[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Senate]
[Pages 27631-27690]
[From the U.S. Government Publishing Office, www.gpo.gov]



  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
      RELATED AGENCIES APPROPRIATIONS ACT, 2002--CONFERENCE REPORT

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now proceed to consideration of the conference report to 
accompany H.R. 3061 which the clerk will report.
  The assistant legislative clerk read as follows:

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     3061) making appropriations for the Departments of Labor, 
     Health and Human Services, and Education, and related 
     agencies for the fiscal year ending September 30, 2002, and 
     for other purposes, having met, have agreed that the House 
     recede from its disagreement to the amendment of the Senate 
     and agree to the same with an amendment and the Senate agree 
     to the same, signed by all conferees on the part of both 
     Houses.

  (The conference report is printed in the House proceedings of the 
Record of Wednesday, December 19, 2001.)
  The ACTING PRESIDENT pro tempore. The Senator from Nevada.
  Mr. REID. Mr. President, I ask unanimous consent that the time that 
has been assigned run equally against all parties during this time. 
There is no one here on the bill.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.


                           Nebraska Senators

  Mr. REID. Mr. President, until someone comes to work on these bills, 
I would like to mention one thing. I wanted to say this last night. The 
hour was late. The Presiding Officer was the same.
  I have had the good fortune during the time I have served in the 
Senate to work with some outstanding Senators. The two who come to my 
mind are from the State of Nebraska. Senator Jim Exon was such a unique 
individual. I have so many fond memories of this great big man who had 
such a big body, but in that big body was a great big heart. He was a 
tremendous Senator. I miss him a great deal.
  Then, of course, to serve with Bob Kerrey is an experience. He was 
truly a free spirit, someone who was not only an American hero, having 
the Congressional Medal of Honor, but someone who was as valiant in his 
legislative duties as he was in his military duties.
  Following in the footsteps of these two men whom I enjoyed serving 
with so much is the Presiding Officer, a man who served as Governor of 
the State of Nebraska and came to the Senate with great credentials 
from my perspective. On paper, the Presiding Officer has all the 
credentials to be a great Senator. A lot of people are good on paper in 
all walks of life. But in the short time I have served with the 
Presiding Officer as a Senator from Nebraska, his credentials certainly 
have served him well in the Senate because the Presiding Officer is as 
good a person as he is on paper.
  I extend my congratulations to the people of Nebraska for sending to 
the Senate a person with such great qualities. I am sure the people of 
Nebraska appreciate Senator Ben Nelson. But I am not sure they 
appreciate him enough. For those of us who work personally with the 
Presiding Officer on a daily basis, in some of the most difficult 
legislative matters that ever come before this country, I can say 
without hesitation that Senator Ben Nelson is in the same caliber as 
Nebraskans who have served before him and with whom I have had the 
honor of serving: Senators Exon and Kerrey.
  Nebraska should be very proud of the dignity and the service of the 
three people I have had the good fortune of serving with in the Senate.
  The ACTING PRESIDENT pro tempore. The Senator from Wyoming.


                           Economic Stimulus

  Mr. THOMAS. Mr. President, I rise to make a couple of general 
comments. As we move towards perhaps the final day, certainly very 
close to the final day of our time here, I hope we can move forward. We 
have three appropriations bills that we have been looking forward to 
discussing and have to finish before we end. There will probably be 
some discussion on particularly the Defense appropriations.
  Nevertheless, the bill and the issue that I suppose we will talk 
about the most, and seems to be one that is not agreed to, is that of 
economic stimulus. Certainly that will be coming forward. We have 
talked about it for a very long time. The President has talked about 
it. We have had meetings about it. The House obviously has worked out a 
separate proposal for us. I am hopeful that as we undertake this 
effort, we will decide, as we should on

[[Page 27632]]

all of the topics that come before us, what do we want to see as the 
result.
  So often we get wrapped up entirely with the details of what is going 
on here, and the details obviously are important, but what is more 
important is what it is we want to accomplish and how will what we are 
talking about do that.
  Certainly, I hope we talk about what is the purpose of an economic 
stimulus package. Obviously, we are in a recession. No one seems to 
know exactly what the best techniques are to deal with stimulating the 
economy. We have listened to all kinds of economists, including our 
nationally celebrated economists. There are different ideas about that. 
Certainly, we want to see if we can't create more jobs, if we can't 
strengthen the economy.
  If it is called an economic stimulus, then certainly that has to be 
the purpose.
  How do you do that? You do it by creating jobs and investment. You do 
it by putting more money in the hands of the people in the countryside, 
particularly those who have suffered, of course. That is another 
alternative. The proposals we have had do both of those things in 
varying degrees. So I hope we can do that.
  There are those, of course, who believe that at this point an 
economic stimulus is not necessary. I don't agree with that, but it is 
a point of view. I was thinking this morning, listening to the TV, 
about politics. This is politics. Well, having different views is not 
unusual. Everyone in the country has different views. In many places, 
that is defined as standing up for what you believe. When we disagree 
here, it is suddenly called politics. I understand that. There are 
legitimate, different views.
  I hope we can keep in mind that certainly one of the major purposes 
of an economic stimulus is to stimulate the economy, to create jobs. We 
are not looking for a continuing assistance program. We are looking for 
something that will cause jobs to come back, so people can spend money. 
The other thing that, obviously, we want to do is assist those who have 
suffered as a result of the September 11 tragedy.
  I look forward to it. I hope we can do something that will have an 
impact. Frankly, we will be limited in time, but I hope we don't 
establish new entitlement programs through this kind of emergency 
program. We ought to really be serious about seeing what we can do that 
is effective in measuring against the results we would like to have.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.


                            Stimulus Package

  Mr. REID. Mr. President, I didn't want this morning to disturb the 
mood of our last day here. Therefore, I didn't do anything about the 
message delivered from the House this morning. When she came in and 
bowed--and I appreciate the dignity that creates here--I had a big 
smile on my face. I wrote on my pad here ``laugh,'' because it is 
laughable.
  A stimulus package now? What in the world are they trying to do in 
the House of Representatives? They are going home at 1:30 this 
afternoon. Did they think, after we worked on this so long and hard, we 
are going to accept that in the Senate? It makes the original bill they 
did that was so bad look good.
  So I hope the American public understands the charade. That is what 
it is. The House of Representatives worked until 4:30 this morning 
coming up with a stimulus package strictly for political purposes. It 
has no substantive merit whatsoever. They knew that, and they know it 
has no chance of passing over here. That is too bad.
  We started out with a stimulus package that made sense. Senator Byrd 
and I wanted to do something to create jobs. We knew that for every 
billion dollars spent on road building, 42 thousand jobs are created, 
and those 42,000 people would, of course, pay taxes and buy 
refrigerators and cars. The Republicans would not go along with that. 
We were always attempting to protect the American worker--their 
unemployment benefits, health benefits.
  Because of the very narrowminded of the Republican House of 
Representatives, we are unable to do anything. That is too bad. I am 
disappointed that we have, on the last day of the session, this silly 
package brought to us from the House of Representatives. That is what 
it is--a silly package.


                      Complimenting Senator Harkin

  Mr. REID. Mr. President, changing the subject for a minute, while I 
still have the floor, I have spent 2 or 3 weeks with the Senator from 
Iowa on the farm bill. He has done a wonderful job getting the bill out 
of committee, trying to satisfy the disparate groups throughout America 
that have farm interests. He has done that. Again, because of a 
filibuster, we were unable to bring the bill forward. He is here again 
today as chairman of the Labor-HHS Appropriations Subcommittee, which 
is, other than Defense, the biggest money-spending bill we have.
  There are so many important provisions for the State of Nevada and 
every State in our Nation. I hope people in Iowa understand what a 
resource they have in Tom Harkin, chairman of the Agriculture 
Committee, chairman of the Labor-HHS Appropriations Subcommittee, one 
of the most senior members of the Appropriations Committee. I didn't 
have a chance, because of the parliamentary situation in the last few 
days, to say anything complimentary about my friend. I want him to 
understand, on behalf of the entire Democratic caucus, how much we 
appreciate what he does. He is a resource that is invaluable to the 
Senate and this country.
  Mr. HARKIN. I thank my friend from Nevada for the very kind words. I, 
again, thank him for all of his great support and help as we tried to 
get the farm bill through, but it was stopped by the other side. I 
thank my friend from Nevada for his great help on getting our 
appropriations bill through.
  As Senator Reid said, this is the second largest appropriations 
bill--second only to Defense. But what is important is that this is the 
appropriations bill that binds our country together. This is the bill 
that makes America unique in the world. This is the appropriations bill 
that says to every kid in America: No matter where you are born, no 
matter the circumstances of your birth, you are going to get a good 
education; we are going to put the resources out there. No matter what 
your resources are, we are going to get you the funds you need to go to 
college, or for job training if you don't want to go to college.
  This provides the underpinning of our medical research. This bill 
underpins the health care of America in so many ways. This is the bill 
that provides all of the support for our jobs, our Job Corps, our 
training programs, all of the worker training programs that come 
through the Department of Health. This is the bill that covers the 
Department of Education, the Department of Health and Human Services, 
and the Department of Labor, and all biomedical research.
  So I am very proud and I feel very privileged to be a Senator, but 
also to be on the Appropriations Committee and to chair this 
subcommittee that I believe speaks about what America really is. I am 
also on the Defense Appropriations Subcommittee. That is the committee 
that defends our interests around the globe. This is the subcommittee 
that makes America what America is in the world community--unique among 
nations.
  I am proud and privileged to bring to the Senate Chamber this morning 
the conference report on the Labor, Health and Human Services, 
Education and related agencies appropriations bill.
  First, I thank my good friend and longtime partner in this effort, 
Senator Specter. We have had a great partnership for a number of years. 
Some time ago, I was chairman of this subcommittee, and he was my 
ranking member. Then when the other party took control of the Senate, 
he became chairman and I was ranking member. Now I am chairman again 
and he is ranking member again. We have had a great partnership, going 
back now just about an even dozen years. I thank him and his staff, who 
I will name after a bit, for helping put together this bill on a truly 
bipartisan basis.
  The conference report is a good bill. It is one I can strongly 
recommend to

[[Page 27633]]

my colleagues. Senator Specter and I worked with our subcommittee 
members, the House leaders, Congressmen Obey and Regula, to help shape 
it. We have done our best to accommodate the literally thousands of 
requests we have received from our colleagues.
  I wish to highlight some of the main features of our conference 
report.
  First, it takes a number of important steps to improve the quality, 
affordability, and accessibility of health care in America. We included 
a record increase for the National Institutes of Health of $3 billion--
again, building upon the excellent work done when Senator Specter 
chaired this subcommittee, in meeting the stated goal of the Congress 
to double NIH funding over 5 years. So we put a record $3 billion into 
this bill for NIH.
  We have also combined with that an additional approximately $200 
million in NIH resources related to bioterrorism, which is included not 
in this bill but in the supplemental appropriations bill. This keeps us 
on track in doubling our commitment. This action holds the hope of 
improving the lives of millions of Americans plagued by killers such as 
Alzheimer's, cancer, Parkinson's, heart disease, diabetes, 
osteoporosis, and so many other things.
  The conference agreement also makes a major improvement in access to 
affordable health care by providing a $175 million increase to 
community health centers and major increases in critical prevention 
activities, such as cancer and heart disease screening. These changes 
will save lives and improve health around the country.
  As a Senator from Iowa and cochair of the Rural Health Caucus of the 
Senate, I am pleased to report that the agreement includes a major new 
effort to improve health care in rural areas and small towns.
  We will bring more doctors, nurses, and other health professionals to 
places they are needed by expanding the National Health Service Corps 
and the Nurse Loan Repayment Program. Our struggling rural hospitals 
are given help to deal with Medicare paperwork and help to expand into 
other activities, such as adult daycare.
  This agreement also includes substantial new resources to improve 
education. While I am disappointed that additional funds were not 
provided by beginning to fully fund special education as a part of the 
education reform bill, I believe we did a good job with the resources 
we were provided.
  The agreement makes college more affordable for millions of young 
people by increasing the Pell grant maximum to $4,000. We increase the 
TRIO Program by $72.5 million, which brings total funding for the TRIO 
Program to $802 million.
  The bill also increases funding for title I reading and math by $1.6 
billion for a total of $10.35 billion to title I.
  We increase afterschool programs by $154 million. We finally broke 
the $1 billion threshold. We provide for $1 billion in afterschool 
programs.
  We increase the funding for teacher quality by three-quarters of a 
billion dollars. The total we have in this bill for teacher quality is 
$2.85 billion.
  The Senate bill contained nearly $1 billion when we passed it to make 
needed repair to our schools, including security enhancements. We 
started this initiative last year. It has been a great success. I am 
very disappointed we could not reach an agreement to continue it this 
year. However, I have made it clear that I will bring the issue back 
again next year. We have schools crumbling all over America, and I 
think it is a legitimate role for the Federal Government to play to 
help our States and local communities repair, rebuild, and modernize 
their schools to make them adaptable for the 21st century. The average 
age of our schools now is well over 40 years, many 50 years old and 
over 75 years old. They need to be upgraded. They need to be 
modernized. Our property-tax payers in my State and I know in the 
Presiding Officer's State are overburdened as it is. Property tax is 
not a real reflection of one's ability to pay, and yet that is still 
how we fund the rebuilding of our schools across America.
  We started on this last year. I am disappointed we could not continue 
it this year, but hopefully we will be back again next year to meet 
that need.
  I am also pleased this agreement improves our commitment to worker 
training and safety. We funded our State unemployment offices to handle 
the increased caseloads they are facing now and probably will face for 
the remainder of the winter. At this time of economic downturn, these 
investments are crucial.
  I wish to highlight a substantial initiative in this bill to improve 
services to our Nation's elderly. We will allow more homebound seniors 
to receive Meals on Wheels. We provide a major increase in services, 
such as adult daycare, to help the elderly stay in their own homes and 
to give their loved ones who are taking care of them needed respite 
care and support.
  Finally, our subcommittee held a series of four hearings on the need 
to better protect Americans from the threat of bioterrorism. Based on 
these hearings, Senator Specter and I put together a comprehensive 
anti-bio-terrorism funding plan.
  While the agreement before us contains a modest level of funding to 
address this need, our comprehensive $3 billion plan is included in the 
homeland security package which we will work on later today on the 
Defense appropriations bill. Between the two, we will be substantially 
improving the security of Americans against a bioterrorist attack. For 
the record, in the bioterrorism supplemental, we have provided $865 
million to expand State and local public health capacity, to expand the 
health alert network, and for round-the-clock disease investigators in 
every State.
  We provided $512 million to acquire enough smallpox vaccine for every 
American, and hopefully the smallpox vaccine will be available for 
every American sometime towards the end of next year, maybe as early as 
September of next year.
  We included $593 million to beef up our entire vaccine stockpile in 
America; $135 million to help our hospitals with surge capacity. If, 
God forbid, we did have a terrorist attack, our hospitals in so many 
areas just would not be able to handle it. We have provided $135 
million that will help hospitals meet that surge capacity if they 
require it.
  We provided $155 million to improve vaccine research and lab 
capacities at NIH. And we included up to $10 million for a new national 
tracking system for deadly pathogens such as anthrax. Right now, we 
track every microscopic ounce of radioactive material that is in our 
powerplants, in our laboratories, and weapons. We keep a good inventory 
and tracking system of radioactive nuclear materials, but we do not 
have such a capacity with our deadly pathogens, as we have seen with 
anthrax.
  It now looks as though the anthrax that was sent to Senator Daschle's 
office and Senator Leahy and others that came through the mail 
originated in this country. There are all kinds of stories in the press 
of it coming through Fort Detrick, MD, and Dugway in Utah, but no one 
knows because we have never had in place an inventory and tracking 
system for deadly pathogens. The money we appropriated will begin the 
process of making sure this situation does not happen again.
  We put in $71 million to improve security at our Nation's 
laboratories.
  That is all the money we put into the bioterrorism portion of the 
bill which will be in the Defense appropriations bill later today.
  I believe we have a good bill of which we can be proud. It is the 
product of a bipartisan compromise. As I said, it is not perfect. Some 
of us wanted different provisions. I wish we could have kept the money 
in for school construction, but that is the legislative process. We had 
good bipartisan cooperation in getting to the end result.
  I close by thanking my chairman, Senator Byrd, for all of his support 
and for the excellent leadership he has provided to make this bill and 
the bioterrorism package possible. I thank our ranking member, Senator 
Stevens. Again, at every step of the way he has been a strong supporter 
and has made sure we received the necessary allocations for our bill.
  Finally, this bill, as I said earlier, would not have been possible 
without

[[Page 27634]]

the tireless and outstanding staff work. Our staffs have done a 
terrific job. I know they have not had much sleep in the process. In 
fact, I understand the night before last they broke at 6 o'clock in the 
morning. They worked all night to get this done. That is the kind of 
dedication and hard work of our Appropriations Committee staff of which 
I am proud.
  I especially note the great work of the staff director on the 
subcommittee, Ellen Murray, who worked tirelessly through the year to 
shape, form, and work on the allocations and bring this all together. 
Just as I have worked closely with Senator Specter, I know she has 
worked closely with another great staff person, Bettilou Taylor with 
Senator Specter, and all of our staffs. Bettilou and Ellen have just 
done an outstanding job of putting this together. It would not have 
been possible without them. I thank them both very much for their 
expertise and their hard work.
  I thank Jim Sourwine, Erik Fatemi, Mark Laisch, Adam Gluck, Lisa 
Bernhardt, Adrienne Hallett, and Carole Geagley, as well as Bev 
Schroeder and Chani Wiggins of my personal staff for their terrific and 
tireless efforts.
  As I said, the bill before us simply would not have been possible 
without them. I mentioned my staff. Let me also mention Mary Dietrich 
on Senator Specter's staff, Sudip Parikh--I do not know where Sudip is, 
but I thank him for all the great briefings he has given me in the 
past. I thank him very much.
  Maybe after all my briefings on anthrax he will let me know how it 
all works. Emma Ashburn, also I thank Emma for all of her great work.
  I say again, we have an outstanding staff, and I thank them all. I 
take this opportunity publicly to wish them a restful Merry Christmas. 
I hope they catch up on all the sleep they have lost over the last 
couple weeks. They have done a great job and have my undying 
appreciation and admiration and thanks for the great job they have 
done.
  I know a couple of other Senators were seeking time. How much time do 
I have remaining?
  The PRESIDING OFFICER (Ms. Stabenow). The Senator has 22 minutes.
  Mr. HARKIN. How much time does the Senator desire?
  Mr. DURBIN. Ten minutes.
  Mr. HARKIN. I yield 10 minutes to the Senator from Illinois.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. I thank the Chair. I thank Senator Harkin. He and I were 
colleagues in the House of Representatives, and he would probably 
recall that Congressman Bill Natcher of Kentucky on the Appropriations 
Committee always chaired the subcommittee that had this appropriations, 
the Labor-HHS appropriations, and he would come to the floor in his 
courtly and dignified way and announce that this was the people's bill, 
Labor-HHS appropriations was the people's bill.
  When Congressman Natcher took a look at the rollcalls he had in 
support of the bill, all the people were voting for it. And I think it 
reflects what Senator Harkin said earlier about what is in this bill. I 
noticed Senator Inouye was here a few moments ago. As chair of the 
Appropriations Subcommittee on Defense, he has a responsibility to 
defend and protect America. Senator Harkin of the Labor-HHS 
Subcommittee of Appropriations has the responsibility to make sure that 
Americans' lives are worth living, whether it is education, health care 
or a commitment to labor. Time and again Senator Harkin, in this 
appropriations bill, has answered the call of this country. I commend 
him, as Senator Reid did earlier.
  This is an important bill for America. It is a better bill because of 
the hard work Senator Harkin and Senator Specter and the staffs have 
put into it. I am going to be an anxious supporter of the bill.
  I have been fortunate to have served 12 years on the House 
Appropriations Committee and now 3 years on the Senate Appropriations 
Committee, but my dream to be on this appropriations subcommittee is 
still yet to be realized. I hope someday to make it because I think it 
is most important and certainly reflects your hard work has made it to 
the bill that will be considered on what may be the last day.


                   Verification of Personal Identity

  Madam President, I would like to address another issue very quickly, 
if I may.
  Since September 11, 2001, all of us in Federal, State, and local 
governments have been looking for ways to enhance our homeland 
security. We have reviewed just about every government regulation or 
practice that affects the security of our daily lives in order to fix 
weaknesses, close loopholes, and beef up protection for all Americans.
  Among other efforts that I have led--such as airline security, food 
safety, assuring a state of national readiness--I am now working on a 
bill to address weaknesses in our nation's personal identification 
system.
  Specifically, I am interested in fixing the problems in the current 
disparate system we have where states issue driver's licenses without 
uniformity and without cross-checking with sister States.
  In the aftermath of the most devastating attacks on America, we 
learned that some of the terrorists who were responsible for the 
September 11 tragedy carried driver's licenses issued to them by states 
that had extremely lax application process.
  In Virginia, for example, it was reported that a terrorist paid a 
complete stranger $50 in the parking lot of a Department of Motor 
Vehicles to sign a sworn statement that vouched for the terrorist's 
identity and in-state residence on his driver's license application.
  It was also reported that 13 of the 19 terrorists held driver's 
licenses from Florida, a state that--at that time--did not require any 
proof of permanent residency from anyone. In fact, any foreign tourist 
could walk into a motor vehicles office, fill out a form on his own, 
and get one.
  I am certainly not asserting that the September 11 attacks would have 
been avoided had the terrorists not had these driver's licenses. 
Clearly, there is little direct connection between the cards these evil 
men carried and the ungodly deeds that they carried out.
  But what these driver's licenses--which have now become the most 
widely used form of personal ID in the country--gave these terrorists 
was the cover of legitimacy that allowed them to walk around and mingle 
into American society without being detected.
  A driver's license is a key that opens many doors. In America, anyone 
who can produce a valid driver's license can access just about 
anything.
  It can get you a motel room, membership in a gym, airline tickets, 
flight lessons, and even buy guns--all without anyone ever questioning 
you about who you are. If you can produce a driver's license, we just 
assume that you are legitimate, and you have a right to be here.
  I realize that the investigations surrounding September 11 are still 
ongoing, but I think we can safely assume what some of the problems 
were that led to the vulnerability we left for the terrorists to 
exploit.
  The terrorists took advantage of a combination of failures in our 
intelligence, law enforcement, border patrol, aviation security, and 
other infrastructures that, at some point, should have been able to 
discover and identify these individuals as threats.
  As we enhance homeland security, it is critical that we improve all 
of these areas. But no amount of data sharing among Federal, State, 
local, and international law enforcement and regulatory agencies can be 
useful if one of the most significant pieces of the data that they 
transmit back and forth is unreliable.
  And today, verification of personal identification is that weakest 
link in the process.
  Whenever someone presents identification to a government official, we 
must be able to rely on that ID to be sure that the person is in fact 
who he says he is. That is the only way to ensure accurate results when 
a government official inputs that person's name into various databases 
that agencies use.

[[Page 27635]]

  But today, with hundreds of different forms of ID cards that are in 
use across the Nation and with rampant identity theft problems, it is 
nearly impossible to know with certainty who a person is standing 
before you, no matter how many ID cards they can produce.
  To further aggravate the problem, one form of ID often begets 
another, and can help someone assume a completely false identity.
  For example, a person can start with a fake driver's license; and 
then pick up a fake Social Security number--this is really easy to get, 
and you don't even need a photo.
  With this, he can easily obtain credit cards, library cards, video 
rental membership cards, etc.--all genuine forms of ID based on the 
fake original.
  To begin the process of critically reviewing our Nation's ID system, 
I am drafting legislation to enhance the reliability of today's most 
popularly-used form of identification--the driver's license and State 
ID card.
  But before I explain what this bill does, let me be absolutely clear 
what it does not do.
  This is not about creating a new national ID card nor is it about 
developing one centralized mega-database that houses everyone's 
personal data. I understand the concerns that Americans have about 
going in that direction, and I agree that we do not need a national ID 
card which crosses that critical line of personal privacy.
  Instead, my effort is focused on fixing a problem that we can address 
immediately and with significant results. My bill is about making the 
driver's license--which many consider as a de facto national ID card--
more reliable and verifiable as a form of personal identification than 
it is today.
  First, my bill requires all States and U.S. territories to adopt a 
minimum uniform standard in issuing drivers' licenses.
  If someone walks into a department of motor vehicles in Virginia, he 
should be required to provide the same methods of verifying who he is, 
and should go through the same set of requirements, as someone who 
walks into a DMV in Illinois.
  Why? Because if we don't have uniformity among States, we will remain 
vulnerable to those who exploit the system by forum shopping for a 
driver's license card in the weakest State. With that initial ID card, 
they can go on to obtain other ID cards and gain official recognition.
  Or, under reciprocity, they can trade in that driver's license for a 
driver's license in another State with more strict application 
requirements even though they may not have qualified to get a license 
in the other State.
  If we mandate a minimum standard that is applied uniformly across the 
Nation, we can ensure that anyone who presents any State-issued 
driver's license can be trusted that he is in fact who he claims he is, 
since he would not have been able to obtain the card but for having 
initially verified his identity in the same way across the country.
  To set up the criteria and implementation of the uniform standard, I 
have enlisted the assistance of the American Association of Motor 
Vehicle Administrators AAMVA, which is a nonprofit organization whose 
members consist of motor vehicle and traffic law enforcement 
administrators of jurisdictions in the U.S., Canada, and Mexico.
  AAMVA is the national expert on issues dealing with motor vehicle 
administration, and it develops model programs and encourages 
uniformity and reciprocity among the States.
  My bill appoints AAMVA as the regulatory document and biometric 
standards-setting body, and tasks AAMVA to develop the minimum 
verification and identification requirements that each State must adopt 
for issues such as:
  Uniform definition of in-State ``residency''; validation of source or 
``breeder'' documents to verify ID; establishment of legal presence in 
the country; initial issuance procedures; and minimum security 
features.
  With congressional oversight, AAMVA would supervise the 
implementation by the States so that within reasonable time, every 
State of our Nation will finally have uniform standards.
  In implementing the uniform standards, it is also important to make 
sure the State DMVs have the support they need to verify the data they 
receive. Many DMVs across the country have complained that they receive 
little cooperation from Federal agencies who maintain databases 
containing information that could verify and confirm the information 
that people present at the DMV counter.
  For example, the Social Security number is one of the primary unique 
identifiers used across the country. Yet many State DMVs have a 
difficult time accessing records from the Social Security 
Administration to match the number with the name of the applicant of 
the driver's license.
  My bill addresses this problem by authorizing the Social Security 
Administration, Immigration and Naturalization Service, law enforcement 
agencies and any other sources of appropriate, relevant, real-time 
databases to provide motor vehicle agencies with limited access to 
their records.
  My bill would also authorize and fund an initiative to ensure that 
all of these databases are compatible and can communicate with each 
other effectively.
  Let me emphasize here that the access to the records is for the 
limited purpose of cross-checking and verifying individuals' name, date 
of birth, address, social security number, passport number if 
applicable, or legal status.
  It is not a carte blanche access to records that could contain many 
confidential and sensitive and private information.
  But we know that there may be unscrupulous employees in any 
organization, and some DMV employee, unfortunately, may be tempted to 
cut corners.
  In order to discourage and prevent anyone from accessing these 
records without authorization, or use it in an unauthorized manner, my 
bill provides stiff penalties for any employee, agent, contractor, or 
anyone else who engages in unlawful access to such records.
  Similarly, my bill provides for internal fraud within a department of 
motor vehicle where state employees access DMV records to make fake IDs 
or to personally profit in any way.
  My bill also encourages individuals to report any suspicious 
activities within such offices by providing whistleblower protection to 
those who uncover internal fraud.
  But setting up the uniformity and data sharing are not enough to 
ensure security. I also want to make sure that the driver licenses and 
other forms of government identification cards issued by departments of 
motor vehicles are tamper proof so that there is no other source from 
which someone can obtain such a card.
  It is time to stamp out the multi-billion dollar cottage industry of 
fake IDs.
  My bill will make life miserable for those who manufacture, 
distribute, market, or sell fake driver's licenses or other forms of 
government identification cards, by raising the stakes for those caught 
in the act.
  Identity theft is a national problem, and it deserves a national 
response. That is why I propose to make it a Federal offense to engage 
in the fake ID business.
  I have heard from State and local officials across the country who 
complain that they didn't have sufficient tools to go after these 
crooks who hang out in parking lots and on the web luring people to buy 
fake IDs
  In most States, such offenses are dealt with a slap on the wrist and 
the criminals are back on the streets eagerly trying to earn back the 
fines they just paid with the sale of a few more fake cards.
  So I believe we need to federalize the illegal nature of this 
activity and go after the manufacturers, distributors, and marketers 
with full force of the law.
  Likewise, I propose severe penalty for anyone who purchases fake IDs, 
obtains legitimate ID cards in a fraudulent manner, or engages in any 
activity that misrepresents their personal identification in anyway by 
using a fake or altered government-issued ID card.
  Last year, I worked with Senator Collins to pass the Internet False

[[Page 27636]]

Identification Prevention Act of 2000 which addressed many of these 
problems. My bill is designed to ensure that this and other laws 
dealing with fake IDs which are already in the books are working, and 
if they are not, that we find ways to ensure they are enforced against 
criminals.
  Since September 11, all of us have been working around the clock with 
a singular goal: enhancing security of our homeland. I believe this 
bill will help us seal some of the cracks in our internal security 
systems, and I urge my colleagues to join me in this effort.
  As chairman of the Governmental Affairs' Subcommittee on Oversight of 
Government Management, I will be holding a hearing when we return from 
the holidays to address this problem.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Massachusetts.
  Mr. KENNEDY. I think there is time that has been allocated to the 
Senator from Massachusetts. Am I correct?
  The PRESIDING OFFICER. There has not at this point been time 
allocated to the Senator from Massachusetts.
  Mr. KENNEDY. I see my friend and colleague from Minnesota. I am 
mindful that there is only about 12 minutes remaining to the Senator 
from Iowa.
  The PRESIDING OFFICER. Fifteen remain.
  Mr. DURBIN. Madam President, I yield any time remaining under my 
allocation of time until Senator Harkin's return to the floor.
  The PRESIDING OFFICER. Without objection, the Senator is recognized. 
The Senator from Massachusetts.
  Mr. WELLSTONE. Madam President, also to facilitate the Senator from 
Massachusetts, I think I have 10 minutes separately allotted; is that 
correct?
  The PRESIDING OFFICER. The Senator is correct. The Senator from 
Massachusetts.
  Mr. KENNEDY. I thank the Chair.
  Madam President, first of all, I join with others in commending our 
friend and colleague from Iowa for an excellent job in finding scarce 
resources and focusing them on the Nation's needs. I think particularly 
of the great efforts he made to make sure children in this country were 
going to have the benefits, hopefully, of an education bill that can 
provide educational opportunities for young people in this country. As 
a result of the actions of Senator Harkin and his committee, more than 
600,000 children who would not have participated in the title I program 
will participate in that program; 400,000 children who would not have 
participated in a bilingual program will participate in those programs; 
200,000 children who would not have had an opportunity for after-school 
programs will benefit from those programs; and there will be tens of 
thousands of children who will benefit from the 1.2 billion that he has 
had in special education. So this has been an impressive achievement.
  When you look at the allocations for funding of these programs in the 
early part of the year, none of this was foreseen. I think he would 
agree with me that we are going to have to do even better in the future 
as we are facing the challenges in education, and understanding the 
importance that has in the lives of families in this country.
  I also commend him for his extraordinary efforts in leading this 
body, along with Senator Hagel and our colleague, Senator Jeffords, in 
the funding for the IDEA program, which is related to education. There 
are those who say it is not, but I think we understand, as indicated in 
the conclusion of the debate on education, that two out of three of the 
children who receive IDEA funding also qualify for Title I. These, in 
many instances, are the same children. Shortchanging one group pits one 
group against the other. By adding the money even over the 
administration's budget, it will mean additional quality services for 
needy children.
  We were unable to get the funding for the children who need IDEA, and 
that is going to be the subject of my comments this morning.
  I also want to thank Senator Harkin and Senator Specter for the great 
progress that was made in funding the health care priorities. Graduate 
Medical Education was increased by $50 million; the National Health 
Service Corps was increased by $24 million; and Community Health 
Centers received an increase of $175 million, which is the largest 
increase in its history.
  Of course Senator Harkin was there in the beginning with his 
subcommittee, understanding the importance of getting the funding to 
deal with bioterrorism. His committee worked with the Appropriations 
Committee and had very instructive and productive hearings developing 
the strong case for funding for bioterrorism as well as building a 
stockpile of vaccines. I feel strongly that, just as we have a 
petroleum reserve, we ought to have a pharmaceutical reserve so every 
child can be protected against any of these potential threats.
  Senator Harkin, in his committee, held very important hearings. Then 
Senator Byrd, with his strong leadership was able, working with Senator 
Harkin, to make sure we are going to meet our Nation's responsibility. 
All of us are thankful for that leadership.
  For more than 200 years, Americans have fought battle after battle 
against discrimination in all its forms. We have fought for racial 
equality to assure that all people are judged not by the color of their 
skin. We have fought for voting rights for women, and their rightful 
place in shaping the nation's democracy. We have acted to end 
discriminatory practices against the elderly and disabled.
  Despite our many successes in the ongoing battle for fairer treatment 
for all, there is one form of dangerous discrimination that still 
pervades every community in this country. Few families have escaped 
facing this discrimination personally, or seeing the harm it has caused 
to loved ones, friends, or acquaintances. This discrimination is not 
based on skin color, gender, or age. It is based on an illness--mental 
illness.
  For years, millions of Americans across this country with mental 
illness have faced stigma and misunderstanding. Even worse, they have 
been denied the treatment that can cure or ease their cruel 
afflictions. Too often, they are the victims of discrimination 
practiced by health insurance companies. It is unacceptable that the 
Nation continues to tolerate actions by insurers that deny medically 
necessary care for curable mental illnesses, while fully covering the 
cost of treatment for physical illnesses that are often more costly, 
less debilitating, and less curable.
  It is long past time to end this unjust discrimination.
  Unfortunately, we have just suffered a serious setback in the ongoing 
battle for the rights of the mentally ill. The House Republican 
leadership has blocked the Domenici-Wellstone Mental Health Equitable 
Treatment Act, which assures fair health insurance coverage of mental 
illness for the millions of Americans who must live with depression, 
post-traumatic stress, anorexia, and other mental illnesses.
  This important bill was approved by the Senate Health, Education, 
Labor, and Pensions Committee last month on a unanimous vote. It passed 
the Senate without a word of opposition. This success was achieved by 
the skilful leadership and hard work of the bipartisan team of Senator 
Paul Wellstone and Senator Pete Domenici.
  That bill deserved to become law this year, but the House Republican 
leadership has refused to act. Three House committees have jurisdiction 
over parts of this legislation, but none has held a markup. Not one has 
held a single day of hearings. Now, operating behind the closed doors 
of the conference committee, the House Republican leadership has 
insisted on striking the amendment which the Senate added to the Labor, 
Health and Human Services Appropriations bill to achieve this essential 
goal.
  The House leadership has bowed to the pressure of insurers and big 
business, at the peril of the health of millions of Americans. This 
legislation has the support of the American people. It has the support 
of a broad bipartisan majority of the Congress. It is cosponsored by 65 
Members of the Senate. Over 240 Members of the House have signed a 
letter urging the House leadership to accept the Senate mental

[[Page 27637]]

health parity amendment as part of the appropriations bill. The 
collective will of Congress has been flagrantly disregarded.
  The message of the opponents on this basic issue is the same message 
of delay and denial that has been such a shameful blot on our national 
history when it was applied to African-Americans, to women, to the 
disabled, and to the elderly.
  One of the most disappointing things about this first session of 
Congress has been the apparent retreat from the principles of equality 
and nondiscrimination.
  On the education bill, the Congress failed to provide needed funding 
for IDEA. The Congress retreated from the commitment made a quarter of 
a century ago to assure that every child with disabilities would have a 
fair and equal chance for a quality education. Today, Congress has once 
again retreated on a basic question of civil rights and 
nondiscrimination--fair treatment for the mentally ill.
  As one who has been involved in these struggles to end discrimination 
throughout my career, I know that the American people understand that 
discrimination against any American diminishes all Americans. They 
understand that discrimination is not only a denial of our brotherhood 
as human beings, it denies our country the ability to benefit from the 
talents and contributions of all our citizens.
  Surely, this time of renewed patriotism in the struggle against the 
common enemy of terrorism is the wrong time to retreat from our basic 
American ideals.
  Equal treatment for the mentally ill is not just an insurance issue, 
it is a civil rights issue. At its heart, mental health parity is a 
question of simple justice.
  The House Republican leadership has now succeeded in blocking action 
for this session of Congress. But the battle goes on, and it will not 
end until true parity has been achieved once and for all. The American 
people understand that this battle is about justice for the mentally 
ill and their families. The Senate and a majority of the House 
understand it. It is time for the House Republican leadership to stop 
kowtowing to powerful special interests and listen to the voice of the 
American people--and to what is fair, just, and right for all those who 
suffer from mental illness.
  I yield the remainder of my time.
  The PRESIDING OFFICER. Who yields time? The Senator from Iowa?
  Mr. HARKIN. Madam President, before I yield time to my good friend 
from Minnesota, let me again thank Senator Specter, who showed up here 
from the hearing in which he has been tied up.
  Let me thank Senator Kennedy for his great leadership on the two 
areas on which he spoke. Basically, I want to speak about education. I 
am privileged to serve on his committee and have for almost all the 
time I have been in the Senate. There isn't anyone I could even think 
of mentioning here in the Chamber who has devoted more of his or her 
life to the education of our kids and making sure they have a good 
quality education than Senator Kennedy of Massachusetts. It has been a 
privilege and honor to work with him all these years.
  We have had a tough fight over the last year in reauthorizing the 
Elementary and Secondary Education Act. I believe we came out with a 
good bill, one that will move us forward. But now, as I said at the 
time when the authorizing bill passed: We have created the 
authorization, now show us the money.
  I think this is an appropriate time to say the President's budget 
will be coming down in a couple of months, the budget for next year. 
The President, I know, is a strong supporter of the reauthorization of 
the Elementary and Secondary Education Act. It has all these 
requirements for schools for testing and teacher quality and 
improvement, all the things on which we agreed. But will we have the 
resources? Will this President, in his budget, provide those resources 
to back up the authorization bills we passed? That will be the real 
test.
  I hope this President will meet that test. I hope we get a budget 
from him next year that reflects those priorities.
  Again, on the issue of the mental health parity, we had it on this 
bill.
  As the Senator from Massachusetts said--I know Senator Wellstone will 
speak about it here in just a second--we had it in the bill, and it was 
widely supported, almost unanimously, in the Senate. It was widely 
supported in the House. But for some reason which I can't really divine 
and understand, the House Members decided they were going to vote 
against it. But it was the moment in time when we could have finally 
gotten over this, when we finally could have provided the same access 
to health care for mental health problems as we do for physical health 
problems.
  Quite frankly, I believe we have failed in this endeavor. It should 
have been done. We held as long as we could, but when the House decided 
they would not agree to it, we had to abide by that and come back to 
the Senate without that provision in it. It is perhaps the biggest 
glaring loophole in our entire appropriations bill that we are now 
reporting back to the Senate.
  My friend from Minnesota, Senator Wellstone, has been the leader in 
fighting for the people with mental health problems in this country to 
assure they have the same kind of health care coverage in their 
policies that people have for physical health problems. He has been the 
leader. He has led the charge on it. I know he is not going to give up. 
If I know anything about Paul Wellstone, he is not going to give up on 
this fight. We will be back again next year. I will look to him next 
year for the same kind of leadership he provided this year, and for so 
many years in the past, for finally breaking down this last civil 
rights issue. I think Senator Kennedy spoke about that. We have to 
confront it here in America.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Madam President, I begin by congratulating my 
distinguished colleague, Senator Harkin, with whom I have worked 
closely on the subcommittee which has the responsibility for 
appropriations for the Departments of Labor, Health and Human Services, 
and Education for many years. While I liked it better when I was 
chairman for 6\1/2\ years, I believe the work of the subcommittee goes 
on seamlessly regardless of whether Tom Harkin is chairman or Arlen 
Specter is chairman. I think Senator Harkin and I both recognize you 
can't get anything done in Washington if you are not willing to cross 
party lines and make accommodations.
  May I just parenthetically note my very deep disappointment that 
there has not been an agreement on a stimulus package before Congress 
adjourns, according to the most recent reports. Perhaps that will be 
corrected before we adjourn. If they would assign it to me and Senator 
Harkin, I am sure we could get it worked out.
  But this subcommittee report adopted by the full committee--and now 
by both the Senate and the House--is one of the most important pieces 
of legislation to emerge from the Congress all year.
  I regret that I could not be here at the outset when the bill was 
called up. But I had reason to go to the hearing of the Commerce 
Committee which is considering the nomination of John Magaw to be the 
No. 3 man at that Department. I came back as soon as I could to make 
brief opening comments before yielding to Senator Wellstone who I know 
is waiting to speak.
  This bill is one of enormous importance to America. The total figure 
of $123 billion represents an enormous investment in critical aspects 
of our way of life.
  This bill contains very important funding and increases in the 
Department of Labor on worker safety, funding for the National Labor 
Relations Board, funding for the various other agencies, the Mine 
Health Safety Board, and OSHA.
  It is my hope yet that we will resolve the critical question of 
ergonomics on which we await action by the Department Of Labor 
subcommittee. The subcommittee has held extensive hearings.

