'FOX NEWS SUNDAY' HOST CHRIS WALLACE: Illegal immigration (search) is like the weather in American politics. Everyone talks about it but no one does anything. Well, our next guest just did something about it, but how much? We turn to Bill Richardson (search), the Democratic governor of New Mexico.

And, Governor, welcome back to "FOX News Sunday".

NEW MEXICO GOV. BILL RICHARDSON (D): Good morning. Good morning, Chris.

WALLACE: A few days ago you declared a state of emergency over illegal immigration from Mexico into your state. Now, this will free up about $2 million more for increased patrols, but you admitted it was basically an act of desperation. Realistically, what can the president do to regain control over our national borders?

RICHARDSON: Well, first, bring state and local officials into decision making. Immigration policy is principally a federal issue, but you have to bring us in. And that's not happening.

Secondly, the president can lead. He has put forth a sensible start to an immigration reform proposal. What we need is massive border enforcement. We need to also find businesses that knowingly hire illegal immigrants.

And then, lastly, Chris, we've got to be smart. Bring some detection equipment -- aerial-to-man vehicles, lasers, new technology. But also, we need to find a realistic way to deal with the 12 million illegal immigrants that are in the United States already.

And what I would do is start with the president's proposal, a guest worker proposal, and then move forward and find benchmarks like making sure that these individuals pay their taxes, pay a fine for being here illegally. But also, if they're participating in society, if they're going to school, if they're working, paying their taxes, they get a certain status -- not amnesty, not citizenship.

This is a federal issue. And as you mentioned at the beginning of the program, it's a very charged political issue. But that doesn't mean you leave states like Arizona and New Mexico and California and Texas defenseless. We need more border patrols. The Cornyn bill in the Senate right now says we need 10,000 border patrol agents. I'm all for that.

So border enforcement and bringing some of the immigrants that exist in this country out of the shadows. That's what I would do.

WALLACE: Governor, you talk tough about cracking down on illegal immigrants. But some critics say that, in fact, you, over the years as governor, have offered incentives to them. And let's take a look at a few of those.

You signed legislation this year that gives illegals the same education benefits as citizens, including scholarships. You approved a bill that allows illegals to get driver's licenses. And you signed an executive order prohibiting law enforcement officers from asking about a person's immigration status.

Governor, it sounds like you're making life in the state of New Mexico easier and more attractive for illegal immigrants.

RICHARDSON: No, that last point is incorrect, Chris. I vetoed a bill that would have prevented local law enforcement from cooperating with federal in identifying an illegal alien.

Now, here's my view, Chris: You've got to be realistic. I want to have illegal immigrants in New Mexico have driver's licenses. Otherwise they drive uninsured. It becomes a safety issue. We want to know where these illegal aliens are and what they want, and we want to know what they're doing. That's the reasoning behind that initiative that the legislature sent to me.

With education, they are here. They have to fulfill all kinds of requirements in New Mexico admissions tests -- one year at a New Mexico institution. My view is what I believe is being considered in Congress by Senator McCain and Senator Kennedy, which is deal with the 11 million that are here.

Reward those that are having some kind of a positive impact on our states -- not reward them with citizenship, not reward them with amnesty. But start a process like the president's guest worker proposal that after certain actions, certain benchmarks -- they pay for fines by being here illegally. They get background checks and screening. Then they are on a path to some kind...

WALLACE: Governor...

RICHARDSON: ... of legalization.

WALLACE: Governor, let's...

RICHARDSON: I'm just being realistic.

WALLACE: ... just address one of the specifics, though. Let's take, for instance, driver's licenses. You talk about making it safer and insurance. But in fact, in the plan that you signed, there is no provision for allowing illegals to obtain and pay for insurance.

And as far as the security issue is concerned, it's worth pointing out that four of the 9/11 hijackers, in fact, got on those planes with valid driver's licenses. At this point, New Mexico is one of only 10 states in the country that allows people to get driver's licenses without offering proof of legal residence.

RICHARDSON: No. Chris, that is incorrect. First of all, when you have licenses given to immigrants, they have got to get insurance. Now, that lets us keep track of them. That makes them responsible. We had an enormously high uninsured rate of our motorists, so it becomes a safety issue, too. We know where they are. So it increases traffic safety for New Mexicans.

