[Congressional Record Volume 146, Number 121 (Tuesday, October 3, 2000)]
[Senate]
[Pages S9685-S9687]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE COUNTERINTELLIGENCE REFORM ACT OF 2000

  Mr. SPECTER. Mr. President, I have sought recognition to discuss 
legislation arising from the investigation by the Senate Judiciary 
Subcommittee on Administrative Oversight and the Courts, which has been 
conducting oversight on the way the Department of Justice and the 
Federal Bureau of Investigation have responded to allegations of 
espionage in the Department of Defense and the Department of Energy. 
This bipartisan proposal will improve the counterintelligence 
procedures used to detect and defeat efforts by foreign governments to 
gain unlawful access to our top national security information by 
improving the way that allegations of espionage are investigated and, 
where appropriate, prosecuted.
  Together with Senators Torricelli, Grassley, Thurmond, Sessions, 
Schumer, Feingold, Biden, Helms and Leahy, I introduced the 
Counterintelligence Reform Act on February 24 of this year. The 
Judiciary Committee unanimously reported the bill on May 18, and it was 
referred to the Senate Select Committee on Intelligence which also 
deals with espionage matters.
  The Senate Intelligence Committee unanimously reported the bill on 
July 20, and has included the measure as an amendment to the 
Intelligence Authorization bill which passed the Senate today.
  Few tasks are more important than protecting our national security, 
so building and maintaining bipartisan support for this legislation to 
correct the problems we identified during the course of our oversight 
was my top priority. The reforms contained in this legislation will 
ensure that the problems we found are fixed, and that the national 
security is better protected in the future.
  To understand why this legislation is necessary, I would like to 
review two of the cases that the subcommittee looked at--the Wen Ho Lee 
case and the Peter Lee case. Former Los Alamos scientist Dr. Wen Ho Lee 
was arrested on December 10, 1999, and charged with 59 counts of 
violating the Atomic Energy Act of 1954 and unlawful gathering and 
retention of national defense information. In a stunning reversal on 
September 13, the government accepted a deal in which Dr. Lee would 
plead guilty to one count of unlawfully retaining national defense 
information and would be sentenced to time served, in exchange for 
telling what he had done with the tapes. There remains a question as to 
whether Department of Justice officials tried to make up for their 
blunders in this case by throwing the book at Dr. Lee. The Judiciary 
Subcommittee on Department of Justice Oversight will continue to hold 
hearings on this matter, but it has been clear from the beginning that 
the Department of Justice bungled the investigation of Dr. Lee.
  The critical turning point in this case came on August 12, 1997, when 
the Department of Justice's Office of Intelligence Policy and Review 
(OIPR) turned down an FBI application for an electronic surveillance 
warrant under the Foreign Intelligence Surveillance Act, or FISA. OIPR 
believed that the application was deficient because it did not show 
sufficient probable cause, and therefore decided not to let the 
application go forward to the special FISA court.
  In making this determination, the DoJ made several key errors. The 
Department of Justice used an unreasonably high standard for 
determining probable cause, a standard that is inconsistent with 
Supreme Court rulings on this issue. For example, one of the concerns 
raised by OIPR attorney Allan Kornblum was that the FBI had not shown 
that the Lees were the ones who passed the W-88 information to the PRC, 
to the exclusion of all the other possible suspects identified by the 
DoE Administrative Inquiry. That is the standard for establishing guilt 
at a trial, not for establishing probable cause to issue a search 
warrant.