[[Page 27638]]

  With respect to education, this bill contains more than $48 billion. 
There is an enormous increase for Federal participation in education. 
Last year's budget increased education funding by $5 billion. This 
year's budget increases education funding by $8 billion more.
  Not only is there additional Federal funding but, as a result of 
action by the Congress, we are directing more of this money to the 
neediest students. Philadelphia, illustratively, under the new formula 
will get $115 million as opposed to $90 million last year.
  In the conference, we adopted an amendment to provide additional 
targeted funding for those who were the neediest. We have provided very 
extensive funding on Pell grants and on guaranteed student loans in our 
recognition that education is a priority second to none and a major 
capital investment for the United States.
  On a brief personal note, education was very heavily emphasized in 
the Specter household, perhaps because my parents had so little of it. 
My father was an immigrant from Russia in 1911 and had no formal 
education but became very extensively self-educated. My mother only 
went to the eighth grade but increased her educational background on 
her own. But my brother and my two sisters and I have been able to 
share the American dream because of our educational opportunity. When 
the President talks about leaving no child behind, it is not only for 
children, it is for college students, adult education, and literacy 
training.
  There is very important funding in this bill.
  The health subcommittee has taken the lead in increasing the funding 
for the National Institutes of Health--some $11 billion in the past 
several appropriations cycles. This year's increase was $2.9 billion. 
Frankly, I would like to have seen more, but there were other 
priorities.
  The mark from our Senate subcommittee was $3.4 billion. The National 
Institutes of Health are the crown jewels of the Federal Government--
maybe the only jewels of the Federal Government. They have made 
marvelous strides in conquering Parkinson's, perhaps with a sight 5 
years down the road to cure Parkinson's, Alzheimer's, cancer, heart 
disease, and virtually every known malady.
  Three years ago, there burst upon the scene the stem cell issue. Stem 
cells are extracted from embryos. Now they are working on inserting the 
stem cells in the human brain to cure Parkinson's or delay Alzheimer's; 
or into the heart, or into many other parts of the body.
  A controversy has arisen because some object to stem cell research 
because they are extracted from embryos. Embryos can produce life. But 
the ones which are used for stem cell research would be discarded. 
Embryos are created from in vitro fertilization--customarily about a 
dozen. Mainly three or four are used, and the balance are being 
discarded.
  If any of those embryos could produce life, I think they ought to 
produce life and ought not be used for stem cell production. If they 
are not going to produce life, why throw them away? Why not use them 
for saving lives?
  We have put into this bill $1 billion for sort of a test program on 
embryo adoption. Let us try to find people who will adopt embryos and 
take the necessary steps on implanting them in a woman to produce life. 
If that could be done and use all of the embryos, that would be 
marvelous to produce life. But where those embryos are going to be 
discarded, I think the sensible thing to do is to use them for saving 
lives.
  We have had in this Chamber an effort by our subcommittee and then 
the full committee to expand Federal funding for research on stem 
cells.
  Right now Federal funding is permitted on stem cells once they have 
been extracted but not to extract them. My view is, that is something 
in which the Federal Government ought to participate, with the 
extensive funding available now in NIH.
  Our efforts to expand that activity, to some extent, was complicated 
by amendments offered by the Senator from Kansas, Mr. Brownback, who 
wanted to raise the cloning issue. We deferred that until next year 
because it would have tied up the bill for a protracted period of time. 
As the slow schedule of the Senate has worked, we could have been tied 
up, in any event, but we made the judgment, with the agreement of the 
majority leader, that a freestanding bill would come up in February or 
March.
  While there is a consensus against cloning of another individual, 
there has been an unfortunate use of the terminology ``therapeutic 
cloning,'' which is really a transplant. That involves a process where 
there is the DNA for a person, for example, who has Parkinson's, and 
that is inserted into the embryo so the stem cells come out consistent 
with the patient, not being rejected by the patient. So that is 
something we will be working on further with hearings set for our 
subcommittee into the next year.
  We have taken a very firm stand on the bioterrorism issue, with our 
bill containing $338 million, and our subcommittee taking the lead on 
having hearings which eventuated in the supplemental appropriations 
bill having an additional $2.5 billion for the needs of State and local 
health departments purchasing vaccines against bioterrorism.
  When the officials from the Centers for Disease Control came in, we 
admonished, I guess is as good a word as any, why they had not made the 
subcommittee aware of their needs before.
  It is no secret, you did not have to wait until anthrax came into the 
Hart Building or the terrorist attack on September 11 to realize the 
dangers of bioterrorism. Had they told us what their needs were, we 
would have responded as we were responding with billions for NIH.
  But we worked through that. We asked them in an October 3 hearing for 
a list of all the bioterrorism threats and what it would cost to cure 
them. They produced the list, but we could not get it. CDC had to give 
it to HHS which did not want to disclose it because HHS had to give it 
to OMB, the Office of Management and Budget. By the time you finish 
playing alphabet soup in Washington, virtually everything is stymied.
  But we had a subsequent hearing, and we got these figures, asking 
them what their professional judgment was as to what the funding should 
be. We have taken very important steps to protect America on 
bioterrorism.
  Head Start has been a big issue for the subcommittee. There is 
additional funding, as we have in community health centers, and 
elevating women's health with additional funding. There was an 
initiative taken in the early 1990s by Senator Harkin and myself to 
create a separate unit on women's health in the National Institutes of 
Health. There is additional funding for LIHEAP, the aging programs, 
AIDS, education, including education for disadvantaged children, school 
improvement programs, impact aid, bilingual education, special 
education, student aid, and public broadcasting.
  Madam President, the conference agreement on the Labor, Health and 
Human Services, and Education bill before the Senate today includes 
$123.1 billion in discretionary spending, the full amount of the 
subcommittee's budget authority allocation under section 302(b) of the 
Budget Act. This amount represents an increase of $14 billion over the 
fiscal year 2001 freeze level.
  At this time, I want to take this opportunity to thank the 
distinguished Senator from Iowa, Mr. Harkin, the chairman of the 
committee, for his hard work in bringing this bill through the 
committee and on the floor for full consideration by all Senators.
  The programs funded within the subcommittee's jurisdiction provide 
resources to improve the public health and strengthen biomedical 
research, assure a quality education for America's children, and offer 
opportunities for individuals seeking to improve job skills. I would 
like to mention several important accomplishments of this bill.
  The conference agreement includes $23.3 billion for the National 
Institutes of Health, the crown jewel of the Federal Government. The 
$2.9 billion increase over the fiscal year 2001 appropriation will 
support medical research

[[Page 27639]]

that is being conducted at institutions throughout the country. This 
increase will continue the effort to double NIH by fiscal year 2003. 
These funds will be critical in catalyzing scientific discoveries that 
will lead to new treatments and cures for a whole host of diseases.
  Since September 11, 2001, Americans have become acutely aware that 
our enemies will use any means to murder and maim large numbers of U.S. 
civilians. The use of biological agents is no longer a threat--it is a 
reality. The committee has included $338 million to coordinate state 
and local readiness, stockpile appropriate pharmaceuticals, and build 
our public health infrastructure to respond to any act of bioterrorism. 
The anthrax found in Senator Daschle's office and in the House and 
Senate mail rooms, at postal facilities in New Jersey and the District 
of Columbia and surrounding areas, in news and other media facilities 
proves that we must try and prevent, detect and quickly respond to any 
further acts of bioterrorism. The supplemental appropriations bill 
which the Senate will take up shortly contains an additional 
$2,504,314,000 to address the needs of state and local health 
departments, purchase smallpox vaccine, to upgrade the capacity of 
laboratories and the CDC and NIH, and develop new vaccines at the 
National Institutes of Health.
  For the first time, the conference agreement includes $1 million for 
a public awareness campaign to educate Americans about the existence of 
spare embryos and adoption options. During stem cell hearings, we were 
made aware that there are 100,000 spare frozen embryos stored in 
invitro fertilization clinics throughout the U.S. Many infertile 
couples could choose to adopt and implant such embryos if they were 
aware of that option.
  To enable all children to develop and function at their highest 
potential, the agreement includes $6.5 billion for the Head Start 
Program, an increase of $338 million over the last year's 
appropriation. This increase will provide services to 916,000 ch8ldren 
in 49,420 classrooms across the nation.
  To help provide primary health care services to the medically 
indigent and undeserved populations in rural and urban areas, the 
agreement contains $1.34 billion for community health centers. This 
amount represents an increase of $175.1 million over the fiscal year 
2001 appropriation. These centers provide health care to nearly 12 
million low-income patients, many of whom are uninsured.
  Again this year, the conferees placed very high priority on women's 
health. Included in the amount is $26.8 million for the Public Health 
Service, Office of Women's Health, an increase of $9.5 million over 
last year's funding level to continue and expand programs to develop 
model health care services for women, provide monies for a 
comprehensive review of the impact of heart disease on women, and to 
launch an osteoporosis public educatoin campaign aimed at teenagers. 
Also included is $265 million for family planning programs; $124.4 
million to support the programs that provide assistance to women who 
have been victims of abuse and to initiate and expand domestic violence 
prevention programs.
  In fiscal year 2001, the Labor-HHS Subcommittee held several hearings 
to explore the factors leading to medical errors and received testimony 
from family members and patients detailing their experiences with 
medical mistakes. The Institute of Medicine also gave testimony and 
outlined findings from their recent report which indicated that 98,000 
deaths occur each year because of medical errors and these deaths may 
cost up to $29 billion in excess health care expenditures and lost 
productivity each year. The conference report bill before the Senate 
contains $55 million to determine ways to reduce medical errors.
  The agreement maintains $2 billion for the low Income Home Energy 
Assistance Program LIHEAP. The amount, when combined with the 
additional $300 million in emergency appropriations, will provide a 
total of $2.3 billion for the LIHEAP program fiscal year 2002 LIHEAP is 
the key energy assistance program for low income families in 
Pennsylvania and in other cold weather states throughout the Nation. 
Funding supports grants to states to deliver critical assistance to low 
income households to help meet higher energy costs.
  For programs serving the elderly, the agreement includes: $357 
million for supportive services and senior centers; $566.5 million for 
congregate and home-delivered nutrition services; and $206 million for 
the national senior volunteer corps; $445 million for the community 
service employment program which provides part-time employment 
opportunities for low-income elderly. Also, the bill provides $893.4 
million for the National Institute on Aging for research into the 
causes and cures of Alzheimer's disease and other aging related 
disorders; funds to continue geriatric education centers; and the 
Medicare insurance counseling program.
  For AIDS, the agreement includes in this amount is $1.9 billion for 
Ryan White programs, an increase of $103.1 million. also included is $; 
$781.2 million for AIDS prevention programs at the Centers for Disease 
Control; and $2.341 billion for research at the National Institute of 
Allergy and Infectious Diseases.
  To enhance this Nation's investment in education, the bill before the 
Senate contains $48.5 billion in discretionary education funds, an 
increase of $8.3 billion over the fiscal year 2001 level, and $4 
billion more than the President's budget request.
  For programs to educate disadvantaged children, the bill recommends 
$12.3 billion, an increase of $2.6 billion over last year's level. The 
agreement also includes $250 million for the Even Start program to 
provide educational services to low-income children and their families.
  For school improvement programs, the agreement includes $7.8 billion, 
an increase of $1.6 billion over the fiscal year 2001 appropriation. 
Within this amount, $2.850 billion will be used for a new state grant 
program for improving teacher quality. The agreement also includes 
$700.5 million for educational technology state grants.
  For impact Aid programs, the agreement includes $1.143 billion, an 
increase of $150.1 million over the 2001 appropriation. Included in the 
recommendation is: $50 million for payments for children with 
disabilities; $982.5 million for basic support payments, $48 million 
for construction and $50 million for payments for Federal property.
  For bilingual education, the agreement provides $665 million to 
assist in the education of immigrant and limited--English proficient 
students. This recommendation is an increase of $205 million over the 
2001 appropriation.
  For special education, the $8.6 billion provided in the agreement 
will help local educational agencies meet the requirement that all 
children with disabilities have access to a free, appropriate public 
education, and all infants and toddlers with disabilities have access 
to early intervention services. The $1.2 billion increase over the 
FY'01 appropriation will serve an estimated 6.5 million children age 3-
21, at a cost of $1,133 per child. While also supporting 612,700 
preschoolers at a cost of $637 per child.
  For student aid programs, the agreement provides $12.3 billion, an 
increase of $1.6 billion over last year's amount. Pell grants, the 
cornerstone of student financial aid, have been increased by $250 for a 
maximum grant 34 million, the work study program is held at the FY '01 
level and the Perkins loans programs is increase by $7.5 million.
  The agreement includes $380 million for the Corporation for Public 
Boardcasting. In addition to the core amount provided for CPB, the 
committee recommends $25 million for the conversion to digital 
broadcasting.
  There are many other notable accomplishments in this agreement, but 
for the sake of time, I have mentioned just several of the kep 
highlights so that the nation may grasp the scope and importance of 
this bill.
  In closing, Madam President, I again thank Senator Harkin and his 
staff and the other Senators on the subcommittee for their cooperation.
  I thank my distinguished colleague from Minnesota for his patience, 
if, in fact, he was patient.

[[Page 27640]]

  I yield the floor. And may I note for the record that I am going to 
have to return to the Commerce Committee, but I will be back to carry 
forward on the floor consideration of the conference report.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I, first of all, say to Senator Specter that was very 
gracious. Senator Specter and Senator Harkin--Senator Harkin and 
Senator Specter--are the ones who have led us, the ones who have been 
the leaders on this bill. So it was important to hear Senator Specter 
outline this legislation. I thank Senators Harkin and Specter for their 
leadership. I am very proud of what they have done, given the resources 
with which we had to work.
  I also thank Ellen Murray and Bettilou Taylor for their work. For a 
lot of us, there is a lot in this bill that is important to the people 
we love and believe in in our States. It is just a fact that a lot of 
the real tough work is done by the people who work with us. I thank 
them.
  I also thank Ellen Gerrity because she is the one who has really 
driven, for me, and for lots of people, the mental health work. I am 
blessed to have her working with me. Senator Domenici and I are blessed 
to have her working with us.
  On the vote which occurred 2 days ago in the conference committee, 10 
House Members basically decided to eliminate the mental health parity 
legislation which would have ended the discrimination against people 
who struggle with this illness. This was the chance to end the 
discrimination, and they decided not to do so.
  There were 67 Senators who were cosponsors of this legislation. It 
passed our committee--the HELP Committee--with the leadership of 
Senator Kennedy, by a 21-to-0 vote. It was unanimously accepted on the 
floor of the Senate. And 244 House Members called on the conference 
committee: Please, don't block this legislation. This is an idea whose 
time has come. You can do something very good. You can end the 
discrimination against people struggling with this illness.
  But the insurance companies won the day. The insurance companies 
lobbied furiously, and they got the House leadership to stop this. And 
the White House did not give us the support. No. The White House did 
not give us the support.
  House leaders say next year they will hold hearings. They never have 
in the last 6, 7, 8, 9 years, but they say they will hold hearings. The 
White House says: We want to help next year. They could have helped 
this year. They could have helped now. It is not as if this 
discrimination just started yesterday. It is not as if we have not been 
working on this legislation for years. But they did not help now.
  But I am confident, working with Senator Domenici--I am proud to work 
with him--that we will get their support next year. All of the groups 
and organizations representing all the people who struggle with this 
illness, and all the people who have loved ones who struggle with this 
illness, will be back.
  My hope is that next year there will be a thousand people who 
struggle with this illness and who have friends and loved ones who 
struggle with this illness who will go to the House of Representatives 
and get 1 inch away from these Members who have blocked this bill and 
say: We are not going to let you do this to us any longer. We are men 
and women of worth and dignity and substance, and we refuse to accept 
this discrimination any longer.
  They argue premiums would go up, but the Congressional Budget Office 
said premiums would go up 0.9 percent. They say it would be too 
expensive, but they do not talk about the $70 billion a year that we 
save by getting the treatment to people who now work, who can work with 
more productivity, with less absenteeism, or whose children now will be 
in school and will not be in jail, incarcerated, and needing to receive 
social services help.
  The Washington Post editorialized last week that ``the new asylums of 
the 21st century'' for people struggling with mental illness are the 
prisons. I visited some of these juvenile ``correctional'' facilities. 
I have seen these children who never should have been there.
  I say to Senator Harkin, if there had been treatment for them on the 
front end, they would have never wound up incarcerated.
  I went down to a hearing in Houston with Sheila Jackson-Lee. She 
asked me to come down there. It was packed with desperate parents who 
talked about the fact that their children ended up in jails because 
they couldn't get any coverage or help anywhere else. And the 
leadership of the House of Representatives, doing the bidding of the 
insurance companies, blocked this bill, and the White House did not 
help.
  Now with the insurance industry we have something we have to be 
careful about. They are saying maybe next year we will cover only 
serious mental illness. They know that 90 percent of their costs are 
associated with severe mental illness, and they know that if they now 
all of a sudden say other illnesses won't be covered, the accountants 
working for the insurance companies will decide, not the doctors.
  Do you want to know what will happen if all of a sudden we say we 
will only cover what they say is serious mental illness? The children 
will be the ones most discriminated against.
  Suicide is the third leading cause of death of young people in the 
United States. Every year 30,000 Americans take their lives. In 90 
percent of these situations it is because of depression, and the cause 
is inadequately treated mental illness. Every 18 minutes a child or 
adult takes their life because of the unmitigated, searing pain of 
depression and mental illness, and next year, while Americans wait for 
fairness in mental health care, thousands more will die and millions 
more will suffer because the House of Representatives, the Republican 
leadership, couldn't stand up to the insurance industry and couldn't do 
the right thing. And the White House couldn't see its way to help.
  I thank the 67 Senators who helped. I thank the 244 House colleagues 
who helped. I thank the 154 organizations that have supported this 
legislation. I thank the Coalition for Fairness in Mental Illness 
Coverage, and I thank all of the organizations that are involved in 
that coalition.
  I look forward to the day when people with mental illness will 
receive decent, humane, and timely health care. It will be a good day 
for our country.
  A critical vote occurred in the Labor Health and Human Services 
conference committee earlier this week when 10 House members decided 
whether Congress would respond to the will of the people and establish 
fair treatment for people with mental illness. They decided they would 
not. The Mental Health Equitable Treatment Act (S. 543), supported by 
67 Senators and 244 House members, was included in the Senate version 
of the LHHS appropriations bill, but not in the House version. Most of 
the 32 conferees had expressed strong support for this bill, and thus 
had their chance to vote their conscience and resist the enormous 
pressure that had been brought to bear by the business and insurance 
industries to kill this measure. Unfortunately, these lobbyists were 
joined by the House Republican Leadership and the White House to stop 
this bill in its tracks. They succeeded when the 10 House Republicans 
voted against accepting the mental health provision. Mental health 
parity was dropped.
  House leaders are reportedly promising to hold hearings on parity for 
next year, and I strongly urge them to do so, and to allow no further 
delay to pass a full mental health parity bill. I look forward to 
continuing my long partnership with Senator Domenici and working with 
the House to ensure that such hearings are fair and represent all those 
with mental illness. Mental health parity supporters on the House side 
have waited nine years for the authorizing committees to do just that 
and move the mental health parity legislation in the House. The White 
House too has expressed support for working on mental health parity 
legislation next year, though they had no explanation for their 
opposition to moving the bill now. They were very pleased with the bill 
as it was voted out of the

[[Page 27641]]

Senate HELP committee with a vote of 21-0 on August 1, 2001. Yet, when 
Americans with mental illness needed the support of their President, 
now more than ever, he was not there for them.
  Sometimes opponents claim that ending unfair limits for mental health 
care will cost too much, yet the Congressional Budget Office reported 
that the bill would increase total premium costs by only 0.9 percent. 
Moreover, this estimate does not even take into account the cost 
savings that have resulted in overall health care costs when mental 
health care is properly covered. Nor does it consider the cost savings 
in the workplace when absenteeism is reduced, and productivity is 
increased. Something else is lurking behind the claim of cost problems. 
What is lurking there is the continuing and widespread discrimination 
against people with mental illness in our health care system.
  The stigma against people with mental disorders has persisted 
throughout history. As a result, people with mental illness are often 
afraid to seek treatment for fear that they will not be able to receive 
help, a fear all too often realized when they encounter outright 
discrimination in health coverage. Why is it that because the illness 
is located in the brain, and not the heart or liver or stomach, that 
such stigma persists?
  One of the most serious manifestations of stigma is reflected in the 
discriminatory ways in which mental health care is paid for in our 
health care system. Health plans routinely set aside ``mental'' 
illnesses as distinct from ``physical'' illnesses in health care 
coverage. Inexplicably, they set an arbitrary number of hospital days 
or visits, or a higher level of copayments or deductible, as a way to 
handle mental health care. There is no clinical or scientific evidence 
that mental illness, or any illness for that matter, can always be 
treated successfully within a fixed number of days. Nor is there any 
economic or moral justification for charging people with mental illness 
more money for their care. One can only conclude that health plans try 
to save money at the expense of people with mental illness, and they 
bank on the stigma that accompanies this illness to discourage 
individuals from demanding better care. What a sad commentary on our 
health care system, and on our country.
  The opponents, business and insurance lobbyists and their 
Congressional friends, who cite cost issues fail to recognize that 
proper treatment of mental illness actually saves money. They ignore 
the $70 billion per year cost of untreated mental illness. They also 
fail to recognize that our society picks up the cost of untreated 
mental illness in any case, for untreated illnesses don't just go away. 
Children with mental illness may end up in public institutions, foster 
care, or jail because their parents cannot afford their care. Adults 
who have private insurance are often forced into public health care 
systems financed through State governments, Medicare, and Medicaid. 
These systems are then forced to take scarce resources from those who 
have no insurance. Families are forced into bankruptcy; lives are 
broken; and lives are lost.
  We also know that the number of people with serious mental illnesses 
in America's jails and prisons today is five times greater than the 
number in state mental hospitals. That is what happens when people, 
including those with jobs and private health insurance, do not get 
adequate care. How can our country tolerate this kind of abuse of basic 
human rights? Prisons, as the Washington Post editorial noted last 
Monday, are ``the new asylums of the 21st century.'' This 
criminalization of the mentally ill is inhumane. It is also emotionally 
and financially costly, and a testament to government failure at all 
levels. We cannot afford to lose any more lives and we must not let 
those with mental illness go on being treated as criminals or as 
unworthy of medical care.
  Opponents also often try to defeat mental health parity legislation 
by claiming they want to cover mental illness, but only ``serious'' 
mental illness, and thus they would limit coverage to a selected list 
that is also designed to discriminate, most of all against children. 
The bill that was developed this year was carefully crafted to address 
the health needs of all those with mental illness as well as the 
concerns of employers, and it did so without discriminating against 
particular diagnoses. The insurance industry is very aware that 90 
percent of their costs associated with mental illness are associated 
with the most severe, as is true for other kinds of health issues as 
well. And yet, they want to oppose coverage for life-threatening 
illnesses that accountants, and not doctors, have listed as not 
``serious''. Any effort on the part of the lobbyists, the House 
Republicans, or the White House to limit coverage by particular 
diagnoses should be stopped immediately. It is just another way to try 
to stop the effort to provide fairness in treatment for people with 
mental illness.
  We know that mental illness is a real, painful, and sometimes fatal 
disease. It is also a treatable disease. The gap between what we know 
from scientific research and clinical expertise and what we do on 
behalf of patients is lethal. Suicide is the third leading cause of 
death of young people in the U.S. Each year, 30,000 Americans take 
their lives, and in 90 percent of these situations, the cause is 
inadequate treated mental illness. This is one of the true costs of 
delaying this bill that I hope those who voted against this understand: 
Every 18 minutes, a child or adult takes their lives because of the 
unmitigated, searing pain of depression or other mental illness. Next 
year, while Americans wait for fairness in mental health care, 
thousands will die and millions will suffer.
  Parity will do so much to end the unfair cost requirements, access 
limits, and personal indignities that people seeking mental health care 
have been forced to endure. Parity in private insurance has been shown 
to save other health care costs and would revolutionize our country and 
our health care system in extraordinarily humane ways. Congress was 
stopped from doing this right now because of a few members and their 
lobbyist friends. We must not let these powerful lobbyists subvert the 
will of the Congress and the will of the 154 supporting organizations 
of the 2001 Mental Health Equitable Treatment Act and the millions of 
Americans they represent whose lives are touched by the pain, 
suffering, and sorrow of mental illness.
  I thank the 67 Senate and the 244 House colleagues who worked hard to 
do the right thing for people with mental illness, and I urge them to 
not take this defeat lightly. I especially want to thank the 154 
organizations who supported this legislation and fought for its 
passage, particularly the Coalition for Fairness in Mental Illness 
Coverage and its member organizations: American Managed Behavioral 
Healthcare Association, American Medical Association, American 
Psychiatric Association, American Psychological Association, Federation 
of American Hospitals, National Alliance for the Mentally Ill, National 
Association of Psychiatric Health Systems, and National Mental Health 
Association.
  We must return quickly to this bill early in 2002 and accept no 
excuses from the Administration or the House for any further delay. I 
look forward to the day when people with mental illness receive decent, 
humane, and timely health care. It will be a good day for our country.
  Mr. SARBANES. Madam President, today I would like to bring to your 
attention title VI of the Labor, Health and Human Services 
Appropriations bill (H.R. 3061), which is the ``Mark to Market 
Extension Act of 2001''. This legislation was passed unanimously out of 
the Committee on Banking, Housing and Urban Affairs on August 1, 2001. 
We worked closely with both the House and the Administration to craft 
the final product that is now part of this conference report.
  The legislation will ensure that HUD continues to have the authority 
to restructure the rents and the mortgages of its FHA-insured section 8 
project- based portfolio. These properties have been operating for the 
past 20 years on long term rental subsidy contracts, many of which are 
currently paying above-market rents. The program we

[[Page 27642]]

seek to reauthorize provides HUD with the tools to reduce those rents 
to market levels and to restructure the underlying mortgages so that 
the new, lower rents will be sufficient to cover the debt. At the same 
time, the program provides for the rehabilitation of these projects, 
and requires another long term commitment to keep the properties 
affordable.
  The appropriators asked that this reauthorization be incorporated 
into this appropriations bill in order to make use of the $300 million 
in savings that this legislation will generate. We were happy to 
accommodate this request.
  I would like to thank Senator Reed, the Chairman of the Subcommittee 
on Housing and Transportation, Senator Gramm and Senator Allard for 
their hard work, support and cooperation throughout this process.
  Below is a detailed description of title VI, which I would like to 
submit for the record on behalf of myself and Senators Reed, Gramm and 
Allard.
  I ask unanimous consent that the two statements be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

Statement of Senator Sarbanes, Senator Gramm, Senator Reed, and Senator 
Allard on Extension of Mark-to-Market Program for Multifamily Assisted 
         Housing in FY-20 Labor-HHS Appropriations Legislation

       The following represents the views of the Chairman and 
     Ranking Members of the Senate Committee on Banking, Housing, 
     and Urban Affairs and its Subcommittee on Housing and 
     Transportation regarding the ``Mark-to-Market Extension Act 
     of 2001,'' which is part of the Labor-HHS Appropriations 
     Conference Report.


Subtitle A--Multifamily Housing Mortgage and Assistance Restructing and 
                       Section 8 Contract Renewal

                         Section 602: Purposes

       The bill includes a number of new purposes that reflect 
     some of the concerns of the Committee and a number of 
     stakeholders regarding the administration of the mark-to-
     market (MTM) program. For example, concerns were raised that 
     the private participating administrative entities (PAEs) 
     might not be providing the amount of rehabilitation and 
     reserves necessary for the properties to meet the 30 years 
     affordability commitment required by the law. Likewise, it is 
     important for the PAEs, both public and private, to correctly 
     calculate project expenses. Underestimation of expenses, as 
     with inadequate investment in rehabilitation, will undermine 
     the physical and financial condition of the properties. 
     Failure to account realistically and accurately for the 
     expenses of running a project could result in the project 
     underwriting being too ``tight'' with too little debt 
     restructured, and too little cash flow. In such cases, 
     unexpected events, such as spikes in energy prices, could 
     force the property into default. Such an outcome would 
     undercut the purpose of this program, which is intended to 
     reposition these properties both physically and financially 
     to continue to serve low-income residents for the long haul.
       The Committee expects the Department to continue to keep 
     track of the properties after they have been restructured. 
     This is particularly important for a number of properties 
     that have had rents reduced to market levels without the debt 
     being restructured. These properties have been put on a 
     ``watch list'' to make sure the owners continue to maintain 
     the properties, despite the reduction in cash flow. The 
     Committee expects HUD to act expeditiously if these 
     properties show any signs of deterioration.

                 Section 611: Mark-to-Market Amendments

       Subsection (a)--Authorizes $10 million per year for tenant 
     groups, non-profit organizations, and public entities for 
     technical assistance and capacity building to meet the 
     purposes of the Act. This provision allows the funding to be 
     carried over. Entities that qualify for debt forgiveness 
     under section 517(a)(5) automatically qualify for grants 
     under this subsection.
       (b) Exception rents are allowed for up to 5 percent of the 
     total number of projects subject to a portfolio restructuring 
     agreement.
       (c) Provides for notice to residents of the Secretary's 
     rejection of an assistance plan.
       (d) Allows certain properties to go through the program 
     upon transfer of ownership, at the request of the new owner.
       (e) Provides the Secretary the authority to reduce the 
     amount of funds contributed by owners for rehabilitation in 
     cases where additional features such as an elevator or air 
     conditioning are added to the project and were not previously 
     in that project. This flexibility extends to these additional 
     features only; the Committee expects the Secretary to 
     continue to apply the full matching funds requirement for all 
     standard rehabilitation.
       (f) Allows owners of previously eligible projects to opt 
     back into the program. HUD believes that the section 8 
     contracts on some properties that should have gone through 
     the mark-to-market program were renewed without going through 
     the program. This subsection allows such properties, at the 
     owner's consent, to get back into the program, if the 
     property would have been otherwise eligible.
       (g) Redefines second mortgages to allow inclusion of 
     miscellaneous costs, subject to likelihood of repayment. This 
     subsection also allows the Secretary to assign the second 
     mortgage to an entity that meets the conditions for debt 
     modification or forgiveness. The Congress intends this 
     additional tool to be used in the same framework as 
     modification or forgiveness. For example, if HUD would 
     otherwise have forgiven a second mortgage, we would expect 
     the Secretary to assign the mortgage to the eligible owner 
     without any additional requirements, if that is the 
     preference of the non-profit owner.
       (h) Retains program exemption for elderly projects financed 
     through section 202 that have been refinanced.

    Section 613: Consistency of Rent Levels Under Enhanced Voucher 
                   Assistance and Rent Restructurings

       The Mark-to-market program is designed to lower section 8 
     rental payments that are above market and, where necessary, 
     restructure the underlying debt in eligible properties. To 
     determine if the contract rent is above, below, or at market 
     levels requires that a rent comparability study be done. The 
     Department raised a concern that some rent comparability 
     studies may be inaccurate, resulting in a number of contracts 
     being renewed at above market rents. Alternatively, the 
     Committee has heard reports that OMHAR is setting rents too 
     low, or that the value of vouchers being provided to 
     residents in the case of opt outs are being set too high, 
     thereby encouraging owners to avoid the mark-to-market 
     program.
       The Committee believes that none of these results is 
     desirable: properties with rents that are above market should 
     go through the program in order to get a thorough financial 
     and physical review. Moreover, whatever organization is 
     establishing the comparable market rent, whether it is the 
     PAE or the PHA, the results should be consistent so that the 
     owner's decision to stay in the program or opt out is not 
     determined by who is doing the rent study. In this section, 
     the Committee directs the Secretary to establish procedures 
     for ensuring rents as determined through this program, the 
     contract renewal process, or for enhanced vouchers for the 
     same units are reasonably consistent.

    Section 614: Eligible Inclusions for Renewal Rents of Partially 
                           Assisted Buildings

       Allows certain projects that are partially assisted with 
     section 8 to get budget-based rents up to comparable market 
     rents, sufficient to cover the costs of maintenance of the 
     project.

 Section 615: Eligibility of Restructuring Projects for Miscellaneous 
                           Housing Insurance

       Amends Section 223(a)(7) of the National Housing Act to 
     allow HUD-held mortgages on properties in the program to be 
     treated as FHA-insured loans to expedite the refinancing 
     process. In addition, it extends the maximum term of FHA-
     insured and HUD-held mortgages refinanced under this 
     subsection to 30 years.


   Subtitle B--Office of Multifamily Housing Assistance Restructuring

    Section 621: Reauthorization of Office and Extension of Program

       Extends the program to October 1, 2006. Extends the Office 
     until October 1, 2004.

 Sections 622 and 623: Appointment of Director and Vacancy in Position 
                              of Director

       Establishes the procedure for appointing the Director of 
     OMHAR and for filling vacancies. The Director would be 
     appointed by the President, but would no longer be a Senate-
     confirmed position.

         Section 624: Oversight by Federal Housing Commissioner

       Places OMHAR under the jurisdiction of the FHA 
     Commissioner/Assistant Secretary of Housing, as requested by 
     the Administration. This is being done to enable better 
     coordination between the Office of Housing and OMHAR. The 
     Committee does this with the understanding, as expressed by 
     Assistant Secretary Weicher at the Subcommittee's June 19, 
     2001 hearing, that HUD has ``every expectation that [OMHAR] 
     will continue to be fully dedicated to [the mark-to-mark] 
     work.''
       The Committee also expects the FHA Commissioner to work 
     conscientiously to maintain the highly qualified staff that 
     exists at OMHAR. At the hearing, the GAO witness noted 
     several times of the need to retain OMHAR's ``contract staff 
     that have unique expertise in this program. . . .''

            Section 625: Limitation on Subsequent Employment

       Prohibits certain OMHAR employees from subsequent 
     compensation from parties with financial interests in the 
     program for a period of 1 year.


          Subtitle C--Miscellaneous Housing Program Amendments

      Section 631: Extension of CDBG Public Services Cap Exception

       Extends the expanded public services cap for Los Angeles 
     for an additional 2 years. It

[[Page 27643]]

     is expected that this will be the last in a number of 
     extensions.

    Section 632: Use of Section 8 Enhanced Vouchers for Prepayments

       Extends eligibility for enhanced vouchers to projects that 
     prepaid in 1996.

   Section 633: Prepayment and Refinancing of Loans for Section 202 
                           Supportive Housing

       Makes the refinancing provisions for elderly (section 202) 
     projects in the American Homeownership and Economic 
     Opportunity Act of 2000 self-enacting. The Committee believes 
     that the provisions enacted last year should have already 
     been implemented by HUD. This Section makes it clear that the 
     provisions from the 2000 Act are self-enacting, and do not 
     need implementing regulations from the Department.


 changes to the 2001 and 2002 appropriations committee allocations and 
                        the budgetary aggregates

  Mr. CONRAD. Madam President, section 314 of the Congressional Budget 
Act, as amended, requires the chairman of the Senate Budget Committee 
to adjust the budgetary aggregates and the allocation for the 
Appropriations Committee by the amount of appropriations designated as 
emergency spending pursuant to section 251(b)(2)(A) of the Balanced 
Budget and Emergency Deficit Control Act of 1985, as amended. The 
conference report to H.R. 3061, the Departments of Labor, Health and 
Human Services, and Education, and Related Agencies Appropriations Act 
for 2002 includes $300 million in emergency-designated funding for the 
Low-Income Home Energy Assistant Program. That budget authority will 
result in $75 million in new outlays in 2002.
  Pursuant to section 302 of the Congressional Budget Act, I hereby 
revise the 2002 allocation provided to the Senate Appropriations 
Committee in the concurrent budget resolution in the following amounts.

     TABLE 1.--REVISED ALLOCATION FOR APPROPRIATIONS COMMITTEE, 2002
                        [In millions of dollars]
------------------------------------------------------------------------
                                                   Budget
                                                 authority     Outlays
------------------------------------------------------------------------
Current Allocation:
  General Purpose Discretionary...............      549,444      551,304
  Highways....................................            0       28,489
  Mass Transit................................            0        5,275
  Conservation................................        1,760        1,232
  Mandatory...................................      358,567      350,837
                                               -------------------------
    Total.....................................      909,771      937,137
                                               =========================
Adjustments:
  General Purpose Discretionary...............          300           75
  Highways....................................            0            0
  Mass Transit................................            0            0
  Conservation................................            0            0
  Mandatory...................................            0            0
                                               -------------------------
    Total.....................................          300           75
                                               =========================
Revised Allocation:
  General Purpose Discretionary...............      549,744      551,379
  Highways....................................            0       28,489
  Mass Transit................................            0            0
  Conservation................................        1,760        1,232
  Mandatory...................................      358,567      350,837
                                               -------------------------
                                                    910,071      937,212
------------------------------------------------------------------------

  Mr. CONRAD. Mr. President, I rise to offer for the Record the Budget 
Committee's official scoring for the conference report to H.R. 3061, 
the Departments of Labor, Health and Human Services, and Education, and 
Related Agencies Appropriations Act for fiscal year 2002.
  The conference report provides $123.371 billion in discretionary 
budget authority, which will result in new outlays in 2002 of $50.089 
billion. When outlays from prior-year budget authority are taken into 
account, discretionary outlays for H.R. 3061 total $107.791 billion in 
2002. The conference report provides virtually the same amount of 
budget authority as did the Senate-passed bill, which provided $123.37 
billion. The conference report is at the Senate subcommittee's section 
302(b) allocation for both budget authority and outlays.
  Included in the conference report's total is $300 million in 
emergency-designated funding for the low-income home energy assistance 
program, (LIHEAP), which will result in new outlays of $75 million in 
2002. In accordance with standard budget practice, I am adjusting the 
appropriations committee's allocation by the amount of that emergency-
designated spending.
  Additionally, H.R. 3061 also provides $18.874 billion in advance 
appropriations for 2003 for employment and training, health resources, 
child care, and education programs. Those advances are specifically 
allowed for under the budget resolution adopted for 2002, and, combined 
with all other advance appropriations considered by the Senate to date, 
fall within the limit imposed by the resolution. Further, the report 
adopts the Senate provision extending the Mark-to-Market Program for 
multifamily assisted housing. That provision, which is included in the 
above totals, is estimated to save $355 million in 2002. Finally, the 
report includes language that extends by one year certain benefits 
regarding mental health parity. Because that provision includes 
language directing how its costs are to be counted for budgetary 
purposes, it violates section 306 of the Congressional Budget Act of 
1974.
  I ask unanimous consent that a table displaying the budget committee 
scoring of this report be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  H.R. 3061, CONFERENCE REPORT TO THE DEPARTMENTS OF LABOR, HEALTH AND
 HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT,
                                  2002
    [Spending comparisons--Conference Report, in millions of dollars]
------------------------------------------------------------------------
                                     General
                                     purpose     Mandatory      Total
------------------------------------------------------------------------
Conference report:
  Budget Authority...............      123,371      272,937      396,308
  Outlays........................      107,791      272,968      380,759
Senate 302(b) allocaiton:\1\
  Budget Authority...............      123,371      272,937      396,308
  Outlays........................      107,791      272,968      380,759
President's request:
  Budget Authority...............      116,382      272,937      389,265
  Outlays........................      105,957      272,968      378,925
House-passed:
  Budget Authority...............      123,371      272,937      396,308
  Outlays........................      106,828      272,968      379,796
Senate-passed:
  Budget Authority...............      123,370      272,937      396,307
  Outlays........................      107,749      272,968      380,717
 
  CONFERENCE REPORT COMPARED TO
 
Senate 302(b) allocation: \1\
  Budget Authority...............            0            0            0
  Outlays........................            0            0            0
President's request:
  Budget Authority...............        7,043            0        7,043
  Outlays........................        1,834            0        1,834
House-passed:
  Budget Authority...............            0            0            0
  Outlays........................          963            0          963
Senate-passed:
  Budget Authority...............            1            0            1
  Outlays........................           42            0           42
------------------------------------------------------------------------
\1\ For enforcement purposes, the budget committee compares the
  conference report to the Senate 302(b) allocation.
 
Notes.--Details may not add to totals due to rounding. Totals adjusted
  for consistency with scorekeeping conventions. In addition, the
  conference report provides $18.874 billion in advance appropriations
  for fiscal year 2003.

  Mr. DURBIN. Mr. President, during this summer's debate on the ESEA 
reauthorization legislation, I offered an amendment to increase the 
authorization for the new math and science partnerships program from 
$500 million in the Senate bill to $900 million in fiscal year 2002. 
Raising the authorization to this level brought math and science 
partnership participated and science partnership funding to the same 
level as the Reading First program also created in the education bill. 
My amendment passed by voice vote.
  During that debate, I joined several of my colleagues in emphasizing 
the critical need to improve math and science education in our nation's 
elementary and secondary schools. U.S. students consistently score 
lower than their counterparts in other nations in math and science, yet 
more than one in four high school math teachers and nearly one in five 
high school science teachers lack even a minor in their main teaching 
field. The training and preparation of math and science teachers must 
be a top priority.
  I am disappointed that the Labor-HHS-Education Appropriations bill 
funds the math and science partnerships at just $12.5 million in fiscal 
year 2002-- a level far below the $450 million authorized by Congress 
for this program in the final ESEA legislation.
  But I am encouraged by language included in the conference report 
that states,

     the conferees believe math providing high-quality math and 
     science instruction is of critical importance to our nation's 
     future competitiveness, and agree that math and science 
     professional development opportunities should be expanded. 
     The conferees therefore strongly encourage the Secretary and 
     the State to continue to fund math and

[[Page 27644]]

     science activities within the Teacher Quality Grant program 
     at a comparable level in fiscal year 2002.

  I understand that the conferees intend that at a minimum, the current 
commitment to the training of math and science teachers will be upheld. 
The conference report urges the Secretary of Education and the States 
to use the Teacher Quality grant program, funding available for math 
and science partnerships and through other federal grants to bring math 
and science education is a level that adequately prepares our young 
people for the demands for the demands of the 21 century. I hope that 
States and districts continue to increase their efforts in the area. I 
look forward to working with my colleagues next year to further support 
strong math and science education in schools.


               smallpox vaccination for first responders

  Mrs. BOXER. Mr. President, smallpox is a deadly disease that if not 
treated within the few first days after initial exposure, can cause 
death in 1 out of 3 cases. Clearly, this is not a disease to take 
lightly.
  The problem with smallpox, unlike our recent experience with anthrax, 
is that it is highly contagious, and not simply infectious. Thus, one 
person can spread the disease to hundreds of people within a matter of 
days.
  In this new climate of threatened bioterrorist attacks, it is 
essential that we prepare ourselves for the worst case scenario and not 
simply sit back and hope for the best.
  This fact was highlighted in disturbing detail in the ``Dark Winter'' 
exercise conducted by the Center for Civilian Biodefense Studies at 
John Hopkins University.
  ``Dark Winter'' showed that an aerosol release of smallpox virus 
would spread easily, and that the dose needed to cause infection is 
very small. The exercise showed that 20 confirmed cases could result in 
as many as 300,000 additional infections and 100,000 deaths in just 3 
short weeks.
  In light of this, the Federal Government is working quickly to ensure 
that public health officials at all levels of government are able to 
work together should an outbreak occur.
  I applaud the steps already taken by the Centers for Disease Control 
to vaccinate some of its first response personnel and to ensure the 
safety of those vaccinations.
  But I believe it is not only essential to have a trained and ready 
team in place at the federal level to respond immediately to a possible 
outbreak, I believe that such a vaccination program should be expanded.
  That is why I sent a letter to Health and Human Services Secretary 
Thompson urging him to work with Governors to identify and vaccinate 
key first responders in all 50 States. I specifically asked Secretary 
Thompson to instruct CDC officials to reach out to Governors and work 
with them to create lists of critical first responders in their States, 
and to authorize those vaccinations within the next 60 days.
  We must also work quickly to make sure we have at least 290 million 
doses of smallpox vaccine available to treat the entire population as 
well as support additional research on antiviral therapies and other 
vaccines to help control and contain any bioterrorist attack.
  In California, many companies are already making progress toward such 
antiviral therapies for smallpox, and I hope that we will not delay in 
providing funding for this type of research.
  Mr. HARKIN. I commend my colleague from California on her thoughtful 
comment on the dangers of smallpox. I agree with her that much more 
research on new vaccines and therapies is needed and am proud of the 
many companies across the nation that are leaders in this important 
effort.
  As my colleague indicates, the CDC has recently developed a strategy 
for vaccination in response to a smallpox outbreak and the funding 
provided in the Labor, Health and Human Services and Education 
Appropriations bill will help the CDC in carrying out this goal.
  Additionally, I believe that the funding provided for the Office of 
Emergency Preparedness for bioterrorism-related activities can be 
especially useful in making the vaccine available to first responders.
  Mrs. BOXER. I thank my distinguished colleague from Iowa for his 
supportive remarks, and hope that Secretary Thompson will seriously 
consider his suggestion.
  I truly believe that a small cadre of vaccinated first responders 
from each of the 50 states would provide an indispensable complement to 
the CDC staff already inoculated.
  Mr. HARKIN. I agree with my colleague from California that 
vaccinating first responders should be given serious consideration as 
the CDC and the Office of Emergency Preparedness pursue bioterrorist 
activities.
  Mrs. BOXER. As we continue to discuss funding to prepare for 
potential bioterrorist attacks, we should also have confidence in this 
country's ability to react to a smallpox outbreak promptly. Ensuring 
that first responders are ``armed'' with a vaccination and in a 
position to respond is a responsible way to achieve this goal.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Madam President, I thank the conferees on this bill for 
their hard work. This is important legislation that provides Federal 
funding for the Departments of Labor and Health and Human Services, and 
Education, and related agencies.
  I am pleased to see increased funding for many programs, especially 
in light of our Nation's war on terrorism. This includes an increase in 
funding for bioterrorism activities and for strengthening our Nation's 
public health infrastructure. This funding is critical for all our 
States, localities, and our Nation as a whole to ensure that we are 
ready to respond to all contingencies.
  There is funding to ensure our Nation's food supply remains safe and 
resources for helping meet the health care needs of the uninsured. In 
addition to funding key public health programs, this bill provides 
funds for helping States and local communities educate our children. 
Furthermore, it funds our scientists who are dedicated to finding 
treatments, if not cures, for many illnesses, including Parkinson's, 
Alzheimer's, and ALS.
  The legislation also ensures our Nation's most vulnerable, our 
children, senior citizens and the disabled, have access to quality 
health care.
  Funds are also provided for important programs that assist working 
families needing child care, adult daycare for elderly seniors, and 
Meals on Wheels.
  For all the good in this bill, I ask: How many other worthy programs 
are being shortchanged because of our parochial appetites? Again, I 
find myself in the unpleasant position of speaking about parochial 
projects in yet another conference report. I have identified nearly $1 
billion in earmarks. The total amount in porkbarrel spending 
appropriations bills considered so far is $15 billion.
  I would like to start out by asking unanimous consent to print in the 
Record the Web site of the U.S. Senate Committee on Appropriations.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

            United States Senate Committee on Appropriations


       authorizations and appropriations: what's the difference?

       Authorization laws have two basic purposes. They establish, 
     continue, or modify federal programs, and they are a 
     prerequisite under House and Senate rules (and sometimes 
     under statute) for the Congress to appropriate budget 
     authority for programs.
       Some authorization laws provide spending directly. In fact, 
     well over half of federal spending now goes to programs for 
     which the authorizing legislation itself creates budget 
     authority. Such spending is referred to as direct, or 
     mandatory, spending. It includes funding for most major 
     entitlement programs. (Some entitlements are funded in annual 
     appropriation acts, but the amounts provided are controlled 
     by the authorization law that established the entitlement.) 
     The authorization laws that provide direct spending are 
     typically permanent, but some major direct spending programs, 
     such as the Food Stamp program, require periodic renewal.
       Discretionary spending, which is provided in the 13 
     appropriation acts, now makes up only about one-third of all 
     federal expenditures. For discretionary spending, the role of

[[Page 27645]]

     the authorizing committees is to enact legislation that 
     serves as the basis for operating a program and that provides 
     guidance to the Appropriations Committees as to an 
     appropriate level of funding for the program. That guidance 
     typically is expressed in terms of an authorization of 
     appropriations. Such authorizations are provided either as 
     specific dollar amounts (definite authorizations) or ``such 
     sums as are necessary'' (indefinite authorizations).
       In addition, authorizations may be permanent and remain in 
     effect until changed by the Congress, or they may cover only 
     specific fiscal years. Authorizations that are limited in 
     duration may be annual (pertaining to one fiscal year) or 
     multiyear (pertaining to two, five, or any number of specific 
     fiscal years). When such an authorization expires, the 
     Congress may choose to extend the life of a program by 
     passing legislation commonly referred to as a 
     reauthorization. Unless the underlying law expressly 
     prohibits it, the Congress may also extend a program simply 
     by providing new appropriations. Appropriations made 
     available for a program after its authorization has expired 
     are called ``unauthorized appropriations.''
       Longstanding rules of the House allow a point of order to 
     be raised against an appropriation that is unauthorized. 
     During initial consideration of a bill in the House (which by 
     precedent originates appropriation bills), unauthorized 
     appropriations are sometimes dropped from the bill. However, 
     the House Committee on Rules typically grants waivers for 
     unauthorized appropriations that are contained in a 
     conference agreement. In the Senate, there is a more limited 
     prohibition against considering unauthorized appropriations.
       Both House and Senate rules require that when the 
     Committees on Appropriations report a bill, they list in 
     their respective committee reports any programs funded in the 
     bill that lack an authorization. The information in the 
     committee reports, however, differs somewhat from the 
     information shown in this report. This report covers programs 
     that at one time had an explicit authorization that either 
     has expired or will expire. Unlike the lists shown in the 
     Appropriations Committee reports, this report does not 
     include programs for which the Congress has never provided 
     authorizations of appropriations. For example, some Treasury 
     Department programs have never received explicit 
     authorizations of appropriations. They receive appropriations 
     nonetheless because the authority to obligate and spend funds 
     is considered ``organic''--inherent in the underlying 
     legislation or executive action that originally empowered the 
     Treasury to perform particular functions.
       As mentioned above, many laws establish programs with 
     authorizations of discretionary appropriations that do not 
     expire. Both the Appropriations Committee reports and this 
     CBO report exclude programs with that type of authorization 
     because its effect is permanent.''


