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The Situation: Wednesday, Sept. 21

Editor's Note: The Situation Report is a running log of dispatches, quotes, links and behind-the-scenes notes filed by the correspondents and producers of CNN's Washington Bureau. Watch "The Situation Room" with Wolf Blitzer on CNN 3 p.m. ET to 6 p.m. ET weekdays.

FBI and Katrina

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_{Posted 4:05 p.m. ET
From Terry Frieden, America Bureau}

FBI Director Robert Mueller Wednesday firmly rejected speculation the chaos and disruption in law enforcement on the Gulf Coast following Hurricane Katrina has made the United States more vulnerable to a terrorist attack.

Citing intelligence, Mueller insisted the substantial federal law enforcement focus on the region had in no way diminished the FBI's top priority of preventing an attack by terrorists on U.S. soil. "We have not seen any indication that terrorists see this as a unique opportunity or that this in any way would trigger an attack that was not perhaps in the staging process before," Mueller told a news conference.

Mueller's comments were his first extensive public remarks since Hurricane Katrina devastated the Louisiana and Mississippi coasts.

The director said counterterrorism agents continue intense pursuit of investigations against potential terrorist targets in the U.S.

"Are there still those who embrace the philosphy of violent jihadists capable of attacking us? Yes," Mueller told reporters.

A senior aide disclosed Mueller had gone into the operations center at FBI headquarters in the immediate aftermath of Katrina, and in a conference call with FBI field office chiefs across the nation ordered them "to keep their eye on the ball."

Mueller also announced the FBI has now opened 31 formal investigations into websites illegally seeking to tap into charitable contributions through the internet.

Illegal Rx sales

_{Posted 3:58 p.m. ET
From Kevin Bohn, CNN America Bureau}

Federal drug agents, led by the Drug Enforcement Administration, arrested 17 people Wednesday as part of an operation against illegal pharmaceutical sales over the internet.

The suspected ringleaders of more than 4,600 rogue internet pharmacy websites were among those taken into custory in Operation CYBERx, the DEA said. Authorities said those arrested included not only operators of websites but owners of pharmacies and those involved in other operational activities.

The DEA said this operation is the first to target e-traffickers who are solely in the United States. Usually, some if not all of the operators of this type of websites work overseas.

E-traffickers own and operate Internet Facilitation Centers, which take information from the websites once customers have ordered the drugs. The operators then distribute the prescriptions to a pharmacy where they are filled and then shipped out. DEA officials said sometimes these orders were filled without any legitimate prescription.

Authorities said some of these pharmaceutical drug traffickers averaged more than $50,000 a day in profits from their allegedly illegal activities.

The Morning Grind

_{Posted: 9:05 a.m. ET
From Molly Levinson, CNN Political Unit}

Heads, and Hearts.

Judicial politics play a prominent role in many Washington heads this morning, as Senate leaders met with President Bush for breakfast to talk about his thoughts for replacing Justice Sandra Day O'Connor, and the Senate Judiciary Committee prepares for a vote tomorrow on whether or not to nominate Judge John Roberts as Chief Justice of the United States.

Our hearts, however (yes, there are some hearts left in Washington) are in the Gulf Coast, hoping that despite becoming a Category 4 storm this morning, Hurricane Rita will take mercy. We will continue to monitor the hurricane extremely closely throughout the day.

After their breakfast with President Bush, Senators Frist, Reid, Leahy and Specter came outside, made brief statements, and took questions about their meeting. Frist spoke first, calling the process so far "constructive" and thanking both Specter and Leahy for their work. Reid then said that they had presented the President with "quite a few names" for potential replacements for O'Connor. There were "about a dozen" names on the list, said Leahy, who confirmed that it was a similar list to those first discussed in July before Judge Roberts was nominated, and that the list included "a number of names of women and a number of Hispanic names."

With a nod to what he called "uncertainty" about the Court, and "bubbling below the surface, a lot of frustration" during the Roberts hearings, Specter mentioned the idea of asking Justice O'Connor to remain on the Court until next June. He said the idea "didn't have a whole lot of support at breakfast," but added that "by next June, we'll know a lot more about John Roberts than we do today." When asked about the idea, Leahy said "I like it...it's eminently doable." Frist made sure to add that "O'Connor has made her intentions clear," and that he "encouraged the President...to proceed with the nomination as anticipated."

