[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[Senate]
[Pages 2147-2149]
[From the U.S. Government Publishing Office, www.gpo.gov]



               THE COUNTERINTELLIGENCE REFORM ACT OF 2000

  Mr. LEAHY. Mr. President, I am pleased to join my colleagues Senators 
Grassley, Specter and Torricelli, and others, in cosponsoring the 
Counterintelligence Reform Act of 2000, S. 2089. I look forward to 
working with my colleagues on making any improvements and refinements 
to the legislation which may become apparent as we hold hearings. This 
is an important issue with serious implications for the careful balance 
we have struck between the need to protect our national security and 
our obligation to defend the constitutional rights of American 
citizens.
  This legislation was crafted in response to perceived problems in the 
investigation of nuclear physicist Wen Ho Lee. Our review of that 
matter is far from complete and, in view of the pending criminal case, 
must be put in abeyance to avoid any prejudice to the parties or 
suggest political influence on the proceedings. Based on the 
Subcommittee's review to date, however, I do not share the views of 
some of my colleagues who have harshly criticized the Justice 
Department's handling of this matter. Notwithstanding my disagreement, 
as explained below, with those criticisms of the Justice Department, I 
support this legislation as a constructive step towards improving the 
coordination and effectiveness of our counterintelligence efforts. 
Senators Grassley, Specter and Torricelli have provided constructive 
leadership in crafting this bill and bringing together Members who may 
disagree about the conclusions to be drawn from the underlying facts of 
the Wen Ho Lee investigation.
  My view of the Justice Department's handling of the Wen Ho Lee 
investigation differs in at least three significant respects from those 
of the Department's critics in the Senate.
  First, the Justice Department's demand in the summer of 1997 for 
additional investigative work by the FBI has been misconstrued as a 
``rejection'' of a FISA application for electronic surveillance. FBI 
officials first consulted attorneys at DOJ on June 30, 1997, about 
receiving authorization to conduct FISA surveillance against Lee. The 
request was assigned to a line attorney in the Office of Intelligence 
and Policy Review (OIPR), who, appreciating the seriousness of the 
matter, drafted an application for the court over the holiday weekend. 
A supervisor in the OIPR unit then reviewed the draft and decided that 
further work by the FBI would be needed ``to complete the application 
and send it forward.'' Further discussions then ensued and two 
additional draft applications were prepared.
  In August 1997, FBI agents met again with OIPR attorneys about the 
FISA request. The OIPR supervisor testified at a Governmental Affairs 
Committee hearing on June 9, 1999 that ``[f]ollowing that meeting, the 
case was put back to the Bureau to further the

[[Page 2148]]