                        Where Does the Money Go?

       While the size of the annual federal budget has increased 
     in dollar terms (reflecting inflation, increased population 
     and economy) over the years, the proportion available for 
     common government services has shrunk dramatically. 
     Competition among federal agencies for funding is heating up.
       Over the last three decades, discretionary spending has 
     been cut significantly to accommodate rapid growths in other 
     expenses. Discretionary spending covers everything from road 
     building to police protection to medical research to our 
     national defense--most of the government services with which 
     Americans are familiar. All other spending is mandatory--
     required by law regardless of what is left over for 
     discretionary spending. Mandatory spending includes 
     entitlements such as Social Security and Medicare, and the 
     enormous interest the U.S. must pay every year to finance the 
     national debt.
       Three decades ago, nearly two-thirds of the federal budget 
     was available for discretionary programs: 1966--$9 billion, 
     interest; $43 billion, entitlement; $90 billion (63%), 
     discretionary.
       In the 1970s, entitlement spending jumped, placing a crimp 
     on discretionary spending: 1976--$27 billion, interest; $189 
     billion, entitlement; $475 billion, (45%), discretionary.
       By the mid-1980's, interest payments on the national debt 
     began to rise: 1986--$136 billion, interest; $462 billion, 
     entitlement; $438 billion (42%), discretionary.
       By 1996, entitlement spending took half of the budget pie. 
     In just 30 years, the amount left over for roads, police, 
     defense, and most other government services shrunk to a third 
     of the budget: 1966--$241 billion, interest; $859 billion, 
     entitlement; $535 billion (33%), discretionary.
       Current budget projections show the same trend. By 2006, 
     entitlement spending will demand the majority of the federal 
     budget. Interest payments will continue to be a major drain 
     on the Treasury, and the remaining amount will be divided 
     among discretionary programs: 2006--$209 billion, interest; 
     $1,476 billion, entitlement; $6266 billion (27%), 
     discretionary.
       Compare the forty-year difference side-by-side: 1966--$9 
     billion, interest; $43 billion, entitlement; $90 billion 
     (63%), discretionary. 2006--$209 billion, interest; $1,476 
     billion, entitlement; $626 billion (27%), discretionary.


rule XVI--appropriations and amendments to general appropriations bills

       1. On a point of order made by any Senator, no amendments 
     shall be received to any general appropriation bill the 
     effect of which will be to increase an appropriation already 
     contained in the bill, or to add a new item of appropriation, 
     unless it be made to carry out the provisions of some 
     existing law, or treaty stipulation, or act or resolution 
     previously passed by the Senate during that session; or 
     unless the same be moved by direction of the Committee on 
     Appropriations or of a committee of the Senate having 
     legislative jurisdiction of the subject matter, or proposed 
     in pursuance of an estimate submitted in accordance with law.
       2. The Committee on Appropriations shall not report an 
     appropriation bill containing amendments to such bill 
     proposing new or general legislation or any restriction on 
     the expenditure of the funds appropriated which proposes a 
     limitation not authorized by law if such restriction is to 
     take effect or cease to be effective upon the happening of a 
     contingency, and if an appropriation bill is reported to the 
     Senate containing amendments to such bill proposing new or 
     general legislation or any such restriction, a point of order 
     may be made against the bill, and if the point is sustained, 
     the bill shall be recommitted to the Committee on 
     Appropriations.
       3. All amendments to general appropriation bills moved by 
     direction of a committee having legislative jurisdiction of 
     the subject matter proposing to increase an appropriation 
     already contained in the bill, or to add new items of 
     appropriation, shall, at least one day before they are 
     considered, be referred to the Committee on Appropriations, 
     and when actually proposed to the bill no amendment proposing 
     to increase the amount stated in such amendment shall be 
     received on a point of order made by any Senator.
       4. On a point of order made by any Senator, no amendment 
     offered by any other Senator which proposes general 
     legislation shall be received to any general appropriation 
     bill, nor shall any amendment not germane or relevant to the 
     subject matter contained in the bill be received; nor shall 
     any amendment to any item or clause of such bill be received 
     which does not directly relate thereto; nor shall any 
     restriction on the expenditure of the funds appropriated 
     which proposes a limitation not authorized by law be received 
     if such restriction is to take effect or cease to be 
     effective upon the happening of a contingency; and all 
     questions of relevancy of amendments under this rule, when 
     raised, shall be submitted to the Senate and be decided 
     without debate; and any such amendment or restriction to a 
     general appropriation bill may be laid on the table without 
     prejudice to the bill.
       5. On a point of order made by any Senator, no amendment, 
     the object of which is to provide for a private claim, shall 
     be received to any general appropriation bill, unless it be 
     to carry out the provisions of an existing law or a treaty 
     stipulation, which shall be cited on the face of the 
     amendment.
       6. When a point of order is made against any restriction on 
     the expenditure of funds appropriated in general 
     appropriation bill on the ground that the restriction 
     violates this rule, the rule shall be construed strictly and, 
     in case of doubt, in favor of the point of order.
       7. Every report on general appropriation bills filed by the 
     Committee on Appropriations shall identify with particularity 
     each recommended amendment which proposes an item of 
     appropriation which is not made to carry out the provisions 
     of an existing law, a treaty stipulation, or an act or 
     resolution previously passed by the Senate during that 
     session.
       8. On a point of order made by any Senator, no general 
     appropriation bill or amendment thereto shall be received or 
     considered if it contains a provision reappropriating 
     unexpended balances of appropriations; except that this 
     provision shall not apply to appropriations in continuation 
     of appropriations for public works on which work has 
     commenced.

  Mr. McCAIN. I will quote from it. It says:

       Authorization laws have two basic purposes. They establish, 
     continue, or modify federal programs, and they are a 
     prerequisite----

  I emphasize, ``a prerequisite''----

       under House and Senate rules . . . for the Congress to 
     appropriate budget authority for programs.

  I found that entertaining and amusing because we have this list of 
hundreds of projects which are not authorized and are funded at 
whatever level the appropriators see fit.
  I will go through a number of them. Some of them are entertaining; 
some of them make you sad. I would like to pose a question to the 
manager of the bill, if I could have his attention. I see that there is 
$1 million for the Shakespeare Rose Theater to enhance educational and 
cultural programs and language literacy in the arts for students and 
the general public.

[[Page 27646]]

  Could the manager of the bill tell me where the Shakespeare Rose 
Theater is located?
  I admit there are hundreds here. I can understand why the manager of 
the bill wouldn't know why it is a paltry $1 million, but could the 
manager of the bill tell me where the Shakespeare Rose Theater is 
located?
  Mr. HARKIN. Might I inquire of the Senator, what committee does the 
Senator----
  Mr. McCAIN. I only have 10 minutes. Can you tell me where the theater 
is located? That is a pretty straightforward question. It deserves a 
straightforward answer.
  Mr. HARKIN. You know, Madam President, I would just say to the 
Senator, he asked me a question----
  Mr. McCAIN. I withdraw the question.
  Mr. HARKIN. You asked me a question. Now he won't let me answer it.
  The PRESIDING OFFICER. The Senator from Arizona has the floor.
  Mr. McCAIN. I asked for an answer. I didn't get an answer.
  Mr. HARKIN. The answer is there are 1,600 different items in this 
bill. If the Senator has about 60 seconds of patience, I will find out 
for him.
  Mr. McCAIN. I thank you, but it is an example. The manager of the 
bill doesn't even know where a place that we are giving $1 million of 
the taxpayers' dollars is located.
  Mr. HARKIN. It is in Massachusetts.
  Mr. McCAIN. That is instructive. That is instructive about the 
proliferation of the pork in this legislation.
  Let me cite a few others: $500,000 for the Mattatuck Museum in 
Waterbury, CT; $800,000 for the Mind-Body Institute of Boston, MA--the 
Mind-Body Institute of Boston, MA?--$150,000 for the Lady B Ranch Apple 
Valley, CA, for the Therapeutic Horseback Riding Program.
  I want to go back to what the Senator said, that there are 1,600 
earmarks. So the manager of the bill doesn't even know where $1 million 
goes. Maybe $1 million isn't much to the manager of the bill, but it 
sure as heck is a great deal of money to my constituents. I won't 
pursue this.
  Again, $150,000 for the Lady B Ranch Apple Valley, CA, for the 
Therapeutic Horseback Riding Program. If you asked the average citizen 
if a therapeutic horseback riding program was at the top of their 
priority list, I don't think so. But therapeutic horseback riding has 
to be earmarked for Apple Valley, CA.
  Continuing, $500,000 for the University of Washington Center for 
Health Workforce Studies in Seattle, WA. By the way, there is $800,000 
for the Seattle King County Workforce Development Council, Seattle, WA, 
for the purpose of retraining displaced Boeing employees. Now in the 
Defense appropriations bill, which is coming up very shortly, we will 
have a $26 billion bailout for Boeing. Yet we still need $800,000 to 
retrain their workers. That is a good deal for Boeing.
  The list continues:
  $750,000 for the Center for Textile Training and Apparel Technology 
at Central Alabama Community College;
  $200,000 for the University of Arkansas Medical Services BioVentures 
Incubator for equipment needed for wetlabs used in training;
  $800,000 for Bishops Museum. I dare not ask the manager where Bishops 
Museum is, but I can find out for myself.
  Continuing with the list: $200,000 for the Mississippi State 
University, Center for Advanced Vehicular Systems, Mississippi State, 
MS, for automotive engineering training.
  The list goes on and on and on. Here is something that is really 
entertaining, or saddening, depending on whether or not you are a 
taxpayer. For example, it earmarks $5 million, $5 million for a program 
never authorized--never a hearing through the Commerce Committee--$5 
million for a program to promote educational, cultural apprenticeships, 
and exchange programs for Alaska Natives, native Hawaiians, and their 
historical whaling and trading partners in Massachusetts. That is 
remarkable, remarkable--$5 million. This is a new program authorized by 
the Senate-passed version of the ESEA authorization bill. It was not 
requested by the administration.
  It is interesting to note that even though the United States does not 
engage or support commercial whaling--we are against commercial 
whaling--we are willing to provide $5 million for a program 
highlighting the practice.
  Another issue of concern is the report's inclusion of $25 million for 
equipment and facilities to assist public broadcasters with the 
transition to digital television. I would remind my colleagues that 
this request was never the subject of a hearing by the Commerce 
Committee, which is the authorizing committee. I don't believe that 
Congress is exercising sound fiscal policy when it decides to 
appropriate millions of dollars to publicly funded television stations 
so that they may purchase the latest in digital technology.
  Rather, the Corporation for Public Broadcasting should have come 
before the Commerce Committee to discuss with us the best way to 
achieve the goals of public broadcasters and ensure that taxpayer 
dollars are spent wisely.
  So as the manager said, there are 1,600 earmarks in this bill, very 
few of them, if any, previously authorized; all of them are in 
violation of the Web site the Appropriations Committee has. The 
overwhelming majority of these earmarks are for members of the 
Appropriations Committee, so that those States that are not represented 
on the Appropriations Committee are shortchanged. There is no 
competition. There is no authorization. There is no hearing. We are 
talking about a billion dollars here. It is remarkable.
  The rules of the Senate have to be changed. The rules of the Senate 
have to be changed so that those of us who don't support these programs 
will have an opportunity to have our States' priorities considered as 
well.
  I have something that my staff put in front of me regarding the Rose. 
Apparently, it is in London, England. It was built in 1587 by Philip 
Henslowe. The Rose was the first theater on London's Bankside. Its 
repertory included plays by Kyd, Jonson, Shakespeare, and Marlowe. In 
1989 its remains were discovered and partially excavated amidst a blaze 
of international press coverage.
  Are we now giving a million dollars to a theater in London, England? 
Remarkable. Put in without any hearing, without any authorization, 
without anything? We are going to give a million dollars for that? Are 
the British so bad off that they need a million dollars from us for a 
theater in London?
  We have homeless people wandering the cities of America and we are 
going to give a million dollars to the Rose Theater? Remarkable. 
Remarkable.
  Madam President, it is outrageous, disgraceful, and it is an 
abrogation of the process of legislation. Again, I will continue to 
oppose this and try to bring this to the attention of the American 
people.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. HARKIN. Madam President, the Senator from Arizona never mentioned 
the projects in Arizona in the amount of $6.7 million. Let me read a 
couple: University of Arizona for a border health initiative. There is 
one for Pima Community College in Arizona for minority students to 
attend college. There is the Pima County Department of Health and the 
University of Arizona. Here is one for Herd Museum in Phoenix to 
develop exhibits and educational programs about the historic Phoenix 
Indian School and the Native Americans who attended the school.
  Does the Senator want us to knock all those out?
  Mr. McCAIN. Absolutely. I have opposed every earmarked project for my 
State, and I have done so for all the years I have been here. I am 
sorry the Senator from Iowa doesn't know that.
  Mr. HARKIN. The Senator knows full well that the other Senator from 
Arizona supports those.
  Mr. McCAIN. The other Senator does not support those. It came from 
the House.
  Mr. HARKIN. So does the Congressman.
  Mr. McCAIN. It came from the House. He doesn't even know where the 
theater is in London.
  Mr. HARKIN. The Congressman also supports them. I want to mention a

[[Page 27647]]

couple of other projects. The Senator mentioned the Bishop Museum 
located in Hawaii. The other one mentioned was in Massachusetts. The 
Senator made fun of a horseback riding project that he kind of mocked. 
I don't know that program intimately, but I remember when it was 
brought up. This is a program in California for therapy for severely 
mentally retarded and brain-injured kids. It is a program where they 
have found that by using this kind of therapy, it allows these kids to 
have a little bit better life. I am not a medical expert. I don't know 
how this works. But according to the Member of Congress who brought 
this up, this is something the health care professionals believe is 
very important to these disabled kids.
  I am told that the Senator from Arizona may be slightly mistaken, 
that the Senator from Arizona did ask for some of these projects. The 
Pima County Department of Health in Arizona, a $400,000 grant was asked 
for by the Senator from Arizona, Mr. McCain--I am sorry, Mr. Kyl. It 
was asked for by the other Senator from Arizona. Certainly, the other 
Senator from Arizona --I can't speak for him--would not say just this 
is mine and nobody else's. So I say that there are four projects in 
Arizona asked for by Senator Kyl from Arizona. I want the record to 
show that.
  Mr. McCAIN. Madam President, do I have any time remaining?
  The PRESIDING OFFICER. The Senator does not have any time remaining.
  The Senator from Kansas is recognized.
  Mr. BROWNBACK. I believe I have 10 minutes.
  The PRESIDING OFFICER. Correct.
  Mr. BROWNBACK. I yield a minute to the Senator from Arizona.
  Mr. McCAIN. The Senator from Iowa knows that Senators speak for 
themselves. My record is clear over many years. I have never supported 
earmarks, not because of its virtue or vices, but because it didn't go 
through an authorizing procedure. The Pima County College project may 
be good and beneficial, and the therapeutic horseback riding project 
might be good and beneficial. I happen to be ranking member of the 
Commerce Committee. Those are under the oversight of our Committee and 
they should be authorized. It is disgraceful the way these are put in.
  The Senator from Kansas will soon bring out an example of a problem 
of legislating on appropriations. There is a major issue in his State 
concerning Indian gaming on which there has never been a hearing, never 
consideration. It was stuck into an appropriations bill, and it has 
profound effects on the State of Kansas. He is here, and rightfully 
upset, to say the least, about the fact that he, as a Senator from 
Kansas, never had any input into it and it was stuck into an 
appropriations bill.
  I tell the Senator from Kansas that I will do everything I can to 
help him in the authorizing process to see that the process is carried 
out in a legitimate fashion.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.


                             Indian Gaming

  Mr. BROWNBACK. Madam President, I want to draw attention to something 
that happened in my State that I think is completely wrong in the 
appropriations process. The Senator from Nevada is aware of this and 
stated yesterday his support to help me out with this problem. I hope I 
can get the attention, as well, of the Senator from Iowa. This is what 
happens in the worst situations in the appropriating committees. It is 
not about money or an appropriation for a particular line item. In a 
conference committee, a half sentence was written in the report that 
overturned a Tenth Circuit Court of Appeals decision about Indian 
gaming in Kansas. It affects the Huron Cemetery in Kansas City, KS.
  You can look at this picture. This is not a casino site. This is a 
cemetery site, Huron Indian Cemetery. It has been there several hundred 
years. It is on the banks of the Kansas River. It is a beautiful site, 
maintained well. What took place was this. We have four recognized 
Indian tribes in Kansas, and all four have casinos. A fifth tribe from 
outside the State, the Wyandotte tribe of Oklahoma, bought adjacent 
land and said: We want to make it into a reservation and casino, even 
though our tribe is in Oklahoma. We want to do this in Kansas City 
because this looks lucrative to us.
  So they said, first, they wanted to put it right on top of this site. 
Then the courts and local opinion said no. Then they wanted to build 
the casino on stilts on the site. They said no to that, also. So they 
bought an adjacent building. That was blocked. That was blocked in the 
courts. The State of Kansas fought it.
  The four recognized tribes of Kansas fought against it. I fought 
against it. The other Senator from Kansas fought against that. It has 
been stopped. The people of Kansas City don't want this taking place 
there.
  OK. So then the tribe from Oklahoma litigates it in court. They are 
defeated at the Tenth Circuit Court of Appeals. They can't do this 
casino in Kansas, according to the Tenth Circuit Court of Appeals. The 
Governor doesn't want it, we Senators don't want it, and the tribes 
don't want it. Then they go into a conference committee--Department of 
Interior--and in the conference, at the last minute, a half-sentence, 
handwritten note was put in that overturns the Tenth Circuit Court of 
Appeals. Now they are going to be able to go forward and build a casino 
next to this beautiful cemetery.
  This is a sacred site to a number of Native Americans in the United 
States. But because in a conference committee they got a half sentence 
in, written in pencil, it will overturn all of this work by all of 
these people. Is that right? Is that fair to take place? Is that the 
way the system is supposed to work? I don't think that is what is 
supposed to take place.
  So we came back in the Labor-HHS appropriations bill and on the floor 
we worked with the managers and said: Look, this isn't right. Let's 
correct this in this appropriations bill.
  The managers in the Senate, to their great credit--and I thank the 
Senator from Iowa--said: You are right; we will correct it in the 
Labor-HHS bill. Then it got stripped out of the bill because the House 
would not recede. We were trying to correct what took place in the dark 
of night through this conference committee report on Labor-HHS, and we 
were not able to get it done.
  Now we are left with the possibility of a casino being built next to 
a cemetery by an out-of-State tribe that the tribes in Kansas, the 
Governor of Kansas, and the Senators from Kansas do not want, and it 
took place in the Appropriations Committee process.
  We need a rule change so it does not happen again. I am here today to 
tell my colleagues that I am going to be working on this next year to 
get this overturned, to get this clarified. There were no hearings on 
this issue--none--in either the House or the Senate. It was stuck in at 
the last minute. It should not have taken place, yet it did, and now it 
is the law of the land, in spite of what all the people involved in 
this think about it.
  This is clearly not appropriate. I hope we can put a rule in place to 
raise a point of order, requiring a 60-vote supermajority, against 
situations such as this happening to the Huron Indian Cemetery in 
Kansas City, KS. This just is not right. I am going to raise this issue 
next year. I hope my colleagues, and those on the Appropriations 
Committee, will work with us to correct such an injustice.
  Thank you, Madam President. I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. HARKIN. Madam President, how much time is remaining?
  The PRESIDING OFFICER. The Senator from Iowa has no time remaining.
  Mr. HARKIN. How much time does Senator Specter have remaining?
  The PRESIDING OFFICER. Twenty-nine minutes.
  If no one yields time, time is charged equally to both parties.
  Mr. HARKIN. Madam President, parliamentary inquiry: If a quorum call 
is instituted, does that time run against both sides?
  The PRESIDING OFFICER. Under a previous order, it will run against 
all sides.

[[Page 27648]]


  Mr. HARKIN. In that case, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. LANDRIEU. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Nelson of Florida). Without objection, it 
is so ordered.
  Ms. LANDRIEU. Mr. President, I ask unanimous consent for 5 minutes to 
speak on the underlying bill and another unrelated subject.
  The PRESIDING OFFICER. Against whose time?
  Ms. LANDRIEU. Whatever time is remaining.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. LANDRIEU. I thank the Chair.
  Ms. LANDRIEU. Mr. President, I realize there is time remaining and I 
thank the Senators for yielding. I have spoken many times on this 
issue, but I want to take another minute to speak about the underlying 
appropriations bill, particularly the educational aspects and 
components of this legislation. There were a few things I didn't get to 
say that I would like to add for the Record.
  I thank the chair of the subcommittee, the Senator from Iowa, Mr. 
Harkin, for his extraordinary work in this area for helping bring 
forward an appropriations bill that reflects the positive changes of 
the authorization bill, to have the appropriations reflect those new 
strategies for improving our schools and strengthening our move for 
reform, for strengthening the notion that every child can learn, that 
we can really have excellence in every school, that we are not happy 
with the status quo, that we recognize some schools are terrific, some 
teachers are wonderful, but the system itself is not as invigorated and 
as strong as it should be, and it can be improved.
  That is what this legislation says: No to the status quo and yes to 
change; no to process and yes to progress; no to ``incomes'' and yes to 
outcomes; and yes to results.
  In this holiday season it is a wonderful gift to ourselves, to our 
Nation, to change the way we are appropriating funding for public 
schools and for all schools in this Nation.
  Today marks a historic moment. For the first time in 35 years since 
the Federal Government says we will work in partnership with States to 
help educate our children, it needs to be a local responsibility, but 
it must be a national priority. Our Nation cannot be strong, it cannot 
be great, it cannot be economically as vital if we don't have good 
schools. In Florida and Louisiana, that does not begin in kindergarten 
or end with a college degree; that is prekindergarten, early childhood 
education, and lifelong learning.
  It is clearly in our Nation's interest to help States and local 
communities educate and bring schools to our citizens. The best place 
to begin doing that is in the home. The second best place to shore that 
up is in schools, starting at the lower grades and working up. As a 
mother with young children, I know directly and very personally that 
those first few years, the foundation, are important.
  This bill is historic because in that whole partnership, for the 
first time, we have actually funded something we talk about. We 
targeted the grants for title I. We have funded the effort to help get 
the money to the districts that need a helping hand, that have 
difficulty raising either sales tax or property tax or industrial tax 
and corporate tax because the tax base is not there, but the children 
are. The tax base might not be there, but there are smart children who 
live in that county. The tax base is not there, but their parents are 
working hard.
  This bill, for the first time, sends the new money through the 
targeting formulas to bring that help to poor and disadvantaged 
children so they can take the new tests, pass them, and meet the new 
standards of accountability.
  It is an extraordinary accomplishment. I thank the Senator from 
Vermont. I know he cast his vote--it was a difficult vote to cast--
against the authorization bill because we failed to fully fund special 
education. I am disappointed in that. I will work with him and pledge 
to work with Democrats and Republicans to pick up more of our fair 
share of those special education dollars. I will work to reform special 
education, to make sure it works for our students, our families, our 
children who are greatly challenged, mentally and physically, as well 
as our teachers.
  Without Senator Jeffords, the Senator from Vermont, his untiring 
commitment and focus to education, we never would have had $3 billion 
added to the Education bill. It would have been left on the table and 
there would not be the energy to get it. I know he is disappointed, but 
I hope he hears my words this morning and is encouraged.
  There are those in the Chamber who recognize without his complete 
commitment and dedication to the schoolchildren of this Nation, this 
bill would be short a lot of money. But because he put his political 
muscle behind it and did what he needed to do, we have seen a 
tremendous increase in these investments. He should be happy and 
grateful. I know he is disappointed in special education, but I commit 
to him I will work diligently to see if we cannot shore up that part of 
the bill.
  I ask unanimous consent to have printed in the Record the list of the 
moneys the States will receive, additional funds. Every State and 
county will be helped, but we will get resources to those families and 
communities that need a helping hand. It is a historic moment.
  The PRESIDING OFFICER. The Senator from New Mexico has 5 minutes 
remaining.
  Mr. DOMENICI. Did I lose time?
  The PRESIDING OFFICER. There was a quorum call in progress that was 
evenly divided.
  Mr. DOMENICI. Mr. President, fellow Senators, let me take a few 
minutes. First, I rise with a sense of great sadness and yet a feeling 
of great hope. You really can have both votes in yourself at the same 
time. Two nights ago Mental Health Equitable Treatment of 2001 was 
dropped from the Labor-HHS appropriations conference report. The Senate 
passed a wonderful bill. We sent it to the House as part of Labor 
appropriations, even though it was a major, major authorizing bill. We 
had our hopes high because in the Senate the support was high. The time 
had come to make sure, 2 years from now in the United States, most 
insurance policies would cover the mentally ill. That meant to this 
Senator in 8 or 10 years we would be able to look back and see a very 
different America when it came to street people, people who during cold 
winter months we see on the grates of our cities with the blankets 
wrapped around them.
  In our jails and prisons, we know that now and for the ensuing months 
those who have mental illnesses such as distress that comes from 
depression, manic depression, schizophrenia, and a whole host of 
serious mental diseases, are more apt to be found in the county jail or 
the State jail than they are in treatment centers, be they treatment 
centers to which you take your sick person, and they are run privately 
or publicly. More mentally ill people, men and women, are in jails and 
facilities not intended for them than there are in facilities intended 
for them.
  We in the Senate, with the leadership and help of my friend, Senator 
Wellstone, have a bill. We call it the Domenici-Wellstone bill. It is 
moving right along. It cleared the Senate, sending a powerful signal to 
those in America by the millions who are sick with these diseases, 
their relatives, and their friends. They had an extremely high hope 
that ran through their bodies and in many cases gave them a superb ray 
of hope that maybe, in the future in the greatest land on Earth, we 
would have insurance--subject to some limitations and some exclusions, 
but across this land the large businesses would be offering insurance 
coverage for those who were mentally ill who worked for them; that we 
would begin to see the same thing happen there that has happened to 
people with heart conditions. We would have doctors taking care of 
them. We would have research taking place. We would have

[[Page 27649]]

centers and facilities for research and for care growing up across this 
land, public or private. We know that would be happening. Sure enough, 
we could cast our eyes, cast our vision not too far ahead of us, and 
say we are doing the right thing, serious mental illness is going to 
receive treatment.
  I ask consent I have 5 additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Insurance companies will be putting forth the kind of 
coverage necessary. What a day this will be. What a time that will be. 
What joy will come to those of us who have worked so hard. But more 
importantly, what joy will come to the millions of parents who will now 
see their children, when they probably have the first signs of these 
dread diseases, and these parents are going to be able to say we are 
not going to go broke trying to take care of an uninsured child with 
one of these dread diseases. What a marvelous, wonderful thing America 
will have done.
  What do we hear? Over on the side, a dull but powerful beat of the 
insurance companies that are saying: This hasn't been covered before. 
Let's not cover it now. We hear a large undercurrent saying: We have 
never done this before. We should not start now. It is going to cost 
too much.
  To them let me say: We hope you will join us when this bill clears 
both Houses, and when at that point you have to start writing insurance 
for people who are sick with schizophrenia, manic depression, those 
kinds of diseases--and there are many other diseases that will be 
covered. Research will start to take place because these kinds of sick 
people are carrying on their backs a package of assets, assets that are 
the payments that will be forthcoming from the sick person running to 
the doctor, to the clinic, to the research facilities. What a change 
and how America will have grown up when that occurs.
  There are a lot of workers in this vineyard. There are thousands upon 
thousands of Americans who are busy in this field, in their home 
cities, in their States. Many came to town this past week to show up at 
the conference meeting where the House and Senate met on this Labor, 
Health and Human Services appropriations bill. Why did they show up? 
They showed up because the Senate had attached to that bill a thorough 
covering of these diseases.
  We knew it was a chance because the House would rather have this 
considered by another committee, not an appropriations committee. We 
got our chance to speak a few words. What words were spoken. Clearly, 
the message did not stay in this little cubicle, Senator Wellstone. The 
message went out from that room. The message went out that it is the 
time, it is the place, and it is ready.
  As a matter of fact, I believe the members there present would have, 
by overwhelming numbers, voted to take this bill and put it on this 
appropriations bill and send it to the President for his signature. We 
made some good things happen. The President of the United States has 
issued a letter saying next year will be the time. We will hold him to 
it. He is saying he would like to do that. We know he had a 
distinguished friend who had depression and committed suicide, and he 
doesn't have any trouble with the idea of this being a disease, severe 
depression. It must be treated. Severe depression must have coverage 
just as the other dread diseases.
  I have here lately been comparing these dread diseases of the mind 
with the diseases of the heart. Clearly, we covered heart even though 
it is part spiritual, part physical. We do not say ``we don't cover 
that because it is very difficult to diagnose and do research on.'' 
Thank God we got it together and worked on it.
  So I understand my time is about to run out. I thank the Chair.
  I just want to say I am happy again. The tenor and the tone--those 
who were saying we are going do it were really a different group of 
people. They are going to have hearings. Where they have not had a 
single hearing in the House of Representatives on the issue of parity 
of coverage for American people, we have had numerous hearings here. 
They have had none. They pledge it. Once they have it, once their 
Members hear, once their Members are importuned by these citizens to do 
this, it will move.
  So I say thanks to Senator Wellstone for all the support and help, 
and to all those in the Senate--there are many, over 65 on the bill. 
The pressure from that, the ambience from that, was strong. We will, 
indeed, next year, be moving ahead with a big strong wave, and it will 
happen.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. HARKIN. Parliamentary inquiry, Mr. President: How much time 
remains on the conference report?
  The PRESIDING OFFICER. The time remaining is 20 minutes to the 
Senator from Pennsylvania.
  Mr. HARKIN. Again, I inquire, if there is a quorum call, then the 
time runs on both sides?
  The PRESIDING OFFICER. It will all be charged to the Senator from 
Pennsylvania.
  Mr. HARKIN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. NELSON of Florida. Mr. President, I ask unanimous consent that 
the order for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Reid). Without objection, it is so 
ordered.
  Mr. NELSON of Florida. Mr. President, I ask if the Senator from 
Pennsylvania would give me 2 minutes of his time.
  Mr. SPECTER. Mr. President, I am delighted to yield 2 minutes to the 
Senator from Florida.
  The PRESIDING OFFICER. The Senator from Florida is recognized for 2 
minutes.
  Mr. NELSON of Florida. I thank the Senator.


                          Terrorism Insurance

  Mr. NELSON of Florida. Mr. President, we are coming down to the 
crunch time with the conclusion of this session. One of the issues to 
be decided this afternoon is whether or not we are going to have any 
protection on terrorism insurance--not only for large and small 
businesses but also for homes and cars, and for personal lives.
  Since there are so many agendas going on with this topic, I urge, 
since this is the very last gasp, the Senate to come to an agreement 
for a fallback and a short period of time--say 6 months--and adopt 
legislation that would have the Federal Government assume the terrorism 
risk for that short period of time with a freeze on rates so the 
consumer is not paying the high rates now being jacked up; and a 
moratorium on the cancellations so the consumers, businesses, and 
individual home and car owners would have protection against a 
terrorist risk of loss.
  We can do that. That is a fallback position. The alternative is to do 
nothing. That is unconscionable.
  Rates are being jacked as we speak, and cancellations of terrorist 
coverage is now occurring in the 50 States.
  I thank the President for letting me bring this to the attention of 
the Senate. I thank the Senator from Pennsylvania for yielding the 
time.
  Mr. SPECTER. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator from Pennsylvania has 13 minutes 
remaining.
  Mr. SPECTER. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator is recognized.
  Is someone yielding time?
  Mr. SPECTER. I yield 2 minutes of my time.
  The PRESIDING OFFICER. The Senator from Texas is recognized for 2 
minutes.
  Mr. GRAMM. Mr. President, I think we need to take the opportunity to 
do

[[Page 27650]]

terrorism insurance. I don't think at this late date, having put 
together two different compromises, that we could start from scratch on 
a program which nobody fully understands. We are going to have a chance 
this afternoon to do it. We have a compromise that has been worked out 
by Senator Dodd, Senator Daschle, Senator Sarbanes, and members of the 
Banking and Commerce Committees. I think we need to take it.


                          The Stimulus Package

  Mr. GRAMM. Mr. President, I hope we get an opportunity to vote on the 
stimulus package. I liken our situation to a situation we would face if 
in the cold of winter a storm came along and blew the roof off of an 
apartment house. It is clear unless something is not done that people 
would get pneumonia, frostbite, and suffer from exposure.
  We have one group of Congressmen and Senators rushing in to say that 
we have to hire doctors. We have to buy penicillin. We need blankets.
  We have another group that says: Why don't we rebuild the roof? Then 
it is suggested that rich people live on the upper floors and they 
would benefit more by putting the roof back on.
  Then the President proposes the classic political compromise, which 
is: Why don't you rebuild some of the roof and buy some of the 
penicillin?
  I hope we can go that route. At least we would benefit people. I hope 
we get a chance to vote on that package today.
  I yield the floor. I thank the Senator for this and for many other 
things.
  Mr. SPECTER. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Nelson of Florida). The clerk will call 
the roll.
  The senior assistant bill clerk proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. Mr. President, we are about at the end of the time in 
this session. I just want to make a comment or two about the subject 
matter of the Domenici-Wellstone amendment to try to bring parity to 
mental health. I regret very much that the Appropriations Committee did 
not act on it.
  That amendment passed the Senate floor. And it had support from some 
in the House, really divided along party lines. There are some 
assurances from the President and at least one of the authorizing 
committees in the House that there will be action to bring parity.
  Mental illness is as much an illness as is physical illness, and that 
ought to be corrected. In the conference, I made the point that it was 
my hope that if action was not taken by the authorizers that the 
appropriators would proceed, again, next year at this time and act in 
our conference.
  Mr. President, how much time remains?
  The PRESIDING OFFICER. There are 8 minutes remaining for the Senator 
from Pennsylvania.
  Mr. SPECTER. Mr. President, I ask unanimous consent that I may 
proceed for the remainder of that time--the 8 minutes--as in morning 
business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


        Reports On The Cases Of Dr. Wen Ho Lee And Dr. Peter Lee

  Mr. SPECTER. Mr. President, before the first session of the 107th 
Congress ends, I want to put on the Record reports on the cases of Dr. 
Wen Ho Lee and Dr. Peter Lee, which were subject to oversight by the 
Judiciary Committee on the Department of Justice during the 106th 
Congress. The Subcommittee's work was controversial, partly because it 
included oversight of Attorney General Reno's handling of the 
investigations into campaign finance matters on President Clinton and 
Vice President Gore.
  Without going into all the details, suffice it to say that bipartisan 
agreement could not be reached within the Subcommittee on a report or 
in the full Committee on issuance of subpoenas to obtain necessary 
testimony.
  When a subpoena was sought for FBI Director Louis Freeh, the 
opposition of Senator Hatch, the Chairman of the Committee, proved 
decisive. In April 2000, the Subcommittee obtained a memorandum from 
Director Freeh dated December 1996 which recited a conversation between 
a ranking FBI official and a ranking Department of Justice official to 
the effect that the investigation of the Department of Justice would 
effect the Attorney General's tenure at a time before President Clinton 
had reappointed her. The Freeh memo further referenced a conversation 
between Attorney General Reno and Director Freeh. The Subcommittee's 
inability to subpoena and question Freeh was a significant hindrance to 
pursuing that important matter.
  That memorandum and other files have been inaccessible since October 
with the closing of the Hart Building due to the anthrax mail. The 
terrorist attack of September 11 has further hindered the finishing of 
the Subcommittee's work because the FBI has, understandably, been 
occupied with investigating terrorists, which preempted other pending 
matters.
  The Subcommittee's oversight was thwarted repeatedly by delays by the 
FBI and the intransigence of the Department of Energy. Once Wen Ho Lee 
was indicted, the FBI refused to provide additional information, 
claiming it would hamper the prosecution. Even after Dr. Wen Ho Lee 
entered a guilty plea and the prosecution was concluded, the FBI 
continued to refuse to provide information on the ground that it would 
impede their debriefing of Dr. Lee in obtaining the tapes which he 
took.
  Congressional oversight is traditionally a difficult matter because 
the House and the Senate are so busy with legislative matters and it is 
like pulling teeth, at best, to get cooperation from the Executive 
branch. The Subcommittee's oversight efforts on Dr. Wen Ho Lee have 
been even tougher. In addition to the general difficulties, the 
Subcommittee's oversight efforts have been further complicated by the 
change in party control in May 2001, the terrorist attack on September 
11 of this year, and the departure of the Subcommittee's key 
investigator Mr. Dobie McArthur. Mr. McArthur did an extraordinary job, 
virtually singlehandedly conducting the oversight investigations and 
writing the reports.
  With the new FBI Director Robert S. Mueller, III focusing on 
reorganization of the Bureau and the additional responsibilities of the 
FBI occasioned by the September 11 terrorist attack, and the shift of 
the Department of Justice in the focus of FBI activities, it is very 
difficult to pursue further the Subcommittee's inquiry on Dr. Wen Ho 
Lee, but it is my hope that at some date that might be done. Because of 
the serious dereliction of the FBI's handling of the Dr. Wen Ho Lee 
investigation, it will never be known beyond a reasonable doubt whether 
Dr. Wen Ho Lee was a spy, although there is substantial evidence to 
that effect in the McArthur reports. The publication of the reports on 
Dr. Wen Ho Lee and Dr. Peter Lee will enable readers to evaluate the 
seriousness of espionage in damaging our national security interests, 
the failure of the Executive branch in dealing with those 
investigations, the need for changes in procedures by the Department of 
Justice, including the FBI, and the Department of Energy. Some 
legislation, as noted in the McArthur reports, has already been enacted 
as a result of the Subcommittee's oversight and further legislative 
reforms are needed. Publication of these reports will promote those 
objectives.
  Mr. President, I ask unanimous consent that the text of the two-page 
Freeh memorandum of December 1996 be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                 December 9, 1996.
     To: Mr. Esposito,
     From: Director,
     Subject: Democratic National Campaign Matter
       As I related to you this morning, I met with the Attorney 
     General on Friday, 12/6/96, to discuss the above-captioned 
     matter.
       I stated that DOJ had not yet referred the matter to the 
     FBI to conduct a full, criminal investigation. It was my 
     recommendation

[[Page 27651]]

     that this referral take place as soon as possible.
       I also told the Attorney General that since she had 
     declined to refer the matter to an Independent Counsel it was 
     my recommendation that she select a first rate DOJ legal team 
     from outside Main Justice to conduct that inquiry. In fact, I 
     said that these prosecutors should be ``junk-yard dogs'' and 
     that in my view, PIS was not capable of conducting the 
     thorough, aggressive kind of investigation which was 
     required.
       I also advised the Attorney General of Lee Radek's comment 
     to you that there was a lot of ``pressure'' on him and PIS 
     regarding this case because the ``Attorney General's job 
     might hang in the balance'' (or words to that effect). I 
     stated that those comments would be enough for me to take him 
     and the Criminal Division off the case completely.
       I also stated that it didn't make sense for PIS to call the 
     FBI the ``lead agency'' in this matter while operating a 
     ``task force'' with DOC IGs who were conducting interviews of 
     key witnesses without the knowledge or participation of the 
     FBI.
       I strongly recommended that the FBI and hand-picked DOJ 
     attorneys from outside Main Justice run this case as we would 
     any matter of such importance and complexity.
       We left the conversation on Friday with arrangements to 
     discuss the matter again on Monday. The Attorney General and 
     I spoke today and she asked for a meeting to discuss the 
     ``investigative team'' and hear our recommendations. The 
     meeting is now scheduled for Wednesday, 12/11/96, which you 
     and Bob Litt will also attend.
       I intend to repeat my recommendations from Friday's 
     meeting. We should present all of our recommendations for 
     setting up the investigation--both AUSAs and other resources. 
     You and I should also discuss and consider whether on the 
     basis of all the facts and circumstances--including Huang's 
     recently released letters to the President as well as Radek's 
     comments--whether I should recommend that the Attorney 
     General reconsider referral to an Independent Counsel.
       It was unfortunate that DOJ declined to allow the FBI to 
     play any role in the Independent Counsel referral 
     deliberations. I agree with you that based on the DOJ's 
     experience with the Cisneros matter--which was only referred 
     to an Independent Counsel because the FBI and I intervened 
     directly with the Attorny General--it was decided to exclude 
     us from this decision-making process.
       Nevertheless, based on information recently reviewed from 
     PIS/DOC, we should determine whether or not an Independent 
     Counsel referral should be made at this time. If so, I will 
     make the recommendation to the Attorney General.

  Mr. SPECTER. Mr. President, I am now going to commence with the 
reading of the report on Dr. Wen Ho Lee: My understanding, after 
consulting with the authorities, is that once I begin the reading of 
the report, the remainder may be incorporated in the Record as if read 
in full.
  The PRESIDING OFFICER. And the Senator is advised he has 2\1/2\ 
minutes left.
  Mr. SPECTER. I thank the Chair. I shall not use the full 2\1/2\ 
minutes.

       This report augments and completes the interim report 
     released on March 8, 2000, regarding the Government's 
     investigation of espionage allegations against Dr. Wen Ho Lee 
     who pleaded guilty on September 13, 2000 to one felony count 
     of unlawful retention of national defense information.\1\ The 
     special Judiciary subcommittee on Department of Justice 
     Oversight, which I chaired in the last Congress, began 
     oversight on the Wen Ho Lee case and several other matters in 
     September 1999, but suspended its review of this case at the 
     request of FBI Director Louis Freeh after Dr. Lee was 
     indicted and jailed on December 10, 1999.
       I issued the interim report in March 2000 to demonstrate 
     the need for reforms contained in the Counterintelligence 
     Reform Act of 2000, which became law as Title VI of Public 
     Law 106-567 on December 27, 2000. That bipartisan bill, which 
     passed the Senate Judiciary and Select Intelligence 
     committees without a single vote in opposition despite 
     sometimes strong disagreements about certain aspects of the 
     Wen Ho Lee case, corrected many of the flaws in the 
     government's procedures for handling espionage investigations 
     and prosecutions. This report, consisting of an executive 
     summary accompanied by a detailed review of the case, 
     completes the oversight record on the Wen Ho Lee matter.


