I would still be in a better place if I could have access to half of the criminal conversations than none of the criminal conversations.

I do fall back, however, on some of the arguments that Ms. Edwards suggests. I think over a long-term period, if the law enforcement standards can be incorporated into the industry standards and we are talking now about designing switches for 1998 and 1999, it seems to me that there will be a much more expansive benefit and a permeating benefit by starting early, particularly with the larger systems which will work to the benefit of upgrading the smaller systems.

Senator LEAHY. Without leaving a blueprint that might cause too much comfort to some, is it not safe to say that no matter what we do, there are going to be areas you are not going to be covering? Mr. FREEH. That is correct. We have already made those choices with respect to private communications networks.

Senator LEAHY. This is the same thing in any kind of law enforcement. People, even under surveillance, people on some occasions escape surveillance or there is somebody else involved that law enforcement doesn't know about. We are not an Orwellian society where everyone is wired, is that not correct?

Mr. FREEH. That is absolutely correct. We never would have gotten John Gotti talking on a telephone, no matter what the access or capability was. There is a certain class of our targets, including spies, who are not going to be amenable to that. That doesn't mean that we give up the whole universe of opportunity.

Senator LEAHY. Mr. Neel, would it be the position of your organization that if the money stopped, then you are not prepared to say you would then take over the funding?

Mr. NEEL. We would hope not, because the burden would most likely fall on ordinary telephone rate payers. That is just the way the telephone company gets its money to do its work.

I think the problem here is, one, there is not a certainty of the continued flow of funds, but the other problem is that even though the money might cease under this legislation after 4 years or even under disputes of another kind, the requirement, we think, is still there. I would say that even though there may not be demands of every telephone company, the requirement to provide a capability to wiretap ordinary telephone conversations as well as these new enhanced services, call forwarding and so on, will still be there for every small telephone company.

The requirement for capability will be ubiquitous unless law enforcement, the Director has an idea of maybe carving out in advance the geographical areas that wouldn't be covered, and I don't think anybody would want to do that. That sort of prescribes the safe haven for criminals.

Senator LEAHY. We may increase the population in some of our rural towns unnecessarily.

Mr. NEEL. Your worst fear might become true under that scenario.

Senator LEAHY. Let us take these 183 cases. Were you unable to get wiretaps in all of those or were you just hindered in your wiretaps?

Mr. FREEH. We were hindered in carrying out the court orders, mostly the pen registers. That doesn't include many cases, not 183, but a few dozen cases where applications were not made for courtauthorized wiretaps because of that deficiency.

Senator LEAHY. Ms. Edwards, what has GAO found? Have you found instances of inabilities to carry out court orders?

Ms. EDWARDS. We had discussions with members in the industry, both on the provider side and on the manufacturer side, and we also spoke with members in the law enforcement community. What we found was that there were reported instances where the law enforcement community had not asked for a particular tap to be made because they knew from prior conversations with industry representatives that it wasn't possible. So rather than going through the anxiety and the effort, as the Director pointed out, that is entailed in getting a court order to do the tap, they just chose not to go that route.

Senator LEAHY. In other words, they felt that if the capability had been there, they could have gotten the court order. Ms. EDWARDS. They would have gotten a court order. Senator LEAHY. But the capability wasn't there.

Ms. EDWARDS. That is right. That was from conversations. We did not identify particular instances, however.

Senator LEAHY. Under this legislation, and Mr. Neel, let me ask you about this, we say that the judge has to take into consideration the availability of funds in deciding whether to issue an enforcement order. Doesn't that protect you enough?

Mr. NEEL. We would hope so, but you have to understand that law enforcement is not your typical consumer. Telephone companies are essentially community-based corporations. No telephone company that I know of is going to want to deny law enforcement the opportunity to do its business, even if perhaps it doesn't have the money to pay for it or if it might be in question.

