Congressional Record, Volume 144 Issue 59 (Tuesday, May 12, 1998)

[Congressional Record Volume 144, Number 59 (Tuesday, May 12, 1998)]
[Senate]
[Pages S4713-S4727]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Ms. MIKULSKI (for herself, Mr. Glenn, and Mr. Sarbanes):
S. 2064. A bill to prohibit the sale of naval vessels and Maritime
Administration vessels for purposes of scrapping abroad, to establish a
demonstration program relating to the breaking up of such vessels in
United States shipyards, and for other purposes; to the Committee on
Armed Services.

naval vessels legislation

Ms. MIKULSKI. Mr. President, I wish to bring to the attention of the
Senate that today I am introducing legislation to change the way we
dispose of Navy ships that are no longer needed. I am proud to say that
this bill is being cosponsored by my senior Senator, Paul Sarbanes, as
well as the distinguished Senator from Ohio, Senator John Glenn.
With the end of the cold war, the number of ships to be disposed of
in the military arsenal is growing. There are 180 Navy and Maritime
Administration ships waiting to be scrapped. These ships are difficult
and dangerous to dismantle. They usually contain asbestos, PCBs, and
lead paint. They were built long before we understood all of the
environmental hazards associated with these materials.
I am prompted to offer this legislation because an issue was brought
to my attention by a Pulitzer Prize-winning series of articles that
appeared in the Baltimore Sun written by reporters Gary Cohn and Will
Englund. They conducted a very thorough and rigorous investigation into
the way we dispose of our Navy and maritime ships. They traveled around
the country and around the world to see firsthand how our ships are
dismantled.
I must advise the Senate that the way we do this is not being done in
an honorable, environmentally sensitive, efficient way. I believe that
when we have ships that have defended the United States of America,
that were floating military bases, they should be retired with honor.
When I unfold to you the horror stories that the Sun paper found, you
will be shocked, and I hope you will join in the cosponsorship of my
bill.
Let me recite from the Sun paper:

As the Navy sells off obsolete warships at the end of the
cold war, a little known industry has grown up in America's
depressed ports, and where the shipbreaking industry goes,
pollution and injured workers are left in its wake.

Headline No. 1. No. 2:

The Pentagon repeatedly deals with shipbreakers with dismal
records, then fails to keep watch as they leave health,
environmental and legal problems in America's ports.

In terms of our own communities on the border in Brownsville, TX:

In this U.S. shipbreaking capital on the Mexican border,
where labor and life are cheap, scrapping thrives amid
official indifference.

And, I might say, danger.
Also, even more horrendous is the way we use the Third World to dump
American ships: In India, the Sun paper found:

On a fetid beach, 35,000 men scrap the world's ships with
little more than their bare hands. Despite wretched
conditions--

And dangerous environmental situations.
I point out what this means close to home. Let me tell you some
stories. In Baltimore:

Workers have been toiling in air thick with asbestos dust.
In Baltimore, laborers scrapping the USS Coral Sea ripped
asbestos insulation from the aircraft carrier with their bare
hands. At times they had no respirators, standard equipment
for asbestos work. [As we all know,] inhaling asbestos fibers
can have . . . lethal consequences.

It was not limited to Baltimore. At Terminal Island, CA, 20 laborers
were fired when they told Federal investigators how asbestos was being
improperly stripped from Navy ships. In Baltimore, workers were ordered
to stuff asbestos into a leaky barge to hide it from inspectors.

Dangerous substances from scrapped ships have polluted
harbors, rivers and shorelines.

The Sun paper goes on to say:

A scrapyard along the Northeast Cape Fear River in
Wilmington, NC, was contaminated by asbestos, oil and lead.
``That site looked like one of Dante's levels of hell,'' said
David Heeter, a North Carolina assistant attorney general.
Ship scrappers frustrate regulators by constructing a maze
of corporate names and moving frequently. The Defense
Department has repeatedly sent ships to scrappers who have
records of bankruptcies, fraud [and] payoffs. . . .

Because of downsizing, the Navy promised that this would be a
bonanza, for amounts ranging from $15,000 to dismantle a destroyer--15
grand to dismantle a destroyer--to $1 million for an aircraft carrier.

They buy the rights to Navy ships, then sell the salvaged
metal. . . .
Because of environmental violations and other issues, the
Navy has had to take back 20 ships in yards in North
Carolina, Rhode Island and California. . . . Of the 58 ships
sold for scrapping since 1991, only 28 have been finished.

And, oh, my God, how they have been finished.
I would like to turn to my hometown of Baltimore. Mr. President, this
is what the Coral Sea looked like while it was being dismantled in the
Baltimore harbor. It looks like it was ravaged, like it was
cannibalized. It looks like a tenement in a Third World area.
The Sun paper continues:

In Baltimore, torch handlers worked without other men on
fire watch and without fire hoses. . . .

Picture yourself going out there trying to do that in the early
morning.

The Coral Sea's dismal end has been marked by stubborn
fires and dumping of oil in the harbor, by lawsuits and
repeated delays--but most of all, by the mishandling of
asbestos.

Let me tell you that it was so bad that even a Navy inspector who
came to look at what they were doing was scared to death to go on that
ship because he was afraid it was too dangerous.
I am quoting the Sun paper.

On September 16, 1993, [the military] sent its lone
inspector----

One inspector for the United States----

On his first visit to the Seawitch Salvage yard in
Baltimore. . . . But Evans didn't inspect [it because]. . . .
He thought it was too dangerous.
The next day, a 23-year-old worker named Alfio Leonardi Jr.
found out how unsafe it would be.

He walked on a flight deck up in that situation and dropped 30 feet
from the hangar.

I felt a burning feeling inside. . . . There was blood
coming out of my month. I didn't think I was going to live.

He suffered a ruptured spleen, fractured pelvis, fractured vertebrae,
and he broke his arms in several places.
The inspector was new to the job when the accident occurred. He had
only 20 hours of training on environmental issues. He was not
appropriately trained, and he didn't even know what shipbreaking was.
At the same time, we had repeated fires breaking out.
In November of 1996, a fire broke out in the Coral Sea engine room.
There was no one standing fire watch, no hose nearby. The blaze burned
quickly out of control, and for the sixth time, Baltimore City's fire
department had to come in and rescue the shipyard. At the same time,
the owner of this shipyard had a record of environmental violations for
which he ultimately went to jail.
We cannot tolerate this in the Baltimore harbor. If you look there,
that is

[[Page S4714]]

where it is, right across from Ft. McHenry that defended the United
States of America and won the second battle in the war of 1812. And
look at it. That is what it looks like. It is a national disgrace that
that was in the harbor as well as a national environment danger.
Right down the road was the Baltimore City Shipyard, the Bethlehem
Steel Shipyard that was foraging for work. Another fighting lady from
Maryland, Helen Bentley, our former Congresswoman--she and I and
Senator Paul Sarbanes worked for Baltimore to be a home port. We were
desperate for work in our shipyard--desperate. But no; do you think the
Navy turned to shipyards like Bethlehem Steel? They turned to the
rogues, the crooks, the scum, the scams, to dismantle our Navy ships.
I think the ships deserve more. I think the Baltimore harbor deserves
more. And I think the United States of America deserves more. That is
why I am introducing legislation to create a pilot project on how we
can dispose of these ships, and in a way that is efficient, is orderly,
and environmentally safe, and keeps the work in American shipyards,
because while this was so terrible in my own home of Baltimore, MD, let
me show you what was going on in the Third World.
This is the U.S. Navy ships being dismantled in India. Thirty-five
thousand people work on a beach, often with no shoes, dismantling ships
with their bare hands. This is so dangerous, in terms of what they are
doing, that I believe it is an international disgrace. I was appalled
we were also exporting our environmental problems overseas.
Mr. President, I called upon Secretary Cohen, when I read this
series, to immediately stop what we were doing and to take a look. He
did it. I want to thank him for his prompt response. He analyzed what
they should do, and they made recommendations. But the recommendation
was more enforcement of the same old way of doing business. Well, more
enforcement of the same old way of doing business will still end up
with the same old way of doing business--occupational safety dangers,
environmental catastrophes, and a national disgrace.

So that is why I am introducing my own legislation. The first section
of the legislation will absolutely ban the shipping, the sending of our
180 Navy ships overseas to be dismantled in such despicable situations.
The other part establishes a pilot project for the U.S. Navy to look at
how it could put our ships out for dismantling bids in American
shipyards that meet environmental and occupational standards. Those
shipyards, like the ones in my own hometown of Baltimore, that are fit
for duty. They know how to build a ship. They know how to convert a
ship. They know how to dismantle a ship.
I think the Navy can do better. The Navy has an outstanding record of
dismantling nuclear submarines. They do it in a particular and unique
way. They have the ingenuity and the technical competence, but they
lack the will and the resources. What I hope my legislation will do is
give them both the will and the resources to dismantle this in a way
that retires our ships with honor. I knew that when the Senate saw
those pictures they would be as taken aback as I have been.
I thank the Sun paper for their outstanding series in bringing this
to not only my attention but to America's attention. They won the
Pulitzer Prize. But I want the United States of America to be sure that
we win an environmental victory here.
So, Mr. President, I am going to be introducing my legislation today
as we speak. In fact, I send my legislation to the desk and ask that it
be referred to the appropriate committees. I just want to close by
saying that when we close military bases, we do it the right way, we
pay to clean them up, we close them down and find other basic ways of
recycling their use.
Every weekend I am around veterans who wear the ships on which they
sailed. They have the U.S.S. Coral Sea; they have a variety of the
ships that they sailed on. They are proud of those ships, and I am
proud of those ships. And I am proud of the military. I conclude by
saying, I thank Secretary Cohen for his leadership as well as Secretary
Perry. They have done more environmentally positive things for the
military than we have ever had done. But this is the next step.
I yield the floor, and I thank the Senate for its kind attention.
The PRESIDING OFFICER. The bill will be received and appropriately
referred.
The Democratic leader.
Mr. DASCHLE. Mr. President, let me thank the distinguished Senator
from Maryland for her eloquent statement. I appreciate her leadership.
Her statement this morning is one that I wish the whole country could
hear. Her leadership and her willingness to be involved in this issue
is critical to all of us. And I appreciate so much her eloquence and
the studious way in which she has pursued this matter.
______

By Mr. MURKOWSKI (for himself and Mr. Stevens):
S. 2065. A bill to amend the Internal Revenue Code of 1986 to clarify
the tax treatment of Settlement Trusts established pursuant to the
Alaska Native Claims Settlement Act; to the Committee on Finance.

alaska native settlement trust tax legislation

Mr. MURKOWSKI. Mr. President, I am pleased to be joined by Senator
Stevens in introducing legislation that will allow Alaska Native
Corporations to establish settlement trusts designed to promote the
health, education, welfare and cultural heritage of Alaska Natives.
Mr. President, in 1987, the Alaska Native Claims Settlement Act was
amended to permit Native Corporations to establish settlement trusts to
hold lands and investments for the benefit of current and future
generations of Alaska Natives. Assets in these trusts are insulated
from business exposure and risks and can be invested to provide
distributions of income to Native shareholders and their future
generations.
Although the 1987 amendments were designed to facilitate the
development of settlement trusts, many Native Corporations have been
stymied in their efforts because the tax law, in many cases, imposes
onerous penalties on the Native shareholders when the trusts are
created. For example, when assets are transferred to the trust, they
are treated as a de facto distribution of assets directly to the
shareholders themselves to the extent of the corporation's earnings and
profits.
Even though the current shareholders receive no actual income at the
time of the transfer into the trust, they are liable for income taxes
as if they received an actual distribution. This not only requires the
shareholder to come up with money to pay taxes on a distribution he or
she never received, but also can result in a situation where a trust
fund beneficiary is required to prepay taxes on his share of the entire
trust corpus, which may be substantially more in taxes than the amount
of cash benefits he or she will actually receive in the future.
Our legislation remedies this inequity by requiring that a
beneficiary of a settlement trust will be subject to taxation with
respect to assets conveyed to the trust only when the actual
distribution is received by the beneficiary. Moreover, the legislation
provides that distributions from the trust will be taxable as ordinary
income even if the distribution represents a return of capital. In
addition, to ensure that these trusts do not accumulate excessive
levels of the corporation's earnings, the legislation requires that the
trust must annually distribute at least 55 percent of their taxable
income.
Mr. President, Alaska Native Corporations are unique entities. Unlike
Native American tribes in the lower 48, Alaska Native corporations are
subject to income tax. But unlike ordinary C corporations, Alaska
Native corporations have diverse purposes, one of which is to preserve
and protect the heritage of the Native shareholders. The settlement
trust concept is well suited to the special needs of Alaska's Natives.
As the Conference Committee Report to ANSCA amendments of 1987 stated:
Trust distributions may be used to fight poverty, provide
food, shelter and clothing and served comparable economic
welfare purposes. Additionally, cash distributions of trust
income may be made on an across-the-board basis to the
beneficiary population as part of the economic welfare
function.