                        Highlights of the Report

       The government's investigation of Los Alamos National 
     Laboratory (LANL) nuclear weapons scientist Dr. Wen Ho Lee 
     was so inept that despite scrutiny spanning nearly two 
     decades, both the FBI and the Department of Energy missed 
     repeated opportunities to discover and stop his illegal 
     computer activities. As a consequence of these numerous 
     failures, magnetic computer tapes containing some of the 
     nation's most sensitive nuclear secrets are now missing when 
     they could have been recovered as late as December 1998 and 
     possibly even later.
       One great tragedy of the Wen Ho Lee case is that the entire 
     truth will likely never be known. As a consequence of an 
     inept investigation, the government has lost the credibility 
     to claim that its version of events is the absolute truth. 
     Dr. Lee also lacks the credibility to tell the definitive 
     tale of this case: he repeatedly lied to investigators, 
     created his own personal nuclear weapons design library 
     without proper authority, copied nuclear secrets to an 
     unclassified computer system accessible from the Internet, 
     and passed up several opportunities to turn his tape 
     collection over to the government. If the information Dr. Lee 
     put at risk did not fall into the wrong hands, it is a matter 
     of mere luck. When the nation's most sensitive nuclear 
     secrets are at issue, it is unacceptable that we should have 
     to rely on luck to keep them safe.
       Among the many concerns arising from the investigation and 
     prosecution of Dr. Lee, the following are most significant:
       The government obtained highly credible information in 1994 
     that Dr. Lee had helped the Chinese with computer codes and 
     software, but took no steps to examine his computer. Had Dr. 
     Lee's computer been examined, his illegal downloads of some 
     of the nation's most sensitive nuclear weapons data to an 
     unclassified computer system accessible from the Internet 
     could have been detected and stopped.
       The manner in which the FBI relied almost completely on the 
     Department of Energy's Administrative Inquiry (AI) throughout 
     the investigation which began in 1996, rather than developing 
     an independent investigative plan, caused an inappropriate 
     focus on the alleged loss of W-88 warhead design information 
     to the exclusion of all else. The FBI never questioned how 
     the suspected loss of the W-88 information related to the 
     codes and software help that Dr. Lee was suspected of having 
     provided to the PRC. The ongoing debate over whether the AI's 
     underlying assumptions--namely that rapid advances in the PRC 
     weapons program in the early 1990s resulted from their 
     acquisition of U.S. weapons design information, and that the 
     loss most likely occurred from Los Alamos--is of secondary 
     importance. The mere fact that the PRC had obtained 
     classified nuclear weapons information should have been 
     sufficient to trigger a thorough investigation, but the FBI's 
     investigation was anything but thorough.
       The Department of Justice was wrong to reject the 1997 
     request by the FBI for electronic surveillance under the 
     Foreign Intelligence Surveillance Act. Had the request been 
     permitted to go forward to the court, Dr. Lee's illegal 
     downloading could have been detected and halted in 1997. The 
     Department of Justice's own internal review, conducted by 
     Assistant U.S. Attorney Randy Bellows, concluded that the 
     request should have been approved.
       The Department of Energy was wrong to allow Wackenhut 
     contract polygraph examiners to administer a polygraph to Dr. 
     Lee on December 23, 1998. The Wackenhut contractors 
     incorrectly reported that Dr. Lee passed the polygraph, 
     prompting the FBI to nearly shut down its investigation at a 
     time when scrutiny of Dr. Lee should have been intensified. 
     Dr. Lee has told investigators the computer tapes that are 
     now missing were in his office on December 23. Had the FBI 
     conducted its investigation consistent with the fact that Dr. 
     Lee did not pass the polygraph, the tapes could have been 
     recovered.
       The nuclear secrets that Dr. Lee mishandled were correctly 
     described by the government as extremely sensitive. Dr. Lee's 
     actions in downloading these files onto an unclassified 
     computer system accessible from the Internet, and later onto 
     portable magnetic tapes, constituted a serious threat to the 
     national security.
       Allegations that Dr. Lee was targeted for investigation and 
     prosecution as a result of ``ethnic profiling'' are 
     unfounded. The repeated investigations of Dr. Lee resulted 
     from reasonable suspicions raised by Dr. Lee's own conduct. 
     Moreover, there is absolutely no evidence that Dr. Lee's 
     ethnicity was a factor in the decision to prosecute Dr. Lee 
     or to hold him in unusually strict pretrial confinement.
       The government's harsh treatment of Dr. Lee after his 
     arrest on December 10, 1999, including putting him in 
     solitary confinement and requiring him to be manacled does, 
     however, raise troubling questions. The government's claim 
     that Dr. Lee was such a threat he had to be held in pretrial 
     confinement under very strict conditions is inconsistent with 
     the long delay from March to December 1999--when the 
     government first learned of the downloaded secrets until he 
     was arrested--and the acceptance of a plea agreement in 
     September 2000 by which Dr. Lee was released with no 
     monitoring whatsoever, and which is only marginally better 
     than it could have had in December 1999, at least in terms of 
     finding out what happened to the tapes. Taken together with 
     the many missed opportunities to detect Dr. Lee's illegal 
     computer activity and recover the tapes, the government's 
     handling of the plea agreement raises questions as to whether 
     the harsh tactics were intended to coerce a confession.
       The government's claim that Dr. Lee presented such a danger 
     that he had to be prohibited from communicating is severely 
     undercut by its failure to even seek any type of

[[Page 27652]]

     electronic surveillance on him even after the existence of 
     the tapes was known. If the government was truly concerned 
     that Dr. Lee could potentially alter the global strategic 
     balance through phrases as innocuous as ``Uncle Wen says 
     hello,'' or might send a signal to a foreign intelligence 
     service to extract him, it should have sought to monitor his 
     communications, but it did not.
       Some of the most controversial and misguided steps in the 
     case appear to have been motivated more by a desire to 
     protect the affected agency's image than the national 
     security. This is particularly true of the Department of 
     Energy's decision to administer a polygraph to Dr. Lee in 
     December 1998 when it seemed likely that the House's Cox 
     Committee report \3\ was going to expose the many missteps 
     that had occurred up to that point.
       The full report which follows addresses each of these 
     matters in detail, as well as several other important aspects 
     of the case.

     Report on the Government's Handling of the Investigation and 
                     Prosecution of Dr. Wen Ho Lee

       The government's conduct in this case is so filled with 
     major breakdowns by every agency involved that it almost 
     defies analysis and makes determining responsibility for the 
     failures a very complicated matter. This report attempts to 
     sort out what went wrong and why, and to determine how such 
     mistakes can be avoided in future cases. It includes some new 
     information which has not been publicly disclosed before, and 
     provides a thorough review of the facts that are known. For 
     ease of reading, it is organized in roughly chronological 
     order, with the exception being a section in the beginning 
     which describes the key elements of the government's case 
     against Dr. Lee.
     The case against Dr. Wen Ho Lee
       Most Americans had never heard of Dr. Wen Ho Lee before he 
     was fired from Los Alamos National Laboratory in New Mexico 
     on March 8, 1999. The first vague hints of the story that 
     would explode on the national scene in March 1999 had come in 
     a January 7, 1999, Wall Street Journal article by Carla Anne 
     Robbins, which alleged that ``China received secret design 
     information for the most modern U.S. nuclear warhead'' and 
     quoted unnamed U.S. officials as saying that the ``top 
     suspect is an American working at a U.S. Department of Energy 
     laboratory.'' \4\ The WSJ article went on say that the loss 
     of information related to the W-88 warhead was the ``most 
     significant in a 20-year espionage effort by Beijing that 
     targeted the U.S. nuclear weapons laboratories,'' and that 
     ``China was given general, but still highly secret, 
     information about the warhead's weight, size and explosive 
     power, and its state-of-the-art internal configuration, which 
     allowed designers to minimize size and weight without losing 
     power.'' \5\ The article further noted that the investigation 
     of the suspected loss of W-88 information was the ``third 
     major Chinese espionage effort uncovered at the U.S. labs 
     over the last two decades,'' and was a key part of the work 
     of the special House committee, known as the Cox Committee, 
     that was reviewing American high-tech transfers to China.\6\
       The story of suspected espionage at LANL remained dormant 
     after the Robbins article until the New York Times published 
     a March 5, 1999 piece by James Risen and Jeff Gerth, titled 
     ``Breach at Los Alamos: A Special Report.'' The article did 
     not name Dr. Lee, but raised the profile of the case by 
     quoting unnamed administration officials as saying that 
     ``working with nuclear secrets stolen from an American 
     Government laboratory, China has made a leap in the 
     development of nuclear weapons: the miniaturization of its 
     bombs. . .'' \7\ The Risen and Gerth story put a political 
     spin on the case, quoting ``some American officials'' as 
     asserting that ``the White House sought to minimize the 
     espionage issue for policy reasons.'' The senior National 
     Security Council official who handled the case, Gary Samore, 
     denied the allegations, telling the NYT reporters that ``The 
     idea that we tried to cover up or downplay these allegations 
     to limit the damage to U.S.-Chinese relations is absolutely 
     wrong.'' \8\
       Risen and Gerth then explained that their own investigation 
     had revealed that ``throughout the Government, the response 
     to the nuclear theft was plagued by delays, inaction and 
     skepticism--even though senior intelligence officials 
     regarded it as one of the most damaging spy cases in recent 
     history.'' \9\ In support of their charges, they cited 
     disagreements between former DOE intelligence chief Notra 
     Trulock, who was the main proponent of the view that Chinese 
     weapons advances were attributable to espionage, and other 
     senior administration officials, including former Acting 
     Energy Secretary Elizabeth Moler, who was said to have 
     ordered Trulock not to brief the Cox Committee ``for fear 
     that the information would be used to attack the President's 
     China policy.'' \10\
       Ms. Moler denied the allegations that she had interfered 
     with Mr. Trulock's congressional testimony, but the die had 
     been cast so that as the story unfolded over the following 
     months there was always an underlying hint that the Clinton 
     Administration had ignored or downplayed an important 
     espionage case to avoid criticism or complications with its 
     China policy.
       On March 8, 1999, Dr. Lee was publicly named for the first 
     time in an Associated Press story by Josef Hebert. Quoting a 
     statement from the Department of Energy (which did not name 
     Dr. Lee), Hebert wrote that Dr. Lee had been fired for 
     ``'failing to properly safeguard classified material' and 
     having contact with `people from a sensitive country'''.\11\ 
     Shortly thereafter, the New York Times ran another article by 
     James Risen, who had interviewed Energy Secretary Bill 
     Richardson. According to Risen, Richardson told him that Dr. 
     Lee had been fired on March 8 ``for security breaches after 
     the FBI questioned him in connection with China's suspected 
     theft of American nuclear secrets. . .'' \12\ Secretary 
     Richardson also acknowledged that Dr. Lee had been questioned 
     for three days, but had ``stonewalled'' during the 
     questioning.\13\
       Through the spring and summer, details of the case dribbled 
     out as the press continued its investigation into the matter 
     and several congressional committees conducted oversight on 
     the case. Among the new details to emerge were allegations 
     totally unrelated to the W-88 matter, including charges that 
     Dr. Lee had transferred massive amounts of classified nuclear 
     data to the unclassified portion of the LANL computer system 
     and later onto portable magnetic tapes, which were thought to 
     be missing.
       The Cox Committee released its unclassified report on May 
     25, 1999, which did not mention Dr. Lee by name but clearly 
     referred to his case. The President's Foreign Intelligence 
     Advisory Board released its own review of security at the 
     national labs in June, concluding that the labs did wonderful 
     science but were lousy on security matters.\15\ In August, 
     Senators Thompson and Lieberman of the Governmental Affairs 
     Committee released a special statement, saying:
       ``This is a story of investigatory missteps, institutional 
     and personal miscommunications, and--we believe--legal and 
     policy misunderstandings and mistakes at all levels of 
     government. The DOE, FBI, and DOJ must all share the blame 
     for our government's poor performance in handling this 
     matter.'' \16\
       By September 1999, the government had finally separated the 
     W-88 matter from the issue of Dr. Lee's illegal file 
     downloads, and had started a new investigation aimed at 
     finding out how the PRC had obtained the W-88 information it 
     was known to possess. It did so quietly, without publicly 
     acknowledging that Dr. Lee was apparently no longer a suspect 
     in the loss of the W-88 information.
       Also in late September 1999, the Senate Judiciary 
     subcommittee on Department of Justice Oversight was 
     organized, with a mandate to examine: technology transfer to 
     the PRC, including the Wen Ho Lee case, the Peter Lee case, 
     and the Loral/Hughes matter; the facts surrounding the FBI's 
     use of pyrotechnic tear gas rounds during the 1993 standoff 
     at Waco, which had recently been confirmed in a special 
     report of the Texas Rangers; and the Department of Justice's 
     handling of campaign finance investigations and prosecutions 
     from the 1996 presidential campaign.\17\
       The subcommittee began an expeditious review of the Wen Ho 
     Lee case and the other matters within its jurisdiction, and 
     sent out letters to witnesses on December 7, 1999, for a 
     hearing on December 14, which would examine two issues: 1) 
     the details of a December 23, 1998 polygraph exam that had 
     been administered to Dr. Lee, and 2) the relationship between 
     the Lees and the government.
       On December 10, 1999, Dr. Lee was arrested and charged in a 
     59-count indictment \18\ of mishandling classified nuclear 
     weapons data, prompting FBI Director Freeh to write to me, 
     asking that I postpone hearings on the case. In view of the 
     extraordinary circumstances of the case and Director Freeh's 
     unprecedented request, which he reiterated to me and Senator 
     Torricelli in a meeting on December 14, I agreed to postpone 
     hearings on the case, but to continue a review of government 
     documents unrelated to the criminal case, as well as 
     documents that came into the public domain as a result of the 
     government's prosecution of Dr. Lee.
       The indictment of Dr. Lee referred to a series of tapes Dr. 
     Lee made from 1993 through 1997, during which time he 
     collected SECRET and CONFIDENTIAL Restricted Data \19\ into a 
     directory on the classified computer system at LANL, then 
     transferred the information onto the unclassified portion of 
     the LANL computer system and ultimately onto a series of 
     portable magnetic computer tapes, each capable of holding 150 
     megabytes of information. All told, the information he 
     collected and transferred to portable magnetic tapes was more 
     than 800 megabytes, the equivalent of over 400,000 pages of 
     data.\20\
       At the bail hearing of Dr. Lee on Dec. 13, 1999, the key 
     government witness, Dr. Stephen Younger, Associate Laboratory 
     Director for Nuclear Weapons at Los Alamos, testified as 
     follows about the nuclear secrets Dr. Lee was accused of 
     mishandling:
       ``These codes, and their associated data bases, and the 
     input file, combined with someone that knew how to use them, 
     could, in my opinion, in the wrong hands, change the global 
     strategic balance.'' \21\
       It would be hard, realistically impossible, to pose a more 
     severe risk than to ``change the global strategic balance.''

[[Page 27653]]

       Dr. Younger further testified that:
       ``They enable the possessor to design the only objects that 
     could result in the military defeat of America's conventional 
     forces . . . . They represent the gravest possible security 
     risk to . . . the supreme national interest.'' \22\
       A ``military defeat of America's conventional forces'' and 
     ``the gravest possible security risk to . . . the supreme 
     national interest'' constitute threats of obvious enormous 
     importance.
       At this same bail hearing, when the judge seemed to be 
     leaning toward a restrictive form of house arrest, Mr. Kelly 
     warned that Dr. Lee could be ``snatched and taken out of the 
     country'' by hostile intelligence services.\23\ The lead FBI 
     Agent then on the case, Robert Messemer, told the judge to 
     expect ``a marked increase in hostile intelligence service 
     activities both here in New Mexico and throughout the United 
     States in an effort to locate those tapes,'' and warned that 
     ``our surveillance personnel do not carry firearms, and they 
     will be placed in harm's way if you require us to maintain 
     this impossible task of protecting Dr. Lee.'' \24\
       The government made these representations in a successful 
     effort to deny Dr. Lee bail and he remained in pretrial 
     confinement for more than nine months. By September 13, 2000, 
     when Judge Parker approved the plea agreement under which Dr. 
     Lee would plead guilty to one of the original fifty-nine 
     felony counts and accept a sentence of ``time-served'' at 278 
     days, the government's case against Dr. Lee appeared to lie 
     in tatters, as did its credibility.
       Judge Parker's statements at the plea hearing were a 
     stunning rebuke of the government when he said:
       ``. . . I believe you were terribly wronged by being held 
     in custody pretrial . . . under demeaning, unnecessarily 
     punitive conditions. I am truly sorry that I was led by our 
     Executive Branch of government to order your detention last 
     December.
       ``Dr. Lee, I tell you with great sadness that I feel I was 
     led astray last December by the Executive Branch of our 
     government through its Department of Justice, by its Federal 
     Bureau of Investigation and by its United States Attorney for 
     the District of New Mexico. . .''\25\
       After praising many of the lawyers on both sides of the 
     case, Judge Parker made clear where he felt the 
     responsibility for the government's mistakes should lay:
       ``It is only the top decision makers in the Executive 
     Branch, especially the Department of Justice and the 
     Department of Energy and locally, during December, who have 
     caused embarrassment by the way this case began and was 
     handled. They did not embarrass me alone. They have 
     embarrassed our entire nation and each of us who is a citizen 
     of it.'' \26\
       When Dr. Lee walked free, convicted of a single felony 
     count out of 59 and sentenced to time served, the nation was 
     stunned by the government's rapid reversal. The government 
     had argued even as late as September 1, 2000 that Dr. Lee was 
     so serious a threat to the national security that he had to 
     be held in solitary confinement under extraordinarily 
     stringent conditions, yet less than two weeks later, he was 
     allowed to walk out of jail a free man. Even President 
     Clinton, who strangely acted as though it was some alien 
     entity that had done such a sharp turnabout rather than an 
     agency within his own administration, seemed stunned by the 
     change of position. On the day after Dr. Lee was released, 
     President Clinton told reporters at the White House:
       ``The whole thing was quite troubling to me, and I think 
     it's very difficult to reconcile the two positions that one 
     day he's a terrible risk to the national security and the 
     next day they're making a plea agreement for an offense far 
     more modest than what had been alleged.'' \27\
       It may remain impossible to reconcile the two positions, 
     but it is necessary to try, if for no other reason than to 
     help Americans understand why the government acted as it did 
     in the Wen Ho Lee case. Although it may not be sufficient to 
     restore the public's confidence in the agencies involved in 
     this case, a thorough examination of the facts such as that 
     attempted here is a necessary step in that direction.
     The Investigations of Dr. Wen Ho Lee
       The purpose of counterintelligence is to identify 
     suspicious conduct and then pursue an investigation to 
     prevent or minimize access by foreign agents to our secrets. 
     From a counterintelligence perspective, the government's 
     handling of the Wen Ho Lee matter has been an unmitigated 
     disaster. The investigation of Dr. Lee since 1982 has been 
     characterized by a series of errors and omissions by the 
     Department of Energy and the Department of Justice, including 
     the FBI, which have permitted Dr. Lee to threaten U.S. 
     supremacy by putting at risk information that could change 
     the ``global strategic balance.''
       While Dr. Lee, of course, must bear primary responsibility 
     for any damage that might result to national security from 
     his mishandling of our nuclear secrets, those officials in 
     the DOE, the FBI and, to a lesser degree, the DOJ, who 
     participated in the investigation of Dr. Lee must accept 
     responsibility for their own failure to detect and put a stop 
     to Dr. Lee's illegal computer activity. It would be one thing 
     if an individual who had never shown up on the 
     counterintelligence radar scope was later found out, but Dr. 
     Lee was under active investigation during the very time he 
     was engaged in illegal computer downloads, yet his activities 
     were not detected.
       In fact, Dr. Lee was investigated on multiple occasions 
     over seventeen years, but none of these investigations--or 
     the security measures in place at Los Alamos--came close to 
     discovering and preventing Dr. Lee from putting the national 
     security at risk by placing highly classified nuclear secrets 
     on an unsecure system where they could easily be accessed by 
     even unsophisticated hackers.\18\ It is difficult to 
     comprehend how officials entrusted with the responsibility 
     for protecting our national security could have failed to 
     discover what was really happening with Dr. Lee, given all 
     the indicators that were present.
     The 1982-1984 Investigation
       Dr. Wen Ho Lee was born in Nantou, Taiwan, in 1939. After 
     graduating from Texas A&M University with a Doctorate in 
     1969, he became a U.S. citizen in 1974, and began working at 
     Los Alamos National Laboratory in applied mathematics and 
     fluid dynamics in 1978.\20\ The X-Division, where Dr. Lee 
     worked from 1982 until 1998, has the highest level of 
     security of any division at LANL. It is responsible for the 
     design of thermonuclear weapons, and Dr. Lee was part of a 
     team working on five Lagrangian mathematical codes, also 
     known as ``source codes'', used in weapons development. Dr. 
     Lee's wife, Sylvia, also worked at LANL from November 1980 
     until June 1995. The last position she held was ``Computer 
     Technician,'' and she held a Top Secret clearance from 1991 
     through 1995.\30\
       The FBI first became concerned about Dr. Lee as a result of 
     contacts he made with a suspected PRC intelligence agent in 
     the early 1980s. On December 3, 1982, Dr. Lee called a former 
     employee of Lawrence Livermore National Laboratory (LLNL) who 
     was suspected of passing classified information to the 
     Peoples Republic of China (PRC). This call was intercepted 
     pursuant to a FISA court authorized wiretap in another FBI 
     espionage investigation. After introducing himself, Dr. Lee 
     stated that he had heard about the Lawrence Livermore 
     scientist's ``matter'' and that Lee thought he could find out 
     who had ``squealed'' on the employee.\31\ Based on the 
     intercepted phone call, the FBI opened an espionage 
     investigation on Dr. Lee.
       For the next several months the FBI investigated Dr. Lee, 
     with much of the work being done under the guise of the 
     periodic reinvestigation required for individuals with 
     security clearances. On November 9, 1983, the FBI interviewed 
     Dr. Lee. Before being informed that the FBI had intercepted 
     his call to the Lawrence Livermore employee, Lee stated that 
     he had never attempted to contact the employee, did not know 
     the employee, and had not initiated any telephone calls to 
     him. These representations were patently false.\32\ Dr. Lee 
     offered during the course of this interview to assist the FBI 
     with its investigation of the other scientist.
       On December 20, 1983 Dr. Lee was again interviewed by the 
     FBI,\33\ this time in California. During this interview, Lee 
     explained that he had been in contact with Taiwanese nuclear 
     researchers since 1977 or 1978, had done consulting work for 
     them, and had sent some information that was not classified 
     but that should have been cleared with DOE officials. He 
     tried to explain that he had contacted the subject of the 
     other investigation because he thought this other scientist 
     was in trouble for doing the same thing that Lee had been 
     doing for Taiwan.\34\ After this interview, the FBI sent Dr. 
     Lee to meet with the espionage suspect.
       On January 24, 1984, Dr. Lee took an FBI polygraph 
     examination which included questions about passing classified 
     information to any foreign government, Lee's contacts with 
     the Taiwanese Embassy, and his contacts with the LLNL 
     scientist. Although the FBI has subsequently contended that 
     Dr. Lee's answers on this polygraph were satisfactory, there 
     remained important reasons to continue the investigation. His 
     suspicious conduct in contacting the Lawrence Livermore 
     scientist and then lying about it, the nature of the 
     documents that he was sending to the Taiwanese Embassy, and 
     the status of the person to whom he was sending those 
     documents were potential danger signals. Although not 
     classified, the documents Dr. Lee was passing to Taiwan's 
     Coordination Council of North America were subject to Nuclear 
     Regulatory Commission export controls. They were specifically 
     stamped ``no foreign dissemination.'' According to testimony 
     of FBI Special Agent Robert Messemer at a special hearing on 
     December 29, 1999, FBI files also contain evidence of other 
     ``misrepresentations'' that Dr. Lee made to the FBI in 1983-
     1984 which have raised ``grave and serious concerns'' about 
     Dr. Lee's truthfulness.\36\ Notwithstanding these reasons for 
     continuing the investigation, the FBI closed its initial 
     investigation of Lee on March 12, 1984.\37\
       Although the FBI's 1982-1984 investigation was generally 
     well run, three areas of concern are worth noting. First, the 
     FBI should have coordinated more closely with the Department 
     of Energy. When initially contacted by the FBI in 1982, the 
     DOE's Office of

[[Page 27654]]

     Security recommended that Dr. Lee be removed from access due 
     to the sensitivity of the area in which he worked. Had the 
     DOE security official's instincts been followed, Dr. Lee 
     would not have been able to put at risk, years later, the 
     massive volume of nuclear data that he ultimately did.
       The second area of concern is that the FBI closed the 
     investigation despite several troubling indicators. As noted 
     previously, FBI Special Agent Messemer mentioned several 
     misrepresentations that Dr. Lee made to the FBI which were 
     relevant to his truthfulness. Two of these misrepresentations 
     stand out as particularly important. First, Dr. Lee learned 
     about the LLNL scientist's situation from a mutual friend 
     during an October 1982 visit to LLNL.\38\ Second, and more 
     importantly, upon learning of the LLNL scientist's 
     predicament, Dr. Lee immediately attempted to call his point 
     of contact at the Coordination Council of North America (the 
     equivalent of the Taiwanese Embassy in Washington, DC).\39\ 
     That Dr. Lee would attempt to contact a foreign embassy 
     seeking help for a fellow scientist should have raised 
     serious questions about his trustworthiness.
       Unfortunately, the FBI did not discover this until after 
     they had already made a decision to use him in the 
     investigation of the LLNL scientist. Had the FBI been more 
     cautious in assessing Dr. Lee's trustworthiness in the first 
     place, it would likely not have used him in the investigation 
     of the other scientist, and would therefore have been in a 
     better position to facilitate his termination from LANL or, 
     at the very least, the removal of his security clearance. 
     Director Freeh recently confirmed that the FBI had made no 
     recommendation to the DOE regarding the removal of Dr. Lee's 
     clearance following the 1982-1984 investigation.\40\
       The second element of Dr. Lee's conduct in the 1982-1984 
     investigation that deserved greater attention from the FBI 
     than it got is the status of the individual to whom Dr. Lee 
     was sending the information at the CCNA. This individual was 
     known to the FBI as an intelligence collector (although it 
     remains unclear as to whether Dr. Lee had any reason to be 
     aware of that). The FBI did take the necessary steps to learn 
     how Dr. Lee came to know this individual, but it did not give 
     sufficient weight to the individual's status as an 
     intelligence collector.
       The third and final area of concern about the FBI's 
     handling of the 1982-1984 investigation relates to the FBI's 
     reporting of Dr. Lee's assistance in the investigation of the 
     LLNL scientist, which has been inconsistent. Some documents, 
     apparently including information provided to Attorney General 
     Reno in preparation for her June 8, 1999 appearance before 
     the Judiciary Committee in closed session, indicate that the 
     FBI did not use Dr. Lee in its investigation. The final draft 
     of the 1997 request for FISA coverage on Dr. Lee, in 
     recounting this episode, states flatly that while Dr. Lee 
     offered to help the FBI in its investigation of the LLNL 
     scientist, the FBI did not use him.\41\ Contemporaneous FBI 
     records of the 1982 investigation, however, indicate that not 
     only did Dr. Lee assist the FBI with its investigation of the 
     other scientist, but that the result was far better than had 
     been anticipated.
       The failure to mention the assistance provided by Dr. Lee 
     in 1983 when requesting FISA coverage in 1997 is troubling 
     because it has the effect of presenting an incomplete picture 
     of the initial investigation of Dr. Lee. Judgements regarding 
     whether an individual is acting as an agent of a foreign 
     power should be made in consideration of the totality of the 
     circumstances, and the FBI's decision to use Dr. Lee in the 
     investigation of the LLNL scientist is an important element 
     of the total circumstances. If the FBI trusted Dr. Lee enough 
     to use him in the investigation of the LLNL scientist, that 
     fact should have been included in the FISA request. The 
     failure to mention that fact gives an incomplete impression, 
     which is inappropriate in these matters.
       It is likely that the FBI's incorrect characterization of 
     Dr. Lee's 1982-1984 activities was merely an inadvertent 
     oversight and was not an attempt to conceal the assistance he 
     had provided. For example, the FBI did not make any effort to 
     conceal or deny Mrs. Lee's assistance to the government.
       While the FBI should have acknowledged Dr. Lee's assistance 
     in the FISA request, the totality of Dr. Lee's conduct in 
     1982-1984 was suspicious and was directly relevant on a 
     probable cause determination.
       The 1982-1984 investigation of Dr. Lee represents a missed 
     opportunity to protect the nation's secrets. Had the matter 
     been handled properly, Dr. Lee's clearance and access would 
     most likely have been removed long ago, before he was able to 
     put the global strategic balance at risk.
     The 1994-November 2, 1995, Investigation of Dr. Lee
       This investigation of Dr. Lee was initiated based upon the 
     discovery that he was well acquainted with a high-ranking 
     Chinese nuclear scientist who visited Los Alamos as part of a 
     delegation in 1994,\42\ and that he was alleged to have 
     helped Chinese scientists with codes and software. Dr. Lee 
     had never reported meeting this scientist, which he was 
     required to do by DOE regulations, so his relationship with 
     this person aroused the FBI's concern. Unclassified sources 
     have reported that Dr. Lee was greeted by ``a leading 
     scientist in China's nuclear weapons program who then made it 
     clear to others in the meeting that Lee had been helpful to 
     China's nuclear program.'' \43\ In concert with the 1982-1984 
     investigation, Dr. Lee's undisclosed relationship with this 
     top Chinese nuclear scientist should have alerted the FBI and 
     the DOE of the imperative for intensified investigation and 
     reconsideration of his access to classified information. 
     Instead, this FBI investigation was deferred on November 2, 
     1995, because Dr. Lee was by then emerging as a central 
     figure in the Department of Energy's Administrative 
     Inquiry,\44\ which was developed by a DOE counterintelligence 
     expert in concert with a seasoned FBI agent who had been 
     assigned to DOE for the purposes of the inquiry. (The DOE 
     Administrative Inquiry was given the code name Kindred 
     Spirit.\45\) The investigation of Dr. Lee was essentially 
     dormant from November 1995 until May 1996, when the FBI 
     received the results of the DOE Administrative Inquiry and 
     opened a new investigation of Dr. Lee on May 30, 1996.
       It is difficult to understand why the FBI would suspend the 
     investigation in 1995, even to wait for the Kindred Spirit 
     Administrative Inquiry, when the issues that gave rise to 
     1994-1995 investigation remained valid and unrelated to the 
     Kindred Spirit investigation. The key elements of the 1994-
     1995 investigation are described in the 1997 Letterhead 
     Memorandum (LHM) which was prepared to support the request 
     for a FISA search warrant. Specifically, the LHM describes 
     the unreported contact with the top nuclear scientist,\46\ 
     and it makes reference to the ``PRC using certain 
     computational codes . . . which were later identified as 
     something that [Lee] had unique access to.'' \47\ And, 
     finally, the LHM states that ``the Director subsequently 
     learned that Lee Wen Ho had worked on legacy codes.'' Given 
     these allegations, it was a serious error to allow the 
     investigation to wait for several months while the DOE AI was 
     being completed. This deferral needlessly delayed the 
     investigation and left important issues unresolved.
       In addition to information known to the FBI which required 
     further intensified investigation and not a deferred 
     investigation on November 2, 1995, the Department of Energy 
     was incredibly lax in failing to understand and pursue 
     obvious evidence that Dr. Lee was downloading large 
     quantities of classified information to an unclassified 
     system. The sheer volume of Dr. Lee's downloading showed up 
     on a DOE report in 1993.\49\ Cheryl Wampler, from the Los 
     Alamos computer office, has testified that the NADIR system, 
     short for Network Anomaly Detection and Intrusion Recording, 
     flagged Dr. Lee's massive downloading in 1993.\50\ This 
     system is specifically designed to create profiles of 
     scientists' daily computer usage so it can detect unusual 
     behaviors. A DOE official with direct knowledge of this 
     suspicious activity failed to act on it, or to tell DOE 
     counterintelligence personnel or the FBI. Based on its 
     design, the NADIR system would have continued to flag Dr. 
     Lee's computer activities in 1994 as being unusual, but no 
     one from DOE took any action to investigate what was going 
     on.\51\ And it wasn't mentioned to the FBI or DOE's counter-
     intelligence personnel.
       In response to written questions after a September 27, 2000 
     hearing on the Wen Ho Lee matter, DOE officials provided 
     information to put the NADIR alerts in perspective. According 
     to DOE, an average of 180 users per week exceeded the 
     thresholds established by the system, and were flagged just 
     like Dr. Lee.\52\ While 180 is a substantial number of 
     individuals, it would not be impossible to devise a system by 
     which counterintelligence personnel can review these records 
     to determine whether or not any individuals who are already 
     under investigation have been identified by the system.
       In response to another question about what happened to the 
     NADIR records for 1994 (which, according to testimony from 
     Ms. Wampler are missing), DOE replied simply that:
       ``. . . in 1993 NADIR was a new and developing technique 
     and many other scientists in addition to Dr. Lee were 
     transferring data due to a change in the computer environment 
     at that time. During the 1993-1994 timeframe, Dr. Lee was not 
     a suspect.'' \53\
       Apart from the fact that the DOE's response is incorrect--
     Dr. Lee was a suspect beginning in 1994--the records should 
     have been available for review when the FBI began its 
     investigation. The fact that the DOE was able to confirm that 
     Dr. Lee was flagged by NADIR in 1993 proves that point, but 
     it does not explain the absence of the 1994 NADIR records. 
     Had the FBI bothered to check with the DOE computer 
     personnel, and there should have been no doubt that Dr. Lee 
     had no expectation of privacy with regard to a system 
     designed to identify abnormal system operations, Dr. Lee's 
     illegal computer downloads could have been detected and 
     halted.
       The DOE computer and counterintelligence personnel could 
     also have been more helpful in this situation.\54\ Had DOE 
     transmitted this information to the FBI, and had the FBI 
     acted on it, Dr. Lee could have and should have been stopped 
     in his tracks in 1994 on these indicators of downloading. The 
     full extent of the importance of the information that Dr. Lee 
     was putting at risk

[[Page 27655]]

     through his downloading was encapsulated in a document the 
     Government filed in December 1999 as part of the criminal 
     action against Dr. Lee:
       ``[I]n 1993 and 1994, Lee knowingly assembled 19 
     collections of files, called tape archive (TAR) files, 
     containing Secret and Confidential Restricted Data relating 
     to atomic weapon research, design, construction, and testing. 
     Lee gathered and collected information from the secure, 
     classified LANL computer system, moved it to an unsecure, 
     ``open'' computer, and then later downloaded 17 of the 19 
     classified TAR files to nine portable computer tapes.'' \55\
       These files, which amounted to more than 806 megabytes, 
     contained information that could do vast damage to the 
     national security.
       The end result of these missteps and lack of communication 
     was that, during some of the very time that the FBI had an 
     espionage investigation open on Dr. Lee resulting from his 
     unreported contacts with a top Chinese scientist and the 
     realization that the Chinese were using codes to which Dr. 
     Lee had unique access, DOE computer personnel were being 
     warned by the NADIR system that Dr. Lee was moving 
     suspiciously large amounts of information around, but were 
     ignoring those warnings and were not passing them on to the 
     FBI. At the same time, FBI personnel were taking no steps to 
     investigate Dr. Lee's computer activities, even when one of 
     the key allegations that prompted scrutiny of him in 1994 was 
     that he had helped the Chinese with codes and software.
       The near perfect correlation between the allegations which 
     began the 1994-1995 investigation and Dr. Lee's computer 
     activities is stunning. The codes the Chinese were known to 
     be using were computer codes, yet FBI and DOE 
     counterintelligence officials never managed to discover these 
     massive file transfers. Where, if not on his computer, were 
     they looking? And, as for the lab computer personnel who saw 
     but ignored the NADIR reports, what possible explanation can 
     there be for a failure to conduct even the most minimal 
     investigation?
       FBI and DOE failures in 1994-1995 represented the loss of a 
     golden opportunity to detect and halt Dr. Lee's illegal 
     computer activities. In the 1995-1996 period, another 
     opportunity to find and fix the problem presented itself in 
     the form of the DOE Administrative Inquiry (AI). 
     Unfortunately, the opportunity represented by the AI was 
     never fully realized.
     The Investigation Renewed, May 30, 1996 to August 12, 1997
       As noted previously, the investigation of Dr. Lee was 
     dormant from November 2, 1995 until May 30, 1996. The 
     investigation had been shut down to await the arrival of 
     DOE's Administrative Inquiry, which was presented on May 28, 
     1996. With the DOE AI in hand, the FBI resumed its 
     investigation of the Lees. To understand that investigation, 
     however, it is first necessary to review the AI.
       The Kindred Spirit Administrative Inquiry
       The public perception of the government's actions in the 
     Wen Ho Lee case, particularly with regard to charges of so-
     called ``ethnic profiling'', has been shaped by a 
     misunderstanding of the Department of Energy's Administrative 
     Inquiry (AI), code named ``Kindred Spirit''. Although he was 
     not its author, former DOE intelligence chief Notra Trulock 
     has been closely associated with this document, in large 
     measure because he was instrumental in commissioning the 
     DOE's Kindred Spirit Analytical Group (KSAG) which spawned 
     the AI, and he later forcefully advocated the position that 
     substantial espionage had occurred and that something needed 
     to be done about it. The KSAG was formed in 1995 when 
     scientists studying Chinese nuclear developments became 
     concerned about certain developments in the level of 
     sophistication of the PRC's weapons. During the summer of 
     1995, these concerns were fueled when an individual provided 
     to the U.S. government a document, subsequently known as the 
     ``walk-in'' document, which contained highly classified 
     details of some of our most advanced nuclear warheads.
       Recent attempts to re-examine the premise of the Kindred 
     Spirit AI and to question its role in the FBI's subsequent 
     investigation of the same name have fostered the perception 
     that the DOE's AI was largely to blame for the FBI's 
     misdirected investigation, which focused almost exclusively 
     on Dr. and Mrs. Lee, the loss of the W-88 information, and 
     the Los Alamos lab, when a much broader investigation was 
     required.
       The perception that DOE's AI was the weakest link in the 
     FBI's Kindred Spirit investigation is unfortunate because it 
     obscures a far more complex set of circumstances. This 
     perception has also unfairly undermined the government's 
     credibility on the ethnic/racial profiling question and 
     seriously damaged Notra Trulock's reputation and career. A 
     more complete public record on this matter may be helpful in 
     repairing some of the damage.
       In an October 29, 1999 letter, Energy Secretary Bill 
     Richardson reacted to the FBI's attempts to lay the blame for 
     its problems in the Kindred Spirit investigation on the 
     Administrative Inquiry:
       ``. . . I think there has been a tendency to overstate the 
     adverse influence that DOE's technical analysis and 
     preliminary investigative support had on the conduct of the 
     KINDRED SPIRIT investigation. There also has been, in my 
     opinion, an over-emphasis on the degree to which DOE input 
     served to limit the FBI's investigative work. . . . [T]he 
     fact is that all of the decisions to limit the scope of the 
     investigation were clearly, mutually agreed-upon by DOE and 
     the FBI, based on security and other concerns.'' \57\
       In this regard, Secretary Richardson is correct. The FBI's 
     failures in the Wen Ho Lee investigation should not be blamed 
     on the AI. The DOE is, by law, limited in the scope of what 
     it can do. The FBI could have and should have looked at the 
     AI as a starting point. Instead, the FBI case agents seemed 
     to think that the DOE investigators had done their job for 
     them, and never seriously looked at the premise of the AI and 
     its relationship to Dr. Lee's activities.
       The facts of the AI and the controversy surrounding it can 
     be stated in an unclassified fashion as follows:
       (A) The U.S. government concluded in 1995 that the PRC had 
     made remarkable progress in its nuclear weapons program in 
     the early 1990s.
       (B) The government also learned in 1995 that the PRC had 
     obtained certain classified nuclear weapons design 
     information on the W-88 warhead and other weapons.
       There is widespread agreement that both A and B are true: 
     the Chinese made rapid advancements in their nuclear weapons 
     program in the early 1990s, and they obtained classified 
     nuclear weapons design information sometime before 1995. The 
     controversy arises over whether there is any causal 
     relationship between the two facts. One school of thought--
     embodied in the Kindred Spirit AI--holds that the Chinese 
     advances occurred because they obtained classified U.S. 
     nuclear weapons design information, particularly that related 
     to the W-88. The contrary school of thought holds that while 
     both A and B may be true, there is no evidence that the 
     Chinese nuclear advances resulted from their acquisition of 
     U.S. nuclear weapons design information.
       Investigations predicated upon these two schools of thought 
     would take remarkably divergent paths. If one took as a 
     starting point, as did the authors of the AI, the belief that 
     the PRC's nuclear weapons design advances were in large part 
     attributable to espionage against the United States, one 
     would be looking for the wholesale transfer of W-88 design 
     information. The alternative view--that the PRC's nuclear 
     weapons advances could have occurred independently of the 
     acknowledged acquisition of classified U.S. weapons data in 
     the ``walk-in'' document--would lead to an investigation 
     focused on the specific bits of classified information the 
     Chinese were known to have obtained, not only about the W-88 
     but about other weapons systems as well. The former theory 
     paints a picture consistent with a single act of espionage, 
     conducted by a single individual transferring information 
     from a specific place. The latter theory forces a broader 
     review, implicitly acknowledging that the information could 
     involve multiple transfers from multiple sources, quite 
     possibly by numerous individuals.
       While the debate over whether or not the PRC's nuclear 
     weapons advances resulted from espionage is important from 
     both a counterintelligence and an intelligence point of view, 
     it should not have been the determinative factor in deciding 
     how to conduct this espionage investigation. The threshold 
     for required action by the FBI is met on the basis of fact B, 
     irrespective of fact A and any relationship between the two 
     elements. Section 811 of the Intelligence Authorization Act 
     of 1995, enacted to improve interagency coordination on 
     espionage investigations in the wake of the Aldrich Ames spy 
     case, requires an agency to notify the FBI when it becomes 
     aware that espionage may have occurred. Proof that the PRC 
     had obtained classified U.S. nuclear weapons design 
     information became available in the summer of 1995 in the 
     form of the ``walk-in'' document, which was really a large 
     cache of documents delivered to the U.S. government by a 
     Chinese national. The information in the ``walk-in'' document 
     was sufficient to trigger the requirements of section 811 and 
     to prompt an investigation by the FBI.
       The DOE could have satisfied its statutory obligations 
     under section 811 simply by notifying the FBI of its view 
     that certain information in the ``walk-in'' document was not 
     in the public domain, had not been authorized for transfer to 
     the PRC, and was therefore likely in the possession of the 
     PRC as a result of espionage. In retrospect, it might have 
     been better if they had done so. The conclusions of the AI, 
     while accompanied by many caveats that the DOE had been 
     limited in its ability to conduct the investigation and that 
     further review was required, were adopted almost wholesale by 
     the FBI and formed the basis of the FBI's own Kindred Spirit 
     espionage investigation.
       The Bellows Report is highly critical of the DOE AI, 
     concluding essentially that the DOE overstated the degree of 
     consensus that existed on the question of espionage as a 
     causal factor in the PRC's nuclear weapons advances, thereby 
     establishing a faulty predicate for the entire investigation. 
     The fact that the DOE was already concerned that the

[[Page 27656]]

