Panetta told the Senate Intelligence Committee that President Barack Obama forbids what Panetta called "that kind of extraordinary rendition - when we send someone for the purpose of torture or actions by another country that violate our human values."
CIA Director Michael Hayden has said that the Bush administration moved secret prisoners between countries for interrogations and imprisonment, separate from the judicial system, fewer than 100 times.
Rendition has been used by U.S. presidents for several decades, and Sen. Kit Bond, R-Mo., said the Clinton administration used it 80 times. However, Panetta said the difference is whether the prisoner is transferred to another government for prosecution in its judicial system or for secret interrogations that may cross the line into torture.
"I think renditions where we return individuals to another country where they prosecute them under their laws, I think that is an appropriate use of rendition, Panetta said.
"Having said that, if we capture a high-value prisoner, I believe we have the right to hold that individual temporarily, to debrief that individual and to make sure that individual is properly incarcerated so we can maintain control over that individual," he said.
While the Obama administration is turning its back on some Bush administration practices, Panetta said there is no intention to hold CIA officers responsible for the policy they were told to carry out. CIA interrogators who used waterboarding or other harsh techniques against prisoners with the permission of the White House should not be prosecuted, he said.
"Those individuals ought not to be prosecuted or investigated if they acted pursuant to the law as presented by the attorney general," Panetta said.
The Bush White House approved CIA waterboarding, a form of simulated drowning, for three prisoners in 2002 and 2003. The CIA banned the practice internally in 2006. Obama has prohibited harsh interrogation techniques going forward.
But Panetta said if interrogators went beyond the methods they were told were legal, they should be investigated.
Panetta said he would come to the job with a list a questions he wants the CIA to be able to answer, including the location of Osama bin Laden, and when and where al Qaeda will next try to attack the United States.
"Our first responsibility is to prevent surprise," he said.
The former White House chief of staff under President Clinton and ex-congressman from California has much experience in government but little in intelligence gathering or analysis. He told the committee that he has asked former CIA chiefs- notably former President George H.W. Bush - how to compensate for that shortcoming.
"They all told me to listen carefully to the professionals at the agency but also to stay closely engaged with Congress," Panetta said. "I am a creature of Congress."
Panetta acknowledged he has little professional intelligence experience. But, he said: "I know Washington. I know how it works. I think I also know why it fails to work."
For intelligence expertise, however, he is retaining the top four officials now at the CIA, including Deputy Director Steven Kappes. He promised not to meddle in day-to-day intelligence operations.
"I anticipate focusing primarily on ensuring policy and procedure is handled correctly, rather than intervening personally in the details of operational planning or the production of individual pieces of analysis," he said. "But let me assure you, the decisions at the CIA will be mine."
In choosing Panetta, Obama passed over current and former CIA officials with impressive credentials. The other candidates had either worked in intelligence during the Bush administration's development of policies on interrogation and torture or earlier, during the months leading up to the terrorist attacks of Sept. 11, 2001.
Panetta is not expected to face major opposition in the Senate. If confirmed, he would assume control of the CIA just weeks after Obama made dramatic changes in the agency's interrogation and detention program, directing that secret prisons be closed and interrogations held to methods approved by the military.
Panetta is a strong supporter of Obama's rules.
"We either believe in the dignity of the individual, the rule of law, and the prohibition of cruel and unusual punishment, or we don't. There is no middle ground," he wrote last year.
Panetta promised the committee that he would brief the entire House and Senate intelligence committees as much as possible, rather than just its top members. He said the Bush administration abused that practice.
"Too often critical issues were kept from this committee," he said.