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Washington, DC. The subcommittees met jointly, pursuant to notice, at 1:10 p.m., in room 2237, Rayburn House Office Building, Hon. Don Edwards, chairman of the Subcommittee on Civil and Constitutional Rights, and Hon. Patrick J. Leahy, chairman of the Subcommittee on Technology and the Law presiding.

Also present: Representatives Coble and Canady, and Senator

Representative EDWARDS. The hearing will come to order.

Today, we resume joint hearings with our Senate colleagues. The question before us is how can law enforcement agencies conducting court-authorized wiretaps keep pace with emerging technologies while still respecting privacy and not hampering the innovation that is fundamental to the competitive success of American industries.

Earlier this week, the ranking Republican, Henry Hyde, and I introduced legislation responding to these concerns. Identical legislation was introduced in the Senate by Senator Leahy.

Some have questioned whether there is a need for this legislation at all. I believe that the need is real. The General Accounting Office has looked at the issue and has found that new technologies and services do pose problems for wiretapping.

The FBI has conducted an informal survey of State, local, and Federal agencies and found 183 instances in which technological problems impeded court-authorized wiretaps. The FBI submitted this information to us but asked that it not be publicly disclosed. However, I have received a summary of the information from the FBI and the FBI has agreed it can be released. I will enter it in the record with my statement.

Finally, I believe that the industry itself acknowledges we have a problem, as reflected by the creation of an industry committee to develop solutions for a number of these newer technologies.

We listened very carefully over the last several years to the interest of concerned parties and the bill before us reflects many suggestions from industry and privacy advocates. I must congratulate three of the key participants in this effort.

FBI Director Louis Freeh has been sensitive to the concerns of industry and privacy. While always insisting that law enforcement's basic needs be respected and met, he has recognized that any legislation must be narrowly focused. He has recognized the need for flexibility and a reasonableness standard, and this is going to be reflected in this bill.

Second, I must thank Jerry Berman of the Electronic Frontier Foundation for putting together the dialog that has brought us to this point. Without Jerry, we wouldn't have had a balanced bill that included privacy protections.

Finally, I thank Larry Clinton of the U.S. Telephone Association, who has worked with us diligently. There are many provisions in the bill that reflect the concerns of his members.

I am personally comfortable with the bill. It is a balanced bill. We have gone a long way to accommodate the interests of everybody.

Senator Leahy?


FROM THE STATE OF VERMONT Senator LEAHY. Thank you very much, Mr. Chairman. I want to commend you for having this hearing and the tremendous work you have done. As I said at the time of the crime bill conference, I am one member of the other body who is going to miss your leadership. Being a colleague of yours has been one of the great joys of my service here in the Senate.

Director Freeh, at our last hearing you identified digital telephony as “the number one law enforcement, public safety, and national security issue facing us today." You and other law enforcement agencies told us difficulties we are going to have as we go into the next century if we can't meet the needs for wiretapping.

I will tell you right at the outset, I do not want law enforcement to lose its capability to use this powerful tool in its crimefighting arsenal. Having spent nearly a decade of my own life in law enforcement, I know how important it is. I know that wiretaps can produce powerful evidence against our most dangerous criminals at the lowest risk to the agents involved. We don't have to make deals with criminals or protect witnesses or expose agents to dangers when the police can convict criminals with taped words out of their own mouths.

But I also want to make sure we don't jeopardize either important privacy rights of all Americans or frustrate the development of new communications technologies. There was a time when the local sheriff could drive up in his pickup truck, stand on the roof, hook alligator clips to the phone, put on the earphones, and know what was being said.

We got concerned there might be a few too many people hooking on the old alligator clips and passed wiretap legislation, which made it very clear that you go through the courts, you do all the things you have to do. So we passed the law that protects people's constitutional rights, but then, the technology changed. We have the law but advancing technology is leaving law enforcement behind in its ability to use that law.