     PRC had detonated what appeared to be an advanced nuclear 
     weapon when the information in the ``walk-in'' document 
     became available may have led some members of the DOE 
     scientific review panel, called the Kindred Spirit Analytical 
     Group (KSAG), to give undue weight to the possibility of a 
     causal link between the PRC's weapons design advances and the 
     information in the ``walk-in'' document. That is a question 
     about which reasonable individuals may disagree--even among 
     the members of the KSAG there was not unanimity on this point 
     \58\--but there is no doubt that the AI which flowed from the 
     KSAG was built upon the belief that the PRC's design advances 
     were the result of espionage. There can also be no doubt that 
     the AI cast strong suspicion on the Lees.
       Any fair reading of the Administrative Inquiry makes clear 
     that its authors (a DOE counterintelligence official and an 
     FBI agent seconded to the DOE to assist with the AI) 
     considered Wen Ho and Sylvia to be the prime suspects in the 
     alleged loss to the PRC of certain W-88 nuclear warhead 
     design information, and that the loss had most likely 
     occurred at Los Alamos. The AI reaches a preliminary 
     conclusion:
       ``. . . it is the opinion of the writer that Wen Ho Lee is 
     the only individual identified during this inquiry who had, 
     opportunity, motivation and legitimate access to both W-88 
     weapons system information and the information reportedly 
     received by [the PRC].'' \59\
       A fair reading of the document also shows that the authors 
     explicitly recognized the limitations of their investigation 
     and recommended that the Lees and Los Alamos be a starting 
     place for an investigation into the loss of the W-88 
     information, an investigation that would necessarily extend 
     well beyond the Lees and Los Alamos. For example, the report 
     says:
       ``This by no means excludes any other DOE personnel as 
     being possible suspects in this matter. However, based upon a 
     review of all information gathered by this inquiry, Wen Ho 
     Lee and his wife, Sylvia appear the most logical suspects. 
     Wen Ho Lee had the direct access to the W-88 [information], 
     motivation and opportunity to provide the PRC the W-88 
     weapons design [information].'' \60\
       The report concluded with the following recommendation:
       ``The writer believes the ECI [DOE Counterintelligence] has 
     basically, exhausted all logical `leads' regarding this 
     inquiry which ECI is legally permitted to accomplish. 
     Therefore, I strongly urge the FBI take the lead in this 
     investigation.'' \61\
       Thus, while the AI strongly points toward the Lees there 
     are also enough qualifiers to make it clear that other 
     suspects should also be investigated.
       Had the AI arrived on the doorstep of the FBI's Albuquerque 
     office under different circumstances, it might have been 
     handled more appropriately. The AI came when the FBI had 
     already been investigating Dr. Lee, albeit not very 
     competently, on the basis of credible allegations from 1994 
     that he had helped the Chinese with codes and software. In 
     this context, the AI served to reinforce the FBI's existing 
     perceptions of Dr. Lee as a likely espionage suspect.
       Instead of using the AI as a starting point for a 
     comprehensive investigation, the FBI did little or no 
     additional analysis and began focusing almost exclusively on 
     the W-88 issue and the Lees. The reason for the FBI's action 
     was made clear in an interview of the special agent who 
     helped write the AI, who said that he assumed that the 
     investigation of Dr. Lee and the Kindred Spirit investigation 
     would eventually merge because it looked like Dr. Lee was the 
     most likely suspect.\62\
       Even when given an opportunity to take a fresh look at the 
     case, the FBI did not do so. When the CIA expressed concern 
     in the summer of 1996 that the individual who provided the 
     ``walk-in'' document might be under the control of a hostile 
     intelligence service, the FBI actually shut down its 
     investigation for nearly three weeks in July and August. An 
     August 20, 1996 teletype from FBIHQ to the Albuquerque 
     division says:
       ``On August 19, 1996, DOEHQ provided FBIHQ with a letter 
     stating it had conferred with CIAHQ and that DOE judged `that 
     a serious compromise of U.S. weapons-specific restricted data 
     occurred most likely in the 1984-1988 timeframe.' In effect, 
     DOE stands by their original conclusion.'' \63\
       Thus, after the details were sorted out, it was clear that 
     the investigation should go forward because the PRC had 
     information they should not have, even if there were 
     disagreements over what, exactly, had been compromised. A 
     September 16, 1996 FBI 302 from an interview of a scientist 
     puts this in perspective. It says, ``There was no 
     disagreement that `Restricted Data' information had been 
     acquired by the Chinese. The only disagreement was over how 
     valuable the information was.'' \64\
       Thus, the recent attempts to dissect the AI, outlined 
     elsewhere in this report, miss the mark. The FBI had an 
     opportunity when the CIA raised a red flag about the ``walk-
     in'' in 1996 to review the structure of their investigation. 
     They knew, based on the review they conducted at the time, 
     that there had been some disagreement within the KSAG, but 
     that espionage had, in fact, occurred. Unfortunately, when 
     the FBI restarted its investigation in August 1996, the case 
     agents never questioned the underlying assumptions of the AI 
     or the impact of these assumptions on the structure and 
     course of the investigation.
       By restarting the investigation where they left off, the 
     FBI failed to take into consideration massive amounts of 
     information in their own files indicating that the 
     investigation should extend beyond the W-88 information, 
     beyond Los Alamos, and beyond the Lees. More importantly, the 
     FBI never seems to have made any effort to understand what, 
     if any, relationship existed between the Kindred Spirit 
     allegations and the investigation of Dr. Lee that was already 
     under way related to computer codes and software. The FBI's 
     failure to ask this basic question sent the investigation on 
     a wild goose chase for more than three years while Dr. Lee's 
     illegal computer activities, which were highly relevant to 
     the 1994 allegations against him, continued unchecked and 
     unimpeded.
       The ``walk-in'' document
       The ``walk-in'' document is central to the Kindred Spirit 
     investigation, so it should be described in the greatest 
     detail consistent with classification concerns. This 
     document, dated 1988, is said to lay out China's nuclear 
     modernization plan for Beijing's First Ministry of Machine 
     Building, which is responsible for making missiles and nose 
     cones.\65\ The 74-page document contains dozens of facts 
     about U.S. warheads, mostly in a two-page chart. On one side 
     of the chart are various US Air Force and US Navy warheads, 
     including some older bombs as well as the W-80 warhead 
     (cruise missiles), the W-87 (Minuteman III); and the W-88 
     (Trident II).\66\ Among the most important items of 
     information in the ``walk-in'' document are details about the 
     W-88 warhead.
       The Cox Committee Report provides the following description 
     and assessment of the ``walk-in'' document:
       ``In 1995, a ``walk-in'' approached the Central 
     Intelligence Agency outside of the PRC and provided an 
     official PRC document classified ``Secret'' that contained 
     design information on the W-88 Trident D-5 warhead, the most 
     modern in the U.S. arsenal, as well as technical information 
     concerning other thermonuclear warheads.
       ``The CIA later determined that the ``walk-in'' was 
     directed by the PRC intelligence services. Nonetheless, the 
     CIA and other Intelligence Community analysts that reviewed 
     the document concluded that it contained U.S. thermonuclear 
     warhead design information.
       ``The ``walk-in'' document recognized that the U.S. nuclear 
     warheads represented the state-of-the-art against which PRC 
     thermonuclear warheads should be measured.
       ``Over the following months, an assessment of the 
     information in the document was conducted by a 
     multidisciplinary group from the U.S. government, including 
     the Department of Energy and scientists from the U.S. 
     national weapons laboratories.''\67\
       The Cox Committee's view that the Chinese had obtained 
     sensitive design information about U.S. thermonuclear 
     warheads is bolstered by the June 1999 report of the 
     President's Foreign Intelligence Advisory Board, which states 
     that the ``walk-in'' document:
       ``unquestionably contains some information that is still 
     highly sensitive, including descriptions, in varying degrees 
     of specificity, of the technical characteristics of seven 
     U.S. thermonuclear warheads.'' \68\
       The preceding analysis shows that while there can be a 
     legitimate debate as to whether the conclusions of the AI 
     were stated with inordinate confidence, which may have 
     contributed to the FBI's decision to focus on the Lees and 
     the loss of the W-88 information, there can be no doubt that: 
     (1) the PRC obtained classified nuclear secrets through 
     espionage, and (2) the FBI had ample reason to investigate 
     Dr. Lee. The problem is that the FBI focused too narrowly on 
     the Lees as suspects in the W-88 investigation without 
     ascertaining whether their suspicions about Dr. Lee were 
     logically related to the alleged loss of the W-88 
     information.
       From 1996 until 1997 the DOE and FBI investigation was 
     characterized by additional inexplicable lapses. For example, 
     in November 1996, the FBI asked DOE counterintelligence team 
     leader Terry Craig for access to Dr. Lee's computer. Although 
     Mr. Craig apparently did not know it until 1999, Dr. Lee had 
     signed a consent-to-monitor waiver \69\ on April 19, 1995. 
     The relevant portion of the waiver states:
       ``Warning: To protect the LAN [local area network] systems 
     from unauthorized use and to ensure that the systems are 
     functioning properly, activities on these systems are 
     monitored and recorded and subject to audit. Use of these 
     systems is expressed consent to such monitoring and 
     recording. Any unauthorized access or use of this LAN is 
     prohibited and could be subject to criminal and civil 
     penalties.'' \70\
       For reasons that have yet to be explained, this waiver was 
     not in Dr. Lee's security file or his personnel file.\71\
       The computer that Dr. Lee used apparently also had a 
     banner, which had information that may have constituted 
     sufficient notice to give the FBI access to its contents. 
     And, finally, LANL computer use policy gave authorities the 
     ability to search computers to

[[Page 27657]]

     prevent waste, fraud and abuse.\72\ As noted in the press 
     release accompanying the August 12, 1999, Department of 
     Energy Inspector General's Report, Mr. Craig's ``failure to 
     conduct a diligent search deprived the FBI of relevant and 
     potentially vital information.'' \73\ Had the FBI National 
     Security Law Unit (NSLU) been given the opportunity to review 
     these facts, it may well have concluded that no FISA warrant 
     was necessary to conduct a preliminary investigation of Dr. 
     Lee's computer. More importantly, records from the DOE 
     monitoring systems like NADIR could almost certainly have 
     been reviewed without a FISA warrant. Had these records been 
     searched, Dr. Lee's unauthorized downloading would have been 
     found nearly three years earlier. Unfortunately, through the 
     failures of both DOE and FBI personnel, this critical 
     information never reached FBI Headquarters, and the NSLU 
     decided that Dr. Lee's computer could not be searched without 
     a FISA warrant.\74\ Thus, a critical opportunity was lost to 
     find and remove from an unsecure system, information that 
     could alter the global strategic balance.
       Nonetheless, the FBI developed an adequate factual basis 
     for the issuance of a FISA warrant. The information developed 
     by the FBI to support its FISA application in 1997 was 
     cogently summarized in the August 5, 1999 special statement 
     of Senators Thompson and Lieberman of the Senate Committee on 
     Governmental Affairs \75\:
       ``DOE counterintelligence and weapons experts had concluded 
     that there was a great probability that the W-88 information 
     had been compromised between 1984 and 1988 at the nuclear 
     weapons division of the Los Alamos laboratory. It was 
     standard PRC intelligence tradecraft to focus particularly 
     upon targeting and recruitment of ethnic Chinese living in 
     foreign countries (e.g., Chinese-Americans).


       ``It is common in PRC intelligence tradecraft to use 
     academic delegations--rather than traditional intelligence 
     officers--to collect information on science-related topics. 
     It was, in fact, standard PRC intelligence tradecraft to use 
     scientific delegations to identify and target scientists 
     working at restricted United States facilities such as LANL, 
     since they ``have better access than PRC intelligence 
     personnel to scientists and other counterparts at the United 
     States National Laboratories.''
       ``Sylvia Lee, wife of Wen Ho Lee, had extremely close 
     contacts with visiting Chinese scientific delegations. Sylvia 
     Lee, in fact, had volunteered to act as hostess for visiting 
     Chinese scientific delegations at LANL when such visits first 
     began in 1980, and had apparently had more extensive contacts 
     and closer relationships with these delegations than anyone 
     else at the laboratory. On one occasion, moreover, Wen-Ho Lee 
     had himself aggressively sought involvement with a visiting 
     Chinese scientific delegation, insisting upon acting as an 
     interpreter for the group despite his inability to perform 
     this function very effectively.
       ``Sylvia Lee was involuntarily terminated at LANL during a 
     reduction-in-force in 1995. Her personnel file indicated 
     incidents of security violations and threats she allegedly 
     made against coworkers.
       ``In 1986, Wen-Ho Lee and his wife traveled to China on 
     LANL business to deliver a paper on hydrodynamics \76\ to a 
     symposium in Beijing. He visited the Chinese laboratory--the 
     Institute for Applied Physics and Computational Mathematics 
     (IAPCM)--that designs the PRC's nuclear weapons.
       ``The Lees visited the PRC--and IAPCM--on LANL business 
     again in 1988.
       ``It was standard PRC intelligence tradecraft, when 
     targeting ethnic Chinese living overseas, to encourage travel 
     to the ``homeland''--particularly where visits to ancestral 
     villages and/or old family members could be arranged--as a 
     way of trying to dilute loyalty to other countries and 
     encouraging solidarity with the authorities in Beijing.
       ``The Lees took vacation time to travel elsewhere in China 
     during their two trips to China in 1986 and 1988.
       ``The FBI also learned of the Lees' purchase of unknown 
     goods or services from a travel agent in Hong Kong while on a 
     trip to that colony and to Taiwan in 1992. On the basis of 
     the record, the FBI determined that there was reason to 
     believe that this payment might have been for tickets for an 
     unreported side trip across the border into the PRC to 
     Beijing.
       ``Though Wen-Ho Lee had visited IAPCM in both 1986 and 1988 
     and had filed ``contact reports'' claiming to recount all of 
     the Chinese scientists he met there, he had failed to 
     disclose his relationship with the PRC scientist who visited 
     LANL in 1994.
       ``Wen-Ho Lee worked on specialized computer codes at Los 
     Alamos--so-called ``legacy codes'' related to nuclear testing 
     data--that were a particular target for Chinese intelligence.
       ``The FBI learned that during a visit to Los Alamos by 
     scientists from IAPCM, Lee had discussed certain unclassified 
     hydrodynamic computer codes with the Chinese delegation. It 
     was reported that Lee had helped the Chinese scientists with 
     their codes by providing software and calculations relating 
     to hydrodynamics.
       ``In 1997, Lee had requested permission to hire a graduate 
     student, a Chinese national, to help him with work on 
     ``Lagrangian codes'' at LANL. When the FBI evaluated this 
     request, investigators were told by laboratory officials that 
     there was no such thing as an unclassified Lagrangian code, 
     which describes certain hydrodynamic processes and are used 
     to model some aspects of nuclear weapons testing. ``In 1984, 
     the FBI questioned Wen-Ho Lee about his 1982 contact with a 
     U.S. scientist at another DOE nuclear weapons laboratory who 
     was under investigation. ``When questioned about this 
     contact, Lee gave deceptive answers. After offering further 
     explanations, Lee took a polygraph, claiming that he had been 
     concerned only with this other scientist's alleged passing of 
     unclassified information to a foreign government against DOE 
     and Nuclear Regulatory Commission regulations--something that 
     Lee himself admitted doing. (As previously noted, the FBI 
     closed this investigation of Lee in 1984.) ``The FBI, as 
     noted above, had begun another investigation into Lee in the 
     early 1990s, before the W-88 design information compromise 
     came to light. This investigation was based upon an FBI 
     investigative lead that Lee had provided significant 
     assistance to the PRC. ``The FBI obtained a copy of a note on 
     IAPCM letterhead dated 1987 listing three LANL reports by 
     their laboratory publication number. On this note, in 
     English, was a handwritten comment to `Linda' saying `[t]he 
     Deputy Director of this Institute asked [for] these paper[s]. 
     His name is Dr. Zheng Shaotang. Please check if they are 
     unclassified and send to them. Thanks a lot. Sylvia Lee.' ''
       The FBI request was worked into a draft FISA application by 
     Mr. David Ryan, a line attorney from the Department of 
     Justice's Office of Intelligence Policy and Review (OIPR) 
     with considerable experience in FISA matters. It was then 
     reviewed by Mr. Allan Kornblum, as Deputy Counsel for 
     Intelligence Operations, and finally, by Mr. Gerald 
     Schroeder, Acting Counsel, OIPR.\77\ As is well known by now, 
     the OIPR did not agree to forward the FISA application, and 
     yet another opportunity to discover what Dr. Lee was up to 
     was lost.
       The Department of Justice should have taken the FBI's 
     request for a FISA warrant on Dr. Lee to the Court on August 
     12, 1997.
       Attorney General Reno testified about this case before the 
     Senate Judiciary Committee on June 8, 1999. A redacted 
     version of her testimony was released on December 21, 1999. 
     The transcript makes it clear that the Department of Justice 
     should have agreed to go forward with the search warrant for 
     surveillance of Dr. Wen Ho Lee under the Foreign Intelligence 
     Surveillance Act when the FBI made the request in 1997.
       The DOJ's internal review of the FISA request, conducted by 
     Assistant U.S. Attorney Randy Bellows, confirms that the 
     request should have gone forward. Mr. Bellows said:
       ``The final draft FISA application [deleted] on its face, 
     established probable cause to believe that Wen Ho Lee was an 
     agent of a foreign power, that is to say, a United States 
     Person currently engaged in clandestine intelligence 
     gathering activities for or on behalf of the PRC which 
     activities might involve violations of the criminal laws of 
     the United States and that his wife, Sylvia Lee, aided, 
     abetted or conspired in such activities. Given what the FBI 
     and OIPR knew at the time, it should have resulted in the 
     submission of a FISA application and the issuance of a FISA 
     order.'' \78\
       In evaluating the sufficiency of the FBI's statement of 
     probable cause, the Attorney General and the Department of 
     Justice failed to follow the standards of the Supreme Court 
     of the United States that the requirements for ``domestic 
     surveillance may be less precise than that directed against 
     more conventional types of crime.'' In United States v. U.S. 
     District Court 407 U.S. 297, 322-23 (1972) the Court held:
       ``We recognize that domestic security surveillance may 
     involve different policy and practical considerations from 
     the surveillance of ``ordinary crime'' . . . the focus of 
     domestic surveillance may be less precise than that directed 
     against more conventional types of crime. . . . Different 
     standards may be compatible with the Fourth Amendment if they 
     are reasonable both in relation to the legitimate need of 
     government for intelligence information and the protected 
     rights of our citizens. For the warrant application may vary 
     according to the governmental interest to be enforced and the 
     nature of citizen rights deserving protection.'' [emphasis 
     added]
       Even where domestic surveillance is not involved, the 
     Supreme Court has held that the first focus is upon the 
     governmental interest involved in determining whether 
     constitutional standards are met. In Camera v. Municipal 
     Court of the City and County of San Francisco, 387 U.S. 523, 
     534-539, (1967), the Supreme Court said:
       ``In cases in which the Fourth Amendment requires that a 
     warrant to search be obtained, ``probable cause'' is the 
     standard by which a particular decision to search is tested 
     against the constitutional mandate of reasonableness. To 
     apply this standard, it is obviously necessary first to focus 
     upon the governmental interest which allegedly justifies 
     official intrusion upon the constitutionally protected 
     interests of the private citizen. . . . [emphasis added]

[[Page 27658]]

       ``Unfortunately, there can be no ready test for determining 
     reasonableness other than by balancing the need to search 
     against the invasion which the search entails. . . .
       ``The warrant procedure is designed to guarantee that a 
     decision to search private property is justified by a 
     reasonable governmental interest. But reasonableness is still 
     the ultimate standard. If a valid public interest justifies 
     the intrusion contemplated, then there is probable cause to 
     issue a suitably restricted search warrant.''
       Where the Court allowed inspections in Camera without 
     probable cause that a particular dwelling contained 
     violations, it is obvious that even more latitude would be 
     constitutionally permissible where national security is in 
     issue and millions of American lives may be at stake. Even 
     under the erroneous, unduly high standard applied by the 
     Department of Justice, however, the FBI's statement of 
     probable cause was sufficient to activate the FISA warrant.
       FBI Director Freeh correctly concluded that probable cause 
     existed for the issuance of the FISA warrant. At the June 8 
     hearing, Attorney General Reno stated her belief that there 
     had not been a sufficient showing of probable cause but 
     conceded that FBI Director Freeh, a former Federal judge, 
     concluded that probable cause existed as a matter of law.\79\
       The Department of Justice applied a clearly erroneous 
     standard to determine whether probable cause existed. As 
     noted in the transcript of Attorney General Reno's testimony:
       ``On 8-12-97 Mr. Allan Kornblum of OIPR advised that he 
     could not send our (the FBI) application forward for those 
     reasons. We had not shown that subjects were the ones who 
     passed the W-88 [design information] to the PRC, and we had 
     little to show that they were presently engaged in 
     clandestine intelligence activities.'' \80\
       It is obviously not necessary to have a showing that the 
     subjects were the ones who passed W-88 design information to 
     the PRC. That would be the standard for establishing guilt at 
     a trial, which is a far higher standard than establishing 
     probable cause for the issuance of a search warrant. Attorney 
     General Reno contended that the remainder of the 12 
     individuals identified in the AI would have to be ruled out 
     as the ones who passed W-88 design information to the PRC 
     before probable cause would be established for issuance of 
     the FISA warrant on Dr. Lee. That, again, is the standard for 
     conviction at trial instead of establishing probable cause 
     for the issuance of a search warrant. Thus, it is apparent 
     from the Kornblum statement that the wrong standard was 
     applied: ``that subjects were the ones that passed the W-88 
     [design information] to the PRC.'' \81\
       DOJ was also wrong when Mr. Kornblum concluded that: ``We 
     had little to show that they were presently engaged in 
     clandestine intelligence activities.'' \82\ There is 
     substantial evidence that Dr. Lee's relevant activities 
     continued from the 1980s to 1992, 1994 and 1997 as noted 
     above.
       When FBI Assistant Director John Lewis met with Attorney 
     General Reno on August 20, 1997, to ask about the issuance of 
     the FISA warrant, Attorney General Reno delegated the matter 
     to Mr. Daniel Seikaly, former Director, DOJ Executive Office 
     for National Security, and she had nothing more to do with 
     the matter. Mr. Seikaly completed his review by late August 
     or early September and communicated his results to the FBI 
     through Mr. Kornblum. As Mr. Seikaly has testified, this was 
     the first time he had ever worked on a FISA request and he 
     was not ``a FISA expert.'' It was not surprising then that 
     Seikaly applied the wrong standard for a FISA application:
       ``We can't do it (a FISA wiretap) unless there was probable 
     cause to believe that that facility, their home, is being 
     used or about to be used by them as agents of a foreign 
     power.'' \83\
       Mr. Seikaly applied the standard from the typical criminal 
     warrant as opposed to a FISA warrant. 18 U.S.C. 2518, 
     governing criminal wiretaps, allows surveillance where there 
     is:
       ``Probable cause for belief that the facilities from which, 
     or the place where, the wire, oral, or electronic 
     communications are to be intercepted, are being used, or are 
     about to be used in connection with the commission of such 
     offense.'' [emphasis added]
       This criminal standard specifically requires that the 
     facility be used in the ``commission of such offense.'' FISA, 
     however, contains no such requirement. 50 U.S.C. 1805 
     (Section 105 of FISA) states that a warrant shall be issued 
     if there is probable cause to believe that:
       ``Each of the facilities or places at which the electronic 
     surveillance is directed is being used, or is about to be 
     used, by a foreign power or an agent of a foreign power.''
       There is no requirement in this FISA language that the 
     facility is being used in the commission of an offense. This 
     incorrect application of the law was a serious mistake. As 
     noted in the Bellows report, ``This matter should not have 
     been assigned to an attorney who did not already have a solid 
     grounding in FISA law, FISA applications, and the FISA 
     Court.'' \84\
       Attorney General Reno demonstrated an unfamiliarity with 
     technical requirements of Section 1802 versus Section 1804. 
     She was questioned about the higher standard under 1802 than 
     1804: ``It seems the statutory scheme is a lot tougher on 
     1802 on its face.'' \85\
       Attorney General Reno replied: ``Well I don't know. I've 
     got to make a finding that under 1804, that it satisfies the 
     requirement and criteria--and requirement of such application 
     as set forth in the chapter, and it's fairly detailed.'' \86\
       When further questioned about her interpretation on 1802 
     and 1804, Attorney General Reno indicated lack of familiarity 
     with these provisions, saying:
       ``Since I did not address this, let me ask Ms. Townsend who 
     heads the office of policy review to address it for you in 
     this context and then I will. . . .'' \87\
       As noted in the record, the offer to let Ms. Townsend 
     answer the question was rejected in the interest of getting 
     the Attorney General's view on this important matter rather 
     than that of a subordinate.
       The lack of communication between the Attorney General and 
     the Director of the FBI on a matter of such grave importance 
     is troubling. As noted previously, Director Freeh sent John 
     Lewis, Assistant FBI Director for National Security to 
     discuss this matter with the Attorney General on August 20, 
     1996. However, when the request for a review of the matter 
     did not lead to the forwarding of the FISA application to the 
     court, Director Freeh did not further press the issue. And 
     Attorney General Reno conceded that she did not follow up on 
     the Wen Ho Lee matter. During the June 8 hearing, Senator 
     Sessions asked, ``Did your staff convey to you that they had 
     once again denied this matter?'' \88\
       Attorney General Reno replied, ``No, they had not.'' \89\
       As the Bellows Report concludes, ``The failure to advise 
     the Attorney General of the resolution of this matter had an 
     unfortunate consequence: It effectively denied the FBI the 
     true appeal it had sought.'' \90\
       The June 8, 1999 hearing also included a discussion as to 
     whether FBI Director Freeh should have personally brought the 
     matter again to Attorney General Reno. The Attorney General 
     replied that she did not ``complain'' about FBI Director 
     Freeh's not doing so and stated, ``I hold myself responsible 
     for it.'' \91\
       Attorney General Reno conceded the seriousness of the case, 
     stating, ``I don't think the FBI had to convey to the 
     attorneys the seriousness of it. I think anytime you are 
     faced with facts like this it is extremely serious.'' \92\
       In the context of this serious case, it would have been 
     expected that Attorney General Reno would have agreed with 
     FBI Director Freeh that the FISA warrant should have been 
     issued. In her testimony, she conceded that if some 300 lives 
     were at stake on a 747 she would take a chance, testifying: 
     ``My chance that I take if I illegally search somebody, if I 
     save 300 lives on a 747, I'd take it.'' \93\
       In that context, with the potential for the PRC obtaining 
     U.S. secrets on nuclear warheads, putting at risk millions of 
     Americans, it would have been expected that the Attorney 
     General would find a balance in favor of moving forward with 
     the FISA warrant. As demonstrated by her testimony, Attorney 
     General Reno sought at every turn to minimize the FBI's 
     statement of probable cause. On the issue of Dr. Lee's 
     opportunity to have visited Beijing when he had been in Hong 
     Kong and incurred additional travel costs of the approximate 
     expense of traveling to Beijing, the Attorney General said 
     that ``an unexplained travel voucher in Hong Kong does not 
     lead me to the conclusion that someone went to Beijing any 
     more than they went to Taipei.'' \94\
       It might well be reasonable for a fact-finder to conclude 
     that Dr. Lee did not go to Beijing; but, certainly, his 
     proximity to Beijing, the opportunity to visit there and his 
     inclination for having done so in the past would at least 
     provide some ``weight'' in assessing probable cause. But the 
     Attorney General dismissed those factors as having no weight 
     even on the issue of probable cause, testifying, ``I don't 
     find any weight when I don't know where the person went.'' 
     \95\ Of course it is not known ``where the person went.'' If 
     that fact had been established, it would have been beyond the 
     realm of ``probable cause.'' Such summary dismissal by the 
     Attorney General on a matter involving national security is 
     inappropriate given the circumstances. In other legal 
     contexts, opportunity and inclination are sufficient to cause 
     an inference of certain conduct as a matter of law.
       The importance of DOJ's erroneous interpretation of the law 
     in this case, which resulted in the FISA rejection, should 
     not be underestimated. Had this application for a FISA 
     warrant been submitted to the court, it doubtless would have 
     been approved. DOJ officials reported that approximately 800 
     FISA warrants were issued each year with no one remembering 
     any occasion when the court rejected an application.
       Assistant U.S. Attorney Randy Bellows concurred on the 
     damage done by OIPR's rejection of the FISA request:
       ``OIPR's erroneous judgment that [deleted] did not contain 
     probable cause could not have been more consequential to the 
     investigation of Wen Ho Lee. From the beginning of that 
     investigation, the FBI's objective had

[[Page 27659]]

     been to obtain FISA coverage. It now faced the prospect of no 
     FISA coverage, an eventuality for which it had never 
     prepared. The other consequence, of course, is that such 
     information as might have been acquired through FISA coverage 
     was not acquired. It is impossible to say just what the FBI 
     would have learned through FISA surveillance. That is, after 
     all, the point of surveillance. What is clear is that 
     [deleted] should have been approved, not rejected. For all 
     the problems with the FBI's counterintelligence investigation 
     of Wen Ho Lee, and they were considerable, the FBI had 
     somehow managed to stitch together an application that 
     established probable cause. That OIPR would disagree with the 
     assessment would deal this investigation a blow from which it 
     would not recover.'' \96\
       Had the FBI obtained the FISA search warrant, it might have 
     had a material effect on the investigation and criminal 
     charging of Dr. Lee. Given the serious mistakes that had been 
     made by the FBI prior to 1997, there is no guarantee that a 
     FISA warrant would have led to a successful conclusion to the 
     investigation, but the failure to issue a warrant clearly had 
     an adverse impact on the case.
       To put the 1997 FISA rejection in perspective, consider 
     that the open network to which Dr. Lee had transferred the 
     legacy codes was ``linked to the Internet and e-mail, a 
     system that had been attacked several times by hackers.'' 
     \97\ Although we do not know the exact figures for the number 
     of times that it was accessed, it has been reported that 
     between October 1997 and June 1998 alone, ``there were more 
     than 300 foreign attacks on the Energy Department's 
     unclassified systems, where Mr. Lee had downloaded the 
     secrets of the U.S. nuclear arsenal.'' \98\
       Consider also the following from a December 23, 1999, 
     Government filing in the criminal case against Dr. Lee:
       ``. . . in 1997 Lee downloaded directly from the classified 
     system to a tenth portable computer tape a current nuclear 
     weapons design code and its auxiliary libraries and utility 
     codes.'' \99\
       This direct downloading had been made possible by Los 
     Alamos computer managers who made Lee's file transfers 
     ``easier in the mid-1990s by putting a tape drive on Lee's 
     classified computer.'' \100\ As incomprehensible as it seems, 
     despite the fact that Dr. Lee was the prime suspect in an 
     ongoing espionage investigation, and despite plans to limit 
     his access to classified information to limit any damage he 
     might do, DOE computer personnel installed a tape drive on 
     his computer that made it possible for him to directly 
     download the nation's top nuclear secrets.
       An important aim of surveillance under the FISA statute is 
     to determine whether foreign intelligence services are 
     getting access to our classified national security 
     information. Although we do not know, and may never know, why 
     Dr. Lee placed these classified files on an unsecure system, 
     there should be no doubt that transferring classified 
     information to an unclassified computer system and making 
     unauthorized tape copies of that information created a 
     substantial opportunity for foreign intelligence services to 
     access that information. The breakdown of communication 
     between the FBI and DOJ which resulted in the rejection of 
     the FISA in 1997 resulted in yet another missed opportunity 
     to find and protect the information Dr. Lee illegally put at 
     risk.
       Certain provisions of the Counterintelligence Reform Act of 
     2000, which became law as Title VI of Public Law 106-567 on 
     December 27, 2000, will prevent the kinds of problems that 
     plagued this FISA request. The law now requires that, upon 
     written notification from the Director of the FBI (or of one 
     of the few other officials who are authorized to make FISA 
     requests), the Attorney General must explain in writing why 
     the Department does not believe that probable cause has been 
     established, and to make recommendations for improving the 
     request. When given such recommendations in writing, the 
     requesting official must personally supervise the 
     implementation of any such recommendations. These procedures 
     will ensure that disagreements over matters of probable cause 
     are resolved rather than allowed to linger, as happened in 
     the Wen Ho Lee case.
     Investigation from August 12, 1997 to December 23, 1998
       Notwithstanding the serious evidence against Dr. Lee on 
     matters of great national security importance, the FBI 
     investigation languished for 16 months, from August 1997 
     until December 1998, with the Department of Energy permitting 
     Dr. Lee to continue on the job with access to classified 
     information.
       After OIPR's August 1997 decision not to forward the FISA 
     application, FBI Director Louis Freeh met with Deputy Energy 
     Secretary Elizabeth Moler to tell her that there was no 
     longer any investigatory reason to keep Lee in place at LANL, 
     and that DOE should feel free to remove him in order to 
     protect against further disclosures of classified 
     information. In October 1997, Director Freeh delivered the 
     same message to Energy Secretary Federico Pena that he had 
     given to Moler.\101\ These warnings were not acted on, and 
     Dr. Lee was left in place, as were the files he had 
     downloaded to the unclassified system, accessible to any 
     hacker on the Internet.
       After the rejection of the FISA warrant request on August 
     12, it took the FBI three and one-half months to send a memo 
     dated December 19, 1997, to the Albuquerque field office 
     listing fifteen investigative steps that should be taken to 
     move the investigation forward. The Albuquerque field office 
     did not respond directly until November 10, 1998. The fifteen 
     investigative steps were principally in response to the 
     concerns raised by OIPR about the previous FISA request. To 
     protect sources and methods, the specific investigative steps 
     in the December 19, 1997 teletype cannot be disclosed, but 
     have been summarized by the FBI as follows:
       1. Conduct Additional Interviews
       (a) Open preliminary inquiries on other individuals named 
     in the DOE AI who met critical criteria;
       (b) Develop information on associate's background, and 
     interview the associate, and
       (c) Interview co-workers, supervisors, and neighbors.
       2. Conduct Physical Surveillance
       3. Conduct Other Investigative Techniques
       (a) Review information resulting from other investigative 
     methods;
       (b) Review other investigations for lead purposes; and
       (c) Implement alternative investigative methods.\102\
       Only two of the leads were seriously pursued. Most 
     importantly, the FBI did not open investigations on the other 
     individuals named in the DOE AI until much later.
       The False Flag
       One of the steps recommended in the December 1997 HQ 
     investigative plan was carried out in August 1998. The 
     results of this ``False Flag'' operation against Dr. Lee are 
     partially described in a November 10, 1998 memorandum from 
     Albuquerque to FBIHQ. The memorandum is identified as a 
     request for electronic surveillance and lays out the basis 
     for probable cause, including a description of a series of 
     phone calls between Dr. Lee and an individual posing as an 
     officer of the Ministry of Foreign Affairs and Ministry of 
     State Security. According to the memo, this undercover agent 
     (UCA) introduced himself to Dr. Lee ``as a representative of 
     the `concerned Department,' from Beijing, PRC,'' and 
     explained that the purpose of his visit to Sante Fe was to 
     ``meet with Wen Ho Lee to assure of Lee's well-being in the 
     aftermath of the conviction of a Chinese-American scientist, 
     Peter Lee in California.'' \103\
       The Albuquerque memo describes Dr. Lee as being ``skeptical 
     of the entire situation and apprehensive about meeting face-
     to-face with [the UCA]'' and relates how Dr. Lee mentioned 
     that ``departmental policy at LANL requires him to report to 
     his superior if he meets with a representative of a foreign 
     government, however, it does not mean that he is forbidden to 
     meet such a person.'' \104\ Dr. Lee stated a preference for 
     discussing any matters with the representative of the PRC 
     over the phone, but when told that there were other sensitive 
     issues besides the Peter Lee case which must be discussed in 
     person, Dr. Lee agreed to meet the UCA at the Hilton 
     Hotel.\105\
       About ten minutes after agreeing to travel to meet the UCA, 
     Dr. Lee called back and said he had changed his mind, 
     reiterating his concerns about registering with his superior 
     when meeting with foreign government officials. Given that 
     Dr. Lee would not agree to a face-to-face meeting, the UCA 
     said that ``although he was an official from the PRC 
     government, he was traveling under civilian status on this 
     trip so that he could avoid scrutiny by the United States 
     government.'' \106\ The UCA then asked Dr. Lee if he had been 
     interviewed by any U.S. authorities, including the FBI, and 
     whether Dr. Lee had noticed anything unusual or was being 
     treated differently by his employer or had any restrictions 
     on his travel arrangements in the wake of the Peter Lee case. 
     Dr. Lee responded negatively.\107\
       The UCA then told Dr. Lee that one of the reasons he wanted 
     to meet was to see if there was any material to take back to 
     the PRC. After Dr. Lee said there was not any such material, 
     the UCA said that ``since the material he brought back to 
     China and the speech he gave were so helpful, did Lee have 
     any plans in going to the PRC in the near future.'' \108\ Dr. 
     Lee said that he would probably not be going to the PRC until 
     after his retirement from LANL in one or two years. He did 
     not, as one would expect, deny that he had previously sent 
     material.
       The next day (August 19), the UCA called Dr. Lee again, 
     saying that he would be leaving Santa Fe in a few days and 
     asking if Dr. Lee would like to have a number where he could 
     contact the UCA in the future. Dr. Lee said he would like to 
     have a number, and was provided a pager number and was told 
     that it belonged to an American friend who had helped the UCA 
     and his associates in the past, and who could be 
     trusted.\109\
       Dr. Lee did not immediately report this contact, but he 
     told his wife who told a friend, who told DOE security. When 
     Dr. Lee was questioned by DOE counterintelligence personnel 
     about the phone call, he was vague, and failed to mention the 
     beeper number or the hotel.
       The FBI did not properly handle the information learned 
     from the False Flag operation. First, it took more than three 
     months

[[Page 27660]]

     for the transcript of the exchange between Dr. Lee and the 
     UCA to get to FBI Headquarters where it could be fully 
     analyzed. Unfortunately, the transcript (and the FISA request 
     based on the results of the False Flag) arrived at FBI HQ 
     just when the DOE was asserting control over the case. Had 
     the transcript been analyzed in the full detail that it 
     deserved, the FBI would have been able to tell the Office of 
     Intelligence Policy and Review that prior concerns about 
     whether Dr. Lee was ``currently engaged'' as an agent of a 
     foreign power had been addressed by his dealings with the 
     undercover agent. Among the key points that should have been 
     worked into the renewed FISA application are the following:
       That Dr. Lee agreed to meet with an individual purporting 
     to be an agent of a foreign government, traveling in the U.S. 
     in civilian clothes to avoid detection by U.S. authorities. 
     Although Dr. Lee called back and canceled the face-to-face 
     meeting, he never reported to lab security personnel that he 
     had agreed to meet in the first place.
       That Dr. Lee accepted the contact number of an individual 
     claiming to be an agent of a foreign power, yet failed to 
     disclose that fact to lab security officials about the 
     incident when asked about this contact. Dr. Lee apparently 
     admitted more of the details of the August phone 
     conversations when he was interviewed by FBI agents in 
     January 1999, but his failure to acknowledge this fact when 
     he spoke to Los Alamos officials in August 1998 continued a 
     pattern of incomplete disclosure from Dr. Lee.
       That Dr. Lee asked questions during the conversation which 
     indicated a knowledge of PRC intelligence and scientific 
     organizations and the operational methods used by these 
     agencies.
       None of these new items of information was sufficient, on 
     its own, to tip the balance of probable cause against Dr. 
     Lee. However, in the context of the other evidence that had 
     already been gathered by the FBI, these elements were 
     certainly relevant to a probable cause determination and 
     should have been relayed to OIPR for consideration. While the 
     FBI informally told OIPR of Dr. Lee's failure to fully report 
     the August contact, that conversation did not take place 
     until three months after the incident occurred. A proper and 
     timely interpretation of the False Flag operation would have 
     set the investigation on a very different course in late 
     1998. The Bellows Report supports the judgement that the 
     FBI's handling of the False Flag was inappropriate, and that 
     the information gained through the False Flag would have 
     added to a showing of probable cause necessary for a FISA 
     warrant.
       Surreptitious Communications
       The December 19, 1997 directive from FBI Headquarters also 
     revived an investigative issue that had come to the FBI's 
     attention in 1995, prior to the start of the Kindred Spirit 
     investigation. Among the 15 actions that FBI Headquarters 
     directed the Albuquerque office to take was a reinvestigation 
     of the possibility that Dr. Lee was engaging in clandestine 
     communications, using either a satellite system or Short 
     Range Agent Communications (SRAC).
       As part of the 1994-1996 investigation of Dr. Lee, the FBI 
     had learned that Dr. Lee was reported to have installed a 
     satellite antenna near his home and was suspected of using it 
     to communicate surreptitiously. The case agents requested 
     assistance in investigating the possibility that Dr. Lee was 
     engaged in some sort of satellite communications, but the 
     request was summarily dismissed by the case manager at FBI 
     Headquarters, Supervisory Special Agent Craig Schmidt, and 
     the matter was not further pursued for nearly three years.
       After the FISA request was rejected in 1997, in part 
     because the FBI had not been able to convince OIPR that Dr. 
     Lee was currently engaged in any clandestine activity, the 
     case manager's interest in the communications issue picked 
     up. In the December 19, 1997 communication to Albuquerque, he 
     directed the agents in the field to renew their investigation 
     of this matter, which they did with substantial vigor. For 
     several months during the summer of 1998, the Albuquerque 
     office collected information to determine whether or not Dr. 
     Lee was, in fact, engaged in some sort of clandestine 
     communication from his home.
       The Albuquerque case agents, with the help of a technical 
     adviser who was brought in specifically for the purpose of 
     helping on this issue, formed a hypothesis that Dr. Lee was 
     communicating by satellite. They included this information, 
     and much of the supporting data, in the November 10, 1998 
     request for a FISA warrant. The agents did not assert 
     conclusively that Dr. Lee was using SRAC or satellite 
     communications, but they explained their reasons for 
     believing that he might be doing so and requested help in 
     making a final determination about the significance of the 
     possible communications.
       The FBI has subsequently concluded that the observed 
     phenomenon which originally led the Albuquerque case agents 
     to believe that Dr. Lee might be using SRAC was not linked to 
     any communication from Dr. Lee's house. The FBI's technical 
     analysis of this issue is thorough and convincing. On the 
     current state of the record, the phenomenon which led the FBI 
     to suspect that Dr. Lee was engaged in surreptitious 
     communications, while still unexplained, cannot be 
     conclusively linked to anything that was going on inside Dr. 
     Lee's house or on his property.
       What is disturbing, however, is that the FBI did not even 
     begin this analysis until November 1999, shortly after the 
     November 3, 1999 closed hearing which focused heavily on this 
     issue. The case manager at FBI Headquarters who received the 
     November 10, 1998 FISA request from Albuquerque rejected the 
     new request, despite the fact that it contained new 
     information beyond what the FBI had felt was sufficient, in 
     1997, to get a FISA warrant. Outside the Albuquerque field 
     office, no one in the FBI made any real effort to understand 
     the data in the November 10, 1998 FISA request.
       Even when the dynamics of the case changed after the FBI 
     concluded that Dr. Lee had not passed the December 23, 1998 
     polygraph, and changed again when Dr. Lee failed an FBI 
     polygraph on February 10, 1999, no one in the FBI expressed 
     any interest in examining the possibility that there might be 
     something more to the SRAC issue than initially suspected. 
     The FBI still did not revisit the clandestine communications 
     issue after learning that Dr. Lee had been downloading 
     computer files and putting them on portable tapes. The notion 
     that there might be a link between the clandestine 
     communications and the portable tapes apparently never 
     occurred to the FBI, and no effort was made to investigate 
     the meaning of the strange electromagnetic phenomenon that 
     had led the FBI case agents to suspect that Dr. Lee was using 
     SRAC.
       Instead of taking action on the new information, the case 
     manager sent back a cable on December 10, telling the case 
     agents that FBIHQ had reviewed the new FISA request and 
     determined that it did ``not yet contain the justification 
     necessary to successfully support a FISA Court application 
     for electronic surveillance,'' and recommended that 
     Albuquerque send copies of written reports from LANL's 
     Counterintelligence officer, Terry Craig, regarding Dr. Lee's 
     deception about the False Flag.\110\
       On the merits, the failure to forward the FISA request to 
     OIPR is inexplicable. The FBI had felt since 1997 that they 
     had sufficient probable cause to get a FISA warrant. The 1998 
     investigative steps yielded new information that directly 
     addressed the concerns OIPR had raised about the Lees being 
     currently engaged in clandestine activity, yet the FBI case 
     manager summarily dismissed the new request, failing to even 
     forward it to OIPR for consideration. The failure to take 
     action when the dynamics of the case changed in early 1999 is 
     just incomprehensible.
       When such serious national interests were involved in this 
     case, it was simply unacceptable for the FBI to tarry from 
     August 12, 1997 to December 19, 1997, to send the Albuquerque 
     field office a memo. It was equally unacceptable for the 
     Albuquerque field office to take from December 19, 1997 until 
     November 10, 1998 to respond to the guidance from 
     Headquarters, and then for the FBI not to renew the request 
     for a FISA warrant based on the additional evidence. The 
     FBI's handling of this issue is impossible to justify.
     The December 23, 1998 Polygraph
       When Dr. Lee returned to the United States from a three-
     week trip to Taiwan in December 1998, he was administered a 
     polygraph examination on instructions from Mr. Ed Curran, 
     Director of DOE's Office of Counterintelligence (OCI). 
     Although Dr. Lee was initially thought to have passed the 
     polygraph with very high scores, his access to the X-Division 
     was temporarily suspended to give the FBI time to conclude 
     its investigation. When the polygraph results were examined 
     by the FBI in late January or early February 1999, it became 
     clear that Dr. Lee had not passed, and the investigation was 
     restarted, eventually leading to the dismissal of Dr. Lee 
     from LANL and, several months later, his indictment and 
     jailing.
       The circumstances surrounding this December 1998 polygraph 
     are among the most important but least understood aspects of 
     the case. The June 1999 report of the President's Foreign 
     Intelligence Advisory Board raised questions about this issue 
     and recommended that the Attorney General determine, ``why 
     DOE, rather than the FBI, conducted the first polygraph in 
     this case when the case was an open FBI investigation. . . 
     .'' \111\ The subcommittee's investigation demonstrates that 
     the handling of the December 23, 1998 polygraph, or more 
     accurately the mishandling of this polygraph is one of the 
     most consequential errors of the Wen Ho Lee matter. To 
     understand the impact of the polygraph on the case, it is 
     necessary to review: 1) the events leading up to and the 
     reasons for the December 23, 1998 polygraph; 2) the results 
     of that polygraph; and 3) the effect on the investigation of 
     the erroneous polygraph reading by Wackenhut. The short 
     answer is that: 1) DOE jumped into the case in a heavy handed 
     way during late 1998 in an effort to avoid criticism related 
     to the upcoming release of the Cox Committee report, 2) the 
     Wackenhut examiners' incorrect conclusion that Dr. Lee passed 
     the polygraph prompted the FBI to nearly shut down its 
     investigation of Dr. Lee, 3) with the result that during the 
     time he supposedly was denied access to the X-Division, Dr. 
     Lee was