[[Page S4715]]

Settlement trusts will ensure that for generations to come, Native
Alaskans will have a steady stream of income on which to continue
building an economic base. The current tax rules discourage the
creation of such trusts with the result that Native corporations are
under extreme pressure to distribute all current earnings rather than
prudently reinvesting for the future.
Mr. President, it is my hope that we will be able to see this
legislation adopted into law this year. For the long-term benefit of
Alaska Natives, this tax law change is fundamentally necessary.
______

By Mr. CHAFEE:
S. 2066. A bill to reduce exposure to environmental tobacco smoke; to
the Committee on Environment and Public Works.

ENVIRONMENTAL TOBACCO SMOKE LEGISLATION

Mr. CHAFEE. Mr. President, today I am introducing legislation
regarding one small aspect of the national tobacco debate. This bill
addresses the problem of second-hand smoke, also known as Environmental
Tobacco Smoke, or ETS for short. It is my hope that the ideas contained
in this bill can be incorporated into any tobacco legislation acted on
by the Senate.
The Committee on Environment and Public Works recently held a hearing
on ETS at which we learned that the principal victims of second-hand
smoke are children who live with smokers. Tobacco smoke has devastating
consequences for children under 18 months of age. Annually, up to
15,000 infants are hospitalized for lung infections caused by ETS such
as bronchitis and pneumonia. These severe lung infections claim the
lives of hundreds of children each year.
Second-hand smoke is also responsible for less severe lung infections
in 300,000 infants, 26,000 new cases of asthma among children, millions
of middle ear infections, and roughly half the cases of Sudden Infant
Death Syndrome (SIDS). These preventable illnesses, but 40 percent of
children in one multi-State study were found to be routinely exposed to
tobacco smoke.
The bill I am introducing today would assign some of the funds
collected under any national tobacco settlement approved by Congress to
a state grant program to educate parents about the dangers of smoking
in the home. The statistics I just recited are not widely known by
parents. Once aware of the profound risk ETS poses for their child,
most parents will go to great lengths to protect their child, and I
believe that even includes parents who smoke.
With the grant funds from this bill, States could provide information
about ETS to pediatricians and other child care professionals for
distribution to parents. States also could develop advertising aimed at
parents. We only need to arm parents with information. They will do the
rest.
This bill has a few other provisions. It affirmatively states that
there is no federal preemption of State or local efforts to address
ETS. It would ban smoking on international flights that originate or
terminate in the United States. It also would extend and codify the
President's Executive Order banning smoking in federal buildings. My
good friend, Senator Warner, in his capacity as Chairman of the Senate
Rules Committee, is working to ban smoking from the public areas of the
Senate. I applaud this effort and encourage my colleagues to support
it. My legislation would complement his efforts in other federal
buildings.
This bill does not address the question of smoking in private
workplaces. Up to 3,000 adults die each year from lung cancer caused by
ETS. Because of this statistic, some have argued that the federal
government should ban smoking in nearly every building in the nation.
Most legislative proposals on this issue would subject every dress shop
and church hall in the nation to federal smoking regulations.
Ironically, most of those bills exempt bars and restaurants and other
places where smoking can be common. That means they ignore the few
places where employees faced a substantial threat from ETS while
regulating every other workplace. I believe that there is a more
efficient way to address workplaces with dangerous levels of ETS.
We should allow State and local governments to take the lead on this
matter, but we also should help them to solve the problem. Some towns
and States have taken action already. We can encourage more of them to
do so by expanding the grant program described in my bill to reward
States that reduce dangerous levels of ETS in the workplace. Incentive
grants would allow States to tailor their solutions to address local
concerns. Some States could seek a gradual ban while others may
establish protective ventilation standards.
Any rule that requires changing a habit as deeply ingrained as
smoking will be met with resistance. In contrast to a federal one-size-
fits-all approach, State and local efforts can be tailored more easily
to local concerns, and will, therefore, be more effective.
I did not address smoking in the workplace in my bill because I hope
to work with other interested members to develop language that will be
supportable on both sides of the aisle. Such a provision must both
avoid rigid federal mandates and provide real incentives for States to
address those workplaces with dangerous levels of ETS. I will continue
to work with interested parties in an effort to devise such a
provision. In the meantime, I wanted to offer the balance of my
proposal for the Senate's consideration.
______

By Mr. ASHCROFT (for himself, Mr. Leahy, Mr. Burns, Mr. Craig,
Mrs. Boxer, Mr. Faircloth, Mr. Wyden, Mr. Kempthorne, Mrs.
Murray, and Mrs. Hutchison):
S. 2067. A bill to protect the privacy and constitutional rights of
Americans, to establish standards and procedures regarding law
enforcement access to decryption assistance for encrypted
communications and stored electronic information, to affirm the rights
of Americans to use and sell encryption products, and for other
purposes; to the Committee on the Judiciary.

the e-privacy act

Mr. ASHCROFT. Mr. President, I rise to speak today on an issue that I
find very important to the future of this country's leading position in
the technology, and that is encryption. This issue has been under
consideration since I first came to Capitol Hill, and for more than
three years nothing has been accomplished by way of assistance to law
enforcement, or to industry, or most importantly to the users of
encryption in this country.
My first involvement in this entire discussion came about as a result
of the need for protection and privacy. If we are to operate at our
highest and best in the information age, instead of settling for
something very far below our potential, we are going to need privacy
and protection, and we are going to need the ability to operate with
integrity on the Internet. The Internet has to be something more than
speaking on the public square, it has to have the ability to allow
individuals to communicate with each other. It has to have the same
kind of rights and protections that are accorded to other aspects of
communication. Without this privacy, the potential of the Internet is
destroyed. In my judgment, the Internet would be destined to become
just a sort of international bull session, nothing more than an
international party line of commentary, or an international broadcast
device. I do not believe it will fulfill its potential as a
communication, entertainment, commercial and educational opportunity
unless Internet communications are secure and the right of privacy is
respected.
The Internet allows for the most participatory form of communications
ever. In order for us to be able to both invite participation by
everyone, and to be able to take advantage of it, we have to be able to
exclude some parties from a particular communication. I do not know of
any more successful exclusion technique in the electronic world than
encryption, especially when so much information is going to be
transmitted digitally, much of it through space as well as over hard
lines of communication.
We have a tremendous potential for commerce on the Internet:
everything from selling clothes, to real estate, to software itself.
Electronic commerce has not reached its full potential, but it can. I
think we've got a big agenda there, not just encryption but we've got
to have legally binding signature legislation and therefore solid
encryption.

[[Page S4716]]

Resisting efforts for mandatory domestic key recovery is also
crucial. We have to remind ourselves that the Internet is like so much
of the rest of the culture--government can't solve all the problems. At
least we have to plead for restraint by those who would harm this
technology. As I have said before, now is the time to draw a bright
line against federal regulation of the computer industry. Washington
must not start down the road of dreaming up regulations to fix problems
that may or may not exist. Two things can be predicted with confidence
about congressional meddling in this sector of the economy. First,
legislation will be obsolete on the day it is passed. Second, it will
hurt consumers, workers, shareholders, and the economy. If Congress had
helped set up the transportation industry, there still might be a
livery stable in every town, and buggy whip factories in large cities.
The irrationality of limiting the United States to levels of
encryption which are far below what the world market is demanding and
supplying in other settings, has been mind boggling. This legislation
declares that American companies will be full and active participants
in the encryption industry. Today, numerous editions of leading
American designed and manufactured software bears the stamp, ``Not for
sale outside the United States,'' because the software features robust
encryption. That stamp does nothing to make Americans more secure, but
it does provide aid and comfort to foreign competitors of American
business. This legislation would eliminate that stamp once and for all.
Encryption, of course, is the most important issue to the future of
electronic commerce and if we are to foster the integrity of the
Internet we must have the means of communication domestically and
international. I have to reaffirm that we must allow the software
industry to compete in an international market where robust encryption
already takes place. Months ago I went to a Commerce Committee meeting
and took with me an ad from the Internet, which was from Seimens
company in Germany advertising robust 128 bit encryption, saying that
you can't get this from a U.S. manufacturer. The advertisement also
indicated, however, that if you buy this you can use it in the United
States and you can use it overseas as well, and, so if you want to have
robust encryption buy it from Seimens. The Administration has decided
to tie the hands of the U.S. encryption industry. To me that's a
disaster, but it is also compounded by people beginning to develop
relationships with foreign software providers as a result of the
unavailability of 128 bit or robust encryption on the part of U.S.
providers.
To see the Germans eagerly promoting this potential, and to have
people from my own jurisdiction, from the state of Missouri, say,
``John, we have an office in Singapore, we have to be able to speak
with them confidentially and communicate with them, and the government
is making it impossible for us to send the encryption that we can use
domestically. We can't send it to our office in Singapore because we
are ineligible to export it.'' I don't want the situation to be such
that I have to say, ``Well, go to Seimens in Germany.'' From Seimens
you can buy the encryption that can be sent into the United States and
from Seimens in Germany it can be sent to Singapore and so you can have
your cake and eat it too by dealing with a non-domestic firm. For us to
have a policy which provides for the slitting of our own throats, in a
technology arena, where we have held the lead and must continue to hold
the lead, I think is foolhardy to say the least. If we are to mark the
next century as an ``American Century,'' or even to celebrate this week
as high technology week in the Senate, we must be forward thinking and
acting. This bill moves us away from antiquated export laws to a future
in which American companies will be able to compete in the
international marketplace without having one hand tied behind their
back by the federal government.
This bill also clarifies the proper approach for encryption
domestically as we move ahead in the digital age. The Administration
and the FBI first indicated support for language that would mandate key
recovery for all domestic encryption and now support several suggested
approaches that would make using domestic key escrow a practical--
though not legal--necessity. Director Freeh has gone so far as to
mention the need for a new Fourth Amendment that considers the
realities of the digital age. I think we need a new and improved
approach to domestic encryption, not a new updated version of the
Fourth Amendment. I, for one, am not eagerly awaiting the FBI's new
release of Fourth Amendment 2.0 or First Amendment '98.
I think we have to work together to find a reasonable alternative to
the current Administration policy and I think we have to ensure secure
transactions. That's a clear responsibility. We can't have a situation
where we don't have security and integrity in our business
transactions. We have to be able to compete effectively in a worldwide
marketplace. For us to limit our own potential in terms of competition
makes no sense. We have to make sure that we don't allow those who
would use information improperly or illegally to have access to it.
That has to do with securing the transactions, and the integrity of the
Internet as well.
This legislation is the solution to the problem. It is well thought
out and attempts to address the legitimate concerns of all affected
parties. I will seek passage of this legislation in this Congress and
will commit the resources of my office that may be needed to achieve
this end.
Business Week has recently reported that 61 percent of adults
responded that they would be more likely to go on-line if the privacy
of their information and communications would be protected. Mr.
President, simply put, strong encryption means a strong economy.
Mandatory access, by contrast, means weaker encryption and a less
secure, and therefore less valuable, network.
I ask for unanimous consent that the entire bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2067

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Encryption
Protects the Rights of Individuals from Violation and Abuse
in Cyberspace (E-PRIVACY) Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Findings.
Sec. 4. Definitions.

TITLE I--PRIVACY PROTECTION FOR COMMUNICATIONS AND ELECTRONIC
INFORMATION

Sec. 101. Freedom to use encryption.
Sec. 102. Purchase and use of encryption products by the Federal
Government.
Sec. 103. Enhanced privacy protection for information on computer
networks.
Sec. 104. Government access to location information.
Sec. 105. Enhanced privacy protection for transactional information
obtained from pen registers or trap and trace devices.

TITLE II--LAW ENFORCEMENT ASSISTANCE

Sec. 201. Encrypted wire or electronic communications and stored
electronic communications.

TITLE III--EXPORTS OF ENCRYPTION PRODUCTS

Sec. 301. Commercial encryption products.
Sec. 302. License exception for mass market products.
Sec. 303. License exception for products without encryption capable of
working with encryption products.
Sec. 304. License exception for product support and consulting
services.
Sec. 305. License exception when comparable foreign products available.
Sec. 306. No export controls on encryption products used for
nonconfidentiality purposes.
Sec. 307. Applicability of general export controls.
Sec. 308. Foreign trade barriers to United States products.

SEC. 2. PURPOSES.