Now you can have a money launderer in Boston calling a drug kingpin in Miami to arrange for a shipment of drugs to come into Los Angeles. Those calls could be going over microwaves or over fiber optic lines. Of course, if it is digitized, it is a bunch of ones and zeroes, and whether you have the alligator clips or something else, you are really not going to find out anything about that money laundering, the drug kingpin, or any part of the criminal conversation. That is not what we want.

We have tried to put together a bill that won't stop technology but will help law enforcement. Congressman Edwards and his staff, my staff, the FBI, telephone companies, and everybody else involved, that have spent hours on crafting a reasonable bill that will assure law enforcement's ability to conduct court-authorized wiretaps.

It sets forth four wiretap capability requirements that telecommunication carriers would be required to meet, so they would know what to do when they set about designing new equipment. Phone companies make sure when they plug in new services that the phone system is not shorted out, so that if I use a new service to call from my farm in Middlesex, VT, to somebody in my office in Washington, DC, we are going to get through. We are not going to short out that system, but we are also not going to short out effective law enforcement.

The privacy and security protections for telephones and computers have been expanded in ways that were first recommended to me by a privacy and technology task force organized back in 1991. The protections in the Electronic Communication Privacy Act of 1986 are extended to cordless phones. We take care of questions about the extent of privacy protection for messages sent over a computer. If you send an E-mail message to somebody, you ought to be protected the same way you would if you picked up the phone. We improve the privacy of mobile phones by expanding criminal penalties for stealing the service from legitimate users. But we do it without impeding innovation in telecommunications services.

Under the bill, law enforcement agencies may not require the specific designs of telecommunications systems or features nor prohibit adoption of such design by any telecommunications providers. Industry, not government officials, will run the show.

I did this because I have always had some frustration with what we have done with telecommunications within the Federal Government. We have studiously tried to stay 15 to 20 years behind the curve. The Department of Defense sometimes at multi-billion-dollar installations will have something that looks like World War II telecommunications. The only thing lacking is somebody turning a handle.

Mr. Neel knows what it was like when the administration went to the White House and found that you have a 1950's system, so poorly designed that when the President asked if he could get a phone of his own they told him, certainly, within a few months they could have one. I suggested that he call the local telephone company and he could probably have it put in that afternoon.

So we don't want that to happen, and we are taking care of many questions. We are still going to have questions remaining about how much it is going to cost and who is going to pay for it.

Mr. Chairman, I will put my whole statement in the record because I suspect that we are going to learn more from the witnesses here than what I would have to say. [The prepared statement of Senator Leahy follows:]

PREPARED STATEMENT OF SENATOR PATRICK J. LEAHY At our last joint hearing, FBI Director Freeh identified the digital telephony issue as “the number one law enforcement, public safety, and national security issue facing us today.”

The FBI and other law enforcement agencies have told Congress that their ability to conduct wiretaps is being undercut by new communications features and services that are designed with no thought as to how they might affect law enforcement.

I, for one, do not want law enforcement to lose its capability to use this powerful tool in its crime-fighting arsenal. Wiretaps produce powerful evidence against our most dangerous criminals, at the lowest risk to the agents involved. We don't have to make deals with criminals, protect witnesses, or expose agents to danger when police can convict criminals with tapes of their own conversations.

At the same time that I want to assist legitimate law enforcement needs, I want to make sure we do not jeopardize important privacy rights of all Americans or frustrate the development of new communications technologies. I believe the companion bills Chairman Edwards and I introduced on Tuesday achieve those goals. Over

the past few months, I have worked closely with the distinguished Chairman of the House Judiciary Subcommittee on Civil and Constitutional Rights, Don Edwards, to craft a digital telephony bill. I am always delighted to the opportunity to work with the Chairman, whose hard work and deserved reputation for staunchly defending our civil liberties will be sorely missed in Congress upon his retirement at the end of this session.

Our digital telephony bills were carefully hammered out during numerous meetings with House and Senate staff, industry groups, privacy and civil liberties advocates and the FBI. These parties have worked diligently and in good faith in this effort. It has not been an easy task, and we are all continuing to work to resolve this matter.