It would be better if the language of the legislation were more specific than just having the court taking into consideration the ability to pay. We would hope that the legislation would reflect more of a certainty that the Government will pay when the Government requests a product or service. It is a little like suggesting that if the highway patrol runs out of money in its budget and can't buy any more cars and radar detectors, that it shuts down the highway and no one can drive on the highway. It may be a little bit of hyperbole, but the law enforcement is not your typical consumer. No, that doesn't give us adequate comfort, but we think you could improve it in the legislation.

Senator LEAHY. My last question is would you agree, however, that if we do not make some changes as technology goes on, that a large part of law enforcement's capability to lawfully intercept conversations will be denied them?

Mr. NEEL. Two changes do need to be done. There needs to be a recommitment to the effort of Government and the private sector to work out standard problems. That is going to be required whether you pass the legislation or not. You can't just wave a magic wand and declare that this will be done. Government and industry are going to have to work those things out.

Second, you have to make it possible to pay for it. If you can do that, then this can be a reality and you can solve law enforcement problems and protect consumers.

Senator LEAHY. But my point still remains, utilizing today's technologies for wiretapping, are we not fast approaching the time, just using today's technology, when a great deal of the ability of law enforcement, will be denied them?

Mr. NEEL. In a number of cases with new enhanced services, that is probably true.

Senator LEAHY. Thank you.

Director Freeh, that is definitely your position?

Mr. FREEH. Yes, that is my position.

Senator LEAHY. Thank you, Mr. Chairman.

Representative EDWARDS. We welcome the Senator from South Dakota, Mr. Larry Pressler.

Senator PRESSLER. Have my colleagues had a chance to inquire? I am the last to arrive, so I want to be the last to ask. Why don't you go first.

Representative EDWARDS. Mr. Coble?

Representative COBLE. Thank you, Mr. Chairman. Thank you, Senator Pressler.

Mr. Chairman, I will be short and sweet. I apologize that I had to be away on the floor. Prior to my question, lady and gentlemen, I want to reiterate what I said were two significant goals at the outset, to assure law enforcement that it does not lose its capability on the one hand and to assure furthermore that individual private rights are not trashed and summarily dismissed.

I believe each of these goals is laudable and I believe each of these goals is realistic if a proper balance is struck. I think balance is the key word here.

Having said that, Mr. Director, let me put the question to you, and any of you feel free to answer. I want to admit to you that although I am not computer illiterate, neither am I computer competent, so I am about to steam in computerized waters that are always invested with rocks, shoals, and reefs for me because of lack of information computerwise.

Scope of coverage, Mr. Director, I think is an important issue to the topic at hand. Under the term "common carrier", this bill covers local exchange carriers, long-distance carriers, competitive access providers, cellular companies, and cable companies when they offer telephone service. Not included in the scope, as you all know, are all computerized systems, that is commercial Internet, some computer networks, pure computer networks, I suppose.

Having said that, I can visualize the mafia kingpin who is considering relocating in Vermont, to use the Senator's term. [Laughter.]

Senator LEAHY. I am just afraid somebody is going to be encouraged. We don't want them.

Representative COBLE. Senator, I wanted to stay in the New England area, not in the Southeast. [Laughter.]

Representative COBLE. But I see this guy locating wherever-we will even say South Dakota, Larry-[Laughter.]

But when he is going to relocate, I fear, lady and gentlemen, that he may detect an alternate highway. Oh my gosh, he says, these

matters are not included in the scope so I will do my communicating here and there and yonder.

Am I reasonably on course, Director? Let me hear from you.

Mr. FREEH. Yes, I think you are directly on course. There is always going to be and perhaps increasing because of the technology developments, a range of criminal activity and a particular type of criminal actor who will be immune from the best-designed and best-built system. There are other tradeoffs, however. In the event that we are unable to use telephone electronic surveillance, we do have under the statute the authority to approve a court-authorized microphone surveillance. There is new technology that is coming which will even enhance the ability to use microphone surveillance as opposed to telephone surveillance.