  DoJ was also wrong when Mr. Kornblum concluded that there was not 
enough to show that the Lees were ``presently engaged in clandestine 
intelligence activities.'' The information provided by the FBI made it 
clear that Dr. Lee's relevant activities continued from the 1980s to 
1992, 1994 and 1997, yet that was deemed to be too stale, and the DoJ 
refused to send the FBI's surveillance request to the FISA court.
  When FBI Assistant Director John Lewis raised the FISA problem with 
the Attorney General on August 20, 1997, she delegated a review of the 
matter to Mr. Dan Seikaly, who had virtually no experience in FISA 
issues. It is not surprising then, that Mr. Seikaly again applied the 
wrong standard for probable cause. He used the criminal standard, which 
requires that the facility in question be used in the commission of an 
offense, and with which he was more familiar, rather than the relevant 
FISA standard which simply requires that the facility ``is being used, 
or is about to be used, by a foreign power or an agent of a foreign 
power.''
  The importance of DoJ's erroneous interpretation of the law as it 
applied to probable cause in this case should not be underestimated. 
Had the warrant been issued, and had the FBI been permitted to conduct 
electronic surveillance on Dr. Lee, the Government would probably not 
be in the position--as it is now--of trying to ascertain what really 
happened to the information that Dr. Lee downloaded. There should be no 
doubt that transferring classified information to an unclassified 
computer system and making unauthorized tape copies of that 
information--seven of which contain highly classified information and 
remain unaccounted for--created a substantial opportunity for foreign 
intelligence services to access our most important nuclear secrets.
  The FISA warrant could have and should have been issued at several 
points, some before and some after it was rejected in 1997. Each key 
event where the FISA warrant was not requested and issued represents 
another lost opportunity to protect the national security. For example, 
Dr. Lee was identified by the Department of Energy's Network Anomaly 
Detection and Intrusion Recording system (NADIR) in 1993 for having 
downloaded a huge volume of files.
  As the name of the system implies, it is designed to detect unusual 
computer activity and look out for possible intruders into the 
computer. Individuals who monitored the lab's computers knew that Dr. 
Lee's activities had generated a report from the NADIR system, but 
didn't do anything about it. They didn't even talk to him. An 
opportunity to correct a problem, to protect national security, just 
slipped away.
  In 1994, Lee's massive downloading would have again showed up on 
NADIR, but DoE security people never took action. Now, we're told, they 
can't even find records of what happened. Yet another missed 
opportunity to protect the national security by looking into what was 
going on.
  When Wen Ho Lee took a polygraph in December 1998, DoE misrepresented 
the results of this test to the FBI. DoE told the FBI that Dr. Lee 
passed this polygraph when, in fact, he had failed. This error sent the 
FBI off the trail for two months.

  When Wen Ho Lee failed a polygraph on February 10, 1999, the FISA 
warrant should have been immediately requested and granted. It wasn't.
  The need for legislation to address these problems is obvious. The 
unclassified information on this case shows clearly that it was 
mishandled. The classified files make that point even more clear. Last 
year the Attorney General asked an Assistant U.S. Attorney with 
substantial experience in prosecuting espionage cases to review the Wen 
Ho Lee matter. That prosecutor, Mr. Randy Bellows, conducted a thorough 
review of the case and confirmed all of our major findings: the case 
was badly mishandled, the FISA request should have gone forward to the 
court. The list goes on. Our counter-intelligence system failed in this 
case, and the information at risk

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is too important to let this dismal state of affairs continue.
  The Counterintelligence Reform Act of 2000 will help to ensure that 
future investigations are conducted in a more thorough and effective 
manner. Among the key provisions in this legislation is one that amends 
the Foreign Intelligence Surveillance Act, FISA, by requiring that, 
upon the request of the Director of the FBI, the Secretary of State, 
the Secretary of Defense or the Director of Central Intelligence, the 
Attorney General shall personally review a FISA application. If the 
Attorney General decides not to forward the application to the FISA 
court, that decision must be communicated in writing to the requesting 
official, with recommendations for improving the showing of probable 
cause, or whatever defect OIPR is concerned with.
  Under this legislation, when a senior official who is authorized to 
make FISA requests goes to the Attorney General for a personal review, 
that senior official must personally supervise the implementation of 
the recommendations. This provision will ensure that when the national 
security is at stake, and where there is a serious disagreement over 
how to proceed, the Attorney General and other senior officials are the 
ones who work together to resolve disputes, and that the matter is not 
delegated to attorneys who have never worked with FISA before.
  The Counterintelligence Reform Act also addresses the matter of 
whether an individual is ``presently engaged'' in a particular activity 
to ensure that genuine acts of espionage which are belatedly discovered 
are not improperly eliminated from consideration. As FISA is currently 
worded, it is possible for someone like Mr. Kornblum to conclude that 
actions as recent as a couple of years ago or even a few months are too 
stale to contribute to a finding of probable cause. Although I do not 
agree with Mr. Kornblum's interpretation of the law, I am confident 
that the changes contained in the Counterintelligence Reform Act will 
make it clear that activities within a reasonable period of time can be 
considered in determining probable cause.
  The investigation of Dr. Lee was also mishandled in the field, where 
the FBI and the Department of Energy often failed to communicate. For 
example, after OIPR rejected the FBI's 1997 FISA application, the FBI 
told the Department of Energy that there was no longer an investigative 
reason to leave Dr. Lee in place, and that the DoE should do whatever 
was necessary to protect the national security. Unfortunately, no 
action was taken by DoE until December 1998, some 14 months after the 
FBI had said it was no longer necessary to have him in place for 
investigative reasons.
  To address this problem, and to ensure that there is no 
misunderstanding about when the subject of an espionage investigation 
should be removed from classified access, the Counterintelligence 
Reform Act requires that decisions of this nature be communicated in 
writing. The bill requires the Director of the FBI to submit to the 
head of the department or agency concerned a written assessment of the 
potential impact of the actions of the department or agency on a 
counterintelligence investigation. The head of the affected agency will 
be required to respond in writing to the recommendation of the FBI. 
This requirement with ensure that what happened in the Wen Ho Lee 
case--where the FBI said he could be removed from access but the Energy 
Department didn't pull his clearance for another 14 months--won't 
happen again.
  To avoid the kind of problems that happened when the DoE ordered a 
Wackenhut polygraph in December 1998, this legislation prohibits 
agencies from interfering in FBI espionage investigations.
  The provisions of this bill will make an important contribution to 
improving the way counter-intelligence investigations are conducted. 
The subcommittee's investigation of the Wen Ho Lee case has made it 
abundantly clear that improvements in these procedures are necessary, 
and the reforms outlined in this legislation are specifically tailored 
to provide real solutions to real problems.
  The subcommittee also looked at the espionage case of Dr. Peter Lee, 
who pleaded guilty in 1997 to passing classified nuclear secrets to the 
Chinese in 1985. According to a 17 February 1998 ``Impact Statement'' 
prepared by experts from the Department of Energy,