The purposes of this Act are--
(1) to ensure that Americans have the maximum possible
choice in encryption methods to protect the security,
confidentiality, and privacy of their lawful wire and
electronic communications and stored electronic information;
(2) to promote the privacy and constitutional rights of
individuals and organizations in networked computer systems
and other

[[Page S4717]]

digital environments, protect the confidentiality of
information and security of critical infrastructure systems
relied on by individuals, businesses and government agencies,
and properly balance the needs of law enforcement to have the
same access to electronic communications and information as
under current law; and
(3) to establish privacy standards and procedures by which
investigative or law enforcement officers may obtain
decryption assistance for encrypted communications and stored
electronic information.

SEC. 3. FINDINGS.

Congress finds that--
(1) the digitization of information and the explosion in
the growth of computing and electronic networking offers
tremendous potential benefits to the way Americans live,
work, and are entertained, but also raises new threats to the
privacy of American citizens and the competitiveness of
American businesses;
(2) a secure, private, and trusted national and global
information infrastructure is essential to promote economic
growth, protect privacy, and meet the needs of American
citizens and businesses;
(3) the rights of Americans to the privacy and security of
their communications and in the conducting of personal and
business affairs should be promoted and protected;
(4) the authority and ability of investigative and law
enforcement officers to access and decipher, in a timely
manner and as provided by law, wire and electronic
communications, and stored electronic information necessary
to provide for public safety and national security should
also be preserved;
(5) individuals will not entrust their sensitive personal,
medical, financial, and other information to computers and
computer networks unless the security and privacy of that
information is assured;
(6) businesses will not entrust their proprietary and
sensitive corporate information, including information about
products, processes, customers, finances, and employees, to
computers and computer networks unless the security and
privacy of that information is assured;
(7) America's critical infrastructures, including its
telecommunications system, banking and financial
infrastructure, and power and transportation infrastructure,
increasingly rely on vulnerable information systems, and will
represent a growing risk to national security and public
safety unless the security and privacy of those information
systems is assured;
(8) encryption technology is an essential tool to promote
and protect the privacy, security, confidentiality,
integrity, and authenticity of wire and electronic
communications and stored electronic information;
(9) encryption techniques, technology, programs, and
products are widely available worldwide;
(10) Americans should be free to use lawfully whatever
particular encryption techniques, technologies, programs, or
products developed in the marketplace that best suits their
needs in order to interact electronically with the government
and others worldwide in a secure, private, and confidential
manner;
(11) government mandates for, or otherwise compelled use
of, third-party key recovery systems or other systems that
provide surreptitious access to encrypted data threatens the
security and privacy of information systems;
(12) American companies should be free to compete and sell
encryption technology, programs, and products, and to
exchange encryption technology, programs, and products
through the use of the Internet, which is rapidly emerging as
the preferred method of distribution of computer software and
related information;
(13) a national encryption policy is needed to advance the
development of the national and global information
infrastructure, and preserve the right to privacy of
Americans and the public safety and national security of the
United States;
(14) Congress and the American people have recognized the
need to balance the right to privacy and the protection of
the public safety with national security;
(15) the Constitution of the United States permits lawful
electronic surveillance by investigative or law enforcement
officers and the seizure of stored electronic information
only upon compliance with stringent standards and procedures;
and
(16) there is a need to clarify the standards and
procedures by which investigative or law enforcement officers
obtain decryption assistance from persons--
(A) who are voluntarily entrusted with the means to decrypt
wire and electronic communications and stored electronic
information; or
(B) have information that enables the decryption of such
communications and information.

SEC. 4. DEFINITIONS.

In this Act:
(1) Agency.--The term ``agency'' has the meaning given the
term in section 6 of title 18, United States Code.
(2) Computer hardware.--The term ``computer hardware''
includes computer systems, equipment, application-specific
assemblies, smart cards, modules, and integrated circuits.
(3) Computing device.--The term ``computing device'' means
a device that incorporates 1 or more microprocessor-based
central processing units that are capable of accepting,
storing, processing, or providing output of data.
(4) Encrypt and encryption.--The terms ``encrypt'' and
``encryption'' refer to the scrambling (and descrambling) of
wire communications, electronic communications, or
electronically stored information, using mathematical
formulas or algorithms in order to preserve the
confidentiality, integrity, or authenticity of, and prevent
unauthorized recipients from accessing or altering, such
communications or information.
(5) Encryption product.--The term ``encryption product''--
(A) means a computing device, computer hardware, computer
software, or technology, with encryption capabilities; and
(B) includes any subsequent version of or update to an
encryption product, if the encryption capabilities are not
changed.
(6) Exportable.--The term ``exportable'' means the ability
to transfer, ship, or transmit to foreign users.
(7) Key.--The term ``key'' means the variable information
used in or produced by a mathematical formula, code, or
algorithm, or any component thereof, used to encrypt or
decrypt wire communications, electronic communications, or
electronically stored information.
(8) Person.--The term ``person'' has the meaning given the
term in section 2510(6) of title 18, United States Code.
(9) Remote computing service.--The term ``remote computing
service'' has the meaning given the term in section 2711(2)
of title 18, United States Code.
(10) State.--The term ``State'' has the meaning given the
term in section 3156(a)(5) of title 18, United States Code.
(11) Technical review.--The term ``technical review'' means
a review by the Secretary, based on information about a
product's encryption capabilities supplied by the
manufacturer, that an encryption product works as
represented.
(12) United states person.--The term ``United States
person'' means any--
(A) United States citizen; or
(B) any legal entity that--
(i) is organized under the laws of the United States, or
any State, the District of Columbia, or any commonwealth,
territory, or possession of the United States; and
(ii) has its principal place of business in the United
States.
TITLE I--PRIVACY PROTECTION FOR COMMUNICATIONS AND ELECTRONIC
INFORMATION

SEC. 101. FREEDOM TO USE ENCRYPTION.

(a) In General.--Except as otherwise provided by this Act
and the amendments made by this Act, it shall be lawful for
any person within the United States, and for any United
States person in a foreign country, to use, develop,
manufacture, sell, distribute, or import any encryption
product, regardless of the encryption algorithm selected,
encryption key length chosen, existence of key recovery or
other plaintext access capability, or implementation or
medium used.
(b) Prohibition on Government-Compelled Key Escrow or Key
Recovery Encryption.--
(1) In general.--Except as provided in paragraph (3), no
agency of the United States nor any State may require,
compel, set standards for, condition any approval on, or
condition the receipt of any benefit on, a requirement that a
decryption key, access to a decryption key, key recovery
information, or other plaintext access capability be--
(A) given to any other person, including any agency of the
United States or a State, or any entity in the private
sector; or
(B) retained by any person using encryption.
(2) Use of particular products.--No agency of the United
States may require any person who is not an employee or agent
of the United States or a State to use any key recovery or
other plaintext access features for communicating or
transacting business with any agency of the United States.
(3) Exception.--The prohibition in paragraph (1) does not
apply to encryption used by an agency of the United States or
a State, or the employees or agents of such an agency, solely
for the internal operations and telecommunications systems of
the United States or the State.
(c) Use of Encryption for Authentication or Integrity
Purposes.--
(1) In general.--The use, development, manufacture, sale,
distribution and import of encryption products, standards,
and services for purposes of assuring the confidentiality,
authenticity, or integrity or access control of electronic
information shall be voluntary and market driven.
(2) Conditions.--No agency of the United States or a State
shall establish any condition, tie, or link between
encryption products, standards, and services used for
confidentiality, and those used for authentication,
integrity, or access control purposes.

SEC. 102. PURCHASE AND USE OF ENCRYPTION PRODUCTS BY THE
FEDERAL GOVERNMENT.

(a) Purchases.--An agency of the United States may purchase
encryption products for--
(1) the internal operations and telecommunications systems
of the agency; or
(2) use by, among, and between that agency and any other
agency of the United States, the employees of the agency, or
persons operating under contract with the agency.
(b) Interoperability.--To ensure that secure electronic
access to the Government is

[[Page S4718]]

available to persons outside of and not operating under
contract with agencies of the United States, the United
States shall purchase no encryption product with a key
recovery or other plaintext access feature if such key
recovery or plaintext access feature would interfere with use
of the product's full encryption capabilities when
interoperating with other commercial encryption products.

SEC. 103. ENHANCED PRIVACY PROTECTION FOR INFORMATION ON
COMPUTER NETWORKS.

Section 2703 of title 18, United States Code, is amended by
adding at the end the following:
``(g) Access to Stored Electronic Information.--
``(1) Disclosure.--
``(A) In general.--Subject to subparagraph (B), a
governmental entity may require the disclosure by a provider
of a remote computing service of the contents of an
electronic record in networked electronic storage only if the
person who created the record is accorded the same
protections that would be available if the record had
remained in that person's possession.
``(B) Networked electronic storage.--In addition to the
requirements of subparagraph (A) and subject to paragraph
(2), a governmental entity may require the disclosure of the
contents of an electronic record in networked electronic
storage only--
``(i) pursuant to a warrant issued under the Federal Rules
of Criminal Procedure or equivalent State warrant, a copy of
which warrant shall be served on the person who created the
record prior to or at the same time the warrant is served on
the provider of the remote computing service;
``(ii) pursuant to a subpoena issued under the Federal
Rules of Criminal Procedure or equivalent State warrant, a
copy of which subpoena shall be served on the person who
created the record, under circumstances allowing that person
a meaningful opportunity to challenge the subpoena; or
``(iii) upon the consent of the person who created the
record.
``(2) Definition.--In this subsection, an electronic record
is in `networked electronic storage' if--
``(A) it is not covered by subsection (a) of this section;
``(B) the person holding the record is not authorized to
access the contents of such record for any purposes other
than in connection with providing the service of storage; and
``(C) the person who created the record is able to access
and modify it remotely through electronic means.''.

SEC. 104. GOVERNMENT ACCESS TO LOCATION INFORMATION.

(a) Court Order Required.--Section 2703 of title 18, United
States Code, is amended by adding at the end the following:
``(h) Requirements for Disclosure of Location
Information.--A provider of mobile electronic communication
service shall provide to a governmental entity information
generated by and disclosing, on a real time basis, the
physical location of a subscriber's equipment only if the
governmental entity obtains a court order issued upon a
finding that there is probable cause to believe that an
individual using or possessing the subscriber equipment is
committing, has committed, or is about to commit a felony
offense.''.
(b) Conforming Amendment.--Section 2703(c)(1)(B) of title
18, United States Code, is amended by inserting ``or wireless
location information covered by subsection (g) of this
section'' after ``(b) of this section''.

SEC. 105. ENHANCED PRIVACY PROTECTION FOR TRANSACTIONAL
INFORMATION OBTAINED FROM PEN REGISTERS OR TRAP
AND TRACE DEVICES.

Subsection 3123(a) of title 18, United States Code, is
amended to read as follows:
``(a) In General.--Upon an application made under section
3122, the court may enter an ex parte order--
``(1) authorizing the installation and use of a pen
register or a trap and trace device within the jurisdiction
of the court if the court finds, based on the certification
by the attorney for the Government or the State law
enforcement or investigative officer, that the information
likely to be obtained by such installation and use is
relevant to an ongoing criminal investigation; and
``(2) directing that the use of the pen register or trap
and trace device be conducted in such a way as to minimize
the recording or decoding of any electronic or other impulses
that are not related to the dialing and signaling information
utilized in call processing.''.
TITLE II--LAW ENFORCEMENT ASSISTANCE

SEC. 201. ENCRYPTED WIRE OR ELECTRONIC COMMUNICATIONS AND
STORED ELECTRONIC COMMUNICATIONS.

(a) In General.--Part I of title 18, United States Code, is
amended by inserting after chapter 123 the following:

``CHAPTER 124--ENCRYPTED WIRE OR ELECTRONIC COMMUNICATIONS AND STORED
ELECTRONIC INFORMATION

``Sec.
``2801. Definitions.
``2802. Unlawful use of encryption.
``2803. Access to decryption assistance for communications.
``2804. Access to decryption assistance for stored electronic
communications or records.
``2805. Foreign government access to decryption assistance.
``2806. Establishment and operations of National Electronic
Technologies Center.

``Sec. 2801. Definitions

``In this chapter:
``(1) Decryption assistance.--The term `decryption
assistance' means assistance that provides or facilitates
access to the plaintext of an encrypted wire or electronic
communication or stored electronic information, including the
disclosure of a decryption key or the use of a decryption key
to produce plaintext.
``(2) Decryption key.--The term `decryption key' means the
variable information used in or produced by a mathematical
formula, code, or algorithm, or any component thereof, used
to decrypt a wire communication or electronic communication
or stored electronic information that has been encrypted.
``(3) Encrypt; encryption.--The terms `encrypt' and
`encryption' refer to the scrambling (and descrambling) of
wire communications, electronic communications, or
electronically stored information, using mathematical
formulas or algorithms in order to preserve the
confidentiality, integrity, or authenticity of, and prevent
unauthorized recipients from accessing or altering, such
communications or information.
``(4) Foreign government.--The term `foreign government'
has the meaning given the term in section 1116.
``(5) Official request.--The term `official request' has
the meaning given the term in section 3506(c).
``(6) Incorporated definitions.--Any term used in this
chapter that is not defined in this chapter and that is
defined in section 2510, has the meaning given the term in
section 2510.