[[Page 27661]]

     able to return and recover the tapes that are now missing. 
     Given the vast number of mistakes that had already been made 
     prior to December 1998, and the number that were made 
     thereafter, it would be wishful thinking to believe that a 
     correct reading of the polygraph would have led to a 
     successful conclusion in this case, but Wackenhut's erroneous 
     initial interpretation of the results and the long delay in 
     getting the charts passed to FBIHQ for review put the case on 
     a downward spiral from which it almost never recovered. 
     Because these issues are both highly important and widely 
     misunderstood, each is examined in some detail.
       The events leading up to the December 23, 1998 Polygraph
       As noted previously, the FBI's investigation of Dr. Lee had 
     been dealt a severe blow in August 1997 when DOJ's Office of 
     Intelligence Policy and Review rejected the FISA request. The 
     local case agents spent most of 1998 trying to get the 
     investigation back on track, but were not notably successful. 
     By November 1998, the newly appointed lead case agent was 
     ready to move forward and sent a new request for FISA 
     coverage to FBI HQ. Unfortunately, the request fell on deaf 
     ears for reasons that will be explored more fully below.
       At approximately the same time the case agents were seeking 
     FISA coverage, Dr. Lee asked for permission to travel to 
     Taiwan to visit a company called Asiatek. According to an FBI 
     document describing this request, Dr. Lee said that ``Asiatek 
     invited him to visit Taiwan in December 1998 to give a 
     presentation in exchange for his airfare.'' \112\ When Dr. 
     Lee submitted a request to travel under these terms, the LANL 
     Internal Security section denied it, so Dr. Lee reportedly 
     traveled at his own expense to visit an ailing sister.\113\
       While the Internal Security section was correct to deny Dr. 
     Lee's request to let Asiatek pay his travel expenses, the 
     request should have set off alarm bells within both DOE and 
     the FBI. The aforementioned FBI document says:
       ``Asiatek is a Taiwan-based company founded in 1985 which 
     introduced state-of-the art information technology to both 
     China and Taiwan. The company works with both private 
     industry and Taiwan government research facilities such as 
     the Chung Shan Institute of Science and Technology 
     (administered by the Ministry of National Defense). Asiatek 
     specializes in information technology, program planning and 
     management, business process re-engineering, integrated 
     logistic support, and continuous acquisition and life cycle 
     support environmental planning and implementation. Asiatek 
     also develops cannon and tank systems.'' \114\
       The fact that the prime suspect in a major espionage 
     investigation was asking to travel out of the country for the 
     second time in less than nine months, with his travel to be 
     paid for by a foreign company, should have been a call to 
     action by someone in DOE or the FBI. The local case agent 
     sent a message to FBIHQ asking that this information be 
     considered ``in conjunction with Albuquerque Division's 
     request for FISA/MISUR coverage of Wen-Ho Lee,'' \115\ but 
     the case manager did not act on it.
       If the travel alone was not sufficient to compel the FBI 
     and/or DOE to take some positive steps to regain control over 
     the case, the nature of the work performed by Asiatek and its 
     relationship to the Chung Shan Institute of Science and 
     Technology should have been because these matters related 
     directly to concerns that had been raised about Dr. Lee 
     during the course of the investigation. When asked why Dr. 
     Lee was allowed to travel under these circumstances, Mr. 
     Curran replied that ``FBI personnel were running the 
     investigation and were the ones that allowed Dr. Lee to 
     travel to Taiwan. If it were my decision, I would not have 
     allowed Mr. Lee to leave the country.'' \116\
       Mr. Curran's statement on the travel issue reflects a 
     larger problem that plagued the Kindred Spirit investigation 
     from beginning to end, namely the systemic breakdown of 
     effective communication between DOE and the FBI on matters of 
     great importance.\117\ If Mr. Curran was opposed to letting 
     Dr. Lee go to Taiwan, he should have said something. As 
     Director of DOE's OCI, his opinion clearly had weight. He did 
     not act, so Dr. Lee went to Taiwan.
       As another example of ineffective communication on 
     important issues, consider Mr. Curran's statement that he 
     first learned on December 15, 1998, that Director Freeh had 
     recommended removing Dr. Lee from access more than a year 
     before.\118\ Mr. Curran assumed his position as Director of 
     OCI in April 1998 and immediately conducted a 90-day review 
     of the CI program at DOE as mandated by PDD-61. He received 
     what he describes as a ``summary briefing on the Kindred 
     Spirit investigation.'' He was aware of the False Flag that 
     was run in August and wanted to ``get the case moving and to 
     resolve the issues of the possible loss of sensitive 
     information,'' but the fact that the FBI had recommended that 
     Dr. Lee's access to classified information be pulled was 
     apparently not shared with Mr. Curran until mid-December 
     1998, while Dr. Lee was in Taiwan.\119\ It should be noted, 
     however, that Mr. Curran told the DOE IG that he learned 
     about Director Freeh's 1997 comments on moving Dr. Lee in 
     October 1998, two months before he finally took action.\120\ 
     This is significant because it undermines Mr. Curran's 
     assertion that the reason he acted in December 1998 was 
     because he had just learned of Director Freeh's 1997 
     recommendations.
       That the Director of DOE's Office of Counterintelligence 
     was not informed (or did not make himself aware) of the FBI's 
     view that Dr. Lee should be pulled from access reflects 
     poorly on the DOE and the FBI. How could anyone brief this 
     case to Mr. Curran in 1998 without mentioning that the 
     Director of the FBI had twice told DOE's top leadership that 
     Dr. Lee's access to classified information should be removed? 
     What would one say, when briefing the new head of 
     counterintelligence, that would not somehow convey the 
     message that the FBI was concerned about the potential damage 
     from keeping him in access? And how could the top 
     counterintelligence officer in the DOE not inquire as to 
     whether consideration had been given to reducing the risk 
     posed by an individual who was the chief suspect in a major 
     espionage investigation? This lack of communication defies 
     comprehension.
       The Counterintelligence Reform Act of 2000 will prevent 
     such disasters in the future. The Act requires the Director 
     of the FBI to notify appropriate officials, in writing, when 
     a full field investigation is started in an espionage case, 
     and to present to the head of the affected agency a written 
     assessment of the potential impact of the actions of that 
     agency or department on an FBI counterintelligence 
     investigation. It will not be possible in future 
     investigations for the head of counterintelligence in an 
     agency to claim ignorance of an FBI recommendation regarding 
     a suspect's access to classified information. And the FBI 
     will have to ensure that its coordination with the affected 
     agency is both close and continuous, so that when new 
     officials come into decision-making roles, they will be fully 
     informed as to the important aspects of pending cases. The 
     FBI/DOE polygraph disaster in the Wen Ho Lee case should be 
     the last such calamity.
       The interim report issued in March 2000 touched briefly on 
     the polygraph issue, prompting a letter from Mr. Curran,\121\ 
     who provided the following account of the events leading up 
     to the polygraph:
       ``Every detail of this case was coordinated between DOE and 
     the FBI. I personally wanted the FBI to do the interview 
     rather than DOE, but they stated that they were not ready to 
     interview him because they first wanted to interview some 
     neighbors and associates of Mr. Lee. DOE had been asking the 
     FBI to bring this case to a conclusion since the [false flag] 
     in August. I did not believe I had the luxury of waiting any 
     longer since the investigative activity in August and this 
     was Mr. Lee's first opportunity to leave the U.S. I was very 
     concerned as to what he would do and say on his trip to 
     Taiwan and then what he would do upon his return. Since the 
     FBI was not going to interview Mr. Lee and bring this case to 
     a conclusion prior to his departure to Taiwan, I made the 
     decision, with the Secretary's approval, to remove Mr. Lee 
     from access upon his return from Taiwan and until the FBI 
     could conclude their investigation through interview and 
     polygraph.
       ``Mr. Lee returned from Taiwan on December 23, 1998. He was 
     interviewed and removed from access and asked to take a 
     polygraph. The FBI was aware that if Mr. Lee refused to take 
     a DOE polygraph, his security clearance would have been 
     removed and steps taken to terminate his employment; if Mr. 
     Lee agreed to take the test and failed, his clearance would 
     be removed and termination proceedings would be initiated. 
     This activity was completely coordinated with the FBIAQ. On 
     December 21, 1998, a memo was furnished to the Secretary of 
     Energy from me setting forth the above scenario. Mr. Lee took 
     the polygraph test and representatives from FBIAQ were 
     present.'' \122\
       In subsequent correspondence with the subcommittee, Mr. 
     Curran elaborated on his reasons for removing Dr. Lee's 
     access in December 1998. Responding to follow-up questions 
     from a September 27, 2000 subcommittee hearing, Mr. Curran 
     cited four reasons for his decision to remove Dr. Lee from 
     access in December 1998: ``(1) the fact that the FBI no 
     longer required Lee be kept in access, (2) my discomfort at 
     the extent of Dr. Lee's access, which was greater than I had 
     originally thought, (3) the fact that the FBI's false flag 
     operation had been unsuccessful, possibly alerting Lee to the 
     investigation, and (4) the fact that Lee was then traveling 
     in Taiwan, thus able to travel easily to Hong Kong or the 
     People's Republic of China without our knowledge.'' \123\
       While Mr. Curran's account explains what happened, it does 
     not adequately explain why these events took place. It was 
     simply inconsistent for DOE to allow Dr. Lee to travel to 
     Taiwan, yet polygraph him and pull his access to classified 
     information upon his return, even though he supposedly passed 
     the polygraph. If Dr. Lee was such a threat that he needed to 
     be polygraphed and removed from access, why was he allowed to 
     go to Taiwan? And if he passed the polygraph after returning 
     from Taiwan, including specific questions about espionage, 
     why was there still a need to remove his access?
       Mr. Curran's explanation for the series of events leading 
     up to the December 1998 polygraph shows an investigation that 
     was, at

[[Page 27662]]

     best, disjointed and poorly coordinated (despite Mr. Curran's 
     assertions to the contrary). Consider, for example, that the 
     FBI agent who took over the case on November 6, 1998, did not 
     agree with the DOE decision to have Wackenhut \124\ give Dr. 
     Lee a polygraph examination, and has called it 
     ``irresponsible.'' According to FBI protocol, Dr. Lee would 
     have been questioned as part of a post-travel interview. 
     However, as Mr. Curran noted, the case agents were 
     inexplicably unprepared to conduct such an interview and the 
     Special Agent in Charge (SAC) in Albuquerque agreed to go 
     ahead with the polygraph at Mr. Curran's request. The lead 
     case agent requested a new FISA in November 1998, but 
     Supervisory Special Agent Craig Schmidt the same FBI case 
     manager at headquarters who had put together an action plan 
     in December 1997 trying to get the investigation back on 
     track had suddenly gotten cold feet on the matter, casually 
     rejecting the FISA request without even showing OIPR a 
     written product. DOE was exercised enough about Dr. Lee that 
     Ed Curran wanted to give Dr. Lee a polygraph and pull his 
     access to classified information (something the FBI had 
     recommended 14 months prior), but was not willing to stop him 
     from traveling to Taiwan. The case was a mess, and then it 
     got worse.
       The disagreement between FBI and DOE over how best to 
     proceed in late 1998 only partially explains why the 
     investigation lurched forward with FBI seemingly in charge 
     one moment (letting Dr. Lee travel to Taiwan, contrary to Mr. 
     Curran's preference) and Mr. Curran prevailing the next 
     (getting the Albuquerque SAC to overrule the lead case agent 
     on the polygraph question). Other testimony and documents 
     provided to the subcommittee paint a more complete and 
     markedly different picture of the events surrounding the 
     polygraph of Dr. Lee on December 23, 1998. Unfortunately, the 
     picture they paint is one of DOE trying desperately to 
     protect its image from the revelations it expected to come 
     with the release of the Cox Committee report, with the FBI 
     going along, and neither agency focusing on the national 
     security implications of their actions.
       To understand the context in which these decisions were 
     being made, consider that the Cox Committee was taking 
     testimony in mid-December, and that key portions of the 
     testimony centered on security at the national labs. The 
     atmosphere leading up to the Cox Committee hearings has been 
     described as follows:
       ``With impeachment as a backdrop, allegations that the 
     Clinton administration was allowing China easy access to 
     American secrets collided with charges that China's military 
     had funneled money into Democratic coffers. The New York 
     Times reported that the daughter of a senior Chinese military 
     officer was giving money to Democrats while also working to 
     acquire sensitive American technology.
       ``Republicans, opening a new front against a beleaguered 
     president, created a House select committee, headed by 
     Representative Cox, to investigate whether the government was 
     compromising technology secrets by letting American companies 
     work too closely with China's rocket industry. With its 
     deadline approaching, the committee stumbled on the W-88 
     case.
       ``Mr. Trulock became a star witness, and committee members 
     were riveted by his testimony. C.I.A. analysts who testified 
     before the committee agreed there was espionage, people who 
     heard the secret proceedings said, but were more equivocal 
     about its value to China.'' \125\
       The Mr. Trulock referenced above is Notra Trulock, former 
     DOE intelligence chief. According to a DOE chronology, the 
     Cox Committee was briefed by DOE on November 12, 1998 and 
     again on December 7. On December 16, Mr. Curran, Mr. Trulock 
     and the Director of the DOE's Office of Intelligence, Mr. 
     Lawrence Sanchez, testified again before the Cox 
     Committee.\126\ Describing the impact of his testimony to the 
     House panel, Mr. Trulock told the subcommittee on September 
     27, 2000 that ``after our initial appearance and particularly 
     our second appearance before the Cox Committee in December of 
     1998, there was a high level of agitation within the Office 
     of Counterintelligence on the part of Mr. Sanchez and within 
     the political appointees at the department.'' \127\ Mr. 
     Trulock further testified:
       ``it is certainly not a coincidence that after the FBI 
     provided the information to the Cox Committee on Dr. Lee and 
     other espionage cases within the Department of Energy that 
     for the first time in almost two years, DOE management became 
     energized about addressing the advice we had received from 
     Director Freeh in August of 1997.'' \128\
       Mr. Trulock's testimony is supported by documentary 
     evidence and testimony from other witnesses. A December 18, 
     1998, memorandum from the FBI's Assistant Director for 
     National Security, Neil Gallagher, says that Secretary 
     Richardson would be calling Director Freeh about the Lee 
     investigation on December 21, 1998. The memorandum explains 
     that DOE counterintelligence personnel wanted to ``neutralize 
     their employee's access to classified information prior to 
     the issuance of a final report by the Cox Committee.'' When 
     questioned on this point Mr. Curran acknowledged that the 
     conversation mentioned in the memo had taken place, but 
     denied any connection between DOE's desire to polygraph Dr. 
     Lee and the release of the Cox Committee report.\130\
       Mr. Curran's account of these events is contradicted by 
     testimony from other individuals who were also directly 
     involved. When Director Freeh testified before the Senate 
     Select Committee on Intelligence on May 19, 1999, he told the 
     committee:
       ``DOE was seeking to establish grounds to terminate Mr. Lee 
     in December of 1998, and they went forward with their 
     polygraph and interview with that objective. We, at that 
     point, wanted more time to prepare for a confrontational 
     interview which in these kinds of cases is the most important 
     interview.'' \131\
       Other FBI files from this period support the contention 
     that Secretary Richardson wanted Dr. Lee fired in early 1999. 
     A January 21 memo from FBI Supervisory Special Agent C. H. 
     Middleton to Deputy Assistant Director Horan said that ``DOE 
     is anxious to avoid criticism about the case. It removed the 
     subject's access to classified information on 12/23/98. DOE 
     wants to fire the subject, but may not have justification to 
     do so at this time.'' \132\
       None of the information the government had in its 
     possession at that point would have justified a decision to 
     fire Dr. Lee, but firing him would have allowed Secretary 
     Richardson to avoid criticism that the DOE had not taken 
     action on a major espionage case. Director Freeh's comments 
     are further buttressed by statements that two security 
     personnel made to the DOE Inspector General during an 
     investigation of the decision-making process related to Dr. 
     Lee's clearance and access. The former Director of LANL's 
     Internal Security Division, Mr. Ken Schiffer, told the IG 
     that he first heard Dr. Lee's name on December 21, 1998, in a 
     conference call with two individuals from the Office of 
     Counterintelligence, one of whom told him that ``the 
     Secretary wanted Mr. Lee to be fired.'' \133\ Mr. Richard 
     Schlimme, the Counterintelligence Program Manager in the 
     Albuquerque office, told the DOE IG that he had been on 
     annual leave on December 21, 1998, when he was called to come 
     in to work to deal with the Wen Ho Lee situation. When he 
     arrived, Mr. Schlimme was told that ``Secretary Richardson 
     wanted immediate action, so Mr. Curran decided to interview 
     Mr. Lee immediately.'' \134\ Further, according to Mr. 
     Schlimme, ``Mr. Curran wanted Mr. Lee removed from the 
     laboratory regardless of how he did on the polygraph.'' \135\
       In addition to the evidence described above, the 
     subcommittee has a sworn deposition from the case manager at 
     FBI Headquarters, Supervisory Agent Craig Schmidt, who said 
     he had very little control over the investigation in December 
     1998 because the ``Department of Energy was becoming more and 
     more concerned about how they would appear and how they were 
     appearing during the [Cox] committee meetings,'' \136\ In the 
     context of all the evidence to the contrary, Mr. Curran's 
     assertion that the decision to act with regard to Dr. Lee had 
     nothing to do with the imminent release of the Cox Committee 
     report is not persuasive.
       Incorrect reading of the December 23, 1998 polygraph
       The subcommittee focused very intently on the question of 
     whether Dr. Lee passed or failed the December 23, 1998 
     polygraph for three reasons: (1) the erroneous reading 
     changed the course of the investigation, prompting the FBI to 
     nearly close down its investigation at a time when the 
     scrutiny of Dr. Lee should have been increasing, (2) it took 
     an inordinate amount of time to discover that the initial 
     reading of the polygraph was wrong, and (3) the public 
     perception that Dr. Lee really passed the test but the FBI 
     somehow later reversed that finding is incorrect.
       The consequences of the incorrect interpretation of the 
     December 23, 1998 polygraph are the subject of the next 
     section of this report. The remainder of this section will 
     address the matter of the delay in getting the charts to the 
     FBI and the question of whether Dr. Lee actually passed or 
     failed this test.
       The initial interpretation of the test was made by Wolfgang 
     Vinskey, a Senior Polygraph Examiner with Wackenhut, a 
     private firm that had a contract with DOE to conduct 
     polygraphs. Mr. Vinskey wrote that he had administered ``a 
     DOE Counterintelligence Scope PDD Examination'' to Dr. Lee, 
     and concluded that ``this person was not deceptive when 
     answering the relevant questions pertaining to involvement in 
     espionage, unauthorized disclosure of classified information 
     and unauthorized foreign contacts.'' \137\ Mr. John Mata, 
     Manager of DOE's AAAP Test Center, reviewed the exam and 
     concurred with Mr. Vinskey that ``upon completion of testing, 
     the Examinee was not deceptive when answering the relevant 
     questions. . . .'' \138\ Mr. Mata followed up the initial 
     report with a more detailed memorandum on December 28, 1998, 
     in which he reiterated to Mr. Curran the information that had 
     been in the December 23 polygraph report, namely that ``data 
     analysis of this examination disclosed sufficient 
     physiological criteria to opine Mr. Lee was not deceptive 
     when answering'' the relevant questions.\139\
       After the exam, the two FBI agents who were on hand were 
     briefed on the results of the test. There is a December 21, 
     1999 memorandum for the record written by John Mata

[[Page 27663]]

     which describes how the test results were relayed to the 
     FBI.\140\ Mr. Mata says that he told the lead case agent that 
     the charts did not show significant reaction on three of the 
     questions, but that ``a plus 3 on the fourth question 
     (relating to having knowledge of anyone he knew who had 
     committed espionage against the United States) was close.'' 
     \141\ Mr. Mata told the agent that Dr. Lee ``had disclosed 
     information during the examination that he had not previously 
     reported regarding an approach that was made to him on his 
     recent or a past trip,'' and gave her a sheet of paper 
     containing the data analyses.\142\ According to Mr. Mata, the 
     agent wrote down the questions from the exam and asked ``if 
     further processing involved the charts being reviewed by 
     their polygraph examiner (specific reference to Roger Black) 
     . . .'' to which he said no.'' \143\ Mr. Mata's memo also 
     says that at no time [on that date] was he asked to provide 
     the charts or any allied data from the test to the FBI.
       During the first week of January, Mr. Mata's memo 
     continues, the entire polygraph package (charts, questions, 
     data analysis sheets and video tape) were sent to OCI 
     Polygraph Program Manager David Renzleman in Richland, 
     Washington. In mid-January, Mr. Mata got a call from Mr. 
     Renzleman instructing him to provide the local FBI with 
     everything generated by the polygraph, which he did.
       An undated Quality Assurance record of this examination, 
     prepared by David Renzleman contains the following comments:
       ``This test was initially classified and consequently DOE 
     OCI did not get to see the collected charts or video tape 
     recording until late January 1999.
       ``When the charts were subjected to the OCI QC [Quality 
     Control] process, the initial NDI [No Deception Indicated] 
     opinion could not be duplicated or substantiated.
       ``The Test Center Manager was advised of these QC concerns 
     and was requested to send the charts to the Department of 
     Defense Polygraph Institute (DODPI) which he did.
       ``DODPI advised the Test Center Manager that they could not 
     duplicate or support the NDI opinion of this test.'' \144\
       In the ``QC Opinion'' section of the report, Mr. Renzleman 
     said, ``I am unable to render an opinion pertaining to the 
     truthfulness of the examinee's answers to the relevant 
     questions of this test. Additional testing is recommended.'' 
     \145\
       When the charts and videotape were subsequently analyzed by 
     FBI polygraph experts in late January or early February, they 
     concluded that Dr. Lee had failed relevant questions \146\ or 
     was, at best, inconclusive.\147\ Based on these concerns, the 
     FBI arranged for additional interviews and a new polygraph on 
     February 10, 1999. In addition to learning on this date that 
     Dr. Lee had reactivated his computer account simply by 
     calling up the help desk and asking that it be restored,\148\ 
     the FBI concluded Dr. Lee failed the February polygraph and 
     increased its investigative activity, but by then the chances 
     of salvaging the investigation were slipping away.
       There remains a serious question about the chain of events 
     which led to the delayed discovery that Dr. Lee did not pass 
     the December 1998 polygraph. A February 26, 1999 memorandum 
     from William Lueckenhoff, Assistant Special Agent in Charge 
     in Albuquerque, says:
       ``The FBI personnel present immediately requested the 
     polygraph charts and documentation to the polygraph in order 
     to have it reviewed by FBIHQ. DOE's initial response to this 
     request, as per Ed Curran, DOE Counterintelligence Office, 
     was not to allow the FBI access to the tapes and charts, only 
     the numerical results of the polygraph.'' \149\
       As is discussed elsewhere in this report, Dr. Lee did not 
     pass the polygraph, and no one other than the initial 
     reviewers have been able to interpret the charts to say that 
     he did pass. Given that the charts clearly show that Dr. Lee 
     did not pass, any effort to prevent their release to the FBI 
     would be a serious matter. Where DOE was concerned about 
     criticism because it was being accused before the Cox 
     Committee of not taking action on the case, a failed 
     polygraph would tend to prove the critic's point. However, a 
     passed polygraph, followed by an investigation which cleared 
     Dr. Lee of the W-88 allegations yet later resulted in his 
     firing for unrelated security violations would show that 
     DOE's critics were wrong about the W-88 investigation, but 
     that DOE was serious about security anyway and ultimately 
     removed Dr. Lee because he was a security risk. In these 
     circumstances, any shenanigans with the polygraph charts 
     would be extremely serious.
       Mr. Curran strongly denies the allegation in Mr. 
     Lueckenhoff's memo and DOE documents indicate that Mr. Curran 
     was instrumental in getting the full record of the polygraph 
     into the FBI's hands in January, 1999.\150\
       When pressed for an explanation of the February 26, 1999 
     memo blaming Mr. Curran for the delay in getting the test 
     results, the FBI took the position that the memo was only a 
     blind memorandum not intended to capture official witness 
     statements.\151\ That does not explain why Assistant Special 
     Agent in Charge William Lueckenhoff would attribute such 
     remarks to Mr. Curran if he had no factual basis to do so.
       Mr. Lueckenhoff's account is consistent with what actually 
     happened, but the FBI is no longer willing to stand by the 
     February 1999 memo. It is also possible that by February 26, 
     1999, after Dr. Lee had failed an FBI polygraph, Albuquerque 
     realized that its failure to obtain the charts in a timely 
     fashion (and the creation of the disastrous January 22 memo 
     clearing Dr. Lee on the W-88 matter) would eventually be 
     questioned. Saying that the FBI tried to get the charts but 
     had been denied by Mr. Curran would provide an excuse for the 
     Albuquerque division's abysmal performance in early 1999. 
     Because the FBI will not stand by the version of events in 
     the February 1999 memo, it is not possible to know what 
     really happened. Instead, the FBI's position has the effect--
     intended or not--of making it next to impossible to assign 
     responsibility for giving Dr. Lee more than a month to regain 
     access to his computer and his office, enabling him to delete 
     the incriminating evidence from his computer and destroy the 
     now-missing tapes.
       The FBI deserves substantial criticism for its handling of 
     this investigation, but the record should be set straight on 
     the result of the December 23, 1998 polygraph. On this 
     matter, the FBI was correct--Dr. Lee did not pass the 
     polygraph test.
       One of the earliest and most sustained attacks on the FBI's 
     reading of the December 1998 polygraph came from Dr. Lee's 
     defense team. After Dr. Lee was held without bail at the end 
     of 1999, defense attorney Mark Holscher claimed that Dr. 
     Lee's scores on the 1998 test had been `` `off the charts'' 
     in indicating truthfulness.'' \152\ It is a common defense 
     tactic to take evidence that might be harmful to the 
     defendant's position and deal with it up front, trying to put 
     a positive spin on it. Mr. Holscher's comments that Dr. Lee's 
     scores were off the charts in indicating truthfulness would 
     certainly fit into that pattern--taking on an issue that 
     might have to be dealt with if the case went to trial and 
     getting a positive interpretation planted in the public's 
     mind, to include the potential jury pool. As the negotiations 
     between the defense and the government went forward, Mr. 
     Holscher continued to press the polygraph issue, claiming 
     that Dr. Lee had passed the only test that had been properly 
     administered, and suggesting that the FBI was wrong to claim 
     that Dr. Lee had failed either exam. Mr. Holscher's 
     statements on the polygraph are exactly what one would expect 
     a defense lawyer to do, but they have created the incorrect 
     impression that the Wackenhut examiners were right and the 
     FBI was wrong.
       Mr. Holscher and Dr. Lee's supporters got help on this 
     score from a story by CBS reporter Sharyl Attkisson. The 
     February 2000 news report, titled ``Wen Ho Lee's Problematic 
     Polygraph,'' claimed that ``three experts gave the nuclear 
     scientist passing scores but the FBI later reversed the 
     findings. CBS investigation fuels argument that he was a 
     scapegoat.'' \153\
       Ms. Attkisson asked precisely the right question, ``. . . 
     how could the exact same charts be legitimately interpreted 
     as `passing' and also `failing?' '' \154\ To answer this 
     question, CBS reached out to Richard Keifer, who was then the 
     chairman of the American Polygraph Association. Mr. Keifer 
     was also a former FBI agent who had run the FBI's polygraph 
     program. The CBS report continues:
       ``Keifer says, ``There are never enough variables to cause 
     one person to say (a polygraph subject is) deceptive, and one 
     to say he's non-deceptive . . . there should never be that 
     kind of discrepancy on the evaluation of the same chart.''
       ``As to how it happened in the Wen Ho Lee case, Keifer 
     thinks, ``then somebody is making an error.''
       ``We asked Keifer to look at Lee's polygraph scores. He 
     said the scores are ``crystal clear.'' In fact, Keifer says, 
     in all his years as a polygrapher, he had never been able to 
     score anyone so high on the non-deceptive scale. He was at a 
     loss to find any explanation for how the FBI could deem the 
     polygraph scores as ``failing.''
       . . . Since Lee was never charged with espionage (only 
     computer security violations), the content of the polygraph 
     may be unimportant to his case. But the fact that his scores 
     apparently morphed from passing to failing fuels the argument 
     of those who claim the government was looking for a 
     scapegoat--someone to blame for the alleged theft of masses 
     of American top secret nuclear weapons information by China--
     and that Lee conveniently filled that role.'' \155\
       The CBS report gave the clear impression that the Wackenhut 
     examiners were correct. Rather than take on the issue, the 
     FBI simply told CBS ``it would be `bad' to talk about Lee's 
     polygraph, and that the case [would] be handled in the 
     courts.'' \156\ The case never went to trial, and the FBI 
     never got the chance to explain its interpretation of the 
     exam. The result has been that there are lingering doubts as 
     to whether the polygraph is a reliable tool, and whether it 
     was misused by the FBI in the Wen Ho Lee case.
       When the case of FBI Special Agent Robert Hanssen broke in 
     February 2001, FBI Director Louis Freeh ordered, among other 
     things,

[[Page 27664]]

     an expanded use of the polygraph within the FBI for 
     counterintelligence purposes. The Judiciary Committee held a 
     hearing on the utility of polygraphs in law enforcement and 
     counterintelligence cases, and heard from a distinguished 
     panel with witnesses offering opinions on both sides of the 
     issue. With the matter of Wen Ho Lee's polygraph still 
     unresolved, two of the witnesses were asked to review the 
     results of the December 23, 1998 polygraph and answer a 
     series of questions that would address the same concern that 
     CBS had raised--how can the same charts be interpreted as 
     both passing and failing?
       Dr. Michael H. Capps, currently Deputy Director for 
     Developmental Programs at the Defense Security Service and 
     formerly head of DOD's Polygraph Institute, reviewed the 
     polygraph data and said that he could ``render no opinion 
     regarding whether or not deception is indicated. . . .'' 
     \157\ Mr. Capps went on to describe how he had evaluated the 
     exam with and without the aid of the John Hopkins algorithm, 
     which is designed to provide a statistical analysis using a 
     mathematical model to render a probability of deception. He 
     noted that ``there are what I believe to be substantial 
     differences in the scores my evaluation produced and those of 
     the Wackenhut examiner. . . . I cannot account for the 
     differences between my results and those of the Wackenhut 
     examiners.'' \158\
       In response to a direct question about how different 
     examiners could reach substantially different conclusions, 
     Mr. Capps said, ``One would expect two properly trained 
     examiners evaluating the same data to draw a similar, but not 
     necessarily identical conclusion. This was not the case when 
     comparing my evaluation with that of the Wackenhut examiner. 
     I cannot account for the differences.'' \159\
       One possible explanation for the differing opinions on the 
     polygraph is that the questions were improperly structured, 
     making the entire test invalid because the control questions 
     and the relevant questions were not sufficiently distinct to 
     permit an accurate differentiation of the responses to each. 
     When Dr. Capps was asked about the appropriateness of the 
     questions, he faulted two of the comparison questions used in 
     the exam and said ``these comparison questions were not 
     sufficiently distinct from the relevant questions so as to 
     generate a useful basis of comparison.'' \160\
       Mr. Richard Keifer was also asked to evaluate the December 
     23, 1998 exam in light of his comments to CBS. He provided a 
     detailed analysis and critique of the test and reported:
       ``My review of the polygraph examination of Wen Ho Lee 
     determined the results to be inconclusive. . . . It is my 
     opinion this examination was not set up, conducted and 
     reviewed using well-established procedures for counter-
     intelligence polygraph testing. This lack of experience in 
     Foreign Counter-Intelligence polygraph testing contributed to 
     an incorrect decision, an unacceptable delay in the decision 
     making process, and negated the potential of fully uncovering 
     the truth with a timely posttest interrogation.'' \161\
       Mr. Keifer further noted that ``I have reviewed these 
     charts at least a dozen times and have done so under every 
     favorable assumption I could make and I have never found this 
     examination to be non-deceptive.'' \162\
       When asked to evaluate the test itself, which was not a 
     standard set of questions but one that was created 
     specifically for the examination of Dr. Lee, Mr. Keifer said 
     that ``the fundamental problem with this examination was in 
     question formulation.'' He then took issue with both the 
     relevant questions and the control questions.\163\ This 
     finding is consistent with the concerns raised by Dr. Capps, 
     as well as by FBI examiners who noted that Dr. Lee appeared 
     to be reacting to all the questions, control and relevant. 
     The structure of the questions used in the test is important 
     because a polygraph is designed to measure differences 
     between a subject's responses to control questions, which 
     should generate little or no reaction, and the relevant 
     questions where a substantial response is meaningful. Control 
     questions that produce a reaction have the effect of 
     minimizing the differences between the reactions to control 
     questions and relevant questions, thereby rendering the test 
     less useful.
       Mr. Keifer also commented on his CBS appearance:
       ``I was quoted out of context and I felt it was deliberate. 
     I had numerous telephonic conversations with Attkisson prior 
     to the taped interview. She was fully briefed regarding 
     polygraph procedures. I clearly and fully explained to her 
     several times that the ``scores'' of the examiners were high 
     on the non-deceptive side, but that subsequent testing and 
     admissions indicated Lee was in fact deceptive. During the 
     course of our conversations she suggested cover up and 
     misconduct of various officials in the matter. Unfortunately, 
     during the taped interview she asked only about the 
     ``scores'' and did not provide an opportunity for me to 
     clarify. In my opinion this was deliberate, and the piece was 
     manipulated to suggest wrongdoing by the government. Once I 
     saw the piece, I called officials at the Energy Department 
     and the FBI to clarify the matter.'' \164\
       The subcommittee's review of the matter shows that Dr. Lee 
     definitely did not pass the December 23, 1998 exam. The best 
     that anyone other than the initial examiners has been able to 
     justify is an ``inconclusive'' or ``no opinion'' rating. It 
     is important that no one has been able to substantiate the 
     ``no deception indicated'' finding because any other result 
     even a ``no opinion''--would have put the investigation on a 
     completely different track. Instead, the government quit 
     looking at Dr. Lee at the precise moment when it should have 
     been looking most intently at his activities.
       The Consequences of DOE's Interference in the Investigation
       Ordinarily, the decision to polygraph an individual or to 
     remove his access to the classified X-Division spaces would 
     have only limited ramifications. In the Wen Ho Lee case, 
     however, the incorrect handling of the polygraph issue was 
     one of the most consequential mistakes in the entire 
     investigation, likely costing the government an opportunity 
     to recover the tapes that ultimately led to Dr. Lee's 
     indictment and conviction, and creating much angst about the 
     fate of the nuclear secrets on those tapes. In a June 28, 
     2001 letter, Assistant Attorney General Daniel J. Bryant 
     confirmed that ``Dr. Lee has told the debriefing team that on 
     December 23, 1998, the computer tapes at issue in the 
     indictment were in his X-Division office at the Los Alamos 
     National Laboratory.'' \165\
       In other words, the tapes containing the ``crown jewels'' 
     of American's nuclear secrets, that could ``change the global 
     strategic balance,'' were sitting in Dr. Lee's X-Division 
     office and could have been recovered by the government if the 
     DOE had not gone into the panic mode and put political 
     considerations ahead of national security concerns when it 
     became concerned about what the Cox Committee report would 
     say. The FBI, especially the Albuquerque SAC, bear equal 
     responsibility for this turn of events for allowing it to 
     happen.
       One of the most fundamental tenets of counterintelligence 
     work is that when you spook a suspect, you watch him. The 
     suspect's reaction to unexpected events, whether planned (as 
     when the FBI decides to confront a suspect in a hostile 
     interview) or driven by unanticipated events (like DOE's 
     decision to interview, polygraph and change Dr. Lee's 
     classified access for no reason that he would know about), is 
     a critical element of any counterintelligence investigation. 
     Success often depends on observing and correctly interpreting 
     that reaction. Even if the suspect does not show any apparent 
     reaction in the presence of investigators, it is imperative 
     that he be watched to see what he does when he thinks he 
     isn't being watched. People with problems react differently 
     than people who don't have anything to worry about. Failure 
     to maintain proper surveillance under these circumstances can 
     lead to the loss of the best opportunity to find out what is 
     really going on. In the Wen Ho Lee, it cost a lot more than 
     that.
       Dr. Lee was definitely spooked by the interview and 
     polygraph on December 23. According to an FBI chronology, the 
     polygraph was completed at 2:18 p.m. and he was told at about 
     5:00 p.m. that his access to secure areas of X-Division and 
     to both his secure and open X-Division computer accounts had 
     been suspended. At 9:36 p.m., Dr. Lee made four attempts to 
     enter the secure area of X-Division through a stairwell. At 
     9:39 p.m., he tried again through the south elevator.\166\ At 
     3:31 a.m. on Christmas Eve, Dr. Lee again tried to gain 
     access to the X-Division. Had the FBI maintained proper 
     surveillance, they would have known that Dr. Lee was making 
     these desperate attempts to get back into the X-Division. 
     Surely that would have been a clue that further investigation 
     was necessary. Had the case been handled properly, FBI or DOE 
     personnel could have done what Dr. Lee eventually did--just 
     walk into the X-Division and pick up the tapes. Instead of 
     destroying them, as Dr. Lee says he did, government officials 
     could have properly secured these tapes containing the crown 
     jewels of America's nuclear secrets.
       In a December 24 meeting, Dr. Lee was told ``that he was 
     being transferred from X-Division to T-Division for thirty 
     days to allow time for the FBI to complete their inquiry.'' 
     \167\ If there had ever been any doubt in his mind as to 
     whether he was under an FBI investigation, this comment from 
     DOE removed that doubt. His conduct over the next few days 
     shows clearly that he was worried about the government's 
     sudden interest in him and the fact that his access to the X-
     Division had been removed. All told, Dr. Lee tried to get 
     back into his X-Division office almost twenty times between 
     the December 23 polygraph and the February 10 exam. Had the 
     FBI and DOE been watching, they might have wondered why Dr. 
     Lee wanted to get back into the X-Division so desperately, 
     and they might have gone there to look.
       It should be noted that not all of the blame for the FBI's 
     lack of interest in Dr. Lee's conduct after the polygraph can 
     be placed on the incorrect interpretation of the polygraph 
     results. Even if one takes the position that the FBI thought 
     that Dr. Lee had passed the polygraph, there is no excuse for 
     completely dropping an investigation solely on the basis of a 
     passed polygraph, especially when DOE and the case agents 
     were told that during

[[Page 27665]]

     the pre-polygraph interview Dr. Lee had admitted foreign 
     contact that he had not previously reported. The FBI should 
     have continued the investigation on the basis of that 
     revelation, regardless of the polygraph exam. A review of the 
     transcript from the March 7, 1999 interview of Dr. Lee shows 
     that the FBI focused very heavily on that unreported contact. 
     If it was worth investigating in March, it should have been 
     worth investigating the previous December.
       DOE's answer as to why it failed to monitor Dr. Lee after 
     the December 23, 1998 polygraph is both baffling and 
     informative. DOE's Ed Curran said that ``since the FBI was 
     conducting the investigation of Dr. Lee, it was responsible 
     for determining the level of monitoring necessary.'' \168\ 
     All available evidence indicates that the impetus for the 
     polygraph clearly came from within DOE, and that the FBI 
     agreed to this at the insistence of DOE, yet DOE washed its 
     hands of any responsibility for determining whether the 
     polygraph provoked a response from Dr. Lee. Consider also 
     that the catalog of Dr. Lee's attempts to get back into the 
     X-Division was culled from information under DOE's control, 
     information that the FBI did not have access to unless the 
     DOE gave it to them. Under these circumstances, it is not 
     surprising that Dr. Lee's attempts to get back into the X-
     Division almost immediately after his access was pulled went 
     undetected until much later. The FBI says that it did not 
     learn of Dr. Lee's attempts to reenter the X-Division until 
     March 13, 2000.\169\
       The almost complete breakdown in the surveillance of Dr. 
     Lee had severe consequences. As the FBI later learned, 
     ``within one hour of reactivation [of his computer account], 
     he immediately deleted three files, including one which was 
     named after the graduate student who had worked for him in 
     1997.'' \170\ In late January, he began erasing the 
     classified files from the unsecure area of the computer. 
     After he was interviewed by the FBI on January 17, Dr. Lee 
     ``began a sequence of massive file deletions . . .'' \171\ He 
     even called the help desk at the Los Alamos computer center 
     to get instructions for deleting files. After he was 
     interviewed and polygraphed again on February 10, within two 
     hours of the time he was told he had failed the exam, he 
     deleted even more files. All told, Dr. Lee deleted files on 
     January 20th, February 9th, 10th, 11th, 12th, and 17th. When 
     he called the help desk on January 22nd, his question 
     indicated that he did not know that the ``delay'' function of 
     the computer he was using would keep deleted files in the 
     directory for some period of time. He asked why, when he 
     deleted files, were the ones in parentheses not going away, 
     and asked how to make them go away immediately. He also 
     asked, on February 16, how to replace an entire file on a 
     tape.\172\
       Thus, the report that Dr. Lee had passed the December 23 
     polygraph gave Dr. Lee precious time to delete and secrete 
     information. The significance of Dr. Lee's file deletions and 
     the unreasonable delays in carrying out the investigation 
     that should have detected and prevented them should not be 
     underestimated. As FBI Agent Robert Messemer has testified, 
     the FBI came very close, ``within literally days, of having 
     lost that material.'' \173\ The FBI was almost unable to 
     prove that Dr. Lee downloaded classified files. If the 
     material had been overwritten after it was deleted, ``that 
     deletion by Dr. Lee [would] have kept that forever from this 
     investigation.'' In this context, the repeated delays, the 
     lack of coordination between the FBI and the Department of 
     Energy, and later between the FBI and the Department of 
     Justice, are much more serious.
     February 10, 1999 to March 8, 1999
       On February 10, 1999, Wen Ho Lee was again given a 
     polygraph examination, this time by the FBI. During this 
     second test, which Lee failed, he was asked: ``Have you ever 
     given any of [a particular type of classified computer code 
     related to nuclear weapons testing] to any unauthorized 
     person?'' and ``Have you ever passed W-88 information to any 
     unauthorized person?'' \174\ It should be noted that the 1997 
     FISA request mentioned that the PRC was using certain 
     computational codes, which were later identified as something 
     Lee had unique access to. \175\ Moreover, the computer code 
     information had been developed independently of the DOE 
     Administrative Inquiry which was subsequently questioned by 
     FBI and DOJ officials.
       After this second failed polygraph, there should have been 
     no doubt that Dr. Lee was aware he was a suspect in an 
     espionage investigation, and it is inconceivable that neither 
     the FBI nor DOE personnel took the rudimentary steps of 
     checking to see if he was engaging in any unusual computer 
     activity. Again, this is not hindsight. The classified 
     information to which Dr. Lee had access, and which he had 
     been asked about in the polygraph, was located on the Los 
     Alamos computer system. The failure of DOE and FBI officials 
     to promptly find out what was happening with Dr. Lee's 
     computer after he was deceptive on the code-related polygraph 
     question is inexplicable. As noted above, this failure 
     afforded Dr. Lee yet another opportunity to erase files from 
     both the unsecure system and the unauthorized tapes he had 
     made.
       As should have been expected, Dr. Lee used the time 
     afforded him by the delays to delete the classified 
     information he had placed on the unclassified system, and to 
     retrieve and dispose of the now-missing tapes. According to 
     press reports, Dr. Lee was allowed to return to the X-
     Division in January 1999 by an unwitting security office. On 
     other occasions, he walked in behind division employees. In 
     fact, he apparently managed to slip in though an open door 
     just hours after he was barred from X-Division.\176\ He also 
     approached two other T-Division employees with a request to 
     use their tape drive to delete classified data from two tapes 
     (he no longer had access to the one that had been installed 
     in his X-Division computer since he had been moved from that 
     division in December 1998).
       Nearly three weeks after the polygraph failure, the FBI 
     finally asked for and received permission to search Lee's 
     office and his office computer, whereupon they began to 
     discover evidence of his unauthorized and unlawful computer 
     activities. Even so, the FBI did not immediately move to 
     request a search warrant. The three week delay, from February 
     10 until the first week of March, is inexplicable.
       The long hiatus in moving the case forward seems to have 
     been broken primarily by the impending release of a story on 
     the W-88 case by the New York Times, after which the case was 
     once again moved from the national security track onto the 
     political track. Upon learning of the New York Times story, 
     government officials asked that it be delayed for several 
     weeks, ``saying they were preparing to confront their 
     suspect.'' \177\ It is almost incomprehensible that the FBI 
     was still not ready, in March 1999, to interview Dr. Lee. The 
     same argument had been made in December 1998 when the DOE 
     wanted to polygraph Dr. Lee, so there is absolutely no reason 
     that the necessary preparations could not have been made in 
     the interim.
       The reporters did not know Dr. Lee's identity, but the FBI 
     said they worried that he might recognize himself from 
     details in the article as if he was not already aware that 
     the FBI was investigating him after having been polygraphed 
     and having his access to classified information suspended 
     since December, having been interviewed by the FBI in 
     January, having been asked to take another polygraph in 
     February.
       The FBI interviewed Dr. Lee on March 5, and the New York 
     Times published its story the next day, ``China Stole Nuclear 
     secrets for Bombs, U.S. Aides Say.'' Prompted to move by the 
     breaking story, the FBI interviewed Dr. Lee again on Sunday, 
     March 7. It was during this interview that one of the case 
     agents, at the suggestion of Albuquerque SAC Kitchen, asked 
     Dr. Lee if he had heard of the Julius and Ethel Rosenberg, 
     the couple who had been executed for providing nuclear 
     secrets to the Soviet Union. The reference to the Rosenberg 
     case, after threats that Dr. Lee would lose his job, be 
     handcuffed and thrown in jail, was over the top, creating the 
     inference that the FBI was trying to scare Dr. Lee into a 
     confession. According to a transcript of the interview:
       ``Do you know who the Rosenbergs are?'' [the agent] asked.
       ``I heard of them, yeah, I heard them mention,'' Dr. Lee 
     said.
       ``The Rosenbergs are the only people that never cooperated 
     with the federal government in an espionage case,'' she said. 
     ``You know what happened to them? They electrocuted them, Wen 
     Ho.''\178\
       FBI Director Freeh later acknowledged that this reference 
     to the Rosenbergs was inappropriate, but he denied that the 
     FBI ever attempted to coerce a confession from Dr. Lee.\179\
       One day after the FBI's confrontational interview, Dr. Lee 
     was dismissed from Los Alamos. Former LANL 
     Counterintelligence chief Robert Vrooman, has suggested that 
     the leaking of Dr. Lee's name to the press had an adverse 
     impact not only on Dr. Lee but also on the integrity of the 
     investigation into how the Chinese obtained U.S. nuclear 
     secrets,\180\ but the investigation was already in deep 
     trouble before Dr. Lee's name became public.
     Reopening the W-88 Investigation
       Before turning to the criminal case against Dr. Lee, it is 
     appropriate to make a comment about the status of the 
     investigation into the loss of the W-88 information, the 
     matter at the heart of the DOE's AI and the FBI's 
     investigation from 1996 to 1999. The September 1999 decision 
     by the FBI and the DOJ to expand the investigation of 
     suspected Chinese nuclear espionage \181\ is puzzling, 
     primarily because it should have happened long ago.
       In an October 1, 1999 letter, Attorney General Reno and FBI 
     Director Freeh explained the rationale for reopening the 
     case:
       ``Our decision to take this action in regard to the 
     investigation into the compromise of U.S. nuclear technology 
     is the result of two separate inquiries. First, there were 
     investigative concerns raised by the FBI Albuquerque field 
     office that began to develop in November, 1998, regarding 
     deficiencies in the DOE Administrative Inquiry. Second, after 
     questions were raised by Senate Governmental Affairs 
     Committee staff, we started to re-examine flawed analysis in 
     the conclusions drawn in the DOE Administrative 
     Inquiry.''\182\