There is a part of the sophisticated criminal world which will not be captured in this bill, but it is not captured now. We now have a very small and expert group of spies, terrorists, organized criminals who have their own encryption devices, who are immune from the type of electronic surveillance that the overwhelming majority of our subjects are not, kidnappers. Most of the wiretaps that State and local authorities use are in kidnapping and extortion-type cases. In drug cases, most of the actors are sophisticated people who use phone beepers and telephones to conduct their business. So you are absolutely right. We are missing a part of the playing field, but our position is we don't want to miss the whole playing field.

Representative COBLE. Thank you. Is there anybody else who wants to be heard on that? I think that is a good answer, Mr. Director.

[No response.]

Representative COBLE. Mr. Chairman, I will conclude. You will recall in my opening statement that I expressed concern about the cost. Upon my return, I see others on the panel here share my concern about that.

I can just see, folks, a common carrier having relied upon the assurance that this is going to cost $500 million and dust starts flying and they start making all sorts of sophisticated improvements and submit their bill up here on the Hill. Oh, I am sorry, Mr. Carrier, the bucket is dry, the well has gone dry. There is no more money. I think that is something we must address before the fact rather than after the fact.

Yes, sir, Jerry?

Mr. BERMAN. At the end of the drafting process, language was added to the legislation which says that lack of appropriated funds, and I think Mr. Neel was referring to it, could be a consideration in whether compliance with the requirements are reasonable.

It would be interesting to hear the Director, because he seemed to be suggesting that it was more than a consideration, that if the requirements could not be met with appropriated funds, he would still say, well, I have half of the network taken care of and that is better than having none of the network taken care of. Perhaps he was suggesting that it would be more than a consideration. It might be a defense or at least a limitation on meeting those requirements if there are no funds. Then that requires prioritizing

within the system, and then it says to Congress, if you want compliance, you have to appropriate more funds.

Mr. FREEH. I think the interested parties are completely protected. I cannot conceive of-I shouldn't say this. I think would be unlikely, extremely unlikely for a district court judge in the process which is contemplated by this legislation to force compliance or use any sanctions when compliance is impossible because of the nonreimbursement which is the predicate in the legislation. I can't think of a better protection than that and a better definition of reasonableness.

For district courts who err, of course we have courts of appeals. So I don't think it is a dangerous path for the parties to begin to tread.

Mr. WHEELER. Mr. Director, with all due respect, there are two issues here. One is the issue of a defense in court against an action. The other is a requirement. We don't want to get to court. We don't want to have to say, hey, but-if the law says you are going to provide this capability and this capacity, we want to salute the flag and say, yes, sir, we will. Then we write the check and we turn around and, to use your term, the bucket is dry.

Mr. FREEH. I guess I can't allay all of that anxiety. What I will say, for instance, is with respect to the 183 instances that we have documented where the execution of court orders have been frustrated, in none of those instances was any action undertaken or, as far as I know, contemplated by the Government authorities to force compliance.

Your industries, all of your industries represented here, are our natural and historical allies and colleagues in this endeavor. We have never had an adversarial relationship with any common carrier. I did hundreds of court-authorized wiretaps in the Southern District of New York as a prosecutor. I never heard of a challenge where a prosecutor decided to force compliance under the current statute, which because of the general language of "all necessary assistance" would certainly give jurisdiction for the Government to come into court.

We have never done that. I don't contemplate that would ever be done, because the whole premise of this regime, in order to work, is a cooperative effort where the parties are melding standards and not in an adversary proceeding.

So I think the rule of reasonableness protects you and I think the track record and the history here should assure you that you will be well protected.

Representative COBLE. Mr. Chairman, I told you I would be short and sweet, so before I become long and sour, I will yield back the balance of my time.

Representative EDWARDS. Thank you.

Senator Pressler?

STATEMENT OF HON. LARRY PRESSLER, A U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA

Senator PRESSLER. Thank you, Mr. Chairman, for holding this hearing. I think it is very important.

Let me ask from a layman's point of view what this really means in terms of the new so-called information superhighway, or what