We at the same time also make them feel part of a society, and we charge them taxes. We do background checks. So this is a measure of security. It's the same with border security.

I want to be sure that the traffic of illegal immigrants is not continuously mixed as it is becoming right now with drug smuggling, with drug kidnapings, with murders, with mutilation of cattle. I've got my cattlemen in New Mexico -- their cattle is being killed by drug smugglers and by illegal alien smugglers.

WALLACE: Governor, let's talk about gas prices, which are now $2.62 a gallon in New Mexico. Is there anything the president can do in the short term to lower the price of gas at the pump?

RICHARDSON: Yes and only the president can do it. He can announce an Apollo-like Marshall plan to reduce our dependence on foreign oil and to deal with gas prices. Only a president can do it.

How do you do it? One, by jawboning OPEC (search) and having them increase production. I would go into the strategic petroleum reserve, take 10 percent, put it out in oil markets to lower the price.

Thirdly, I would have massive public investments in fuel efficiency, in ethanol (search), in renewable energy technologies. I would also look at nuclear as an option, although I'm not as sanguine as Senator Graham.

What I believe we need, Chris, is not these little handmade short-term energy bills, although it is a modest step in the right direction. America's number one problem right now -- and it's a security problem, it's a terrorism problem -- it's our over-dependence on foreign oil, 58 percent. And at the same time it's costing us $200 billion a year to purchase that foreign oil.

WALLACE: But, Governor, any serious solution, I think you'll agree, has a serious lag time. You were the energy secretary in the Clinton administration. And I want to put up on the screen something that was said this week.

An energy analyst for the Sierra Club, no friend of President Bush, said, "The big problem is we did not make the right decisions 10 years ago." In fact, during the Clinton years oil consumption went up, dependence on foreign oil went up and the production of domestic oil went down.

RICHARDSON: Chris, look. Republicans and Democrats for years have failed adequately to deal with this issue. I'm not casting exclusive blame. This is why we need a bipartisan solution.

We did try in the Clinton administration to go to the Congress and increase our commitment to renewable energy, fuel efficiency. It wasn't approved. But apart from that, what we don't need right now is partisan bickering.

WALLACE: But governor, let me...

RICHARDSON: This is a major...

WALLACE: Governor, I mean, just as...

RICHARDSON: ... national security issue.

WALLACE: Governor, as part of the record, I mean, the fact is that the Clinton administration sued a number of industrial coal users and utilities. You did not push nuclear power development. And you opposed the development of ANWR (search), the Alaska National Wildlife Refuge. I mean, those are all things that...

RICHARDSON: Well, first of all...

WALLACE: ... one could say now are now coming back to bite us.

RICHARDSON: Not really, Chris. I think the ANWR argument is ridiculous. That is such a minor component of our energy security. It's much less than 1 percent. And what we want to see is a Marshall plan, not an energy bill, a Marshall plan where the president says our number one priority is to reduce our dependence on foreign oil.

And it's going to take public investments in renewable technologies, in ethanol, in fuel efficiency. We're going to invest in new technologies to get us away from this dependence. Again, 58 percent of our oil, of our energy, is purchased overseas in areas that have real national security implications for us like the Persian gulf.

WALLACE: Governor, I want to talk about one last issue, and we're running out of time. You've made no secret of your presidential ambitions. And I want to put up on the screen the latest Gallup poll. Here it is. Hillary Clinton -- this is a Gallup poll of Democrats -- led with 40 percent of the vote. Bill Richardson was sixth with 3 percent of the vote.

Question: How do you possibly hope to beat Hillary Clinton in the Democratic primaries?

RICHARDSON: Hey, Chris. I can't hear you anymore. I can't hear anything. No, seriously, look. I want to be a good governor of New Mexico. I first have to be re-elected. I'm chairman of the Democratic Governors.

I think the future of the Democratic party lies in the abilities of Democratic governors to revitalize the party. That's all I'm thinking about. It's three years away. I know you want to get into it, but I'm thinking about being a good governor of New Mexico.

WALLACE: And I'm sure you were thinking about that when you were visiting in New Hampshire and Iowa this year. Hey, Governor, we want to thank you so much for talking with us. We'll catch up with you down the road.

RICHARDSON: Thanks, Chris. Thank you.