investigation in order to flesh out and eliminate some of the 
inconsistencies, to flesh out some of the things that had not been 
done.'' He testified that the primary concern with the FBI 
investigation ``had to do with the fact that the DOE and Bureau had 
[multiple] suspects, and only two were investigated. . . . That is the 
principal flaw which ha[d] repercussions like dominoes throughout all 
of the other probable cause.''
  This was not a ``rejection.'' The OIPR attorneys expected the FBI to 
develop their case against Lee further and to return with additional 
information. This is normal, as most prosecutors know. Working with 
agents on investigations is a dynamic process, that regularly involves 
prosecutors pushing agents to get additional information and facts to 
bolster the strength of a case. Yet, nearly a year and a half passed 
before the attorneys at OIPR were again contacted by the FBI about Lee.
  The report issued by the Governmental Affairs Committee on this issue 
concludes that although the OIPR attorneys did not view their request 
for additional investigation as a ``denial'' of the FISA request, the 
FBI ``took it as such.'' Notwithstanding or even mentioning these 
apparently differing views as to what had transpired, some have 
criticized the Justice Department for rejecting the FISA application in 
1997. It is far from clear that any rejection took place, and I credit 
the perspective of the OIPR attorneys that their request to the FBI for 
additional investigative work was made in an effort to complete--not 
kill--the FISA application.
  Second, the Justice Department correctly concluded that the FBI's 
initial FISA application failed to establish probable cause. Indeed, 
even the chief of the FBI's National Security Division, John Lewis, who 
worked on the FISA application, has admitted that he turned in the 
application earlier than anticipated and without as much supporting 
information as he would have liked.
  Determining whether probable cause exists is always a matter of 
judgment and experience, with important individual rights, public 
safety and law enforcement interests at stake if a mistake is made. 
From the outset, prosecutors making such a determination must keep a 
close eye on the applicable legal standard.
  Pursuant to the terms of the FISA statute, intelligence surveillance 
against a United States person may only be authorized upon a showing 
that there is probable cause to believe: (1) that the targeted United 
States person is an agent of a foreign power; and (2) that each of the 
facilities or places to be surveilled is being used, or about to be 
used by that target. 50 U.S.C. Sec. Sec. 1801(b)(2), 1804(a)(4). With 
regard to the first prong, the statute defines several ways in which a 
United States person can be shown to be an agent of a foreign power. 
Most relevant here, a United States person is considered an agent of a 
foreign power if the person ``knowingly engages in clandestine 
intelligence gathering activities, for or on behalf of a foreign power, 
which activities involve or may involve a violation of the criminal 
statutes of the United States.'' 50 U.S.C. Sec. 1801(b)(2)(A).
  Without dissecting all of the allegations against Lee here, there are 
several issues that undermined the FBI's evidence that Lee was an 
``agent of a foreign power'' and, in 1997, engaged in ``clandestine 
intelligence gathering activities.'' In the letterhead memorandum by 
which the FBI first sought DOJ approval for the FISA warrant, the FBI 
reported that an administrative inquiry conducted by DOE and FBI 
investigators had identified Wen Ho Lee as a suspect in the loss of 
information relating to the W-88 nuclear warhead. Most critically, 
however, the FBI indicated that Lee was one of a group of laboratory 
employees who: (1) had access to W-88 information; (2) had visited 
China in the relevant time period; and (3) had contact with visiting 
Chinese delegations.
  The problem with the FBI's reliance on this administrative inquiry 
and corresponding narrow focus on Lee and his wife as suspects was that 
the FBI ``did nothing to follow up on the others.'' The Attorney 
General testified at the June 8, 1999 Judiciary Committee hearing that 
``the elimination of other logical suspects, having the same access and 
opportunity, did not occur.'' Similarly, the OIPR supervisor who 
testified at the GAC hearing confirmed that ``the DOE and Bureau had 
[multiple] suspects, and only two [meaning Lee and his wife] were 
investigated.'' According to him, as noted above, ``[t]hat is the 
principal flaw which ha[d] repercussions like dominoes throughout all 
of the other probable cause.'' Quite simply, the failure of the FBI to 
eliminate, or even investigate, the other potential suspects identified 
by the DOE administrative inquiry undermined their case for probable 
cause.
  Indeed, this failure to investigate all potential leads identified in 
the DOE administrative inquiry has prompted the FBI to conduct a 
thorough re-examination, which is currently underway, of the factual 
assumptions and investigative conclusions of that initial inquiry.
  The other evidence that the FBI had gathered about Lee was stale, 
inconclusive or speculative, at best and certainly did not tie him to 
the loss of the W-88 nuclear warhead information. For example, the FBI 
proffered evidence pertaining to a fifteen-year-old contact between Lee 
and Taiwanese officials. The FBI's earlier investigation boiled down to 
this: after the FBI learned in 1983 that Lee had been in contact with a 
scientist at another nuclear laboratory who was under investigation for 
espionage, Lee was questioned. He explained, eventually, that he had 
contacted this scientist because he had thought the scientist had been 
in trouble for doing similar unclassified consulting work that Lee 
volunteered that he had been doing for Taiwan. To confirm his veracity, 
the FBI gave Lee a polygraph examination in January 1984, and he 
passed. This polygraph included questions as to whether he had ever 
given classified information to any foreign government. Shortly 
thereafter, the FBI closed its investigation into Lee and this 
incident.
  Even if viewed as suspicious, Lee's contacts fifteen years earlier 
with Taiwanese officials did not give rise to probable cause to believe 
that in 1997 he was currently engaged in intelligence gathering for 
China.
  As a further example, the FBI also relied on evidence that during a 
trip by Lee to Hong Kong in 1992, there was an unexplained charge 
incurred by Lee that the FBI speculated could be consistent with Lee 
having taken a side trip to Beijing. As Attorney General Reno testified 
at the hearing, the fact that Lee incurred an unexplained travel charge 
in Hong Kong did not standing alone support an inference that he went 
to Beijing. It therefore did nothing to support the FBI's claim that 
Lee was an agent for China.
  The OIPR attorneys who pushed the FBI for additional investigative 
work to bolster the FISA application for electronic surveillance of Wen 
Ho Lee were right--the evidence of probable cause proffered by the FBI 
was simply insufficient for the warrant.
  Third, the Justice Department was right not to forward a flawed and 
insufficient FISA application to the FISA court. Some have suggested 
that the Lee FISA application should have been forwarded to the court 
even though the Attorney General (through her attorneys) did not 
believe there was probable cause. To have done so would have violated 
the law.
  The FISA statute specifically states that ``[e]ach application shall 
require the approval of the Attorney General based upon [her] finding 
that it satisfies the criteria and requirements. . . .'' 50 U.S.C. 
Sec. 1804 (a). The Attorney General is statutorily required to find 
that the various requirements of the FISA statute have been met before 
approving an application and submitting it to the court.
  As a former prosecutor, I know that this screening function is very 
important. Every day we rely on the sound judgement of experienced 
prosecutors. They help protect against encroachments on our civil 
liberties and constitutional rights. Any claim that the Attorney 
General should submit a FISA application to the court when in

