Mr. Neel?

Mr. NEEL. Mr. Chairman, we may not be in great disagreement about this issue. Maybe we are simply not acknowledging the problem of making available massive amounts of money in the out years here, that is sort of the unstated problem.

You could ameliorate much of this by doing two things. First of all is lifting the cap on the time period after which you—at this point in the legislation, you don't provide for reimbursing for capability. As I said earlier, we don't know what kind of new technologies will need to be retrofitted or adapted, and that goes to the capability question. Those problems are not going to be solved in 4 to 6 years. Our sense is that it takes at least 5 to 6 years to simply develop a new product, so that cap on time would be a problem. The second improvement would be to simply not require compliance, certainly not with penalties, huge financial penalties, if the Government is unable to reimburse. In other words, if you run out of money, if it turns out that in the first year you have to spend the whole $500 million and there is no more money authorized, that you then don't force with fines and other kinds of requirements including forcing a carrier to pull a service off, that you don't do that if a company can't be reimbursed.

Those would be significant improvements in terms of dealing with this cost problem.

Ms. EDWARDS. Mr. Chairman, to amplify on that a little bit, I would like to give reference to the points where we have identified opportunities to save dollars or to control the cost.

In the event that we move forward with the $500 million as the designated amount, the question becomes whether or not at the end of the designated period the law enforcement agencies are getting the kinds of capabilities that they need in a priority order, and that brings us to the point of prioritizing the specific needs, be it on the capacity or the capability side, and that prioritization would take place between the two parties, the law enforcement community and the industry. We think that that would be very important. The second point I would like to emphasize is that on the cost containment side, there are solutions that are being developed today that will address some of these issues that we have talked about in general terms. It is important that those technical solutions are shared among the various participating members of the service providers so as not to spend a long period of time waiting for the solutions to transcend all of the carriers, but in addition to that, ultimately to save costs and prevent the redundant development of solutions.

So on the point of prioritizing, we think that is important for containing costs, but also sharing the technical solutions that are available today, those are important in the near term.

For the longer term, the point that Director Freeh raises in terms of setting standards and having those standards guide the development of new technologies I think is very important. Representative EDWARDS. Mr. Wheeler?

Mr. WHEELER. Mr. Chairman, it is not surprising that nobody can put their hands around what the number is, because we don't know what the requirement is.

But there is a parallelism here in the two processes for capability and capacity, or rather, there should be a parallelism which doesn't exist. You look at the procedure the bill establishes for establishing capabilities. First of all, there is the working group which comes up with technical standards. Then there is a formal proceeding at the FCC, if necessary, to notice and comment on that.

On the other side of those items which are going to determine what the cost is, the capacity question, there is no such structure for debate, for exchange, for no, that doesn't make sense, let us do it this way, that kind of a thing. If there were in place a formal procedure, I think we would begin to get down to understanding what the requirements are and what is behind the requirements, and only then can we begin to understand what the costs are. Representative EDWARDS. Senator Leahy?

Senator LEAHY. Thank you, Mr. Chairman.

Mr. Wheeler, just to follow up a little bit on this, you have expressed a concern that we don't know what the capacity is finally going to be, and I understand that. If the Attorney General has to pay for whatever capacity we use, won't that serve as a brake on shooting the moon on this issue?

Mr. WHEELER. I guess I wear two hats here, then, Senator. First of all, I will put on my hat as a taxpayer and say, I would like to see some constraints on what those numbers are.

Now let me put on my hat representing the industry and say that this bill doesn't step up and pay for whatever improvements there are. This bill says that you, the carrier, will spend the money to meet demands which the Government imposes on you. Then you will submit a bill to the Government for that, which we will reimburse you if they have the money.

Senator LEAHY. So what you are saying is the Government might still decide, maybe we need some capacity here. We haven't had any experience with it yet but we might, so let us require it and then see if we have the money to pay for it. Is that your concern? Mr. WHEELER. Yes, sir.

Senator LEAHY. You don't think it would be the other way around?