       The ICF data provided by Dr. [Peter] Lee was of significant 
     material assistance to the PRC in their nuclear weapons 
     development program. . . . For that reason, this analysis 
     indicates that Dr. Lee's activities have directly enhanced 
     the PRC nuclear weapons program to the detriment of U.S. 
     national security.

  Dr. Peter Lee also confessed to giving the Chinese classified anti-
submarine warfare information on two occasions in 1997. Under the terms 
of the plea agreement the Department of Justice offered to Peter Lee, 
however, he got no jail time. He served one year in a half-way house, 
did 3,000 hours of community service and paid a $20,000 fine. 
Considering the magnitude of his offenses and his failure to comply 
with the terms of the plea agreement--which required his complete 
cooperation--the interests of the United States were not served by this 
outcome.
  The subcommittee's review of the Peter Lee case led to the inevitable 
conclusion that better coordination between the Department of Justice, 
the investigating agency--which is normally the FBI--and the victim 
agency is necessary to ensure that the process works to protect the 
national security. One of the problems we saw in this case was the 
reluctance of the Department of the Navy to support the prosecution of 
Dr. Peter Lee. A Navy official, Mr. John Schuster, produced a memo that 
seriously undermined the Department of Justice's efforts to prosecute 
the case. This memorandum was based on incomplete information and did 
not reflect the full scope of what Dr. Peter Lee confessed to having 
revealed. As a consequence of the breakdown of communications between 
the Navy and the prosecution team, the 1997 revelations were not 
included as part of the plea agreement.
  This legislation contains a provision that will ensure better 
coordination in espionage cases by requiring the Department of Justice 
to conduct briefings so that the affected agency will understand what 
is happening with the case, and will understand how the Classified 
Information Procedures Act, or CIPA, can be used to protect classified 
information even while carrying out a prosecution. In these briefings 
Department of Justice lawyers will be required to explain the right of 
the government to make in camera presentations to the judge and to make 
interlocutory appeals of the judge's rulings. These procedures are 
unique to CIPA, and the affected agency needs to understand that taking 
the case to trial won't necessarily mean revealing classified 
information. The Navy's position, as stated in the Schuster memo, that 
``bringing attention to our sensitivity concerning this subject in a 
public forum could cause more damage to the national security that the 
original disclosure,'' was simply wrong. It was based on incomplete 
information and a misunderstanding of how the case could have been 
taken to trial without endangering national security. The provisions of 
this legislation which require the Department of Justice to keep the 
victim agency fully and currently informed of the status of the 
prosecution, and to explain how CIPA can be used to take espionage 
cases to trial without damaging the national security, will ensure that 
the mistakes of the Peter Lee case are not repeated.