``Sec. 2802. Unlawful use of encryption

``Any person who, during the commission of a felony under
Federal law, knowingly and willfully encrypts any
incriminating communication or information relating to that
felony, with the intent to conceal that communication or
information for the purpose of avoiding detection by a law
enforcement agency or prosecutor--
``(1) in the case of a first offense under this section,
shall be imprisoned not more than 5 years, fined under this
title, or both; and
``(2) in the case of a second or subsequent offense under
this section, shall be imprisoned not more than 10 years,
fined under this title, or both.

``Sec. 2803. Access to decryption assistance for
communications

``(a) Criminal Investigations.--
``(1) In general.--An order authorizing the interception of
a wire or electronic communication under section 2518 shall,
upon request of the applicant, direct that a provider of wire
or electronic communication service, or any other person
possessing information capable of decrypting that
communication, other than a person whose communications are
the subject of the interception, shall promptly furnish the
applicant with the necessary decryption assistance, if the
court finds that the decryption assistance sought is
necessary for the decryption of a communication intercepted
pursuant to the order.
``(2) Limitations.--Each order described in paragraph (1),
and any extension of such an order, shall--
``(A) contain a provision that the decryption assistance
provided shall involve disclosure of a private key only if no
other form of decryption assistance is available and
otherwise shall be limited to the minimum necessary to
decrypt the communications intercepted pursuant to this
chapter; and
``(B) terminate on the earlier of--
``(i) the date on which the authorized objective is
attained; or
``(ii) 30 days after the date on which the order or
extension, as applicable, is issued.
``(3) Notice.--If decryption assistance is provided
pursuant to an order under this subsection, the court issuing
the order described in paragraph (1)--
``(A) shall cause to be served on the person whose
communications are the subject of such decryption assistance,
as part of the inventory required to be served pursuant to
section 2518(8), notice of the receipt of the decryption
assistance and a specific description of the keys or other
assistance disclosed; and
``(B) upon the filing of a motion and for good cause shown,
shall make available to such person, or to counsel for that
person, for inspection, the intercepted communications to
which the decryption assistance related, except that on an ex
parte showing of good cause, the serving of the inventory
required by section 2518(8) may be postponed.
``(b) Foreign Intelligence Investigations.--
``(1) In general.--An order authorizing the interception of
a wire or electronic communication under section 105(b)(2) of
the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C.
1805(b)(2)) shall, upon request of the applicant, direct that
a provider of wire or electronic communication service or any
other person possessing information capable of decrypting
such communications, other than a person whose communications
are the subject of the interception, shall promptly furnish
the applicant with the necessary decryption assistance, if
the court finds that

[[Page S4719]]

the decryption assistance sought is necessary for the
decryption of a communication intercepted pursuant to the
order.
``(2) Limitations.--Each order described in paragraph (1),
and any extension of such an order, shall--
``(A) contain a provision that the decryption assistance
provided shall be limited to the minimum necessary to decrypt
the communications intercepted pursuant to this chapter; and
``(B) terminate on the earlier of--
``(i) the date on which the authorized objective is
attained; or
``(ii) 30 days after the date on which the order or
extension, as applicable, is issued.
``(c) General Prohibition on Disclosure.--Other than
pursuant to an order under subsection (a) or (b) of this
section, no person possessing information capable of
decrypting a wire or electronic communication of another
person shall disclose that information or provide decryption
assistance to an investigative or law enforcement officer (as
defined in section 2510(7)).

``Sec. 2804. Access to decryption assistance for stored
electronic communications or records

``(a) Decryption Assistance.--No person may disclose a
decryption key or provide decryption assistance pertaining to
the contents of stored electronic communications or records,
including those disclosed pursuant to section 2703, to a
governmental entity, except--
``(1) pursuant to a warrant issued under the Federal Rules
of Criminal Procedure or an equivalent State warrant, a copy
of which warrant shall be served on the person who created
the electronic communication prior to or at the same time
service is made on the keyholder;
``(2) pursuant to a subpoena, a copy of which subpoena
shall be served on the person who created the electronic
communication or record, under circumstances allowing the
person meaningful opportunity to challenge the subpoena; or
``(3) upon the consent of the person who created the
electronic communication or record.
``(b) Delay of Notification.--In the case of communications
disclosed pursuant to section 2703(a), service of the copy of
the warrant or subpoena on the person who created the
electronic communication under subsection (a) may be delayed
for a period of not to exceed 90 days upon request to the
court by the governmental entity requiring the decryption
assistance, if the court determines that there is reason to
believe that notification of the existence of the court order
or subpoena may have an adverse result described in section
2705(a)(2).

``Sec. 2805. Foreign government access to decryption
assistance

``(a) In General.--No investigative or law enforcement
officer may--
``(1) release a decryption key to a foreign government or
to a law enforcement agency of a foreign government; or
``(2) except as provided in subsection (b), provide
decryption assistance to a foreign government or to a law
enforcement agency of a foreign government.
``(b) Conditions for Cooperation With Foreign Government.--
``(1) Application for an order.--In any case in which the
United States has entered into a treaty or convention with a
foreign government to provide mutual assistance with respect
to providing decryption assistance, the Attorney General (or
the designee of the Attorney General) may, upon an official
request to the United States from the foreign government,
apply for an order described in paragraph (2) from the
district court in which the person possessing information
capable of decrypting the communication or information at
issue resides--
``(A) directing that person to release a decryption key or
provide decryption assistance to the Attorney General (or the
designee of the Attorney General); and
``(B) authorizing the Attorney General (or the designee of
the Attorney General) to furnish the foreign government with
the plaintext of the encrypted communication or stored
electronic information at issue.
``(2) Contents of order.--An order is described in this
paragraph if it is an order directing the person possessing
information capable of decrypting the communication or
information at issue to
``(A) release a decryption key to the Attorney General (or
the designee of the Attorney General) so that the plaintext
of the communication or information may be furnished to the
foreign government; or
``(B) provide decryption assistance to the Attorney General
(or the designee of the Attorney General) so that the
plaintext of the communication or information may be
furnished to the foreign government.
``(3) Requirements for order.--The court described in
paragraph (1) may issue an order described in paragraph (2)
if the court finds, on the basis of an application made by
the Attorney General under this subsection, that--
``(A) the decryption key or decryption assistance sought is
necessary for the decryption of a communication or
information that the foreign government is authorized to
intercept or seize pursuant to the law of that foreign
country;
``(B) the law of the foreign country provides for adequate
protection against arbitrary interference with respect to
privacy rights; and
``(C) the decryption key or decryption assistance is being
sought in connection with a criminal investigation for
conduct that would constitute a violation of a criminal law
of the United States if committed within the jurisdiction of
the United States.

``Sec. 2806. Establishment and operations of National
Electronic Technologies Center

``(a) National Electronic Technologies Center.--
``(1) Establishment.--There is established in the
Department of Justice a National Electronic Technologies
Center (referred to in this section as the `NET Center').
``(2) Director.--The NET Center shall be administered by a
Director (referred to in this section as the `Director'), who
shall be appointed by the Attorney General.
``(3) Duties.--The NET Center shall--
``(A) serve as a center for Federal, State, and local law
enforcement authorities for information and assistance
regarding decryption and other access requirements;
``(B) serve as a center for industry and government
entities to exchange information and methodology regarding
information security techniques and technologies;
``(C) support and share information and methodology
regarding information security techniques and technologies
with the Computer Investigations and Infrastructure Threat
Assessment Center (CITAC) and Field Computer Investigations
and Infrastructure Threat Assessment (CITA) Squads of the
Federal Bureau of Investigation;
``(D) examine encryption techniques and methods to
facilitate the ability of law enforcement to gain efficient
access to plaintext of communications and electronic
information;
``(E) conduct research to develop efficient methods, and
improve the efficiency of existing methods, of accessing
plaintext of communications and electronic information;
``(F) investigate and research new and emerging techniques
and technologies to facilitate access to communications and
electronic information, including--
``(i) reverse-stenography;
``(ii) decompression of information that previously has
been compressed for transmission; and
``(iii) demultiplexing;
``(G) investigate and research interception and access
techniques that preserve the privacy and security of
information not authorized to be intercepted; and
``(H) obtain information regarding the most current
hardware, software, telecommunications, and other
capabilities to understand how to access digitized
information transmitted across networks.
``(4) Equal access.--State and local law enforcement
agencies and authorities shall have access to information,
services, resources, and assistance provided by the NET
Center to the same extent that Federal law enforcement
agencies and authorities have such access.
``(5) Personnel.--The Director may appoint such personnel
as the Director considers appropriate to carry out the duties
of the NET Center.
``(6) Assistance of other federal agencies.--Upon the
request of the Director of the NET Center, the head of any
department or agency of the Federal Government may, to assist
the NET Center in carrying out its duties under this
subsection--
``(A) detail, on a reimbursable basis, any of the personnel
of such department or agency to the NET Center; and
``(B) provide to the NET Center facilities, information,
and other nonpersonnel resources.
``(7) Private industry assistance.--The NET Center may
accept, use, and dispose of gifts, bequests, or devises of
money, services, or property, both real and personal, for the
purpose of aiding or facilitating the work of the Center.
Gifts, bequests, or devises of money and proceeds from sales
of other property received as gifts, bequests, or devises
shall be deposited in the Treasury and shall be available for
disbursement upon order of the Director of the NET Center.
``(8) Advisory board.--
``(A) Establishment.--There is established in the NET
Center an Advisory Board for Excellence in Information
Security (in this paragraph referred to as the `Advisory
Board'), which shall be comprised of members who have the
qualifications described in subparagraph (B) and who are
appointed by the Attorney General. The Attorney General shall
appoint a chairman of the Advisory Board.
``(B) Qualifications.--Each member of the Advisory Board
shall have experience or expertise in the field of
encryption, decryption, electronic communication, information
security, electronic commerce, privacy protection, or law
enforcement.
``(C) Duties.--The duty of the Advisory Board shall be to
advise the NET Center and the Federal Government regarding
new and emerging technologies relating to encryption and
decryption of communications and electronic information.
``(9) Implementation plan.--
``(A) In general.--Not later than 2 months after the date
of enactment of this chapter, the Attorney General shall, in
consultation and cooperation with other appropriate Federal
agencies and appropriate industry participants, develop and
cause to be published in the Federal Register a plan for
establishing the NET Center.
``(B) Contents of plan.--The plan published under
subparagraph (A) shall--
``(i) specify the physical location of the NET Center and
the equipment, software,

[[Page S4720]]

and personnel resources necessary to carry out the duties of
the NET Center under this subsection;
``(ii) assess the amount of funding necessary to establish
and operate the NET Center; and
``(iii) identify sources of probable funding for the NET
Center, including any sources of in-kind contributions from
private industry.
``(b) Authorization.--There are authorized to be
appropriated such sums as may be necessary for the
establishment and operation of the NET Center.''.
(b) Technical and Conforming Amendment.--The analysis for
part I of title 18, United States Code, is amended by adding
at the end the following:

``124. Encrypted wire or electronic communications and stored
electronic information..................................2801''.....

TITLE III--EXPORTS OF ENCRYPTION PRODUCTS

SEC. 301. COMMERCIAL ENCRYPTION PRODUCTS.

(a) Provisions Applicable to Commercial Products.--The
provisions of this title apply to all encryption products,
regardless of the encryption algorithm selected, encryption
key length chosen, exclusion of key recovery or other
plaintext access capability, or implementation or medium
used, except those specifically designed or modified for
military use, including command, control, and intelligence
applications.
(b) Control by Secretary of Commerce.--Subject to the
provisions of this title, and notwithstanding any other
provision of law, the Secretary of Commerce shall have
exclusive authority to control exports of encryption products
covered under subsection (a).

SEC. 302. LICENSE EXCEPTION FOR MASS MARKET PRODUCTS.