Mr. WHEELER. I think one of the concerns is that nobody ever wants to get stuck with having said, we don't need that capacity in this place, because

Senator LEAHY. And I share your concern there. I look at some of the experience we have had in these areas, particularly in the Department of Defense where you have to refine, refine, and refine something that you could have bought off the shelf for X-amount. But after you refine for every possible contingency, you do two things: It could cost 8-X instead of 1-X and be a good 10 to 15 years behind the curve.

I think of the example of deciding that we have to have nuclear bomb-proof fax machines and the Department of Defense went and developed and developed. As you know, fax machines have changed very rapidly in the last few years so now they have a lot of antiquated, huge, $40,000 fax machines which may survive a nuclear attack. You tend to wonder who is going to be sending faxes. Do you want to fax a press release, "we just got bombed."? [Laughter.]

Senator LEAHY. As somebody said, they could have just gone down to the local store and picked up a couple of extras, stuck them in a lead box and left them there just in case anybody is around to talk with afterwards. You would have had not only a more modern machine but you would have saved 80 percent of the cost. But I digress.

I am sorry, do you want to say something?

Mr. WHEELER. No, I think you don't digress. I think you are right on point. What is missing is that dialog, the, hey, wait a minute, do we really need a nuclear bomb-proof fax machine?

Senator LEAHY. Everybody uses poor Topsham Telephone Company. For those who don't understand, this has about 1,100 cus

tomers.

Mr. WHEELER. Five employees or something like that.

Senator LEAHY. Five employees, in a beautiful place in a State that I am despairing of ever seeing again if we don't get out of here. [Laughter.]

As much as I love Washington in August, I would much rather be in Vermont.

But the point is, I share a concern that I don't want somebody to say, "gee, just suppose the mafia chieftain decides to move up to Vermont." This is not, to anybody watching us on television, this is not an open invitation, we don't want him. [Laughter.]

But suppose he does. They had better be rewired up there just in case. We don't want to do that.

I think, though, in the testimony and the discussions I have had with the FBI and others, that there is a sense of reasonableness that we are trying to build into the legislation. I don't want somebody to build the bomb-proof fax machine. I don't want somebody to say, just because some criminal happened to vacation for one weekend in Vermont, they would have to be totally rewired and have two extra employees just in case. We don't want to do that. Director Freeh, is this not a subject that you have looked at, the perfect being the enemy of the good in this whole thing?

Mr. FREEH. Just one response to that. Mr. Neel mentioned that the passage of the statute and the enactment of these mechanisms would be an invitation for the ubiquitous use, I think the word was, of wiretaps. I think that is just not valid.

Having been a prosecutor and a judge, knowing what is still going to be unchanged in terms of the legal requirements, I do not expect any additional wiretapping to be done because of any increased capacity. What may happen, and what has happened over 22 years, is an increase in the use of that technique because of the catastrophe of crime, particularly drugs and organized crime.

We have a pretty good idea, and this is why the cooperation, I think, is so critical, and it was alluded to by Mr. Neel, we have a pretty good idea where, based on past crime patterns, the most likely venues and the most critical needs for capacity are. We do not propose, and I don't think anybody is proposing, rewiring America on the bomb-proof fax machine theory. We will never, in any estimation of the use of this technique, require that type of ridiculous cost and preparation.

I think we know where the trends are showing the greatest difficulty. That is where the capacity has to be addressed first, as Ms.

Edwards mentioned, on a priority basis, to keep up with the people who are using telecommunications to commit more and more complicated crimes.

So I would take issue with the idea that this is going to spawn more_wiretaps simply by the use of the capability and access and that I think we have a pretty good idea where we need to build to protect.

Senator LEAHY. Let me use an example on that. When you were a prosecutor, you were involved with the applications for wiretaps on occasions, is that correct?

Mr. FREEH. Yes, that is correct.

Senator LEAHY. As a Federal judge, you saw applications for wiretaps?

Mr. FREEH. Yes.

Senator LEAHY. Did you ever have an experience with a Federal judge that their first question about a wiretap was well, is it easy to do or not? Or rather, do they look at whether you have the probable cause, do you comply with the Constitution, do you follow the statute in applying for this?