With regard to tomorrow's vote on Judge Roberts, Leahy said, "We all recognize the fact that Judge Roberts will be confirmed as Chief Justice, the question is how many votes there will be." Leahy announced that he would make his statement about Roberts at about 10 a.m., and that they would "make sure everybody does have time" for other Senators to express their views on the floor.

Meanwhile, as for ongoing efforts in the wake of Hurricane Katrina, heads and hearts are battling it out to determine where the money will come from to pay for the mess. And while reassurances come from the Bush Administration, headlines this morning show that even members of the President's own party want a more concrete plan to work with, given the sizable cost.

The Democrats, continue to ask questions about accountability for the Katrina aftermath - including continuing demands for an independent investigation, and raising concerns, sparked by political appointee Michael Brown's failure to lead FEMA in the Katrina aftermath, over the Administration's nominee to lead the Immigration and Customs Enforcement Agency, 36 year-old Julie Myers.

And of course, predictably, accusations of taking hurricane politics too far have popped up. At a concert last night at Madison Square Garden, Bette Midler invoked a word used by Vice President Cheney when she talked about receiving a "thank you for your support" letter from the President - she said she returned it with a note saying "go [Cheney's word] yourself".

And then there's the editorial page of the Boston Herald this morning, reminding Senator John Kerry that "it's not all about" him, calling his speech on Monday to Brown University his "latest self-serving bleatings" and saying, "The rebuilding of the Gulf Coast, and the rebuilding of the lives disrupted by Hurricane Katrina ought to be a shared goal, not just more political fodder for the unbridled ambitions of a failed presidential candidate."

Political Hot Topics

_{Posted: 8:35 a.m. ET
From Stephen Bach, CNN Washington Bureau}

BUSH - U.S. MUST PAY UNDER LAW: President Bush, accused of embarking on a discretionary spending spree to rebuild the Gulf Coast, yesterday said the federal government is required by law to shoulder most of the cost. He said the federal government is "the principal party responsible for rebuilding infrastructure." White House officials pointed out that the 1988 Stafford Act, which is triggered by disasters such as Katrina, requires that the federal government pay at least 75 percent of the cost of rebuilding public infrastructure. Washington Times: U.S. 'must pay' to rebuild

TEXAS BRACES FOR RITA: As Rita threatened Tuesday to turn into a Category 4 hurricane, officials in the coastal community [of Galveston] called for a mandatory evacuation starting Wednesday. Hurricane Rita, upgraded to a Category 3 hurricane early Wednesday, lashed the Florida Keys with flooding rain and strong winds. But forecasters expected it would become a Category 4 storm -- the same intensity as Katrina -- by midafternoon Wednesday. It was expected to make landfall somewhere on the Texas Gulf Coast by Friday night. Dallas Morning News: 'It's time to leave now'

REID WILL VOTE NAY: The Senate Democratic leader, pressed by several allies to build as much opposition as possible to Supreme Court nominee John G. Roberts Jr., said yesterday he will vote against President Bush's choice for chief justice. But Sen. Harry M. Reid of Nevada conceded that Roberts will be confirmed easily next week and "will get plenty of votes" from his fellow Democrats.Re id's announcement, made in a closed party caucus luncheon and then a Senate speech, came as Democratic senators are struggling with the first chief justice confirmation in 19 years. Washington Post: Reid Will Oppose Roberts for Chief Justice

WHO'S NEXT? Leading senators floated the names of about a dozen candidates to fill Sandra Day O'Connor's vacancy on the Supreme Court, but President Bush kept his list to himself at a White House breakfast Wednesday. Talking to reporters outside the Executive Mansion, Senate Judiciary Chairman Arlen Specter said he thinks the next nomination will be more contentious than the confirmation process for John Roberts.AP via Yahoo! News: Senators Pitch Ideas to Bush on Nominee

COME BACK IN NOVEMBER: Republican Gov. Arnold Schwarzenegger said Tuesday he wants President Bush to delay a planned October fundraising visit to California because the governor fears it will siphon off donations he needs to help his Nov. 8 special election measures. "In the next two months, it would be better if we just do the fundraising," Schwarzenegger said in an interview with The Chronicle. "Then let us go (past) our special election -- and then they can pick it up again, the (Republican) national committee." Schwarzenegger stressed that he and Bush have "a terrific relationship" and added, "the president is always welcome in our state. Any way I can help him, I will help him." San Francisco Chronicle: Governor to President; Stay away until after vote

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