(a) Export Control Relief.--Subject to section 307, an
encryption product that is generally available, or
incorporates or employs in any form, implementation, or
medium, an encryption product that is generally available,
shall be exportable without the need for an export license,
and without restrictions other than those permitted under
this Act, after a 1-time 15-day technical review by the
Secretary of Commerce.
(b) Definitions.--In this section, the term ``generally
available'' means an encryption product that is--
(1) offered for sale, license, or transfer to any person
without restriction, whether or not for consideration,
including, but not limited to, over-the-counter retail sales,
mail order transactions, phone order transactions, electronic
distribution, or sale on approval; and
(2) not designed, developed, or customized by the
manufacturer for specific purchasers except for user or
purchaser selection among installation or configuration
parameters.
(c) Commerce Department Assurance.--
(1) In general.--The manufacturer or exporter of an
encryption product may request written assurance from the
Secretary of Commerce that an encryption product is
considered generally available for purposes of this section.
(2) Response.--Not later than 30 days after receiving a
request under paragraph (1), the Secretary shall make a
determination regarding whether to issue a written assurance
under that paragraph, and shall notify the person making the
request, in writing, of that determination.
(3) Effect on manufacturers and exporters.--A manufacturer
or exporter who obtains a written assurance under this
subsection shall not be held liable, responsible, or subject
to sanctions for failing to obtain an export license for the
encryption product at issue.

SEC. 303. LICENSE EXCEPTION FOR PRODUCTS WITHOUT ENCRYPTION
CAPABLE OF WORKING WITH ENCRYPTION PRODUCTS.

Subject to section 307, any product that does not itself
provide encryption capabilities, but that incorporates or
employs in any form cryptographic application programming
interfaces or other interface mechanisms for interaction with
other encryption products covered by section 301(a), shall be
exportable without the need for an export license, and
without restrictions other than those permitted under this
Act, after a 1-time, 15-day technical review by the Secretary
of Commerce.

SEC. 304. LICENSE EXCEPTION FOR PRODUCT SUPPORT AND
CONSULTING SERVICES.

(a) No Additional Export Controls Imposed if Underlying
Product Covered by License Exception.--Technical assistance
and technical data associated with the installation and
maintenance of encryption products covered by sections 302
and 303 shall be exportable without the need for an export
license, and without restrictions other than those permitted
under this Act.
(b) Definitions.--In this section:
(1) Technical assistance.--The term ``technical
assistance'' means services, including instruction, skills
training, working knowledge, and consulting services, and the
transfer of technical data.
(2) Technical data.--The term ``technical data'' means
information including blueprints, plans, diagrams, models,
formulae, tables, engineering designs and specifications,
manuals and instructions written or recorded on other media
or devices such as disk, tape, or read-only memories.

SEC. 305. LICENSE EXCEPTION WHEN COMPARABLE FOREIGN PRODUCTS
AVAILABLE.

(a) Foreign Availability Standard.--An encryption product
not qualifying under section 302 shall be exportable without
the need for an export license, and without restrictions
other than those permitted under this Act, after a 1-time 15-
day technical review by the Secretary of Commerce, if an
encryption product utilizing the same or greater key length
or otherwise providing comparable security to such encryption
product is, or will be within the next 18 months,
commercially available outside the United States from a
foreign supplier.
(b) Determination of Foreign Availability.--
(1) Encryption export advisory board established.--There is
hereby established a board to be known as the ``Encryption
Export Advisory Board'' (in this section referred to as the
``Board'').
(2) Membership.--The Board shall be comprised of--
(A) the Under Secretary of Commerce for Export
Administration, who shall be Chairman;
(B) seven individuals appointed by the President, of whom--
(i) one shall be a representative from each of--

(I) the National Security Agency;
(II) the Central Intelligence Agency; and
(III) the Office of the President; and

(ii) four shall be individuals from the private sector who
have expertise in the development, operation, or marketing of
information technology products; and
(C) four individuals appointed by Congress from among
individuals in the private sector who have expertise in the
development, operation, or marketing of information
technology products, of whom--
(i) one shall be appointed by the Majority Leader of the
Senate;
(ii) one shall be appointed by the Minority Leader of the
Senate;
(iii) one shall be appointed by the Speaker of the House of
Representatives; and
(iv) one shall be appointed by the Minority Leader of the
House of Representatives.
(3) Meetings.--
(A) In general.--Subject to subparagraph (B), the Board
shall meet at the call of the Under Secretary of Commerce for
Export Administration.
(B) Meetings when applications pending.--If any application
referred to in paragraph (4)(A) is pending, the Board shall
meet not less than once every 30 days.
(4) Duties.--
(A) In general.--Whenever an application for a license
exception for an encryption product under this section is
submitted to the Secretary of Commerce, the Board shall
determine whether a comparable encryption product is
commercially available outside the United States from a
foreign supplier as specified in subsection (a).
(B) Majority vote required.--The Board shall make a
determination under this paragraph upon a vote of the
majority of the members of the Board.
(C) Deadline.--The Board shall make a determination with
respect to an encryption product under this paragraph not
later than 30 days after receipt by the Secretary of an
application for a license exception under this subsection
based on the encryption product.
(D) Notice of determinations.--The Board shall notify the
Secretary of Commerce of each determination under this
paragraph.
(E) Reports to president.--Not later than 30 days after a
meeting under this paragraph, the Board shall submit to the
President a report on the meeting.
(F) Applicability of faca.--The provisions of the Federal
Advisory Committee Act (5 U.S.C. App.) shall not apply to the
Board or to meetings held by the Board under this paragraph.
(5) Action by secretary of commerce.--
(A) Approval or disapproval.--The Secretary of Commerce
shall specifically approve or disapprove each determination
of the Board under paragraph (5) not later than 30 days of
the submittal of such determination to the Secretary under
that paragraph.
(B) Notification and publication of decision.--The
Secretary of Commerce shall--
(i) notify the Board of each approval or disapproval under
this paragraph; and
(ii) publish a notice of the approval or disapproval in the
Federal Register.
(C) Contents of notice.--Each notice of a decision of
disapproval by the Secretary of Commerce under subparagraph
(B) of a determination of the Board under paragraph (4) that
an encryption product is commercially available outside the
United States from a foreign supplier shall set forth an
explanation in detail of the reasons for the decision,
including why and how continued export control of the
encryption product which the determination concerned will be
effective in achieving its purpose and the amount of lost
sales and loss in market share of United States encryption
products as a result of the decision.
(6) Judicial review.--Notwithstanding any other provision
of law, a decision of disapproval by the Secretary of
Commerce under paragraph (5) of a determination of the Board
under paragraph (4) that an encryption product is
commercially available outside the United States from a
foreign supplier shall be subject to judicial review under
the provisions of subchapter II of chapter 5 of title 5,
United States Code (commonly referred to as the
``Administrative Procedures Act'').
(c) Inclusion of Comparable Foreign Encryption Product in a
United States Product Not Basis for Export Controls.--A
product that incorporates or employs a

[[Page S4721]]

foreign encryption product, in the way it was intended to be
used and that the Board has determined to be commercially
available outside the United States, shall be exportable
without the need for an export license and without
restrictions other than those permitted under this Act, after
a 1-time 15-day technical review by the Secretary of
Commerce.

SEC. 306. NO EXPORT CONTROLS ON ENCRYPTION PRODUCTS USED FOR
NONCONFIDENTIALITY PURPOSES.

(a) Prohibition on New Controls.--The Federal Government
shall not restrict the export of encryption products used for
nonconfidentiality purposes such as authentication,
integrity, digital signatures, nonrepudiation, and copy
protection.
(b) No Reinstatement of Controls on Previously Decontrolled
Products.--Those encryption products previously decontrolled
and not requiring an export license as of January 1, 1998, as
a result of administrative decision or rulemaking shall not
require an export license.

SEC. 307. APPLICABILITY OF GENERAL EXPORT CONTROLS.

(a) Subject to Terrorist and Embargo Controls.--Nothing in
this Act shall be construed to limit the authority of the
President under the International Emergency Economic Powers
Act, the Trading with the Enemy Act, or the Export
Administration Act, to--
(1) prohibit the export of encryption products to countries
that have been determined to repeatedly provide support for
acts of international terrorism; or
(2) impose an embargo on exports to, and imports from, a
specific country.
(b) Subject to Specific Denials for Specific Reasons.--The
Secretary of Commerce shall prohibit the export of particular
encryption products to an individual or organization in a
specific foreign country identified by the Secretary if the
Secretary determines that there is substantial evidence that
such encryption products will be used for military or
terrorist end-use, including acts against the national
security, public safety, or the integrity of the
transportation, communications, or other essential systems of
interstate commerce in the United States.
(c) Other Export Controls Remain Applicable.--(1)
Encryption products shall remain subject to all export
controls imposed on such products for reasons other than the
existence of encryption capabilities.
(2) Nothing in this Act alters the Secretary's ability to
control exports of products for reasons other than
encryption.

SEC. 308. FOREIGN TRADE BARRIERS TO UNITED STATES PRODUCTS.

Not later than 180 days after the date of enactment of this
Act, the Secretary of Commerce, in consultation with the
United States Trade Representative, shall--
(1) identify foreign barriers to exports of United States
encryption products;
(2) initiate appropriate actions to address such barriers;
and
(3) submit to Congress a report on the actions taken under
this section.

Mr. LEAHY. Mr. President, I am pleased to join Senator Ashcroft, and
others, in introducing today the ``Encryption Protects the Rights of
Individuals from Violation and Abuse in Cyberspace,'' or E-PRIVACY Act,
to reform our nation's cryptography policy in a constructive and
positive manner. It is time the Administration woke up to the critical
need for a common sense encryption policy in this country.
I have been sounding the alarm bells about this issue for several
years now, and have introduced encryption legislation, with bipartisan
support, in the last Congress and again in this one, to balance the
important privacy, economic, national security and law enforcement
interests at stake. The volume of those alarm bells should be raised to
emergency sirens.
Hardly a month goes by without press reports of serious breaches of
computer security that threaten our critical infrastructures, including
Defense Department computer systems, the telephone network, or computer
systems for airport control towers. The lesson of these computer
breaches--often committed by computer savvy teenagers--is that all the
physical barriers we might put in place can be circumvented using the
wires that run into every building to support the computers and
computer networks that are the mainstay of how we do business. A well-
focused cyber-attack on the computer networks that support
telecommunications, transportation, water supply, banking, electrical
power and other critical infrastructure systems could wreak havoc on
our national economy or even jeopardize our national defense or public
safety.
We have been aware of the vulnerabilities of our computer networks
for some time. It became clear to me almost a decade ago, during
hearings I chaired of the Judiciary Subcommittee on Technology and the
Law on the risks of high-tech terrorism, that merely ``hardening'' our
physical space from potential attack is not enough. We must also
``harden'' our critical infrastructures to ensure our security and our
safety.
That is where encryption technology comes in. Encryption can protect
the security of our computer information and networks. Indeed, both
former Senator Sam Nunn and former Deputy Attorney General Jamie
Gorelick, who serve as co-chairs of the Advisory Committee to the
President's Commission on Critical Infrastructure Protection, have
testified that ``encryption is essential for infrastructure
protection.''
Yet U.S. encryption policy has acted as a deterrent to better
security. As long ago as 1988, at the High-Tech Terrorism hearings I
chaired, Jim Woolsey, who later became the director of the Central
Intelligence Agency, testified about the need to do a better job of
using encryption to protect our computer networks. Of particular
concern is the recent testimony of former Senator Sam Nunn that the
``continuing federal government-private sector deadlock over encryption
and export policies'' may pose an obstacle to the cooperation needed to
protect our country's critical infrastructures.
I have long advocated the use of strong encryption by individuals,
government agencies and private companies to protect their valuable and
confidential computer information. Moreover, as more Americans every
year use the Internet and other computer networks to obtain critical
medical services, and conduct their personal and business affairs,
maintaining the privacy and confidentiality of our computer
communications both here and abroad has only grown in importance. As an
avid computer user and Internet surfer myself, I care deeply about
protecting individual privacy and encouraging the development of the
Internet as a secure and trusted communications medium.
Encryption is the key to protecting the privacy of our online
communications and electronic records by ensuring that only the people
we choose can read those communications and records. That is why the
primary thrust of the encryption legislation I have introduced is to
encourage--and not stand in the way of--the widespread use of strong
encryption.
Strong encryption serves as a crime prevention shield to stop
hackers, industrial spies and thieves from snooping into private
computer files and stealing valuable proprietary information.
Unfortunately, we still have a long away to go to reform our country's
encryption policy to reflect that this technology is a significant
crime and terrorism prevention tool.
Even as our law enforcement and intelligence agencies try to slow
down the widespread use of strong encryption, technology continues to
move forward. Ironically, foot-dragging by the Administration on export
controls is driving encryption technology, expertise and manufacturing
overseas where we will lose even more control over its proliferation.
Indeed, due to the sorry state of our export controls on encryption,
we are seeing rising numbers of our high-tech companies turning to
overseas firms as suppliers of the strong encryption demanded by their
customers. For example, Network Associates recently announced that it
will make strong encryption software developed in the United States
available through a Swiss company. Other companies, including Sun
Microsystems, are cooperating with foreign firms to manufacture and
distribute overseas strong encryption software originally developed
here at home.
Encryption technology, invented with American ingenuity, will now be
manufactured and distributed in Europe, and imported back into this
country.
Driving encryption expertise overseas is extremely short-sighted and
poses a real threat to our national security. Driving high-tech jobs
overseas is a threat to our economic security, and stifling the
widespread, integrated use of strong encryption is a threat to our
public safety. The E-PRIVACY Act would reverse the incentives for
American companies to look abroad for strong encryption by relaxing our
export controls.
Specifically, the bill would grant export license exceptions, after a
one-time technical review, for mass market products with encryption
capabilities,