[[Page 27666]]

       This letter is significant on several fronts. First, it 
     represents the beginning of a top level assault within DOJ 
     and FBI on the AI as an explanation for why the W-88 
     investigation had been bungled. The reference to concerns in 
     the Albuquerque office in November 1998 is misleading all--of 
     the documents coming out of Albuquerque in 1998 were focused 
     on getting FISA coverage on Dr. Lee. The documents did 
     contain acknowledgment that somewhere in the neighborhood of 
     250 personnel per year had access to the W-88 information, 
     which was more than had been previously believed, but the 
     case agent nevertheless pressed for a FISA. It is simply not 
     accurate to portray the November 1998 documents as raising 
     questions about the AI as a basis for investigating Dr. Lee.
       Subsequent documents from Albuquerque did raise concerns 
     about the AI. One of the worst in this regard is the January 
     22, 1999 memorandum which essentially clears Dr. Lee. It 
     says:
       ``A review of the pertinent questions asked in the 
     [December 23, 1998] polygraph exam showed that Lee did not 
     pass classified information to a foreign intelligence 
     service. The polygraph charts and other documentation 
     relating to the examination were made available to FBI AQ by 
     DOE on 01/22/1999 . . .''\183\
       In a section titled ``SAC ANALYSIS'' David Kitchen wrote 
     that ``based on FBI AQ's investigation it does not appear 
     that
       Lee is the individual responsible for passing the W-88 
     information.'' At that point, FBI-AQ had done remarkably 
     little investigation. The lead case agent had requested a 
     FISA in November 1998, but had been overruled. By December, 
     the DOE jumped into the investigation in response to the Cox 
     Committee hearings and gave Dr. Lee a polygraph. Based on 
     nothing more than a supposedly passed polygraph--the results 
     of which Albuquerque received on the same day it was writing 
     the memo and could not have--analyzed and an interview on 
     January 17 (during which, according to Director Freeh, Dr. 
     Lee provided new information about his relationships with 
     Chinese scientists), the SAC Kitchen was prepared to shut 
     down the investigation. This is nothing short of outrageous.
       Was it mere coincidence that in his ``Dr. Lee's not guilty 
     memo'' Kitchen took aim at the AI, which contained the very 
     allegations that were the subject of testimony before the Cox 
     Committee? The January 22, 1999 memo does not even address 
     the allegations, from 1994, that Dr. Lee had helped the 
     Chinese with codes and software, yet Mr. Kitchen is prepared 
     to shut down the investigation. Any comments from Mr. Kitchen 
     regarding flaws in the Administrative Inquiry must be viewed 
     in the context of the Albuquerque division's bungling of the 
     Kindred Spirit investigation.
       Another significant result of the decision to reopen the W-
     88 investigation, and to do so based on the supposedly faulty 
     analysis in the AI, has been to put FBI Assistant Director 
     Neil Gallagher on the spot based on his testimony to 
     Congress. In a November 10, 1999 letter on the question of 
     why the investigation was reopened, he acknowledged that when 
     discussing the DOE's Administrative Inquiry (AI) during his 
     June 9, 1999, testimony before the Governmental Affairs 
     Committee,\185\ he stated that he ``had full credibility in 
     the report,'' had ``found nothing in DOE's AI, nor the 
     conclusions drawn from it to be erroneous,'' and stated there 
     is a ``compelling case made in the AI to warrant focusing on 
     Los Alamos.'' \186\
       As a result of further inquiry, however, Mr. Gallagher now 
     has reason to question the conclusions of the AI. He cites an 
     August 20, 1999, interview by FBI officials of one of the 
     scientists who participated in the technical portion of the 
     AI, in which the scientist ``stated that he had expressed a 
     dissenting opinion with respect to the technical aspects of 
     the AI,'' and points out that the statement of this scientist 
     is ``in direct conflict with the AI submitted to the FBI 
     because the AI does not reflect any dissension by the `DOE 
     Nuclear Weapons Experts.' '' \187\
       A General Accounting Office investigation of Mr. 
     Gallagher's comments regarding the AI later concluded that 
     his testimony had been inaccurate and misleading because he 
     had ample opportunity to know and should have known that 
     documents created by the Albuquerque office of the FBI raised 
     questions about the FBI in late 1998 and early 1999.\188\
       In his November 1999 letter, Mr. Gallagher could also have 
     mentioned the draft of the July 9, 1999 document prepared by 
     the Albuquerque division, ``Changed: FBI-DOE National 
     Laboratory Assessment. . . .'' Had he done so, he would have 
     reported that:
       ``Albuquerque is of the firm opinion that the AI should 
     have been used only for investigative assistance during the 
     initial portion of the 'Kindred Spirit' inquiry, and that a 
     more in-depth and comprehensive analysis of the relevant 
     issues/facts should have been continued through the course of 
     the investigation.'' \189\
       A subsequent draft of the same document lists half a dozen 
     reasons why the AI was flawed. The document says that the 
     espionage could have been done by a network of sources, the 
     travel analysis was incomplete, the strategic opinions were 
     preliminary, there had been a disagreement over the extent of 
     the W-88 information compromise, the Lees had been doing 
     things at the behest of the Government, and finally, ``. . . 
     the AI was extremely confusing and self contradictory in 
     reporting its conclusions . . .'' \190\
       This is a classic case of too little too late, and it 
     raises questions as to whether the FBI's assault on the AI 
     was intended to get an investigation back on track or to 
     spread the blame for a bungled investigation.
       The delay by DOJ and the FBI until September 1999 is 
     perplexing since five governmental reports had concluded, 
     with varying degrees of specificity, that the losses of 
     classified information extended beyond W-88 design 
     information and beyond Los Alamos:
       (1) the classified version of the Cox Report (January 
     1999);
       (2) the April 21, 1999 damage assessment by Mr. Robert 
     Walpole, the National Intelligence Officer for Strategic and 
     Nuclear Programs; \191\
       (3) the unclassified version of the Cox Committee Report 
     (May 25, 1999);
       (4) the Special Report of the President's Foreign 
     Intelligence Advisory Board (June 1999); and
       (5) the Special Statement by Senators Thompson and 
     Lieberman (August 5, 1999)
       All of these reports gave FBI and DOJ ample evidence that 
     further investigation was necessary. For example, the Cox 
     Committee report states flatly that ``the PRC stole 
     classified information on every currently deployed U.S. 
     inter-continental ballistic missile (ICBM) and submarine-
     launched ballistic missile (SLBM).\192\ Tellingly, the Cox 
     Committee notes that ``a Department of Energy investigation 
     of the loss of technical information about the other five 
     U.S. thermonuclear warheads had not begun as of January 3, 
     1999 . . .'' and that ``the FBI had not yet initiated an 
     investigation'' as of that date.\193\ Thus, the failure to 
     reopen the investigation into the loss of W-88 design 
     information much sooner, or to even initiate an investigation 
     of the other losses, simply continued that pattern of errors.
     The Prosecution of Dr. Lee
       Two weeks \194\ after Dr. Lee was fired from LANL, 
     investigators discovered a notebook in his X-Division office 
     containing a one-page computer-generated document showing the 
     files in the ``kf1'' directory Dr. Lee had created on the 
     unclassified portion of common file system.\195\ When it was 
     discovered that many of these files were highly classified, 
     the FBI began a criminal investigation of Dr. Lee which led 
     to his indictment, arrest and pretrial incarceration 
     beginning on December 10, 1999.
       Almost from the moment Dr. Lee was taken into custody, his 
     attorneys protested the strict conditions of confinement and 
     worked to secure his release under some combination of home 
     detention and electronic monitoring. Judge James Parker, who 
     presided over much of the case, repeatedly urged the 
     government to relax the conditions of confinement, but the 
     government steadfastly argued against releasing Dr. Lee, even 
     under strict monitoring, until September 13, 2000. On that 
     date, the government entered into a plea agreement with Dr. 
     Lee under which he would plead guilty to a single felony 
     count of mishandling government secrets and go free 
     immediately in exchange for a promise to explain what 
     happened to the missing tapes.
       FBI Director Louis Freeh issued a statement on September 
     13, 2000, explaining the government's decision to reach the 
     plea agreement. In relevant part, the statement said:
       ``In this case, as has often happened in the past, national 
     security and criminal justice needs intersect. In some cases, 
     prosecution must be foregone in favor of national security 
     interests. In this case, both are served.
       ``As the government indicated previously, the indictment 
     followed an extensive effort to locate any evidence that the 
     missing tapes were in fact destroyed, and repeated requests 
     to Dr. Lee for specific information and proof establishing 
     what did or did not happen to the nuclear weapons data on 
     these tapes. None was forthcoming. The indictment followed 
     substantial evidence that the tapes were clandestinely made 
     and removed from Los Alamos but no evidence or assistance 
     that resolved the missing tape dilemma. . . .
       ``The obligation that rests on the government is first and 
     foremost to determine where the classified nuclear weapons 
     information went and if it was given to others or destroyed. 
     This simple agreement, in the end, provides the opportunity 
     of getting this information where otherwise none may exist.'' 
     \196\
       But the sudden reversal of the government's position 
     flabbergasted Judge Parker. During the hearing to finalize 
     the plea agreement, he commented from the bench:
       ``I would like to know why the government argued so 
     vehemently that Dr. Lee's release earlier would have been an 
     extreme danger to the government when at this time he, under 
     the agreement, will be released without any restrictions.'' 
     \197\
       At a later point in the hearing, the judge continued:
       ``What I believe remains unanswered is the question: What 
     was the government's motive

[[Page 27667]]

     in insisting on your being jailed pretrial under 
     extraordinarily onerous conditions of confinement until 
     today, when the Executive Branch agrees that you may be set 
     free essentially unrestricted? This makes no sense to me.'' 
     \198\
       The judge was not alone in being puzzled by the 
     government's handling of the criminal phase of the case. It 
     is difficult to reconcile the lack of forceful action between 
     the time the government discovered, in June 1999 at the 
     latest, that the tapes had been created, with its December 
     1999 claims that the only way to safeguard the secrets on the 
     tapes was to hold Dr. Lee virtually incommunicado. As will be 
     discussed later in this report, the information on the tapes 
     was extremely sensitive, but it does not necessarily follow 
     that the pretrial confinement conditions the government 
     demanded represent the only way to protect that information. 
     If it was the government's judgement that protecting the 
     information required extraordinary restrictions on Dr. Lee, 
     then why not act as soon as the existence of the tapes was 
     known? \199\ Moreover, if the government was willing, in 
     September 2000, to accept Dr. Lee's sworn statement as to the 
     disposition of the tapes (to be verified by polygraph 
     examination), why could it not have accepted a very similar 
     offer from Mr. Holscher on December 10, 1999, the date of Dr. 
     Lee's arrest?
       The remainder of this report addresses the government's 
     handling of: (1) the investigation of Dr. Lee from March-
     December 1999, (2) the pretrial confinement of Dr. Lee, and 
     (3) the case against Dr. Lee. The subcommittee's 
     investigation supports the following conclusions regarding 
     these matters: (1) the information on the tapes was highly 
     sensitive and, if anything, the government should have acted 
     sooner than it did to find out what happened to them, (2) the 
     government overreached in demanding such onerous conditions 
     of confinement prior to trial, and (3) the plea agreement was 
     an acceptable resolution to the case, one that very likely 
     could have been had much sooner if the government had not 
     backed itself into a corner with its aggressive tactics after 
     December 1999.
       The March-December 1999 Investigation \200\
       One day after Dr. Lee was fired, the Albuquerque Division 
     of the FBI (FBI-AQ) met with the U.S. Attorney for the 
     District of New Mexico, Mr. John J. Kelly. The following day, 
     Dr. Lee's lawyer, Mr. Mark Holscher, wrote to the government 
     offering to surrender Dr. Lee's passport and asking whether 
     Dr. Lee was a target or a subject of investigation. In this 
     letter, Mr. Holscher also advised the government that his 
     client intended to travel to Los Angeles for several 
     days.\201\
       On March 11, the FBI learned that another LANL employee had 
     been asked by Dr. Lee to retrieve a box of documents from his 
     X-Division office.\202\
       After a telephone conversation between Mr. Kelly and Mr. 
     Holscher on March 15, Mr. Holscher wrote on March 19 asking 
     that the investigation of Dr. Lee be terminated, and 
     requesting security clearances so that he could counsel Lee. 
     In this letter, Mr. Holscher also noted that at least six 
     newspapers had carried stories quoting unnamed FBI officials 
     as saying that there was not enough information to indict, 
     much less convict, Dr. Lee. Mr. Holscher described this 
     information as Brady material, and said the government had no 
     evidence that Dr. Lee had any intent to injure the United 
     States, as would be required under the espionage 
     statutes.\203\
       On March 23, investigators discovered the ``kf1'' file 
     listing, and reached a tentative conclusion that classified 
     files had been maintained on the unclassified portion of the 
     LANL computer system. That same day, Mr. Holscher wrote to 
     Mr. Kelly protesting government leaks to the press about the 
     case, including statements that Dr. Lee had failed to 
     cooperate with the government and had failed a polygraph 
     exam. Mr. Holscher pointed out that 28 CFR 50.2(b)(2) 
     prohibits DOJ personnel from disclosing any information that 
     ``may reasonably be expected to influence the outcome of a 
     pending or future trial.'' \205\
       Mr. Holscher also sent a letter to FBI Director Louis Freeh 
     on March 23, demanding an investigation into case-related 
     leaks. In a clear reference to Dr. Lee's assistance to the 
     government in the 1980s, Mr. Holscher told Director Freeh 
     that he had ``refrained from explaining to the press the true 
     facts concerning the Lee's 1986 visit to China and follow-up 
     activities that are known to the FBI,'' and requested that 
     Director Freeh release a statement showing that Dr. Lee had 
     cooperated with the government.\206\
       On March 26, a LANL scientist assisting with the 
     investigation told the FBI that the ``kf1'' directory had 
     been in the open part of the common file system (CFS), that 
     the file names in the directory suggested they were 
     classified, and that the files had been deleted from the CFS 
     on February 11, 1999. The scientist also told the FBI that 
     Dr. Lee had typed up and stored in a CFS directory letters 
     seeking employment overseas.
       After a telephone conversation between the two men, Mark 
     Holscher wrote to Robert Gorence on March 29, saying that he 
     understood from the conversation that Dr. Lee was the subject 
     of a grand jury investigation rather than a target.\207\ The 
     difference is significant because being the target of an 
     investigation is more serious than merely being the subject 
     of one.
       On March 30, a draft rule 41 search warrant affidavit for 
     Dr. Lee's home was presented to the U.S. Attorney's Office 
     (USAO) in New Mexico. From April 1-8, personnel in Washington 
     and the USAO worked on an affidavit for a search warrant.
       During this time the FBI was pursuing a dual track, and a 
     key meeting took place on April 7 between the FBI and 
     representatives of the Office of Intelligence Policy and 
     Review. Rather than moving quickly to discover the extent of 
     the potential damage, FBI and DOJ officials continued to 
     wrangle over whether the matter should be handled under FISA 
     or was ``way too criminal'' for that.\208\ OIPR attorneys 
     raised their old concerns about the currency and sufficiency 
     of the evidence against Lee, as well as new concerns about 
     the appearance of improperly using FISA for criminal purposes 
     and the prospect of conducting an unprecedented overt FISA 
     search.\209\ FBI officials indicated that FBI Director Freeh 
     was ``prepared formally to supply the necessary 
     certifications that this search met the requirements of the 
     FISA statute--that is, that it was being sought for purposes 
     of intelligence collection (e.g., to learn about Lee's 
     alleged contacts with Chinese intelligence).'' \210\ The 
     draft FISA application the FBI prepared was never formally 
     presented to OIPR, in large part because the criminal search 
     warrant was issued.
       On April 9, Attorney General Reno made the necessary 
     certification for using FISA derived material \211\ in a rule 
     41 search warrant, and Magistrate Judge William W. Deaton 
     issued the warrant later that same day. The following day, 
     April 10, Dr. Lee's home was searched, and he provided 
     written consent to search his automobiles.
       In a letter to Mark Holscher dated April 16, Mr. Kelly and 
     Mr. Gorence made one demand and several requests. The two 
     prosecutors demanded the return of any classified material in 
     Dr. Lee's possession, and requested the names and addresses 
     of the individuals with whom the Lees stayed during their 
     March 9 to April 7 trip to Los Angeles. The prosecutors also 
     told Mr. Holscher of their intent to issue a grand jury 
     subpoena to Mrs. Lee regarding the 1986 and 1988 trips to the 
     PRC, and any actions related to those trips.\212\
       On April 18, LANL provided two computer reports, one which 
     outlined the deletion of files by Dr. Lee from his open CFS 
     directories in January and February, and another describing 
     the earlier transfer of these files from the closed to open 
     CFS. A week later, according to an FBI chronology, a 
     technical expert assisting the FBI in the investigation said 
     that the information Dr. Lee had downloaded would not be 
     sufficient for a foreign power to build or duplicate U.S. 
     weapons, but that ``the files would significantly enhance 
     their program and save them years of research and testing.'' 
     \213\
       On April 30, a LANL computer security expert informed the 
     FBI of two incidents involving Dr. Lee which showed up in a 
     review of the Network Anomaly Detection and Intrusion 
     Recording system, one in 1993 and another in 1997.\214\ That 
     Dr. Lee was flagged by this system in 1997, while he was 
     under investigation, but the FBI only learned about it in 
     April 1999 is simply inexplicable.
       On May 5, the FBI was informed by a LANL scientist that a 
     notebook recovered during the search of Dr. Lee's residence 
     contained directions for transferring classified files to a 
     Sun Sparc computer workstation and from there onto portable 
     DC6150 computer tape cartridges. On May 9, a LANL computer 
     official provided a report on how the file transfers had been 
     accomplished.
       In response to suggestions from counsel for Mrs. Lee that 
     she might claim marital communication privilege, spousal 
     privilege or both, Mr. Kelly and another prosecutor, Ms. 
     Paula Burnett, wrote to Mr. Brian Sun on May 5. The 
     prosecutors laid out the areas of proposed questioning, to 
     include: (1) biographical information on Mrs. Lee, her 
     husband and their children; (2) contacts the Lees have with 
     extended family, friends or business contacts in the PRC and 
     Taiwan; (3) cooperation with the FBI in the 1986-1988 period; 
     and (4) her knowledge of Dr. Lee's work and any job related 
     activity that he did at home. Focusing on the Mrs. Lee's 
     assistance to the FBI, the prosecutors explained that:
       ``Not only would we ask her the details of what she was 
     asked to do and what she did during the time of cooperation 
     with the FBI, but also the extent to which her husband was 
     aware of those activities and participated in them.'' \215\
       The next day, Mr. Sun responded in writing, saying that he 
     had spoken to Mr. Holscher and felt it was appropriate for 
     Mrs. Lee to assert the marital communications privilege and 
     the spousal privilege. He said, however, that he might be 
     willing to make an attorney proffer.\216\
       On May 11, FBI-AQ prepared a Letterhead Memorandum on the 
     Lee case, which was followed on May 16 by a written status 
     report from USA Kelly to Deputy Attorney General Eric Holder 
     and Attorney General Reno.
       The next day, May 17, a LANL computer official provided a 
     report on potential movement of files on Dr. Lee's CFS 
     directories from LANL computers to outside computers.

[[Page 27668]]

       The U.S. Attorney presented a prosecution memorandum on May 
     27, and requested guidance form DOJ because ``the Atomic 
     Energy Act violation had never been prosecuted before.'' He 
     anticipated difficulty showing Lee intended to harm the U.S. 
     as a necessary element of the crime.\217\ The FBI, USAO, and 
     Criminal Division met in Washington, DC, on the same day the 
     prosecution memorandum was presented, to discuss the case, 
     and two days later FBI-AQ provided a written prosecutive 
     report to USAO.
       Mr. Holscher wrote on June 9, complaining that the 
     government had not yet advised him what it wanted to discuss 
     with Lee and had not sought to schedule a meeting. Six days 
     later, Mr. Kelly responded that the government was 
     considering serious charges, but ruled out espionage charges 
     under 18 USC 794 (the most serious espionage charge), and 
     suggested a meeting for June 21. In the letter, Mr. Kelly 
     said that he had postponed a previously scheduled meeting so 
     the government could complete its investigation. He further 
     explained to Mr. Holscher:
       ``I did so not to inconvenience your client, but rather to 
     insure that the interview would take place toward the 
     conclusion of the investigation at a time when I would be 
     able to provide meaningful information about potential 
     charges and, in turn, your client would be motivated to 
     provide a more complete explanation for his potentially 
     criminal conduct. As I stated in our telephone conversation 
     last night, that time has now come.
       ``You should know that I will be making a charging decision 
     in this matter before the end of June and that the offense 
     conduct under consideration involves various actions by your 
     client over the last decade that collectively have 
     compromised some of our nation's most highly sensitive and 
     closely guarded nuclear secrets.'' \218\
       At the June 21 meeting, which was attended by USAO, FBI and 
     Criminal Division representatives, Dr. Lee's counsel asserted 
     that he had only downloaded unclassified data onto the 
     unsecure computer and then on to tapes. (When later 
     confronted with evidence that Dr. Lee had, in fact, 
     downloaded classified data onto portable tapes, counsel 
     claimed that if Dr. Lee had done so, any such tapes had been 
     destroyed.) The meeting was followed by a written status 
     report to the DAG and the AG the following day.
       In the interim, on June 15, the FBI learned that Dr. Lee 
     had asked a colleague to retrieve a box of materials that he 
     had left in his X-Division office when he had been 
     transferred to the T-Division. The FBI was told that the 
     colleague had retrieved the box for Dr. Lee, but had taken 
     the materials to LANL security, which had questions regarding 
     some of the contents of the box.\219\ The FBI chronology does 
     not mention when the colleague had retrieved the box or what 
     LANL security did about the contents. The absence of details 
     raises the inference that the now-missing tapes could have 
     been in the box, and LANL security may have passed them back 
     to Dr. Lee without knowing what was on them. The FBI has not 
     answered this question.
       During the first week of July 1999, Dr. Lee's lawyers made 
     written presentations to the Albuquerque USAO and the 
     Criminal Division in Washington, each of which was designed 
     to dissuade the government from taking action against Dr. 
     Lee.
       On July 15, a LANL scientist provided a report on the 
     creation of Tape N, which was downloaded directly to tape in 
     1997. It was also during July that the government learned 
     that one of the six tapes which had been recovered from Dr. 
     Lee's T-Division office contained a classified file, and that 
     two others contained deleted classified files. LANL computer 
     officials advised the government that one tape had been 
     cleansed of classified data in February 1999, on the unsecure 
     computer workstation belonging to a T-Division colleague of 
     Dr. Lee.
       Three days after a meeting in Washington between the USAO 
     and the Criminal Division, Mr. Holscher sent a letter to the 
     government explaining that Dr. Lee had not violated the 
     Atomic Energy Act of 1954. The letter was followed one day 
     later, on July 27, by a meeting in Washington between counsel 
     for Dr. Lee and the Criminal Division.
       Mr. Holscher wrote again on August 2, offering to make 
     additional factual submissions, which prompted a response 
     from Mr. Kelly on August 4, saying the government would 
     review anything Mr. Holscher submitted but wanted a complete 
     explanation from Dr. Lee himself. At the same time, Mr. Kelly 
     sent a letter to Eugene Habiger, Director of DOE's Office of 
     Security and Emergency Operations, seeking to include in a 
     proposed indictment of Dr. Lee information about Dr. Lee's 
     downloading activity.
       After an August 9 telephone conversation between counsel 
     for Dr. Lee and Richard Rossman, Chief of Staff of the 
     Criminal Division, Mr. Holscher wrote a letter on August 10 
     stating that Dr. Lee would not submit to any additional 
     interviews and offering further arguments why Dr. Lee had not 
     violated 18 USC 793.
       On August 16, Criminal Division Chief of Staff Rossman 
     wrote to counsel for Dr. Lee advising that the government had 
     not yet made a decision whether to charge Dr. Lee, and asking 
     for additional information (which had been discussed during 
     the July meeting) by August 30.
       Following a supplemental written presentation by Dr. Lee's 
     counsel on August 30, Mr. Kelly wrote to Mr. Holscher on 
     September 3 asking for information about the location and 
     custody of the tapes from the time of their creation until 
     the present.
       On September 8, representatives of the Criminal Division, 
     USAO, LANL and DOE met in Washington to discuss the handling 
     of classified information in the prosecution of Dr. Lee. All 
     of the DOE and LANL representatives concurred as to the 
     significance of the data at issue. By October 4, DOE had 
     prepared a draft classification guide governing issues 
     related to Dr. Lee's illicit computer activity and the 
     classified files involved.
       On October 14, the Senate Judiciary Committee approved a 
     resolution authorizing subpoenas relevant to the work of the 
     Department of Justice Oversight subcommittee, including the 
     Wen Ho Lee matter. (A second, broader resolution was 
     authorized on November 17.\220\)
       On October 27, Assistant Attorney General James Robinson, 
     Criminal Division, wrote a memo to USA Kelly recommending 
     that Dr. Lee be prosecuted under the Atomic Energy Act of 
     1954.
       On November 3, the Department of Justice Oversight 
     subcommittee held its first hearing on the Wen Ho Lee case. 
     Much of the testimony focused on the failure of the FBI to 
     properly investigate, from 1995 to 1998, the information it 
     had related to Dr. Lee potentially engaging in surreptitious 
     electronic communications.
       The Lee case was discussed at an National Security Council 
     meeting on November 11, with DOE, DOJ and LANL 
     representatives in attendance.
       On November 15, a LANL scientist wrote a ``Draft of Input 
     to Damage Assessment'' regarding the case, which was faxed to 
     USA Kelly on November 15. At the request of the NSC, the CIA 
     prepared a damage assessment regarding the material on the 
     missing tapes on November 24.
       The case was briefed at the White House on December 4. A 
     September 24, 2000 Washington Post article by Walter Pincus 
     and David A. Vise described the events leading up to and the 
     discussion at the December 4 meeting as follows:
       ``The decision to prosecute Lee was made at a meeting in 
     [Attorney General] Reno's conference room shortly before 
     Thanksgiving. Despite lingering question's about Lee's 
     motives, according to participants, there was unanimity among 
     the federal prosecutors from New Mexico and their superiors 
     in Washington that the government should bring a massive, 59-
     count indictment against Lee using the Atomic Energy Act. 
     Indeed, officials in Washington had decided to charge Lee 
     with intent to injure U.S. national security and (not ``or'') 
     to aid a foreign adversary.
       ``Crossing a final hurdle, Reno called a meeting of senior 
     national security officials in the White House Situation Room 
     on Dec. 4, 1999, to explain how much classified information 
     prosecutors were prepared to reveal in court. In addition to 
     Reno, Kelly, Freeh, and Richardson, those present included 
     national security adviser Samuel R. ``Sandy'' Berger, CIA 
     Director George J. Tenet and deputy defense secretary John J. 
     Hamre.
       ``Robert D. Walpole, the national intelligence officer for 
     strategic and nuclear programs, began the meeting with a 
     formal assessment that the loss of the data downloaded by Lee 
     would be a serious blow to national security
       ``The meeting ended after Reno offered her assurance that 
     prosecutors were prepared to drop the case immediately if the 
     judge were to grant a motion, sure to come from the defense, 
     that the data downloaded by Lee had to be introduced, in 
     full, in open court.'' \221\
       On December 7, the Department of Justice Oversight 
     subcommittee sent letters requesting testimony in a closed 
     hearing from nine FBI witnesses, including two of the case 
     agents, FBI General Counsel Larry Parkinson, Albuquerque 
     Special Agent in Charge David Kitchen, Assistant Director for 
     National Security Neil Gallagher, and other case supervisors 
     and managers. The hearing, scheduled for December 14, was to 
     explore the circumstances of the December 23, 1998 polygraph 
     and the relationship between the government and the Lees.
       On December 8, as required by statute, the Attorney General 
     sent letters to Energy Secretary Richardson and USA Kelly 
     approving charges against Dr. Lee under the Atomic Energy Act 
     of 1954. That same day, Mr. Kelly spoke to Mr. Holscher by 
     phone, telling him that indictment was imminent and asking 
     for information about the missing tapes. At some point in 
     late 1999, prior to the indictment, Mr. Kelly told Mr. 
     Holscher that the case might be resolved without an 
     indictment and advised Mr. Holscher to look at the latter 
     sections of 18 USC 793.
       Although Mr. Holscher faxed a letter at 8:24 a.m. (Pacific 
     Time) on December 10, offering to make Dr. Lee available for 
     a polygraph by a mutually agreeable polygrapher to verify 
     that Dr. Lee did not mishandle the tapes or provide them to a 
     third party, Dr. Lee was indicted and arrested later that 
     same day.
       Also on December 10, FBI Director Freeh wrote to request 
     that I ``delay hearings on any aspect of this investigation 
     until the

[[Page 27669]]

     conclusion of the current criminal proceedings resulting from 
     the indictment handed down today.'' \223\ In explaining why 
     it was necessary to delay subcommittee hearings, Director 
     Freeh said:
       ``In my view, the potential that your hearings could 
     inadvertently interfere with the prosecution is substantial. 
     Subcommittee hearings at this time risk impacting upon the 
     Government's ability to successfully prosecute Mr. Lee by 
     creating issues that may not presently exist. Moreover, it is 
     critical for our national security that we have every 
     opportunity to learn as much as we can from Wen Ho Lee in a 
     carefully controllable setting. Given the gravity of the 
     allegations and charges, and the potential opportunities that 
     could be lost by hearings, I respectfully ask that you not go 
     forward at this time. I hope you will agree that to do 
     otherwise poses a substantial risk not only to the 
     prosecution but to the Government's ultimate ability to 
     discover the full extent of the damage done.'' \224\
       When Director Freeh met with Senator Torricelli and me on 
     December 14, he made the same arguments. The subcommittee 
     agreed to withhold hearings until the case was resolved, 
     which occurred on September 13, 2000, with the acceptance of 
     the plea agreement.
       With the inexplicable exception of never seeking electronic 
     surveillance on Dr. Lee, the chronology presented here shows 
     a thorough and methodical investigation. The discovery that 
     Dr. Lee had created his own portable nuclear weapons data 
     library must, in large measure, be credited to the 
     extraordinary level of effort and skill on the part of the 
     investigators from the FBI and the DOE. In Senate testimony, 
     Director Freeh said that the investigation had required the 
     ``interview of over 1,000 witnesses, review of 20,000 pages 
     of documents in English and Chinese, and the forensic 
     examination of more than 1,000 gigabytes containing more than 
     one million computer files . . .'' \225\ Any assessment of 
     the investigation must acknowledge the vast amount of work 
     involved in discovering Dr. Lee's illegal computer activity 
     after he tried so diligently to erase any traces of what he 
     had done. In this regard, the government personnel should be 
     commended.
       There are, however, two areas for concern \226\ related to 
     the conduct of the March-December 1999 investigation. The 
     first is the delay from the time the existence of the tapes 
     was known, which occurred at the latest in June, and the time 
     Dr. Lee was indicted in December. The chronology provided by 
     the Department of Justice shows continuing activity on the 
     part of the government, and multiple contacts with Dr. Lee's 
     attorneys seeking information about the fate of the tapes, 
     but nothing commensurate with its subsequent declarations in 
     court that the only way to keep the information from falling 
     into the wrong hands, where it could change the global 
     strategic balance, was to hold Dr. Lee in very strict 
     pretrial confinement. In responding to a question about this 
     delay, Director Freeh testified, ``This was an extremely 
     complex investigation and prosecutive process. It could not 
     have been brought, in my view, fairly and accurately before 
     it was.'' \227\
       The second great concern is that the FBI did not seek 
     electronic surveillance of Dr. Lee during this period.\228\ 
     In view of the government's later pleadings that Dr. Lee 
     could, in effect, upset the global strategic balance merely 
     by saying something as seemingly innocuous as ``Uncle Wen 
     says hello,'' it is difficult to comprehend why the 
     government never sought electronic surveillance in an effort 
     to discover the whereabouts of the missing tapes. In the 
     December 1999 detention hearings, the U.S. Attorney, John 
     Kelly, suggested that if Dr. Lee still had the tapes, he 
     could send a signal to a foreign intelligence service to 
     extract him. If he wasn't in custody ``then we would be 
     dealing with a situation in which an individual not in 
     custody is going to be snatched and taken out of the 
     country.'' \229\ As early as April 30, 1999, the FBI had been 
     told by a LANL scientist that if the files Dr. Lee downloaded 
     were given to a foreign power, they would have the ``whole 
     farm,'' the ``crown jewels'' of the U.S. program which had 
     been obtained through decades of effort by the U.S.\230\
       If the government felt his communications were such a 
     potential threat, why was there never an effort to ascertain 
     with whom and about what he was communicating during the 
     March-December 1999 period? This lapse severely undercuts the 
     government's later arguments that the harsh conditions of 
     confinement were only to protect the downloaded information.
       The Pretrial Confinement of Dr. Lee
       After his arrest on December 10, 1999, and a detention 
     hearing before U.S. Magistrate Judge Don Svet on December 13, 
     1999, Dr. Lee was placed in pretrial confinement in the Santa 
     Fe County Correctional Facility. The conditions of his 
     incarceration, including the Special Administrative Measures 
     (SAM) taken to prevent him from possibly communicating to 
     others about the location of the tapes or the material 
     thereon, have received a great deal of attention from Dr. 
     Lee's attorneys, the press, and eventually, Congress.
       The government's decision to hold Dr. Lee under such strict 
     conditions raises a number of important points. Defendants 
     are presumptively entitled to pretrial release except in 
     certain circumstances specified in statute. Because none of 
     the ordinary conditions for pretrial confinement--for 
     example, when a violent criminal is captured after a killing 
     spree--applied to Dr. Lee, Judge Parker explained in his 
     order that:
       ``Only after a hearing and a finding that ``no condition or 
     combination of conditions will reasonably assure the 
     appearance'' of the defendant and the safety of the 
     community, can a judge order a defendant's pretrial 
     detention. 18 USC 3142(e). A finding against release must be 
     ``supported by clear and convincing evidence.'' 18 USC 
     3142(f).'' \231\
       In reaching a decision on pretrial detention, the judge was 
     required to take into account the available information 
     regarding: (1) the nature and circumstances of the offense 
     charged, (2) the weight of the evidence against the person, 
     and (3) the history and characteristics of the person.\232\
       At a series of detention hearings from December 13 through 
     December 29, before two different magistrates, the government 
     painted a stark picture of Dr. Lee's conduct. A December 23, 
     1999 filing by Mr. Gorence summarized the government's 
     position:
       ``Lee stole America's nuclear secrets sufficient to build a 
     functional thermonuclear weapon. Lee absconded with that 
     information on computer tapes, seven of which are still 
     missing. Those missing tapes, in the hands of an unauthorized 
     possessor, pose a mortal danger to every American. The 
     government does not know what Lee did with the tapes after he 
     surreptitiously created them. Despite previous denials, Lee 
     now admits that he created the tapes--tapes which the 
     government will establish contain an entire thermonuclear 
     weapon design capability. The risk to U.S. national security 
     is so great if Lee were to communicate the existence, 
     whereabouts, or facilitate the use of the tapes that there is 
     no condition or combination of conditions that will 
     reasonably assure the safety of this country if Lee is 
     released.'' \233\
       The Atomic Energy counts with which Dr. Lee had been 
     charged required that the conduct at issue be done with 
     intent to injure the United states. On this score, the 
     government argued that:
       ``Lee's secretive and surreptitious actions to gather the 
     classified TAR files, to down-partition and download the 
     files on to tapes, to lie to colleagues to facilitate his 
     actions, and then his subsequent deletions to cover his 
     tracks all evidence an intent to injure the United States. 
     Lee's intent to injure the United States also can be inferred 
     by the additional testimony that the government will present 
     to this Court that Lee, in taking complete thermonuclear 
     weapon design capability, stole information that was not in 
     any way related to his duties as a hydrodynamicist. The 
     United States also will offer additional testimony that there 
     was no work related reason to ever move the classified 
     information that Lee moved and downloaded on to computer 
     tapes from the secure to the unsecure computing environment. 
     These facts evidence an intent to injure the United States by 
     depriving it of exclusive control of its most sensitive 
     nuclear secrets.'' \234\
       The government also argued that the only way to safeguard 
     the information on the tapes Dr. Lee created was to hold him 
     in detention, with special restrictions on his 
     communications. As described in the government's motion on 
     December 23, these measures included segregation from other 
     prisoners; limiting his visitors to immediate family members 
     and his attorneys, having an FBI agent monitor all family 
     visitations, denial of access to a phone except to call his 
     attorneys, and mail screening.\235\
       After the required hearings, Judge Parker issued his order 
     on December 30, 1999, in which he concluded that ``at this 
     time there is no condition or combination of conditions of 
     pretrial release that will reasonably assure the appearance 
     of Dr. Lee as required and the safety of any other person, 
     the community, and the nation.'' \236\ He then addressed the 
     nature of the alleged crimes, the weight of the evidence, and 
     the characteristics of the defendant. Judge Parker noted that 
     while the offenses charged fell short of espionage, they were 
     ``quite serious and of grave concern to national security.'' 
     \237\ The judge also described the surreptitiousness with 
     which the tapes had been created, citing the government's 
     contention that Dr. Lee had misled a T-Division employee by 
     claiming to want to download a resume to tape.\238\ In 
     addressing the weight of the evidence against Dr. Lee, Judge 
     Parker noted that the government had presented direct 
     evidence of the downloads, which was the relevant conduct at 
     issue. With regard to the intent to injure, which was also an 
     element of the charged offenses, he noted that:
       ``although the Government did not present any direct 
     evidence regarding Dr. Lee's intent to harm the United States 
     or to advantage a foreign nation . . . the Government did 
     present circumstantial evidence of Dr. Lee's intent to 
     violate these provisions of the Atomic Energy Act and the 
     Espionage Act.'' \239\
       With regard to the characteristics of the defendant, Judge 
     Parker made points on both sides, noting that Dr. Lee had 
     ``lied to

[[Page 27670]]

     LANL employees and to law enforcement agents and has 
     consciously deceived them about the classified material that 
     he had put on the tapes and about contacts with foreign 
     scientists and officials.'' \240\ On the other hand, the 
     judge noted Dr. Lee's longstanding ties to the community, and 
     said, ``Aside from Dr. Lee's deceptive behavior regarding the 
     issues raised in this case, his past conduct appears to have 
     been lawful and without reproach.'' \241\ And, finally, the 
     judge concluded that the government had presented ``credible 
     evidence showing that the possession of information by other 
     nations or by organizations or individuals could result in 
     devastating consequences to the United States' nuclear weapon 
     program and anti-ballistic nuclear defense system.'' \242\
       In concluding, the judge stated:
       ``With a great deal of concern about the conditions under 
     which Dr. Lee is presently being held in custody, which is in 
     solitary confinement all but one hour a week when he is 
     permitted to visit his family, the court finds, based on the 
     record before it, that the Government has shown by clear and 
     convincing evidence that there is no combination of 
     conditions of release that would reasonably assure the safety 
     of any person and the community or the nation. The danger is 
     presented primarily by the seven missing tapes, the lack of 
     an explanation by Dr. Lee or his counsel regarding how, when, 
     where, and under what circumstances they were destroyed, and 
     the potentially catastrophic harm that could result from Dr. 
     Lee being able, while on pretrial release, to communicate 
     with unauthorized persons about the location of the tapes or 
     their contents if they are already possessed by others. 
     Although Dr. Lee's motion to revoke Magistrate Judge Svet's 
     detention order is denied at this time, changed circumstances 
     might justify Dr. Lee renewing his request for release. If, 
     for instance, Dr. Lee submits to a polygraph examination . . 
     . and the results of the exam allay concerns about the seven 
     missing tapes, Dr. Lee's request for pretrial release can be 
     reconsidered in a significantly different light.'' \243\
       The judge's final statement before denying Dr. Lee's motion 
     for pretrial release was an admonishment to the government 
     ``to explore ways to loosen the severe restrictions currently 
     imposed upon Dr. Lee while preserving the security of 
     sensitive information.'' \244\
       Having lost the initial fight for pretrial release, Dr. Lee 
     returned to jail where the conditions of his confinement 
     became a rallying point for his defenders. The following 
     excerpt is taken from an Internet site established and 
     maintained by Dr. Lee's supporters:
       ``He was arrested on December 10, 1999 and is now put in 
     solitary confinement in a cell in a New Mexico jail 23 hours 
     a day. He is allowed only one hour of visit a week from his 
     immediate family. He is shackled any time he is out of his 
     cell, at his waist, his ankle and his wrist except when he is 
     meeting with his lawyers (and even then he must wear an ankle 
     chain). A chain around his belly connecting to his handcuff 
     prevents him from raising his hand above his head. We were 
     told that two U.S. Marshals with machine guns accompanied him 
     whenever he goes within the confine of the prison and a 
     `chase car' with armed Marshals follows Dr. Lee when he is 
     moved from Santa Fe to Albuquerque and back. This is highly 
     unusual and we questioned that other prisoners received the 
     same treatment. The lawyer said Lee was kept separate from 
     other prisoners during his hour-long exercise period. He is 
     finally allowed to speak Mandarin with his family but with 
     two FBI agents listening in. We were told by his families 
     that Dr. Lee was always in shackles and chain even during 
     their one hour weekly meeting. We were also told that the 
     food provided by the prison system was inappropriate to Dr. 
     Lee because he has long adopted to live on a non red meat 
     diet after his colon cancer surgery several years ago.'' 
     \245\
       The government, however, portrayed Dr. Lee's conditions of 
     confinement as a matter of necessity to protect the 
     classified information he had downloaded to portable tapes. 
     In a series of memoranda written by Lawrence Barreras, Senior 
     Warden of the Santa Fe County Correctional Facility, on 
     December 10 and 14, 1999, and January 4, 2000, the terms of 
     Dr. Lee's confinement were outlined in detail. Specifically, 
     Dr. Lee's confinement consisted of 24 hour supervision by a 
     rotation of guards, permission to speak only with his 
     attorneys and immediate family members (his wife, daughter 
     and son) and in English only, non-contact visits from his 
     immediate family members limited to one hour per week, no 
     personal phone calls, and that he remain secured in his cell 
     24 hours a day.\246\ Further, Dr. Lee was to remain in full 
     restraints (leg and hand irons) anytime he was to be out of 
     his cell being moved from one location to another.\247\
       As previously noted, Dr. Lee's lawyers protested his 
     conditions of confinement almost from the beginning. In a 
     December 21, 1999 letter to Mr. Kelly and Mr. Gorence, lead 
     defense attorney Mark Holscher said:
       ``Apparently at the request of the Department of Justice 
     and the FBI, Dr. Lee's jailers have barred his family from 
     visiting him for more than one hour a week. In addition, the 
     agents have demanded that my client and his wife speak only 
     English and do so in the presence of a federal agent.
       ``Please provide me immediately with a written description 
     of the conditions that you have placed on Dr. Lee's 
     imprisonment, and a statement of the legal authority for 
     these draconian conditions.'' \248\
       The legal authority to which Mr. Holscher referred was at 
     that time still being assembled. Title 28 of the Code of 
     Federal Regulations, section 501.2, provides that upon 
     direction of the Attorney General, special administrative 
     measures may be implemented that are reasonably necessary to 
     prevent disclosure of classified information, upon written 
     certification . . . by the head of a member agency of the 
     United States intelligence community that the unauthorized 
     disclosure of classified information would pose a threat to 
     the national security and that there is a danger that the 
     inmate will disclose such information. Energy Secretary Bill 
     Richardson sent a letter to the Attorney General on December 
     27, 1999, in which he said:
       ``In my judgment, such a certification is warranted to 
     enable the Department of Justice to take whatever steps are 
     reasonably available to it to preclude Mr. Lee, during the 
     period of his pretrial confinement, any opportunity to 
     communicate, directly or through other means, the extremely 
     sensitive nuclear weapons data that the indictment alleges 
     Mr. Lee surreptitiously diverted to his own possession from 
     Los Alamos National Laboratory (LANL). I make this 
     certification at the request of the U.S. Attorney for the 
     District of New Mexico, John Kelly, and upon the 
     recommendations and evaluations of the Director of the 
     Federal Bureau of Investigation and DOE's Director of 
     Security and Emergency Operations, Eugene Habiger.'' \249\
       By January 6, the Department of Justice had reviewed the 
     administrative segregation procedures at the Santa Fe County 
     Correctional Facility and determined with some additional 
     measures, the standard segregation policy would adequately 
     confine Dr. Lee. In a letter to Warden Lawrence Barreras, the 
     local U.S. Marshal, John Sanchez described ten additional 
     measures that were necessary:
       1. Mr. Lee is to be kept in segregation until further 
     notice (single cell).
       2. Mr. Lee is not to have contact with other inmates at 
     anytime.
       3. All outgoing mail EXCEPT LEGAL MAIL will be screened by 
     the FBI.
       4. Mr. Lee will not be permitted personal telephone calls.
       5. Mr. Lee will be allowed to place collect telephone calls 
     to attorneys of record [Mr. John Cline and Mr. Mark 
     Holscher].
       6. Mr. Lee will be allowed contact visits with his 
     attorneys only.
       7. Mr. Lee will be allowed non-contact visits with 
     immediate family members. . . . The FBI must be on site to 
     monitor each visit. Visits will not be allowed unless an FBI 
     agent is present.
       8. Visitors are to be restricted to Attorneys of Record and 
     immediate family.
       9. Any changes to Mr. Lee's conditions of confinement will 
     be authorized by USMS [U.S. Marshals Service] personnel only.
       10. Mr. Lee is NOT TO BE REMOVED FROM THE FACILITY BY 
     ANYONE UNLESS AUTHORIZED BY THE USMS.\250\
       That same day, another of Dr. Lee's attorneys, Mr. John 
     Cline, wrote to Mr. Gorence expressing the view that the 
     conditions of confinement were unlawful. He requested three 
     specific changes, including: (1) two hours outdoors every 
     day, (2) permission for Dr. Lee to have a television, radio, 
     and a CD player in his cell and to receive access to 
     newspapers, and (3) a daily shower.\251\
       A January 12, 2000 memorandum to the Attorney General from 
     Principal Associate Deputy Attorney General Gary Grindler 
     demonstrates that at least some of the concerns of Dr. Lee's 
     lawyers were taken to the highest reaches of the Justice 
     Department. The memo notes that the Attorney General had 
     ``advised that some individuals have expressed concern about 
     Dr. Lee's access to exercise,'' and explains that the order 
     for Special Administrative Measures that she was being asked 
     to sign ``does not limit Dr. Lee's access to exercise. 
     According to the Santa Fe County Jail rules, Dr. Lee will be 
     limited to one-hour per day of exercise, as are all 
     administrative segregation prisoners.'' \252\
       On January 13, 2000, the Attorney General formally 
     authorized the special administrative measures for a period 
     of 120 days in a memorandum to John W. Marshall, the Director 
     of the Marshals Service. The conditions of confinement were 
     as previously described. It should be noted, however, that 
     from December 10, 1999 until the date the Attorney General 
     signed the order on January 13, 2000, any special conditions 
     of confinement imposed on Dr. Lee would have been without 
     proper authority. If federal regulations require 
     certifications from agency heads and the Attorney General, it 
     can only be presumed that restrictions such as those imposed 
     on Dr. Lee would not be properly authorized until all the 
     certifications were in place. It is troubling that the 
     government was not better prepared to make the necessary 
     certifications in a timely fashion.
       As the end of the initial 120 days approached, the Attorney 
     General received a new letter from Secretary Richardson on

