996, told NEWSWEEK. “I can’t imagine what Porter had in mind.”

Goss himself could not be reached for comment today. But a congressional source familiar with the drafting of Goss’s bill said the language reflects a concern that he and others in the U.S. intelligence community share—that the lines between foreign and domestic intelligence have become increasingly blurred by the war on terrorism.

At the time he introduced the bill, Goss thought the 9/11 commission might recommend the creation of a new domestic intelligence agency patterned after Britain’s M.I.5. The commission ended up rejecting such a proposal on civil-liberties grounds. But in his bill Goss wanted to give the DCI and a newly empowered CIA the “flexibility”—if directed by the president—to oversee and even conduct whatever domestic intelligence and law-enforcement operations might be needed to combat the terrorism threat, the congressional official said.

“This is just a proposal,” said the congressional official familiar with the drafting of Goss’s bill. “It was designed as a point of discussion, a point of debate. It’s not carved in stone.”

But other congressional staffers predicted that the Goss bill, even if it has little chance of passage, is likely to get substantial scrutiny at his upcoming confirmation hearings—in part as an opportunity to explore his own attitudes toward civil liberties.

Those hearings are already expected to be unusually contentious—partly because of concerns among Democrats that the Florida Republican, a former CIA officer himself who has chaired the House Intelligence Committee, has been too partisan and too close to the Bush White House. But so far, most staffers expect Goss to be confirmed eventually—if only because Democrats are loath to appear overly obstructionist on a matter that might be portrayed as central to  national security.

The Goss bill tracks current law by stating that the DCI shall  “collect, coordinate and direct” the collection of intelligence by the U.S. government—except that the CIA “may not exercise police, subpoena, or law enforcement powers within the United States.”

The  bill then adds new language after that clause, however, saying that the ban on domestic law-enforcement operations applies  “except as otherwise permitted by law or as directed by the president.”

In effect, one former top U.S. intelligence community official told NEWSWEEK, the language in the Goss bill would enable the president to issue secret findings allowing the CIA to conduct covert operations inside the United States—without even any notification to Congress. The former official said the proposal appeared to have been generated by Goss’s staff on the House Intelligence Committee, adding that the language raises the question: “If you can’t control a staff of dozens, how are you going to control the tens of thousands of people who work for the U.S. intelligence community?”

A CIA  spokeswoman said today that, while familiar with the provision, she was not aware of any agency official seeking such a modification to the longstanding ban on the CIA from conducting domestic law-enforcement operations. (Ever since the creation of the CIA in 1947, the agency has been excluded from federal law-enforcement within the United States. That function was left to the FBI—which must operate in conformity to domestic laws and, in more recent years, under guidelines promulgated by the attorney general designed to insure protection of the rights of citizens.)

Sean McCormack, a White House spokesman, said the president’s own proposal for the creation of a national intelligence director—separate from the director of the CIA—to oversee the entire U.S. intelligence community does not envision any change along the lines called for in the Goss bill. “I have not heard any discussion of that,” said McCormack about the idea of allowing the CIA to operate domestically.

Some congressional staffers speculated today that Goss most likely had reached an understanding with President Bush that, if Congress does create the new position of a national intelligence director, he would move into that position rather than serve in the No. 2 position of CIA director. Asked if such a deal had been reached, McCormack responded: “Nothing has been ruled in or out.”

Goss introduced his legislation, H.R. 4584, on June 16—before the September 11 commission issued its own recommendations for the creation of a national intelligence director as well as a new National Counterterrorism Center that would conduct “joint operational planning” of counterterrorism operations involving both the FBI inside the United States and the CIA abroad.  The congressional official familiar with the Goss bill pointed to that proposal as a recognition of the increasingly fuzzy lines between foreign intelligence operations and domestic law enforcement.

The proposal comes at a time when the Pentagon is also seeking new powers to conduct intelligence operations inside the United States. A proposal, adopted last spring by the Senate Intelligence Committee at the request of the Pentagon, would eliminate a legal barrier that has sharply restricted the Defense Intelligence Agency and other Pentagon intelligence agencies from recruiting sources inside the United States.

That restriction currently requires that Pentagon agencies be covered by the Privacy Act, meaning that they must notify any individual they contact as to who they are talking to and what the agency is talking to them about—and then keep records of any information they collect about U.S. citizens. These are then subject to disclosure to those citizens. Pentagon officials say this has made it all but impossible for them to recruit intelligence sources and conduct covert operations inside the country—intelligence gathering, they say, that is increasingly needed to protect against  any potential terror threats to U.S. military bases and even contractors. But critics have charged the new provision could open the door for the Pentagon to spy on U.S. citizens—a concern that some said today is  only amplified by the language in the Goss bill.

Olympic Threats
How serious is the terror threat to the Olympics? Because Greece has a long and intricate coastline with dozens of islands, the country is viewed as relatively vulnerable to infiltration. And while security for Olympic venues is tight, Athens presents a whole range of civilian "soft targets" that are less well protected.

Nevertheless,  U.S. intelligence officials tell NEWSWEEK, it’s not Al Qaeda they are most worried about. Instead, officials  say the most imminent threat to the peace of the games is anarchist and antiglobalization activists of the type who caused significant violence and property damage at a summit several years ago in Seattle. Officials believe such protestors plan to swarm Athens and conduct a campaign of disruption and vandalism.

It’s not that officials are complacent. But sources say that the “chatter” they are picking up on Al Qaeda-linked Web sites is focused more on targeting the United States mainland and American interests abroad than on possible threats against the Olympics.

Specific Al Qaeda threats to the U.S., to U.S. interests abroad and to countries working with Washington in Iraq are regarded by American intelligence as more foreboding than possible threats to the Olympics. Several months ago, Osama bin Laden issued a message threatening to attack countries which did not withdraw from Iraq within 90 days, a deadline which expired in July. "I think we will be seeing some serious attempts to make good on that promise," a senior U.S. counterterror official told NEWSWEEK. But the official said he was unaware of any more specific threat that bin Laden made against the Olympics.