[[Page S4722]]

products which do not themselves provide encryption but are capable of
interoperating with encryption products, and customized hardware and
software with encryption capabilities so long as foreign products with
comparable encryption are available.
At the same time, the bill retains important restrictions on
encryption exports for military end-uses or to terrorist-designated or
embargoed countries, such as Cuba and North Korea. It also affirms the
continued authority of the Secretary of Commerce over encryption
exports and assures that before export, the Secretary is able to
conduct a one-time technical review of all encryption products to
ensure that the product works as represented.
The E-PRIVACY Act puts to rest the specter of domestic controls on
encryption. This legislation bars government-mandated key recovery (or
key escrow encryption) and ensures that all computer users are free to
choose any encryption method to protect the privacy of their online
communications and computer files.
At the heart of the encryption debate is the power this technology
gives computer users to choose who may access their communications and
stored records, to the exclusion of all others. For the same reason
that encryption is a powerful privacy enhancing tool, it also poses
challenges for law enforcement. Law enforcement agencies want access
even when we do not choose to give it. We are mindful of these national
security and law enforcement concerns that have dictated the
Administration's policy choices on encryption.
With the appropriate procedural safeguards in place, law enforcement
agencies should be able to get access to decryption assistance. The E-
PRIVACY Act contains a number of provisions designed to address these
concerns, including a new criminal offense for willful use of
encryption to hide incriminating evidence from law enforcement
detection, establishment of a NET Center to help federal, state and
local law enforcement stay abreast of advanced technologies, and
explicit procedures for law enforcement to obtain decryption assistance
from third parties for encrypted communications or records to which law
enforcement has lawful access.
One of the starkest deficiencies in the Administration's key recovery
proposals has always been the question of foreign government access.
The Administration has sought reciprocal relationships with foreign
governments as a critical part of an effective global key recovery
system. Yet many Americans and American companies are rightfully
concerned about the terms under which foreign governments would get
access to decryption assistance. The E-PRIVACY Act makes clear what
those terms will be and ensures that foreign governments will not get
access to private decryption keys, but only, at most, plaintext.
This is not just an important issue for the privacy and security of
Americans; it also is a significant human rights issue. Today, human
rights organizations worldwide are using encryption to protect their
work and the lives of investigators, witnesses and victims overseas.
Amnesty International uses it. Human Rights Watch uses it. The human
rights program in the American Association for the Advancement of
Science uses it. It is used to protect witnesses who report human
rights abuses in the Balkans, in Burma, in Guatemala, in Tibet. I have
been told about a number of other instances in which strong encryption
has been used to further the causes of democracy and human rights.

For example, in the ongoing trial of Argentinean military officers in
Spain, on charges of genocide and terrorism arising out of the ``dirty
war,'' the human rights group Derechos uses the encryption program
Pretty Good Privacy (PGP)--which the United States government tried to
keep out of the hands of foreigners--to encrypt particularly
confidential messages that go between Spain and Argentina, to stop the
Argentinean intelligence forces from being able to read them and so try
to jeopardize the trial.
A group in Guatemala is using a computer database to track the names
of witnesses to military massacres. A South African organization keeps
the names of applicants for amnesty for political crimes carried out in
South Africa during the apartheid regime. Workers at both groups could
be subject to intimidation, harassment, or murder by those intent on
preventing the public discussion and analysis of the claims. Both
systems are protected by strong cryptography.
A not-for-profit agency working for human rights in the Balkans uses
PGP to protect all sensitive files. Its offices have been raided by
various police forces looking for evidence of ``subversive
activities.'' Last year in Zagreb, security police raided its office
and confiscated its computers in the hope of retrieving information
about the identity of people who had complained about human rights
abuses by the authorities. PGP allowed the group to communicate and
protect its files from any attempt to gain access. The director of the
organization spent 13 days in prison for not opening his encrypted
files but has said ``it was a very small price to pay for protecting
our clients.''
The Iraqi National Congress, a group opposing Saddam Hussein with
offices in London and supporters inside Iraq, uses encrypted e-mail to
communicate with its supporters inside Iraq. (Non-governmental Internet
connections are banned in Iraq, but the dissidents within Iraq access
e-mail by dialing outside the country with satellite telephones).
Burmese human rights activists working in the relative safe haven of
Thailand use encryption when communicating on-line, because the Thai
government maintains diplomatic relations with the Burmese government
and is expected to turn over information to the Burmese authorities.
The FBI has argued that lives may be lost in sensitive terrorist and
other investigations if government agencies do not have access to
private encryption keys. However, the reverse is equally true: weak
encryption or easy government access to decryption assistance could
jeopardize lives as well.
Finally, the E-PRIVACY Act contains provisions to enhance the privacy
protections for communications, even when encryption is not employed.
Specifically, the bill would require law enforcement to obtain a court
order based on probable cause before using a cellular telephone as a
tracking device. In addition, the bill would require law enforcement
agencies to obtain a court order or provide notice when seizing
electronic records that a person stores on a computer network rather
than on the hard drive of his or her own personal computer. Finally,
the bill grants Federal judges authority to evaluate the reasons
proffered by a prosecutor for issuance of an ex parte pen register or
trap and trace device order, by contrast to their mere ministerial
authority under current law.
In sum, the E-PRIVACY Act accomplishes the eight goals that Senator
Ashcroft and I set out during our April 2, 1998, colloquy on the floor.
Specifically, we sought to craft legislation that promotes the
following principles:
First, ensure the right of Americans to choose how to protect the
privacy and security of their communications and information;
Second, bar a government-mandated key escrow encryption system;
Third, establish both procedures and standards for access by law
enforcement to decryption keys or decryption assistance for both
encrypted communications and stored electronic information and only
permit such access upon court order authorization, with appropriate
notice and other procedural safeguards;
Fourth, establish both procedures and standards for access by foreign
governments and foreign law enforcement agencies to the plaintext of
encrypted communications and stored electronic information of United
States persons;
Fifth, modify the current export regime for encryption to promote the
global competitiveness of American companies;
Sixth, avoid linking the use of certificate authorities with key
recovery agents or, in other words, not link the use of encryption for
confidentiality purposes with use of encryption for authenticity and
integrity purposes;
Seventh, consistent with these goals of promoting privacy and the
global competitiveness of our high-tech industries, help our law
enforcement agencies and national security agencies deal with the
challenges posed by the use of encryption; and

[[Page S4723]]

Eighth, protect the security and privacy of information provided by
Americans to the government by ensuring that encryption products used
by the government interoperate with commercial encryption products.
Resolving the encryption debate is critical for our economy, our
national security and our privacy. This is not a partisan issue. This
is not a black-and-white issue of being either for law enforcement and
national security or for Internet freedom. Characterizing the debate in
these simplistic terms is neither productive nor accurate.
Delays in resolving the encryption debate hurt most the very public
safety and national security interests that are posed as obstacles to
resolving this issue. We need sensible solutions in legislation that
will not be subject to change at the whim of agency bureaucrats.
Every American, not just those in the software and high-tech
industries and not just those in law enforcement agencies, has a stake
in the outcome of this debate. We have a legislative stalemate right
now that needs to be resolved, and I hope to work closely with my
colleagues and the Administration on a solution.
I ask unanimous consent that the sectional summary for the ``E-
PRIVACY Act'' be printed in the Record.
There being no objection, the summary was ordered to be printed in
the Record, as follows:

Section-by-Section Analysis of E-Privacy Act

Sec. 1. Short Title.--The Act may be cited as the
``Encryption Protects the Rights of Individuals from
Violation and Abuse in CYberspace (E-PRIVACY) Act.''
Sec. 2 Purposes.--The Act would ensure that Americans have
the maximum possible choice in encryption methods to protect
the security, confidentiality and privacy of their lawful
wire and electronic communications and stored electronic
information. The Act would also promote the privacy and
constitutional rights of individuals and organizations and
the security of critical information infrastructures.
Finally, the Act would establish privacy standards and
procedures for law enforcement officers to follow to obtain
decryption assistance for encrypted communications and
information.
Sec. 3 Findings.--The Act enumerates sixteen congressional
findings, including that a secure, private and trusted
national and global information infrastructure is essential
to promote citizens' privacy, economic growth and meet the
needs of both American citizens and businesses, that
encryption technology widely available worldwide can help
meet those needs, that Americans should be free to use, and
American businesses free to compete and sell, encryption
technology, programs and products, and that there is a need
to develop a national encryption policy to advance the global
information infrastructure and preserve Americans' right to
privacy and the Nation's public safety and national security.
Sec. 4 Definitions.--The terms ``agency'', ``person'',
``remote computing service'' and ``state'' have the same
meaning given those terms in specified sections of title 18,
United States Code.
Additional definitions are provided for the following
terms:
The terms ``encrypt'' and ``encryption'' mean the use of
mathematical formulas or algorithms to scramble or descramble
electronic data or communications for purposes of
confidentiality, integrity, or authenticity. As defined, the
terms cover a broad range of scrambling techniques and
applications including cryptographic applications such as PGP
or RSA's encryption algorithms; stegonagraphy;
authentication; and winnowing and chafing.
The term ``encryption product'' includes any hardware,
software, devices, or other technology with encryption
capabilities, whether or not offered for sale or
distribution. A particular encryption product includes
subsequent versions of the product, if the encryption
capabilities remain the same.
The term ``exportable'' means the ability to transfer,
ship, or transmit to foreign users. The term includes the
ability to electronically transmit via the Internet.
The term ``key'' means the variable information used in or
produced by a mathematical formula to encrypt or decrypt wire
or electronic communications, or electronically stored
information.
The term ``technical review'' means a review by the
Secretary of Commerce based on information about a product's
encryption capabilities supplied by the manufacturer that an
encryption product works as represented.