[[Page 2149]]

her view the statutory requirements have not been satisfied undermines 
completely the FISA safeguards deliberately included in the statute in 
the first place.
  I appreciate that those who disagree with me that the evidence for 
the Lee FISA application was insufficient to meet the FISA standard for 
surveillance against a United States person may urge that this standard 
be weakened. This would be wrong.
  The handling of the Wen Ho Lee FISA application does not suggest a 
flaw in the definition of probable cause in the FISA statute. Instead, 
it is an example of how the probable cause standard is applied and 
demonstrates that effective and complete investigative work is and 
should be required before extremely invasive surveillance techniques 
will be authorized against a United States person. The experienced 
Justice Department prosecutors who reviewed the Lee FISA application 
understood the law correctly and applied it effectively. They insisted 
that the FBI do its job of investigating and uncovering evidence 
sufficient to meet the governing legal standard.
  The Counterintelligence Reform Act of 2000 correctly avoids changing 
this governing probable cause standard. Instead, the bill simply makes 
clear what is already the case--that a judge can consider evidence of 
past activities if they are relevant to a finding that the target 
currently ``engages'' in suspicious behavior. Indeed, the problem in 
the Lee case was not any failure to consider evidence of past acts. 
Rather, it was that the evidence of past acts presented regarding Lee's 
connections to Taiwan did not persuasively bear on whether Lee, in 
1997, was engaging in clandestine intelligence gathering activities for 
another country, China.
  Finally, some reforms are needed. The review of the Lee matter so far 
suggests that internal procedures within the FBI, and between the FBI 
and the Office of Intelligence Policy and Review, to ensure that 
follow-up investigation is done to develop probable cause do not always 
work. I share the concern that it took the FBI an inordinately long 
time to relay the Justice Department's request for further 
investigation and to then follow up.
  The FBI and the OIPR section within DOJ have already taken important 
steps to ensure better communication, coordination and follow-up 
investigation in counterintelligence investigations.
  The FBI announced on November 11, 1999, that it has reorganized its 
intelligence-related divisions to facilitate the sharing of appropriate 
information and to coordinate international activities, the gathering 
of its own intelligence and its work with the counter-espionage 
agencies of other nations.
  In addition, I understand that OIPR and the FBI are working to 
implement a policy under which OIPR attorneys will work directly with 
FBI field offices to develop probable cause and will maintain 
relationships with investigating agents. This should ensure better and 
more direct communication between the attorneys drafting the FISA 
warrants and the agents conducting the investigation and avoid 
information bottlenecks that apparently can occur when FBI Headquarters 
stands in the way of such direct information flow. I encourage the 
development of such a policy. It should prevent the type of delay in 
communication that occurred within the FBI from happening again. In 
addition, the Attorney General advised us at the June 8, 1999 hearing 
that she has instituted new procedures within DOJ to ensure that she is 
personally advised if a FISA application is denied or if there is 
disagreement with the FBI.
  Notwithstanding all of these wise changes, the FISA legislation will 
require formal coordination between the Attorney General and the 
Director of the FBI, or other head of agency, in those rare cases where 
disagreements like those in the Lee case arise. I am confident that the 
Directors of the FBI and CIA and the Secretaries of Defense and State, 
and the Attorney General, are capable of communicating directly on 
matters when they so choose, even without legislation. I am concerned 
that certain of these new requirements will be unduly burdensome on our 
high-ranking officials due to the clauses that prevent the delegation 
of certain duties.
  For instance, the bill requires that upon the written request of the 
Director of the FBI or other head of agency, the Attorney General 
``shall personally review'' a FISA application. If, upon this review, 
the Attorney General declines to approve the application, she must 
personally provide written notice to the head of agency and ``set forth 
the modifications, if any, of the application that are necessary in 
order for the Attorney General to approve the application.'' The head 
of agency then has the option of adopting the proposed modifications, 
but should he choose to do so he must ``supervise the making of any 
modification'' personally.
  I appreciate that these provisions of this bill are simply designed 
to ensure that our highest ranking officials are involved when disputes 
arise over the adequacy of a FISA application. However, we should 
consider, as we hold hearings on the bill, whether imposing statutory 
requirements personally on the Attorney General and others is the way 
to go.
  I also support provisions in this bill that require information 
sharing and consultation between intelligence agencies, so that 
counterintelligence investigations will be coordinated more effectively 
in the future. In an area of such national importance, it is critical 
that our law enforcement and intelligence agencies work together as 
efficiently and cooperatively as possible. Certain provisions of this 
bill will facilitate this result.
  In addition, Section 5 of the bill would require the adoption of 
regulations to govern when and under what circumstances information 
secured pursuant to FISA authority ``shall be disclosed for law 
enforcement purposes.'' I welcome attention to this important matter, 
since OIPR attorneys had concerns in April 1999 about the FBI efforts 
to use the FISA secret search and surveillance procedures as a proxy 
for criminal search authority.
  Whatever our views about who is responsible for the miscommunications 
and missteps that marred the Wen Ho Lee investigation, S. 2089, the 
Counterintelligence Reform Act of 2000, stands on its own merits and I 
commend Senators Grassley, Specter, and Torricelli for their leadership 
and hard work in crafting this legislation.

                          ____________________