Mr. FREEH. They certainly and very critically look at the probable cause. Perhaps more importantly, they look at the showing that is required to be made, which is that no other technique, including the most sophisticated, are amenable to getting the type of evidence which can be found by this technique applied very carefully.

The showing of necessity is almost as great as the probable cause showing, which is exactly what makes only less than 1,000 wiretaps per year and will be

Senator LEAHY. In fact, that is my point. It is not like in some of the television shows where the sergeant turns and says, get a wiretap on this, and 2 minutes later somebody is listening in on something. It is a fairly cumbersome procedure. In fact, it is a very difficult and cumbersome procedure, is it not?

Mr. FREEH. That is exactly right. The more likely reaction, when the squad supervisor says, let us get a wiretap, everybody bails out of the squad area because of the work involved.

Senator LEAHY. I will put in the record the technology-based problems that are encountered by Federal, State, and local law enforcement agencies. There are 183 problems and how they are broken down.

Concerning the funds on this, will the administration be putting in line item requests for these funds? Do you know?

Mr. FREEH. I don't know the answer to that question. I know that the commitment is there and I know that the precise mechanisms, of course, need to be worked out between the Congress and the administration.

Senator LEAHY. Has any thought been given to burden sharing? Of the wiretaps, only about half are Federal, are they not?

Mr. FREEH. The majority are done by State and local authorities. Senator LEAHY. That is what I thought. And yet this law, obviously, is going to have great benefit to them. In fact, if you, that is the FBI, develop techniques that work, I would assume that most State and local authorities, want to follow your techniques because you have done the research and development and everything

else. Is there any possibility of having them share some of the costs?

Mr. FREEH. I think it would be very difficult. They certainly will pick up the costs of the lease-line, the implementation of the specific mechanisms to conduct the wiretap. But to burden, for example, the Petaluma Police Department and the county prosecutor for expenses which certainly would be amenable to solving the kidnapping and murder of Polly Klaus, for example, I think to put those kind of burdens on already pressed and overstrapped State and local authorities would probably be imprudent.

I think if you fix this for one, you fix it for all. Because there is such a great national and Federal interest here, both national security and criminal, it really does seem appropriate to me that the Federal Government bear the costs.

Mr. NEEL. Mr. Chairman?

Senator LEAHY. Yes?

Mr. NEEL. The Director suggested that I indicated that there would be wiretaps, that wiretaps would become ubiquitous. My comment, I think, was that the requirement that every telephone exchange in every rural area in upstate Vermont or wherever would be forced to build in the capability, whether there had ever been in history a request for a wiretap or, to use the director's analogy, might never be in the future, and that that would require those small rural exchanges to build in capability and incur those costs potentially nonreimbursed beyond the 4-6-year period built into this legislation.

If I might mention, the letter that Mr. Berman mentioned, if we could ask that this be put into the record from ten groups that have analyzed this legislation.

Senator LEAHY. It will be included.

I have a related question to ask both of you in this regard. Let us suppose we do appropriate $500 million. Director Freeh, you have testified that it could be more than that and it could be less than that. But suppose we do and we process with the Government paying for this. Let us assume we work out the formula that is realistic.

I would assume that the Government is first going to look to those places where the Director has said we know from historic investigations and law enforcement patterns that the need is greatest and they are more apt to have wiretaps. This is not going to be the Topsham Telephone Company in Vermont but it could well be in Manhattan or Dade County or other such places.

The money is expended there, and you go to the places that have been designated as the first priority, second, third, wherever it goes. But then you run out of money and you still have three or four priority areas, not the whole country but three or four other priority areas. Who pays? Do we stop? I am assuming the Congress says, we are up against our caps this year. There is no more money. Where do you go?

Mr. FREEH. My own view of that is that if this Congress, these committees made a finding that the cost/benefit of supplying further monies to a system which has been, perhaps, half-improved but not totally improved, if those fundings are no longer appropriate, then that money stops funding.