  I appreciate the efforts of my colleagues on the Judiciary Committee 
and the Senate Select Committee on Intelligence who have worked with me 
and the cosponsors of this bill. I am confident that the reforms we are 
about to pass will significantly improve the way espionage cases are 
investigated and, if necessary, prosecuted.
  I yield the floor.


                              section 305

  Mr. BIDEN. Section 305 of S. 32507, the Intelligence Authorization 
bill, provides, in brief, that no future ``Federal law . . . that 
implements a treaty or other international agreement shall be construed 
as making unlawful an otherwise lawful and authorized intelligence 
activity of the United States Government . . . unless such Federal law 
specifically addresses such intelligence activity.'' This provision is 
necessary, the Committee report explains, because ``[t]here has been a 
concern that future legislation implementing international agreements

[[Page S9687]]

could be interpreted, absent the enactment of section 305, as 
restricting intelligence activities that are otherwise entirely 
consistent with U.S. law and policy.'' The concern arises from an 
opinion issued in 1994 by the Office of Legal Council (OLC) of the 
Department of Justice. In that opinion, the Office interpreted the 
Aircraft Sabotage Act of 1984--a law implementing an international 
treaty on civil aviation safety--as applying to government personnel. 
Although the OLC opinion emphasized that its conclusions should ``not 
be exaggerated'' and also warned that its opinion ``should not be 
understood to mean that other domestic criminal statutes apply to 
U[nited S[tates] G[overnment] personnel acting officially,'' the 
Central Intelligence Agency, out of an abundance of caution, wants to 
avoid cases in which legislation implementing a treaty might 
criminalize an authorized intelligence activity even though Congress 
did not so expressly provide. I understand the Agency's concern that 
clarity for its agents is important. At the same time, however, we 
should take care to specify how section 305 is intended to work.
  One question is this: how do we tell when a Federal law actually 
``implements a treaty or other international agreement?'' My working 
assumption, in supporting section 305, is that we will be able to tell 
whether a future law ``implements a treaty or other international 
agreement'' by reading the law and the committee reports that accompany 
its passage. If the text of that future law or of the committee reports 
accompanying that bill states that the statute is intended to implement 
a treaty or other international agreement, then section 305 is 
pertinent to that statute. If there is no mention of such intent in 
that future law or in its accompanying reports, however, then we may 
safely infer that section 305 does not apply. Is that the understanding 
of the Select Committee on Intelligence, as well?
  Mr. SHELBY. That is certainly our intent. If a future law is to 
qualify under section 305 of this bill, we would expect its status as 
implementing legislation to be stated in the law, or some other 
contemporaneous legislative history.
  Mr. BIDEN. another question is how to tell that a U.S. intelligence 
activity ``is authorized by an appropriate official of the United 
States Government, acting within the scope of the official duties of 
that official and in compliance with Federal law and any applicable 
Presidential directive.'' I am concerned that this could be 
misinterpreted to mean that some intelligence bureaucrat could 
authorize some otherwise illegal activity with a wink and a nod. It is 
not the intent of the Select Committee on Intelligence that there be 
written authorization for a U.S. intelligence activity?
  Mr. SHELBY. I understand the concerns of the Senator from Delaware. 
We expect that in almost all cases intelligence operations exempted 
from future treaty-implementing legislation will have been authorized 
in writing. I would note however, that many individual actions might be 
authorized through general written policies, rather than case-specific 
authorizations.
  Neither would I rule oral authorization in exigent circumstances. The 
Committee believes that intelligence agencies would be well advised to 
make written records of such authorizations, so as to guard against lax 
management or later assertions that unrecorded authorization was given 
for a person's otherwise unlawful actions. Such written records will 
also protect the government employees from allegations that their 
actions were not authorized.
  Mr. BIDEN. My final question to the chairman of the Select Committee 
on Intelligence relates to how other countries may view section 305. I 
interpret section 305 as governing only the interpretation of a certain 
set of U.S. criminal laws enacted in the future and whether those laws 
apply to government officials. Is that also the understanding of the 
chairman of the Select Committee on Intelligence?
  Mr. SHELBY. Yes, it is. Section 305 deals solely with the application 
of U.S. law to U.S. Intelligence activities. It does not address the 
question of the lawfulness of such activities under the laws of foreign 
countries, and it is in no respect meant to suggest that a person 
violating the laws of the United States may claim the purported 
authorization of a foreign government to carry out those activities as 
justification or as a defense in a prosecution for violation of U.S. 
laws.
  Mr. BIDEN. I thank the distinguished chairman.

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