title i--privacy protection for communications and electronic
information

Sec. 101. Freedom to use Encryption.
(a) In General.--The Act legislatively confirms current
practice in the United States that any person in this country
may lawfully use any encryption method, regardless of
encryption algorithm, key length, existence of key recovery
or other plaintext access capability, or implementation
selected. Specifically, the Act states the freedom of any
person in the U.S., as well as U.S. persons in a foreign
country, to make, use, import, and distribute any encryption
product without regard to its strength or the use of key
recovery, subject to the other provisions of the Act.
(b) Prohibition on Government-Compelled Key Escrow or Key
Recovery Encryption.--The Act prohibits any federal or state
agency from compelling the use of key recovery systems or
other plaintext access systems. Agencies may not set
standards, or condition approval or benefits, to compel use
of these systems. U.S. agencies may not require persons to
use particular key recovery products for interaction with the
government. These prohibitions do not apply to systems for
use solely for the internal operations and telecommunications
systems of a U.S. or a State government agency.
(c) Use of Encryption For Authentication or Integrity
Purposes.--The Act requires that the use of encryption
products shall be voluntary and market-driven, and no federal
or state agency may link the use of encryption for
authentication or identity (such as through certificate
authority and digital signature systems) to the use of
encryption for confidentiality purposes. For example, some
Administration proposals would condition receipt of a digital
certificate from a licensed certificate authority on the use
of key recovery. Such conditions would be prohibited.
Sec. 102. Purchase and Use of Encryption Products by the
Federal Government.--The Act authorizes agencies of the
United States to purchase encryption products for internal
governmental operations and telecommunications systems. To
ensure that secure electronic access to the Government is
available to persons outside of and not operating under
contract with Federal agencies, the Act requires that any key
recovery features in encryption products used by the
Government interoperate with commercial encryption products.
Sec. 103. Enhanced Privacy Protection For Electronic
Records on Computer Networks.--The Act adds a new subsection
(g) to section 2703 of title 18, United States Code, to
extend privacy protections to electronic information stored
on computer networks.
Under United States v. Miller, 425 U.S. 435 (1976)
(customer has no standing to object to bank disclosure of
customer records) and its progeny, records in the possession
of third parties do not receive Fourth Amendment protection.
When held in a person's home, such records can only be seized
pursuant to a warrant based upon probable cause, or compelled
under a subpoena which can be challenged and quashed. In both
these instances, the record owner has notice of the search
and an opportunity to challenge it. By contrast, production
of records held by third parties can be compelled by a
governmental agent with a subpoena to the third party holding
the information, without notice to the person to whom the
records belong or pertain. The record owner may never receive
notice or any meaningful opportunity to challenge the
production.
This lack of protection for records held by third parties
presents new privacy problems in the information age. With
the rise of network computing, electronic information that
was previously held on a person's own computer is
increasingly stored elsewhere, such as on a network server or
an ISP's computers. In many cases the location of such
information is not even known to the record's owner.
The Act amends section 2703 to extend the same privacy
protections to a person's records whether storage takes place
on that person's personal computer in their possession or in
networked electronic storage. The term ``networked electronic
storage'' applies to electronic records held by a third
party, who is not authorized to access the contents of the
record except in connection with providing storage services,
and where the person who created the record is able to access
and modify the record remotely through electronic means.
Electronic data stored incident to transmission (such as e-
mail) and covered under 2703(a) is not included.
The new section 2703(g) requires that a governmental entity
may only require disclosure of electronic records in
``networked electronic storage'' pursuant to (i) a state or
federal warrant (based upon probable cause), with a copy to
be served on the record owner at the same time the warrant
is served on the record holder; (ii) a subpoena that must
also be served on the record owner with a meaningful
opportunity to challenge the subpoena; or (iii) the
consent of the record owner.
Sec. 104. Government Access to Location Information.--The
Act adds a new subsection (h) to section 2703 of title 18,
United States Code, to extend privacy protections for
physical location information generated on a real time basis
by mobile electronic communications services, such as
cellular telephones. This section requires that when cellular
telephones are used as contemporaneous tracking devices, the
physical location information generated by the service
provider may only be released to a governmental entity
pursuant to a court order based upon probable cause.
Sec. 105. Enhanced Privacy Protection for Transactional
Information Obtained From Pen Registers or Trap and Trace
Devices.--The Act enhances privacy protections for
information obtained from pen register and trap and trace
devices by amending section 3123(a) of title 18, United
States

[[Page S4724]]

Code. This amendment would not change the standard for
issuance of an ex parte order authorizing use of a pen
register or trap and trace device, but would grant a court
authority to review the information presented in a
certification by the prosecuting attorney to determine
whether the information likely to be obtained is relevant to
an ongoing criminal investigation. Under current law, the
court is relegated to a mere ministerial function and must
issue the order upon presentation of a certification.
In addition, the amendment requires law enforcement to
minimize the information obtained from the pen register or
trap and trace device that is not related to the dialing and
signaling information utilized in call processing. Currently,
such devices capture not just such dialing information but
also any other dialed digits after a call has been completed.

TITLE II--LAW ENFORCEMENT ASSISTANCE

Sec. 201. Encrypted Wire or Electronic Communications and
Stored Electronic Communications.--The Act adds a new chapter
124 to Title 18, Part I, governing the unlawful use of
encryption, protections and standards for governmental
access, including foreign governments, to decryption
assistance from third parties, and establishment of a ``Net
Center'' to assist law enforcement in dealing with advanced
technologies, such as encryption.
(a) In General.--New chapter 124 has six sections. This
chapter applies to wire or electronic communications and
communications in electronic storage, as defined in 18 U.S.C.
Sec. 2510, and to stored electronic data. Thus, this chapter
describes procedures for law enforcement to obtain assistance
in decrypting encrypted electronic mail messages, encrypted
telephone conversations, encrypted facsimile transmissions,
encrypted computer transmissions and encrypted file transfers
over the Internet that are lawfully intercepted pursuant to a
wiretap order, under 18 U.S.C. Sec. 2518, or obtained
pursuant to lawful process, under 18 U.S.C. Sec. 2703, and
encrypted information stored on computers that are seized
pursuant to a search warrant or other lawful process.
Sec. 2801. Definitions.--Generally, the terms used in the
new chapter have the same meanings as in the federal wiretap
statute, 18 U.S.C. Sec. 2510. Definitions are provided for
``decryption assistance'', ``decryption key'', ``encrypt;
encryption'', ``foreign government'' and ``official
request''.
Sec. 2802. Unlawful use of encryption.--This section
creates a new federal crime for knowingly and willfully using
encryption during the commission of a Federal felony offense,
with the intent to conceal that information for the purpose
of avoiding detection by law enforcement. This new offense
would be subject to a fine and up to 5 years' imprisonment
for a first offense, and up to 10 years' imprisonment for a
second or subsequent offense.
Sec. 2803. Access to decryption assistance for
communications.--In the United States today, decryption keys
and other decryption assistance held by third parties
constitute third party records and may be disclosed to a
governmental entity with a subpoena or an administrative
request, and without any notice to the owner of the encrypted
data. Such a low standard of access creates new problems in
the information age because encryption users rely heavily on
the integrity of keys to protect personal information or
sensitive trade secrets, even when those keys are placed in
the hands of trusted agents for recovery purposes.
Under new section 2803, in criminal investigations a third
party holding decryption keys or other decryption assistance
for wire or electronic communications may be required to
release such assistance pursuant to a court order, if the
court issuing the order finds that such assistance is needed
for the decryption of communications covered by the order.
Specifically, such an order for decryption assistance may be
issued upon a finding that the key or assistance is necessary
to decrypt communications or stored data lawfully intercepted
or seized. The standard for release of the key or provision
of decryption assistance is tied directly to the problem at
hand: the need to decrypt a message or information that the
government is otherwise authorized to intercept or obtain.
This will ensure that third parties holding decryption keys
or decryption information need respond to only one type of
compulsory process--a court order. Moreover, this Act will
set a single standard for law enforcement, removing any extra
burden on law enforcement to demonstrate, for example,
probable cause for two separate orders (i.e., for the
encrypted communications or information and for decryption
assistance) and possibly before two different judges (i.e.,
the judge issuing the order for the encrypted communications
or information and the judge issuing the order to the third
party able to provide decryption assistance).
The Act reinforces the principle of minimization. The
decryption assistance provided is limited to the minimum
necessary to access the particular communications or
information specified by court order. Under some key recovery
schemes, release of a key holder's private key--rather than
an individual session key--might provide the ability to
decrypt every communication or stored file ever encrypted by
a particular key owner, or by every user in an entire
corporation, or by every user who was ever a customer of the
key holder. The Act protects against such over broad releases
of keys by requiring the court issuing the order to find that
the decryption assistance being sought is necessary. Private
keys may only be released if no other form of decryption
assistance is available.
Notice of the assistance given will be included as part of
the inventory provided to subjects of the interception
pursuant to current wiretap law standards.
For foreign intelligence investigations, new section 2803
allows FISA orders to direct third-party holders to release
decryption assistance if the court finds the assistance is
needed to decrypt covered communications. Minimization is
also required, though no notice is provided to the target of
the investigation.
Under new section 2803, decryption assistance is only
required under third-parties (i.e., other than those whose
communications are the subject of interception), thereby
avoiding self-incrimination problems.
Finally, new section 2803 generally prohibits any person
from providing decryption assistance for another person's
communications to a governmental entity, except pursuant to
the orders described.
Sec. 2804. Access to decryption assistance for stored
electronic communications or records.--New section 2804
governs access to decryption assistance for stored electronic
communications and records.
As noted above, under current law third party decryption
assistance may be disclosed to a governmental entity with a
subpoena or even a mere request and without notice. This
standard is particularly problematic for stored encrypted
data, which may exist in insecure media but rely on
encryption to maintain security; in such cases easy access to
keys destroys the encryption security so heavily relied upon.
Under new section 2804, third parties holding decryption
keys or other decryption assistance for stored electronic
communications may only release such assistance to a
governmental entity pursuant to (1) a state or federal
warrant (based upon probable cause), with a copy to be served
on the record owner at the same time the warrant is served on
the record holder; (2) a subpoena that must also be served on
the record owner with a meaningful opportunity to challenge
the subpoena; or (3) the consent of the record owner. This
standard closely mirrors the protection that would be
afforded to encryption keys that are actually kept in the
possession of those whose records were encrypted. In the
specific case of decryption assistance for communications
stored incident to transit (such as e-mail), notice may be
delayed under the standards laid out for delayed notice under
current law in section 2705(a)(2) of title 18, United States
Code.
Sec. 2805. Foreign government access to decryption
assistance.--New section 2805 creates standards for the U.S.
government to provide decryption assistance to foreign
governments. No law enforcement officer would be permitted to
release decryption keys to a foreign government, but only to
provide decryption assistance in the form of producing
plaintext. No officer would be permitted to provide
decryption assistance except upon an order requested by the
Attorney General or designee. Such an order could require the
production of decryption keys or assistance to the Attorney
General only if the court finds that (1) the assistance is
necessary to decrypt data the foreign government is
authorized to intercept under foreign law; (2) the foreign
country's laws provide ``adequate protection against
arbitrary interference with respect to privacy rights''; and
(3) the assistance is sought for a criminal investigation of
conduct that would violate U.S. criminal law if committed in
the United States.
Sec. 2806. Establishment and operations of National
Electronic Technologies Center.--This section establishes a
National Electronic Technologies Center (``NET Center'') to
serve as a focal point for information and assistance to
federal, state, and local law enforcement authorities to
address the technical difficulties of obtaining plaintext of
communications and electronic information through the use of
encryption, steganography, compression, multiplexing, and
other techniques.

title iii--exports of encryption products

Sec. 301. Commercial Encryption Products.
(a) Provisions Applicable to Commercial Products.--This
title applies to all encryption products other than those
specifically designed or modified for military use.
(b) Control by Secretary of Commerce.--This section grants
exclusive authority to the Secretary of Commerce (the
``Secretary'') to control commercial encryption product
exports.
Sec. 302. License Exception for Mass Market Products.
(a) Export Control Relief.--The Act permits export under a
license exception of generally available, mass market,
encryption products, which by their nature are uncontrollable
given the volume sold and ease of distribution, without a
license or restrictions, other than those permitted under
this Act, after a 1-time 15-day technical review by the
Secretary.
(b) Definitions.--This section defines ``generally
available'' as a product offered for sale, license, or
transfer, including over-the-counter sales, mail or phone
order transactions, electronic distribution, or sale on
approval and not designed, developed or customized by the
manufacturer for specific purchasers (except for installation
or configuration parameters).

[[Page S4725]]