This bill ensures law enforcement's continued ability to conduct court-authorized wiretaps by setting forth four wiretap capability requirements that telecommunications carriers would be required to meet. This means that when the phone companies set about designing and deploying new services or features, they must consider law enforcement's needs among the numerous other factors that go into such designs.

Just as phone companies make sure that when they plug in new services, the phone system is not shorted out so, too, we do not want to short the American people's need for effective law enforcement.

The bill also expands privacy and security protections for our telephone and computer communications in ways that were first recommended to me by a Privacy and Technology Task Force I organized in 1991. The protections of the Électronic Communications Privacy Act of 1986 are extended to cordless phones and certain data communications transmitted by radio.

In addition, this bill increases the protection for consumers when they transact their business over the telephone or send messages over their computers. If you call your bank to transfer money, send E-mail messages to an online discussion group, or order a movie from a payperview service, the bill protects the privacy of your transaction.

The bill further protects privacy by requiring telecommunications systems to protect communications not authorized to be intercepted and by restricting the ability of law enforcement to use pen register devices for tracking purposes or for obtaining

transactional information. Finally, the bill improves the privacy of mobile phones by expanding criminal penalties for stealing the service from legitimate users.

The bill does all this without impeding innovation in telecommunications services. Under the bill, law enforcement agencies may not require the specific design of telecommunications systems or features, nor prohibit adoption of any such design, by any telecommunications provider.

The bill protects law enforcement wiretap capabilities, but defers to industry on meeting those needs. Industry, not a government official, runs the show.

To allay pụblic concern over the breadth of wiretapping in America, the entire process remains subject to public scrutiny, oversight and accountability. This bill accomplishes this by requiring any standards or technical requirements that industry adopts to insure wiretap capability be publicly available.

Industry is not hobbled when innovation moves swifter than law enforcement needs. If industry is ready to deploy a new phone feature or service, but lacks current technology to satisfy access for lawful wiretaps, a court can allow the technology to go on line. But if industry can adapt the service to assist law enforcement-it must do so.

Some questions remain that need to be explored at this hearing, including how much is this going to cost and who is going to pay for it. The bill authorizes $500,000,000 toward implementation of any required retrofitting of the system over the next four years. This is based on Director Freeh's previous testimony and the FBI's estimate of costs.

I look forward to hearing from our witnesses about these cost issues and intend to work diligently to resolve this matter this year.

Representative EDWARDS. Thank you, Senator. The gentleman from North Carolina, Mr. Coble?


CONGRESS FROM THE STATE OF NORTH CAROLINA Representative COBLE. Thank you, Mr. Chairman.

I don't have a prepared statement but I will say a word or two, Mr. Chairman. You and the distinguished gentleman from Vermont have pretty well echoed my view on this. I share the gentleman from Vermont's concern in that I in no way want to emasculate or weaken law enforcement in its capability, but I am just as concerned and will guard just as jealously the assurance that in hanging onto that capability and even refining it, that we don't trash or scuttle individual rights to privacy.

That has been a very fine line, Mr. Chairman, that we have to pursue in this area of the law and it has always bothered me, the rights of law enforcement on the one hand, which I heartily defend and promote, but on the other hand, I don't care if it is the biggest bum or the biggest crook in town, we cannot trample individual rights to privacy. I am very uneasy about that.

I realize safeguards are in place. Oh, yes, Congress is taking care of that. But I wonder, ladies and gentlemen, how many times that when wiretap authority is granted, how many times that is done as a result of rubber-stamping it as opposed to thorough and deliberate study surrounding the request for the wiretap. That still plagues me. I am not going to give a sermon today, Mr. Chairman, but I wanted to share that with you all and with our panel here today.

Finally, and this is of no small concern either, cost. This is going to cost a whole lot of money. Ladies and gentlemen, in this town, and Mr. Chairman, you know it as well as I do, in this town, bureaucrats have a way of recklessly and indiscreetly flashing out figures. Oh, this is only going to cost $500 million-only $500 million, that is, and then by the time the dust has settled it is going to cost

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