(c) Commerce Department Assurance.--This section permits
requests from manufacturers or exporters to the Secretary for
written assurance that a product is ``generally available,''
and requires that the Secretary notify the petitioner of a
decision within 30 days. This section prohibits imposition of
liability or sanctions on petitioners who receive such a
written assurance for failing to obtain an export license.
Sec. 303. License Exception for Products Without Encryption
Capable of Working With Encryption Products.
This section permits export under a license exception of
products, which do not provide any encryption themselves, but
that are capable of working with encryption products, without
restriction other than those permitted under this Act, after
a 1-time, 15 day technical review by the Secretary.
Sec. 304. License Exception For Product Support and
Consulting Services.
(a) No Additional Export Controls Imposed if Underlying
Product Covered by License Exception.--This section permits
export of product support and consulting services, including
technical assistance and technical data associated with the
installation and maintenance of mass market encryption
products or products capable of working with encryption
products without an export license and without restrictions
other than those permitted under this Act.
(b) Definitions.--This section defines technical assistance
as services, such as instruction, skills training, working
knowledge, consulting services and transfer of technical
data. ``Technical data'' is defined as information, including
blueprints, plans, diagrams, models, formulae, table,
engineering designs and specifications, manuals and
instructions.
Sec. 304. License Exception When Comparable Foreign
Products Available.
(a) Foreign Availability Standard.--This section permits
unrestricted export of customized encryption hardware and
software products (i.e., not generally available mass market
products) if a foreign encryption product using the same or
greater key length or providing comparable security is, or
will within 18 months, be commercially available outside the
United States.
(b) Determination of Foreign Availability.--This section
establishes an Encryption Export Advisory Board (the
``Board''), which is chaired by the Under Secretary of
Commerce for Export Administration, with seven Presidential
appointees (3 government and 4 private sector
representatives); and four Congressional appointees from the
private sector. The Board is required to meet at the call of
the Chairman, or if there are any pending applications for a
license exception, the Board shall meet at least once every
30 days.
The primary duties of the Board shall be to determine
whether comparable foreign encryption products are
commercially available outside the United States. The
decision is by majority vote, and must be made within 30 days
of receipt of application for a license exception. The Board
must notify the Secretary of its determination, and submit a
report to the President within 30 days. Board meetings are
exempt from the Federal Advisory Committee Act.
The Secretary is required to approve or disapprove each
Board determination within 30 days of receipt of that
determination, notify the Board of the approval or
disapproval, and publish notice of the approval or
disapproval in the Federal Register. The notice shall include
an explanation in detail of the reasons for the decision,
including why and how continued export controls will be
effective and the amount of lost sales and market share of
U.S. encryption product which resulted. Judicial review of
the Secretary's decision to disapprove a Board decision that
a product is commercially available is permitted.
(c) Inclusion of Comparable Foreign Encryption Products in
a United States Product Not Baiss for Export Controls.--This
section permits export under a license exception of products
incorporating or employing a foreign encryption product in
the way it was intended to be used and that the Board has
determined to be commercially available outside the United
States, without an export license and without restrictions
other than those under the Act, after a 1-time 15 day review
by the Secretary.
Sec. 306. No Export Controls on Encryption Products Used
For Nonconfidentiality Purposes.
(a) Prohibition on New Controls.--This section prohibits
restrictions on encryption exports used for
nonconfidentiality purposes such as authentication,
integrity, digital signatures, nonrepudiation and copy
protection.
(b) No Reinstatement of Controls on Previously Decontrolled
products.--This section prohibits administratively imposed
encryption controls on previously decontrolled products not
requiring an export license as of January 1, 1998.
Sec. 307. Applicability of General Export Controls.
(a) Subject to Terrorists and Embargo Controls.--Nothing in
the Act shall limit the President's authority under the
International Emergency Economic Powers Act, the Trading With
the Enemy Act, or the Export Administration Act to prohibit
export of encryption products to countries that have
repeatedly provided support for international terrorism, or
impose an embargo on exports or imports from a specific
country.
(b) Subject to Specific Denials for Specific Reasons.--The
Secretary is required to prohibit export of encryption
products to an individual or organization in a specific
foreign country identified by the Secretary, if the Secretary
determines that there is substantial evidence that such
encryption product will be used for military or terrorist
end-use, including acts against the critical infrastructure
of the United States.
(c) Other Export Controls Remain Applicable.--Encryption
products remain subject to all export controls imposed for
reasons other than the existence of encryption capabilities,
and the Secretary retains the authority to control exports of
products for reasons other than encryption.
Sec. 308. Foreign Trade Barriers to United States Products.
The Secretary, in consultation with the United States Trade
Representative, is required within 180 days of enactment of
the Act to: (1) identify foreign barriers to the export of
U.S. encryption products; (2) initiate appropriate actions to
address such barriers; and (3) submit to Congress a report on
the actions taken under this section.
Mr. BURNS. Mr. President, I stand before the chamber today in support
of the e-Privacy Act because the very future of electronic commerce on
the Internet is being held hostage to cold-war era export controls.
These outdated regulations tie the hands of the U.S. high technology
industry and pose a threat to privacy and security of all Americans who
use the Internet. Despite some small concessions by the Administration,
the competitive advantage of the U.S. high technology industries and
the privacy and security of our citizens remain trapped by the Clinton
Administration's outdated policy.
The e-Privacy Act will relax current export controls on encryption
technologies so that U.S. companies can effectively compete in the
global marketplace. The bill will also prevent the government from
mandating risky and expensive ``key-recovery'' or ``key-escrow''
encryption systems domestically. It's a good bill, it has broad support
from the computer and communications industry, Internet users, and
privacy advocates from both the left and right of the political
spectrum.
The Clinton Administration has expressed concerns about the impact
the e-Privacy Act would have on the legitimate needs of law enforcement
and national security. My colleagues and I do not take their concerns
lightly. Several provisions in the e-Privacy Act address the
Administration's valid concerns while at the same time freeing U.S.
companies to effectively compete in the global marketplace, and
ensuring that the American people can trust the Internet as a secure
means of commerce, education, and free expression of ideas.
The e-Privacy Act would create a National Electronic Technology
Center (``NET Center'') to serve as a central point for information and
assistance to federal, state, and local law enforcement authorities to
address the technical difficulties of obtaining electronic information
because of encryption. National security and law enforcement would be
given seats at the table in making these determinations. Once again, I
am very sensitive to the legitimate needs of national security and law
enforcement, and I think the provisions made in the e-Privacy Act
address them.
The e-Privacy Act also extends to citizens that same privacy rights
that they have in their homes to their digital property in cyberspace.
The bill would require a court order or subpoena to obtain either the
plaintext or decryption key from their parties. I believe that this is
the correct approach.
Citizens are also specifically given the right to use whatever kind
of encryption software at whatever strength they choose. The bill
recognizes the folly of requiring the government to create procedures
to license ``key certificate authorities'' and ``key-recovery agents,''
as well as require the development of a massive and complicated
infrastructure to ensure that the government could recover the right
key out of the hundreds of millions of keys in real time.
On many occasions, the world's leading cryptographers concluded that
building such a key recovery infrastructure would be prohibitively
expensive and would create a less secure network. The bill recognizes
that mandatory key escrow will never work, no one will use it and
certainly no criminals or other bad actors will use a system that is
immediately accessible by the government.
I urge my colleagues to support the e-Privacy Act, which I feel is
the true compromise package. We all have the same goals in mind--
allowing for the

[[Page S4726]]

continued growth of high tech industries while not harming national
security. If we move forward with the compromise bill being offered
today, I am confident we can do both.
______

By Mr. THOMPSON (for himself and Mr. Glenn):
S. 2068. A bill to clarify the application of the Unfunded Mandates
Reform Act of 1995, and for other purposes; to the Committee on the
Budget and the Committee on Governmental Affairs, jointly, pursuant to
the order of August 4, 1977, with instructions that if one Committee
reports, the other committee have 30 days to report or be discharged.

UNFUNDED MANDATES LEGISLATION

Mr. THOMPSON. Mr. President, I rise today to introduce a bill to
clarify the application of the Unfunded Mandates Reform Act of 1995. On
its face, this legislation is necessary to correct the Congressional
Budget Office's interpretation of the law as it applies to large
entitlement programs. But more fundamentally, it is a bill to force
Congress to abide by the spirit of the law we passed in 1995 to
discourage Congress from imposing costly new mandates on States and
local governments.
CBO's performance in fulfilling its responsibilities under the
Unfunded Mandates Reform Act has been commendable. CBO cost estimates
have been timely and sound, and analysts have been responsive. However,
I have serious concern that CBO is misinterpreting the definition of
``Federal intergovernmental mandate'' as provided in the law. The
result is a loophole that makes the Unfunded Mandates Reform Act
inoperative for two-thirds of all federal aid to all governments for
all purposes. Every State, every municipality is justifiably concerned;
indeed, it is with the strong backing of the National Governors'
Association that I introduce this bill today.
The Unfunded Mandates Reform Act defined ``federal intergovernmental
mandate'' with the intent to cover new requirements or a cap on the
federal share of costs under Medicaid or other large entitlement
programs--unless the legislation imposing the new mandates also
provides new flexibility in the program to offset the cost. However,
CBO has taken the position that existing flexibility is sufficient to
offset the cost of new mandates. For example, CBO has determined that
the current ability of States to reduce ``optional'' Medicaid services
is, in effect, the flexibility called for in the law. If this had been
the intent of the drafters, there would have been no reason for them to
cover Medicaid under the Act in the first place. CBO's interpretation
of the law largely removes the point of order as a tool to discourage
new mandates or cost-shifts to States under the large entitlement
programs where mandates tend to be the most burdensome and expensive.
Let's stop for a moment and consider why it is so important that we
act to correct this problem. Congress passed the Unfunded Mandates
Reform Act in 1995 with the recognition that State and local
governments are not wayward subordinates who cannot be trusted to run
their own affairs, nor are they just more entities for the Federal
Government to regulate. They are our partners in government. The
Unfunded Mandates Reform Act was intended to force Congress to stop and
think twice before violating this partnership. It does not preclude new
mandates, but it does give any member the right to raise a point of
order against new mandates which would cost States or localities more
than fifty million dollars.
To avoid the point of order, the House and Senate intended that the
flexibility required under the Act be new flexibility, concomitant with
the mandate-imposing legislation, for States to amend their
responsibilities to provide ``required services''--not optional
services. CBO is not reading the law as Congress intended. The bill I
am introducing today amends the Unfunded Mandates Reform Act to clarify
that new flexibility is required to offset any new federally-imposed
costs that States or localities will incur under large entitlement
programs.
I am pleased that Senator Glenn, an original cosponsor and conferee
on the Unfunded Mandates Reform Act of 1995, has joined me in
cosponsoring this bill to clarify its application.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2068

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. FEDERAL INTERGOVERNMENTAL MANDATE.

Section 421(5)(B) of the Congressional Budget and
Impoundment Control Act of 1974 (2 U.S.C. 658(5)(B)) is
amended--
(1) by striking ``the provision'' after ``if'';
(2) in clause (i)(I) by inserting ``the provision'' before
``would'';
(3) in clause (i)(II) by inserting ``the provision'' before
``would''; and
(4) in clause (ii)--
(A) by inserting ``that legislation, statute, or regulation
does not provide'' before ``the State''; and
(B) by striking ``lack'' and inserting ``new or expanded''.
______

By Mr. DeWINE:
S. 2070. A bill to provide for an Underground Railroad Educational
and Cultural Program; to the Committee on Labor and Human Resources.

the underground railroad educational and cultural act

Mr. DeWINE. Mr. President, today I am introducing the Underground
Railroad Educational and Cultural Act. This legislation will provide
for the establishment of programs to research, display, interpret, and
collect artifacts relating to the history of the Underground Railroad.
Let me tell you how important the Underground Railroad is to Ohio--
and to me personally. In the 20 years prior to the Civil War, more than
40,000 slaves escaped bondage and made their way to free soil on the
trails of the Underground Railroad. More than 150 key Underground
Railroad sites have been identified in Ohio--sites that symbolized
freedom for thousands of enslaved Americans.
When I visit these places, it gives me some real cause for hope about
the future of America. When we talk about race relations in this
country, we would do well to remind ourselves that at one of the
darkest times in our nation's history--the period of slavery--some
blacks and whites took immense personal risks to work together to
liberate slaves.
That is the part of the American story that we should be proud of--
and build on. In Ohio, we are very proud of the part our ancestors
played in this great story--and why I think this legislation is so
important.
Mr. President, I ask my colleagues to support this legislation. It is
very important to recognize this period in our history.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:

S. 2070

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. UNDERGROUND RAILROAD EDUCATIONAL AND CULTURAL
PROGRAM.

(a) Short Title.--This section may be cited as the
``Underground Railroad Educational and Cultural Act''.
(b) Program Established.--The Secretary of Education, in
consultation and cooperation with the Secretary of the
Interior, is authorized to make grants to 1 or more nonprofit
educational organizations that are established to research,
display, interpret, and collect artifacts relating to the
history of the Underground Railroad.
(c) Grant Agreement.--Each nonprofit educational
organization awarded a grant under this section shall enter
into an agreement with the Secretary of Education. Each such
agreement shall require the organization--
(1) to establish a facility to house, display, and
interpret the artifacts related to the history of the
Underground Railroad;
(2) to demonstrate substantial private support for the
facility through the implementation of a public-private
partnership between a State or local public entity and a
private entity for the support of the facility, which private
entity shall provide matching funds for the support of the
facility in an amount equal to 4 times the amount of the
contribution of the State or local public entity, except that
not more than 20 percent of the matching funds may be
provided by the Federal Government;
(3) to create an endowment to fund any and all shortfalls
in the costs of the on-going operations of the facility;
(4) to establish a network of satellite centers throughout
the United States to help disseminate information regarding
the Underground Railroad throughout the United States, if
such satellite centers raise 80 percent of the funds required
to establish the

[[Page S4727]]

satellite centers from non-Federal public and private
sources;
(5) to establish the capability to electronically link the
facility with other local and regional facilities that have
collections and programs which interpret the history of the
Underground Railroad; and
(6) to submit, for each fiscal year for which the
organization receives funding under this section, a report to
the Secretary of Education that contains--
(A) a description of the programs and activities supported
by the funding;
(B) the audited financial statement of the organization for
the preceding fiscal year;
(C) a plan for the programs and activities to be supported
by the funding as the Secretary may require; and
(D) an evaluation of the programs and activities supported
by the funding as the Secretary may require.
(d) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section $6,000,000 for
fiscal year 1999, $6,000,000 for fiscal year 2000, $6,000,000
for fiscal year 2001, $3,000,000 for fiscal year 2002, and
$3,000,000 for fiscal year 2003.

____________________