[[Page 27671]]

     May 4, in which he expressed his support for continuing the 
     SAM. However, he mentioned the conditions of Dr. Lee's 
     pretrial confinement, saying:
       ``At the same time, I want to emphasize my concern, that to 
     the extent consistent with protecting the sensitive weapons 
     information to which the indictment of Dr. Lee pertains, Dr. 
     Lee's civil rights as a pre-trial detainee should be honored. 
     I understand that, in response to a request by Dr. Lee's 
     counsel, the Department of Justice has arranged for a 
     translator to be present when he speaks with his family so 
     that he can speak Chinese. I further understand that 
     arrangements have been made to permit him to visit with his 
     family on weekends, to have access to Los Alamos National 
     Laboratory with his lawyers under appropriate safeguards so 
     that he can prepare his defense, and to have access to a 
     radio and reading material of his choice, as well as a 
     reasonable period of exercise every day. Finally, I 
     understand that the conditions of his confinement are in no 
     respect more restrictive than those of others in the 
     segregation unit of the detention facility, where he is 
     confined specifically to protect against further compromise 
     of classified information. Based on this information, I am 
     satisfied that his civil rights are being adequately 
     protected.'' \254\
       At about the same time the FBI SAC in Albuquerque, David 
     Kitchen, wrote to the new U.S. Attorney in New Mexico, Norman 
     Bay, and expressed his unequivocal support for maintaining 
     the SAM in place. Agent Kitchen expressed his ``firm 
     conviction that any loosening of the SAM would enable Dr. Lee 
     to communicate with an agent of a foreign power regarding the 
     disposition or usage of the materials contained in the seven 
     missing tapes.'' \255\
       In July, the new lead prosecutor on the case, George 
     Stamboulidis, arranged to have restraints removed from Dr. 
     Lee during his scheduled recreation times,\256\ but this did 
     not occur without some difficulty.\257\
       An August 1, 2000 letter from Warden Barreras to Mr. 
     Stamboulidis describes the final state of Dr. Lee's 
     confinement:
       ``In response to your letter date July 30th, 2000 inmate 
     Wen Ho Lee began recreating without restraints on July 18th, 
     2000 at 8:30 a.m. As of August 5th, 2000 he is also allowed 
     participation in the recreation yard 7-days a week for a 
     period of 1-hour per day.
       ``In reply to inmate Wen Ho Lee's housing conditions: 
     inmate Wen Ho Lee is permitted to have a radio in his cell, 
     this gives him the ability to listen to news programs; he 
     receives reading materials per the SAM guidelines.
       ``In addition, an exception to the rule was made to grant 
     inmate Wen Ho Lee visits on Saturdays as opposed to the 
     regular Friday schedule: this was done in order to 
     accommodate his family. Supervisors are the only staff that 
     are assigned to oversee his escort and visit. Inmate Wen Ho 
     Lee also receives extra fruit at dinnertime, daily.'' \258\
       On September 7, 2000, U.S. Attorney Norman Bay requested 
     that the Attorney General continue the SAM, which had last 
     been extended on May 12. In his letter, he outlined recent 
     developments in the case, including Judge Parker's order 
     granting Dr. Lee's renewed motion for pretrial release on 
     August 24. Mr. Bay informed the Attorney General of the 
     government's motion to stay the request of that order, and 
     noted that the Tenth Circuit had stayed Judge Parker's order 
     pending further review. Mr. Bay concluded his request to the 
     Attorney General by noting that ``nothing has changed since 
     the special administrative measures were first imposed to 
     reduce the risk of Lee disclosing highly sensitive classified 
     information to an unauthorized possessor,'' and requested 
     another 120 days of SAM.\259\
       Before the Attorney General acted on the request, the 
     government reached a plea agreement with Dr. Lee, which ended 
     his confinement.
       After the plea agreement, the conditions of Dr. Lee's 
     confinement were widely discussed in a way that they had not 
     been discussed before, with new allegations that a light had 
     been left on his cell 24-hours a day, and that he had been 
     kept in shackles an inordinate amount of time. During a 
     series of three hearings in late September and early October 
     2000, Department of Justice witnesses were asked about the 
     conditions of detention. Attorney General Reno made the point 
     that Dr. Lee's lawyers had not previously complained about 
     the leg-restraints and that no one had ever mentioned the 
     light before.\260\ Mr. Bay explained that the light in 
     question was ``a dull blue light, kind of like a night light, 
     in Dr. Lee's room . . . [used] to make sure that if someone 
     walked by and looked inside his cell that they could make 
     sure that he was there and that he was doing okay.'' \261\
       The Attorney General also read into the record a memorandum 
     from Raymond L. Cisneros, the local sheriff in Santa Fe who 
     served as the jail monitor. The memorandum, dated March 10, 
     2000, was to the county manager and explained that Mr. 
     Cisneros had met with Dr. Lee after receiving phone calls 
     from unknown persons claiming that Dr. Lee was not being 
     treated well. According to the memo:
       ``Other than being incarcerated, he had no complaints. The 
     staff was treating him very well. He singled out Warden 
     Barreras and Deputy Warden Romero as treating him great. . . 
     . His only request was for additional fruit at the evening 
     meal, which I relayed to Warden Barreras.
       ``I gave him my business card and told him to contact me 
     through his attorney if there was any mistreatment of other 
     issues regarding his incarceration. . . . Because of the high 
     profile nature of this case, I felt it was necessary to 
     either confirm or disprove the allegations. Mr. Lee was very 
     surprised about the calls and stated, `I haven't complained 
     to anyone about the jail because I am being treated very 
     well.' '' \262\
       Realizing that the hearings had not provided all the 
     necessary information on the confinement issue, the DOJ later 
     provided several hundred pages of relevant documents. Much of 
     the discussion above has been drawn from these documents. The 
     Department also sent a letter, dated January 20, 2001, which 
     provided additional detail on the matter. Assistant Attorney 
     General Robert Raben explained that the manner in which Dr. 
     Lee had been treated flowed ``directly from a policy that 
     sets bright line rules that apply to all prisoners under 
     defined circumstances. These bright line rules are, in the 
     Department's view, better than an alternative that would 
     require detention facility personnel to make ad hoc decisions 
     in each individual prisoner's case. A rule allowing such 
     discretion would invite both favoritism and abuse.'' \263\ 
     Mr. Raben went on to explain that, because there is no 
     federal detention facility in New Mexico, Dr. Lee had been 
     housed at the Santa Fe County Detention Facility, under its 
     administrative segregation policies, with the additional 
     condition that he be allowed no unmonitored communications. 
     According to Mr. Raben:
       ``While housed in the Santa Fe County Detention Facility, 
     Dr. Lee was subject to all of that facility's other 
     regulations for all prisoners in administrative segregation 
     in addition to the ban on unmonitored communications. One of 
     those requirements is that prisoners in administrative 
     segregation must be in ``full restraints'' (handcuffs, waist 
     chains, and leg irons) whenever they are outside of their 
     cells within the facility, including during exercise periods. 
     Dr. Lee was not in restraints while in his cell. In July 
     2000, after the issues was raised by Dr. Lee's attorneys, the 
     restraints policy was modified uniquely for Dr. Lee so that 
     he, unlike others in administrative segregation could 
     exercise without restraints.'' \264\
       Mr. Raben further explained that Dr. Lee was transported 
     for all court appearances and meetings with his attorneys by 
     the U.S. Marshals, under standard procedures, which included 
     ``full restraints'' during transport, and at all times except 
     when Dr. Lee was in a holding area cell administered by the 
     Marshals Service and when he was meeting with his attorneys. 
     During such meetings, the leg irons remained on, but Mr. 
     Raben said that Dr. Lee's attorneys had never objected to 
     that procedure.\265\
       After reviewing the documents and testimony on the 
     conditions of Dr. Lee's pretrial confinement, it is clear 
     that the reasonableness of the government's actions turns on 
     the question of whether or not it was really necessary to 
     restrict his ability to communicate. The government was 
     convinced that the only way to protect the national security 
     was to prevent Dr. Lee from communicating. Having taken that 
     position, the remainder of the government's actions were 
     simply to further the objective of limiting Dr. Lee's ability 
     to communicate. Although some of the government's responses 
     were not as prompt as one might like--for example, taking 
     more than a month to get the initial SAM guidelines signed by 
     the Attorney General--the government seems to have been 
     generally responsive to requests from Dr. Lee's attorneys.
       That is not to say that the government's actions were 
     appropriate, however, because the government has not made a 
     showing as to why it was necessary to hold Dr. Lee under such 
     strict terms of confinement in the first place. If he had not 
     communicated the whereabouts of the tapes to a third party in 
     the period prior to his arrest, what made the government 
     believe he would do so from jail? None of the documents, 
     testimony or other information available to the subcommittee 
     provides a compelling answer to this question. While the 
     government may have believed such harsh conditions were 
     necessary, they have not made a convincing case. Judge Parker 
     was not convinced by the government's arguments, and granted 
     Dr. Lee's renewed motion for pretrial release on August 24, 
     2001. In his remarks at the plea hearing, Judge Parker 
     expressed his sentiments, telling Dr. Lee that ``since by the 
     terms of the plea agreement that frees you today without 
     conditions, it becomes clear that the Executive Branch now 
     concedes, or should concede, that it was not necessary to 
     confine you last December or at any time before your trial.'' 
     \266\
       The Case Against Dr. Lee
       Had the government not reached a plea agreement with Dr. 
     Lee, the case was scheduled for trial in late November 2000. 
     When the government settled, many questioned the 
     appropriateness of the plea agreement because it seemed to be 
     in such stark contrast with what the government had argued

[[Page 27672]]

     all along. To ascertain whether the plea agreement was 
     appropriate, it is first necessary to examine the 
     government's case.
       Although the government would likely have won a conviction 
     because many elements of the charged conduct were not 
     disputed Dr. Lee could not credibly deny that he had made the 
     tapes containing vast quantities of classified nuclear 
     weapons data this would not have been an easy case. The 
     government faced a number of obstacles, including: (1) 
     challenges to the government's claims about the importance of 
     the material on the missing tapes, (2) threats by Dr. Lee's 
     attorney to take the government on a ``long, slow death march 
     under CIPA,'' (3) claims that Dr. Lee was the victim of 
     selective prosecution based on racial profiling, and (4) the 
     issue of Dr. and Mrs. Lee's assistance to the government 
     during the 1980s. None of these obstacles would have been 
     unsurmountable. Each is discussed below.
       The Importance of the Missing Tapes
       As previously noted, government witnesses testified at Dr. 
     Lee's bail hearing that the information on the tapes was the 
     ``crown jewels'' of our nuclear secrets that could, in the 
     wrong hands, change the global strategic balance. When Dr. 
     Lee's lawyers renewed their motion for pretrial release in 
     July 2000, they made a direct assault on this claim. The 
     defense offered depositions from Dr. Harold Agnew, former 
     Director of LANL, and Dr. Walter Goad, a Fellow Emeritus at 
     LANL, both of whom took issue with the government's 
     characterization of the material on the tapes. Dr. Lee's 
     lawyers also noted that the information in question was not 
     classified at the highest level--Top Secret--and had, in 
     fact, been placed in a special category called ``Protect as 
     Restricted Data'' or PARD when Dr. Lee downloaded it.
       When Judge Parker held three days of hearings in August 
     2000 to consider Dr. Lee's renewed motion for pretrial 
     release, he got testimony from Dr. John Richter that the 
     information on the tapes was 99% unclassified.\267\ The 
     government was also forced to acknowledge that the 
     information in question was classified as Secret Restricted 
     Data (SRD) rather than Top Secret Restricted Data (TSRD), and 
     could therefore be sent through certified or registered mail, 
     as demonstrated in the following excerpt from the hearing on 
     August 17:

       Mr. Cline: SRD, unlike TSRD, can be, for example, double 
     wrapped and sent by registered mail from one classified 
     location to another, can it not?
       Dr. Robinson: That is true today, yes.
       Mr. Cline: And TSRD can not be sent by mail?
       Dr. Robinson: That is correct.
       Mr. Cline: . . . . the information that we are talking 
     about here, which has been described as the crown jewels, 
     could be double wrapped and sent by registered mail from 
     Washington, D.C. to New Mexico, correct?
       Dr. Robinson: Correct.\268\

       The defense team also noted that the material Dr. Lee had 
     downloaded fell into a category called Protect As Restricted 
     Data, or PARD, when he made the tapes. The definition of 
     PARD, taken from the U.S. Department of Energy Office of 
     Security Glossary of Terms, is as follows: A handling method 
     for computer-generated numerical data or related information 
     which is not readily recognized as classified or unclassified 
     because of the high volume of output and low density of 
     potentially classified data.\269\
       As described in the judge's order for Dr. Lee's pretrial 
     release, the effect of the expert opinions offered by Drs. 
     Agnew, Goad and Richter, the defense's showing that the 
     material was SRD as opposed to TSRD, and that the material 
     was marked as PARD when it was downloaded was to ``show that 
     the information Dr. Lee took is less valuable than the 
     government had led the Court to believe it was and less 
     sensitive than previously described to the Court. . . .'' 
     \270\
       Judge Parker also raised a question as to whether the 
     missing tapes contained ``all the information needed to build 
     a functional thermonuclear weapon.'' \271\ He went on to say, 
     ``In sum, I am confronted with radically divergent opinions 
     expressed by several distinguished United States nuclear 
     weapons scientists who are on opposite sides of the issue of 
     the importance of the information Dr. Lee took.\272\ The 
     judge's findings on the sensitivity of the material on the 
     tapes were a principal factor in his decision to order Dr. 
     Lee's pretrial release, which he did on August 24, 2000.
       When the government settled the case with a plea agreement 
     less than three weeks later, it gave the impression that it 
     was backing away from its claims about the importance of the 
     material. This had the unfortunate effect of reinforcing the 
     public perception that the government was persecuting, rather 
     than prosecuting Dr. Lee. Like the judge, the subcommittee 
     can only rely on the testimony of expert witnesses, but it 
     seems that the government's witnesses made the stronger 
     arguments in this regard.
       The most concise description of the information Dr. Lee 
     downloaded is found in the government's public filing in 
     response to Dr. Lee's appeal of Judge Parker's initial denial 
     of bail, the relevant portions of which are excerpted below:
       ``The source codes model and simulate every aspect of the 
     complex physics process involved in creating a thermonuclear 
     explosion. The source codes are written to design specific 
     portions of a nuclear weapon--either the primary or the 
     secondary.
       ``Although nuclear weapons source codes contain all of the 
     physics involved in a thermonuclear weapon, the source codes 
     themselves require ``data files''--both classified and 
     unclassified--to run actual simulations. Data files contain 
     all of the physical and nuclear properties of materials 
     required for a nuclear explosion. . . . Data files become 
     classified as SRD [Secret Restricted Data] when the 
     properties of the materials are most directly relevant to 
     nuclear weapons, i.e., in environments involving very high 
     pressures and temperatures. . . .
       `` `Input decks' are mathematical descriptions of the 
     actual geometry and materials within a nuclear device itself. 
     In essence, an input deck is an `electronic blueprint' of 
     either a primary or a secondary within a nuclear weapon.
       ``. . . [Dr.] Lee down-partitioned and downloaded all of 
     LANL's significant nuclear weapon primary and secondary 
     design codes in their entirety. . . . In addition, Lee down-
     partitioned and downloaded ``all of the data files required 
     to operate those codes,'' as well as multiple input decks 
     representing actual nuclear bomb designs that ranged in 
     sophistication from relatively simple to complex.
       ``. . . . For a group or state that did not have the 
     indigenous scientific capability to do it alone, the 
     information would represent an immediate capability to design 
     a credible nuclear explosive. A country that had some 
     experience with nuclear explosives could use the information 
     to optimize its nuclear bombs. An advanced nuclear state 
     could use the information to augment their own knowledge of 
     nuclear explosives and to uncover vulnerabilities in the 
     American arsenal which would help them to defeat our weapons 
     through anti-ballistic missile systems or other means.'' 
     \273\
       At the August detention hearings, government scientists 
     elaborated on the significance of the material and, 
     specifically the increased importance that came from the way 
     the files had been put together on the tapes. Dr. Paul 
     Robinson, president of Sandia National Laboratories, 
     testified that the tapes ``were very carefully designed to be 
     loaded with the subroutines that would be needed for each 
     design code to be placed right behind that design code. And 
     so I believe they should not require a lot of additional 
     instruction.\274\ In other words, the collection of files was 
     more than just a collection of files--it had been assembled 
     so as to ensure that the data files called for in the codes 
     were available at the right place, making it possible for the 
     codes to actually run when executed.
       The government also explained its rationale for claiming 
     that the information on the tapes could change the global 
     strategic balance. After a lengthy discussion of the 
     technical aspects of ballistic missile defense and the 
     challenges presented by Multiple Independently Targeted 
     Reentry Vehicles (MIRVs), which are generally quite small, 
     Dr. Robinson expressed his concern that the tapes Dr. Lee 
     made could enable another nation to develop devices that 
     would have reentry vehicles approximately the size of orange 
     traffic cones. \275\ Such small warheads would present an 
     enormous challenge to U.S. ballistic missile defenses, even 
     more difficult than that of defending against single warhead 
     weapons which are larger (about the size of a minivan or 
     small bus).
       While it might be tempting to simply state that one group 
     of scientist's arguments on this issue is most persuasive, it 
     is not necessary to do so. One of the key witnesses who 
     testified in support of Dr. Lee's position at the August 2000 
     hearings, Dr. John Richter, subsequently modified his 
     position. The following exchange took place at an October 3, 
     2000 hearing before the Department of Justice Oversight 
     subcommittee:

       Senator Specter: Dr. Richter, you have been quoted as 
     testifying before Judge Parker that at least 99 percent of 
     the nuclear secrets that Dr. Lee downloaded to tapes were 
     unclassified. Is that an accurate statement?
       Dr. Richter: An accurate statement regarding the codes. I 
     still maintain that. The materials properties, I do not think 
     I was referring to that at that time, If I did say it that 
     way then I did not mean it and I erred.\276\

       Dr. Richter also acknowledged that the input decks 
     contained important information, \277\ but ultimately took 
     the position that the loss of the information on the tapes 
     would be ``marginally harmful, at worst.'' \278\
       In evaluating Dr. Richter's opinion on the value of the 
     information on the tapes, it is helpful to consider that ``in 
     1995, he was the first to suggest that the Chinese might have 
     significant information about the W-88 warhead. Even though 
     he eventually backed off that opinion, it helped start the 
     investigation that led to the discovery of Dr. Lee's download 
     and his jailing.'' \279\ Dr. Richter later put his dual roles 
     at the start and at the end of the Wen Ho Lee case in 
     perspective for a reporter when he said, ``If I had any 
     influence in getting him out, I figured that's a payback.'' 
     \280\

[[Page 27673]]

       In sum, the information on the tapes was clearly important. 
     It does not necessarily follow, however, that the government 
     was right to hold Dr. Lee in harsh pretrial conditions on 
     that basis. In fact, in the August hearings, the judge was 
     only ruling on the question of whether not Dr. Lee should 
     remain in pretrial confinement--under conditions that were 
     considerably harsher than he would be subjected to if he had 
     been convicted. If the case had gone to trial, the government 
     would undoubtedly have prevailed on the matter of whether or 
     not the material on the tapes was important. The government's 
     error was not in claiming the material was important, but in 
     claiming that the only way to protect it was to hold Dr. Lee 
     under such harsh conditions.
       The Classified Information Procedures Act (CIPA) issues
       CIPA establishes a framework for handling trials involving 
     classified information, with the objective of protecting both 
     national security information and the rights of the 
     defendant. One of the key concepts in CIPA is the provision 
     permitting substitutions for classified information to 
     prevent the government from having to expose that information 
     at trial. Rather than show the actual material at trial, the 
     government is permitted to offer a document that conveys the 
     same information in unclassified form. The judge presiding 
     over the case reviews the material in question and the 
     government's proposed substitutions. If the judge finds that 
     the substitutions are an adequate representation of the 
     material in question, the case goes forward. If the judge 
     finds the government's substitutions lacking, the government 
     can make an interlocutory appeal of the judge's ruling, 
     meaning that the appeal is decided before the case goes 
     forward rather than after as is the usual fashion. If the 
     government loses a CIPA ruling, it can also simply drop the 
     case.
       Although the prosecution of Dr. Lee ended before the CIPA 
     issues were fully tested in court, the defense clearly 
     intended to implement a classic graymail tactic of forcing 
     the government to dismiss the case by claiming that secret 
     information had to be revealed in open court to guarantee 
     their client a fair trial. According to U.S. Attorney Norman 
     Bay:
       ``In late May, we met with defense counsel in this case. . 
     . . And the defense lawyer said that he would never take a 
     plea to any count in the indictment--that is, `he' being Dr. 
     Lee--and that if the Government wasn't willing to accept, the 
     defense was going to put the United States on a, quote, 
     `long, slow death march under CIPA.' '' \281\
       Senator Specter replied, ``Mr. Bay, if somebody had told me 
     when I was a prosecuting attorney they were going to put me 
     on a long, slow death march, I would say let's start 
     walking.\282\
       One of Dr. Lee's attorneys, Mr. John Cline, was the lead 
     attorney on CIPA issues. He told the judge that using 
     classified information in the trial: would be necessary for 
     proving four central defense arguments: that most of the 
     downloaded material was already in the public domain; that 
     some of the computer codes contained flaws that made them 
     less useful; that the codes were related to Dr. Lee's work; 
     and that they were difficult to use without user manuals, 
     which were not on the tapes.'' \283\
       The defense found a sympathetic ear with Judge Parker on 
     these issues. In an order filed August 1, 2000, the judge 
     gave the government two weeks to provide substitute language 
     for specified classified information. He agreed with Dr. Lee 
     (and opposed the government) as to the relevance of 
     particular information to the defense. For example, Judge 
     Parker said that:
       ``Although the parties dispute the existence or magnitude 
     of any `flaws' or imperfections in the various codes at 
     issue, the Court nonetheless finds that evidence of those 
     alleged flaws or imperfections is relevant to the Defendant's 
     intent to secure an advantage to a foreign nation or to 
     injure the United States. Evidence of these alleged flaws and 
     imperfections is also relevant for use in the Defendant's 
     cross-examination of witnesses and in the Defendant's 
     rebuttal of Government witnesses' testimony on the issue of 
     the sensitive nature of these codes.'' \284\
       The Court delivered another blow to the Government when he 
     ruled that:
       ``Evidence making a comparison of the input decks of Files 
     1 through 19 and Tape N to a nuclear weapons blueprint is 
     relevant to the Defendant's intent. In addition, this 
     evidentiary comparison is relevant to the cross-examination 
     of witnesses and to the Defendant's rebuttal of Government 
     witnesses' testimony on the Government's assertion that the 
     input decks constitute an electronic blueprint of a nuclear 
     weapon.'' \285\
       Consonant with these determinations, the judge ordered the 
     government to propose substitutions by August 14, with the 
     defense to respond by August 21. Any issues that could not be 
     agreed upon were to be resolved at a hearing on August 
     31.\286\
       The government was perhaps most concerned that the argument 
     about flaws in the codes could force an in-depth discussion 
     of the codes in open court, something it was not prepared to 
     do. There was also a very real concern about permitting Dr. 
     Lee to make a comparison between an actual blueprint and the 
     electronic version of a weapon contained in the input deck. 
     These would have been challenges, but the government had not 
     taken any of its appeals when it made the plea deal, and was 
     a long way from having to cede the case on CIPA grounds.
       Allegations of Selective Prosecution/Racial Profiling
       Among the more sensational allegations of government 
     misconduct in this case are charges that Dr. Lee was selected 
     for investigation and prosecution based on his ethnicity. The 
     terms ``selective prosecution'' and ``racial profiling'' have 
     been used to describe how the government allegedly decided to 
     focus on Dr. Lee. The subcommittee's review of these 
     allegations shows that the evidence simply does not support 
     charges that Dr. Lee's ethnic heritage was a decisive factor 
     in the government's actions during any phase of this case.
       In June 2000, Dr. Lee's defense team filed a motion ``for 
     discovery of materials relevant to establishing that the 
     government has engaged in unconstitutional selective 
     prosecution.'' \287\ As grounds for this discovery request, 
     the defense team claimed that Dr. Lee had ``concrete proof 
     that the government improperly targeted him for criminal 
     prosecution because he is 'ethnic Chinese.''' \288\ The 
     defense's memorandum cited four examples as proof of such 
     targeting:
       ``A sworn declaration from a LANL counterintelligence 
     official who participated in the investigation of Dr. Lee 
     that Dr. Lee was improperly targeted for prosecution because 
     he was ``ethnic Chinese.''
       ``Videotaped statements of the FBI Deputy director who 
     supervised counterintelligence investigations until last year 
     admitting that the FBI engaged in racial profiling of Dr. Lee 
     and other ethnic Chinese for criminal counterintelligence 
     investigations.
       ``The sworn affidavit the U.S. Attorney's Office used to 
     obtain the warrant to search Dr. Lee's home, in which the FBI 
     affidavit incorrectly claimed that Dr. Lee was more likely to 
     have committed espionage for the People's Republic of China 
     (PRC) because he was ``overseas ethnic Chinese.''
       ``A posting to the Los Alamos Employees Forum by a LANL 
     employee who assisted counterintelligence investigations and 
     personally observed that the DOE engaged in racial profiling 
     of Asian-Americans at Los Alamos during these 
     investigations.'' \289\
       The memorandum went on to explain that even if Dr. Lee did 
     not have the direct evidence of bias, he had:
       ``satisfied the stringent requirements of United States v. 
     Armstrong, 517 U.S. 456 (1996), which held that . . . a 
     defendant is nevertheless entitled to discovery if he 
     provides some evidence that similarly situated people have 
     not been prosecuted and that his investigation and 
     prosecution were caused by improper racial motivations.'' 
     \290\
       At the plea hearing in September 2000, Judge Parker noted 
     from the bench that the government had made a deal with Dr. 
     Lee only a short time before it would have been required to 
     produce to the judge a substantial volume of material on the 
     selective prosecution issue,\291\ raising the inference that 
     the government reached the plea agreement to avoid its 
     discovery obligations on the selective prosecution issue. A 
     Department of Energy review of ethnic bias within the 
     department concluded that there was room for improvement on 
     ethnic sensitivity,\292\ but none of the survey's results 
     supported the allegations that Dr. Lee had been targeted 
     because of his ethnicity. An April 2001 review by DOE 
     Inspector General Gregory Friedman was even more direct, 
     concluding that ``information reviewed by the Office of 
     Inspector General did not support concerns regarding unfair 
     treatment based on national origin in the security processes 
     reviewed.'' \293\
       Because these charges have not been rebutted, the public 
     may have been left with the impression that Dr. Lee's 
     allegations were correct, and that the government acted out 
     of racial or ethnic prejudice. Any such impression is 
     injurious to the public's trust in the institutions which are 
     charged with enforcing the nation's laws and must be properly 
     addressed.
       In pleading the case that Dr. Lee was targeted for criminal 
     investigation because he is ethnic Chinese, Dr. Lee's lawyers 
     alleged that ``the troubling chain of events that led to Dr. 
     Lee's indictment began when the DOE's Chief Intelligence 
     Officer, Notra Trulock, incorrectly concluded in 1995 that 
     the PRC had obtained the design information for the W-88 
     warhead from someone at the Los Alamos National Laboratory.'' 
     \294\ The defense memorandum further alleges that the 
     Administrative Inquiry which was issued by Mr. Trulock in May 
     1996 listed Dr. Lee as the main suspect, prompting the FBI to 
     open a criminal investigation of Dr. Lee.\295\
       There is legitimate debate about the scope and conclusions 
     of the AI, and that subject is addressed elsewhere in this 
     report, but the defense's allegations are inaccurate in two 
     major ways. First, the memorandum overstates Mr. Trulock's 
     role in the development of the AI, which was written by Dan 
     Bruno and an FBI Special Agent who was assigned to the DOE 
     for the purpose of helping to conduct the AI. Although Mr. 
     Trulock was an aggressive advocate in the 1995-1996 period of 
     the argument that the Chinese nuclear weapons program had 
     successfully targeted the

[[Page 27674]]

     U.S. labs for espionage, he had only a limited role in the 
     investigation which resulted in the list of names upon which 
     Dr. and Mrs. Lee appeared. Second, and more importantly, the 
     defense memorandum fails to acknowledge that the FBI was 
     predisposed to focus on Dr. Lee because he was already under 
     investigation, albeit at a lower level than what happened 
     after the AI was issued.
       The cumulative effect of these errors has been to create 
     the incorrect impression that somehow Mr. Trulock was 
     directly or primarily responsible for the government's focus 
     on Dr. Lee. The defense memorandum fails to even address the 
     question of how Mr. Trulock supposedly played a role in the 
     prosecution of Dr. Lee when Mr. Trulock left government 
     service in August 1999, nearly four months before Dr. Lee was 
     indicted.\296\
       To bolster its case that Mr. Trulock was responsible for 
     focusing on Dr. Lee, the defense memorandum cites Mr. Robert 
     Vrooman, who was Chief Counterintelligence Officer at LANL 
     from 1987 until 1998. The defense quoted Mr. Vrooman as 
     saying that ``Mr. Trulock's office chose to focus 
     specifically on Dr. Lee because he is `ethnic Chinese.' 
     Caucasians with the same background and foreign contacts as 
     Dr. Lee were ignored,'' and that ``racial profiling was a 
     crucial component in the FBI's identifying Dr. Lee as a 
     suspect.'' \297\
       The bevy of civil lawsuits that this case has spawned will 
     have to sort out whether anyone has violated anyone else's 
     rights or engaged in slander or defamation, but for the 
     purposes of this report, several observations about Mr. 
     Vrooman's allegations are appropriate. First, his statement 
     that ``Caucasians with the same background and foreign 
     contacts as Dr. Lee were ignored'' is factually incorrect. 
     While any fair reading of the document would suggest that the 
     authors of the AI were of the opinion that Dr. and Mrs. Lee 
     were the prime suspects, the document also listed several 
     other individuals, some of whom were Caucasian, and 
     recommended that the others be investigated as well. 
     Therefore, it is simply inaccurate to state that Mr. 
     Trulock's office focused specifically on Dr. Lee, for any 
     reason, let alone because he was ethnic Chinese.
       Second, Mr. Vrooman raised questions in the late 1980s 
     about Dr. Lee's contacts with Chinese officials and 
     identified Dr. Lee to Energy Department officials as a 
     potential suspect in the W-88 case.\298\ He also formerly 
     subscribed to the theory that the Chinese had obtained 
     information about the W-88 through espionage, telling the FBI 
     at one point of a ``smoking gun'' in the case.\299\ Thus, 
     although Mr. Vrooman has become critical of the conclusions 
     of the AI and its focus on Dr. Lee, he was instrumental in 
     relaying the DOE analysis regarding the extent of the PRC 
     espionage to the FBI. Had Mr. Vrooman doubted the analysis of 
     the DOE's review group, he could have raised those concerns 
     then rather than saying that a smoking gun had been 
     discovered. When challenged on this point during a hearing, 
     Mr. Vrooman said that he had called Mr. Trulock's office in 
     May 1996, but Mr. Trulock was not in. He said that he did not 
     further pursue the matter because:
       ``My supervisor, who was the lab's director, told me he 
     wanted me to improve my relationship with Mr. Trulock and 
     what I was about to say would not have done that.
       ``So we decided, as a matter of course, to let the FBI have 
     this case. We had worked with the FBI for years. They had 
     always protected people's civil rights and did the case well 
     and we thought they would quickly come to the same conclusion 
     we had.'' \300\
       Mr. Vrooman also said that he met weekly with FBI agents on 
     the case and routinely expressed reservations, which came to 
     a head in December 1998 when ``we were basically thinking 
     that Lee was not the right man.'' \301\ Given that Mr. 
     Vrooman retired from Los Alamos on March 13, 1998,\302\ it 
     remains unclear as to how he was sufficiently informed on the 
     case in December of that year to make judgements of this 
     sort.
       And, finally, it should be noted that Mr. Vrooman was one 
     of the three individuals disciplined for his role in failing 
     to remove Dr. Lee from access after the Director of the FBI 
     recommended twice in late 1997 that Dr. Lee's clearance be 
     removed.\303\ The subsequent discovery that Dr. Lee had been 
     engaged in massive illegal downloading reflects poorly on Mr. 
     Vrooman's conduct as the lab's counterintelligence chief and 
     gives him a strong motive to minimize Dr. Lee's conduct and 
     to allege government discrimination. Any assessment of Mr. 
     Vrooman's opinion of the government's handling of the case 
     against Dr. Lee must be made with these facts in mind.
       Furthermore, when pressed for examples of supposed bias on 
     the part of the government, Mr. Vrooman fell short. At an 
     October 3, 2000 hearing of the Judiciary subcommittee on 
     Department of Justice Oversight, Senator Grassley pursued 
     this line of questioning. Senator Grassley asked for 
     information to substantiate Mr. Vrooman's allegation that 
     whenever Dr. Lee's motive [for the alleged espionage against 
     the United States] was discussed, it came down to ethnicity. 
     The following exchange occurred:

       Mr. Vrooman: Well, the Department of Justice representative 
     asked the FBI what Lee's motive was because it was not clear 
     to him and the response was an elaboration on how the Chinese 
     focus their efforts on ethnic Chinese. That is one example. 
     And there are others, conversations over the years since this 
     investigation proceeded, that that was the only motive.
       Senator Grassley: Okay. Could you point to any 
     documentation that would back up the point that was just 
     made?
       Mr. Vrooman: No, sir, I cannot.
       Senator Grassley: Or the points that you are making about 
     ethnicity being of prime concern?
       Mr. Vrooman: I do not believe there are any documents.\304\

       In fact, there are documents which describe Dr. Lee's 
     motives, but they run counter to what Mr. Vrooman alleges. In 
     the November 10, 1998 request for electronic surveillance on 
     Dr. Lee, the newly appointed FBI case agent describes several 
     incidents from Dr. Lee's past and states their relevance to 
     the issue of motive. One section of this November 1998 FISA 
     request from the Albuquerque office describes how Dr. Lee 
     sent numerous documents to Taiwan's Coordinating Council of 
     North America (CCNA) in the late 1970s and early 1980s, and 
     says that Dr. Lee told the FBI that:
       ``his motive for sending the publications was brought on 
     out of a desire to help in scientific exchange. During the 
     same interview, Dr. Lee stated that he helps other scientists 
     routinely, and had no desire to receive any monetary or any 
     other type of reward.''\305\
       The memo continues, saying the Albuquerque Division of the 
     FBI believes that Dr. Lee's actions in sending these 
     documents to a foreign government without proper 
     authorization ``shows that Wen Ho Lee has the propensity to 
     commit and engage in the crime of espionage to include 
     willingly providing documentation to foreign officials. . . 
     .''\306\ This discussion of motive makes no mention of Dr. 
     Lee's ethnicity. If documents or information provided to a 
     foreign government could injure the United States or aid a 
     foreign country, the crime of espionage has still been 
     committed even if the transfer was motivated by a desire to 
     promote scientific exchange and in the absence of a desire 
     for monetary reward.
       The November 10, 1998 memorandum also describes a meeting 
     at Los Alamos in early 1994 during which it became apparent 
     that Dr. Lee had a relationship with a top PRC nuclear 
     weapons scientist. A reliable source quoted this top PRC 
     nuclear scientist as saying of Dr. Lee, ``We know him very 
     well. He came to Beijing and helped us a lot.'' \307\ The 
     source further reported that Dr. Lee had helped the Chinese 
     Academy of Engineering Physics ``with various computational 
     codes used in fluid dynamics which is a very important aspect 
     of thermal nuclear [sic] weapons design work.'' \308\ The 
     Albuquerque memo cited these specific acts as showing ``Wen 
     Ho Lee's propensity to associate with foreign governments and 
     provide information to foreign governments and therefore the 
     propensity to aid in and commit acts of espionage.'' \309\ 
     These statements demonstrate clearly that the government's 
     assertions about Dr. Lee's motives were based on specific 
     acts he was known to have committed rather than on the fact 
     that he is ethnic Chinese. These specific acts gave the 
     government ample reason to investigate him and the 
     allegations of Mr. Vrooman and others, that the government 
     relied only on ethnic profiling, are simply incorrect.
       In fact, all of the arguments put forward by Dr. Lee's 
     lawyers on the racial profiling issue are a skewed 
     interpretation of the same point--namely the U.S. 
     government's recognition that the PRC intelligence services 
     focus on Chinese-Americans. Consider the second and third 
     examples cited in the discovery memorandum, where the defense 
     claims that former FBI Deputy Director Paul Moore has 
     confirmed that Dr. Lee was targeted by the FBI due to racial 
     profiling, and that the affidavit in support of a search 
     warrant for Dr. Lee's home claimed that Dr. Lee was more 
     likely to have engaged in espionage for the PRC because he 
     was ethnic Chinese. Neither of these claims stands up to even 
     the most minimal level of scrutiny because both are 
     misrepresentations of what was actually said.
       The defense memorandum on selective prosecution quotes 
     former FBI Deputy Director Paul Moore as saying in a 
     televised interview with Jim Lehrer on December 14, 1999:
       ``There is racial profiling based on ethnic background. 
     It's done by the People's Republic of China. . . . Now the 
     FBI comes along and it applies a profile, so do the other 
     agencies who do counter intelligence investigations they 
     apply a profile, and the profile is based on People's 
     Republic of China, PRC intelligence activities. So, the FBI 
     is committed to following the PRC's intelligence program 
     wherever it leads. If the PRC is greatly interested in the 
     activities of Chinese-Americans, the FBI is greatly 
     interested in the activities of the PRC as [regards] Chinese-
     Americans.'' \310\
       To say that the United States government is cognizant of 
     the fact that the PRC prefers to target individuals for 
     elicitation based on their ethnicity is completely different 
     from saying that an individual would be more likely to engage 
     in espionage because he or she is a member of a particular 
     ethnic group. The former statement about recruitment efforts 
     of PRC intelligence services would be a

[[Page 27675]]

     logical, relevant and acceptable observation so long as it 
     was based on fact. The latter statement, implying that an 
     individual would be more likely to engage in espionage on the 
     basis of his or her race, would be an outrageous, biased and 
     unacceptable claim that would have no place in any law 
     enforcement or counterintelligence investigation.
       In the Wen Ho Lee case, the government's assertions were 
     confined to acknowledging that the PRC focused on overseas 
     ethnic Chinese, without making inferences that the targeted 
     individuals would be more likely to respond positively 
     because of their Chinese heritage. The defense memorandum 
     cites FBI Special Agent Michael Lowe's April 9, 1999 
     affidavit in support of a search warrant, saying that it 
     leaves no doubt that improper racial profiling was a 
     substantial basis for the targeting of Dr. Lee. The defense's 
     assertion on this point is incorrect. In relevant part, the 
     affidavit says:
       ``. . . PRC intelligence operations virtually always target 
     overseas ethnic Chinese with access to intelligence 
     information sought by the PRC. Travel to China is an integral 
     element of the Chinese intelligence collection tradecraft, 
     particularly when it involves overseas ethnic Chinese. FBI 
     analysis of previous Chinese counterintelligence 
     investigations indicates that the PRC uses travel to China as 
     a means to assess closely and evaluate potential intelligence 
     sources and agents, as a way to establish and reinforce 
     cultural and ethnic bonds with China, and as a safehaven in 
     which to recruit, task, and debrief established intelligence 
     agents.'' \311\
       This does not allege that Dr. Lee is likely to have engaged 
     in espionage because he is ethnic Chinese, only that he is 
     likely to have been targeted by the PRC intelligence services 
     on that basis. All the defense memorandum shows is that if 
     there is any ethnic profiling done, it is done by the PRC. 
     Since the PRC had no role in the decision to investigate or 
     prosecute Dr. Lee, any bias on their part would be 
     irrelevant.
       It should be noted that Dr. Lee's request for discovery 
     related to selective prosecution contained several factual 
     errors, including an incorrect claim that no one else had 
     ever been prosecuted under the Atomic Energy Act, and an 
     incorrect claim that the Department of Justice had never 
     prosecuted anyone under the espionage statutes without 
     evidence that classified material had been transferred to a 
     third party. These claims were shown to be incorrect in the 
     government's response to Dr. Lee's discovery request.\312\
     The Relationship Between the Lees and the Government
       Shortly after Dr. Lee was fired from LANL, he retained Mark 
     Holscher as his counsel. On May 6, 1999, Mr Holscher released 
     the following statement, which clearly indicated that any 
     prosecution of Dr. Lee would have to deal with the Lees' 
     cooperation with the government:
       ``Dr. Wen Ho Lee has dedicated himself to the defense of 
     this country for the last 20 years. His work, much of which 
     is classified, has led directly to the increased Safety and 
     national security of all Americans, and he is responsible for 
     helping this country safely simulate nuclear tests.
       ``In 1986 and 1988, Dr. Lee went to Mainland China to 
     present papers at two technical conferences. Dr. Lee's 
     participation in these conferences was pre-approved and 
     encouraged by the Los Alamos Laboratory and the Department of 
     Energy. These same entities also cleared the texts of the 
     papers given at these conferences, which covered mathematics 
     and physics topics.
       ``The press has incorrectly reported that Dr. Lee made 
     ``several'' trips to Mainland China and also has failed to 
     report that his two trips were approved in advance by the Los 
     Alamos Laboratory and the Department of Energy. These two 
     approved trips were the only times Dr. Lee has ever traveled 
     to Mainland China. These false press reports do a disservice 
     both to Dr. Lee and the Los Alamos Laboratory.
       ``The press reports also fail to include the fact that Dr. 
     Lee presented similar papers at conferences in several 
     countries throughout Western Europe and other parts of the 
     world. The false insinuations that Dr. Lee went to Mainland 
     China in the late 1980s with an improper purpose are unfair. 
     Not only did Dr. Lee go to Mainland China to present a 
     technical paper, his and his wife's attendance were with the 
     full knowledge and approval of the Federal Bureau of 
     Investigation.
       ``There have been inaccurate press reports regarding the 
     circumstances surrounding Dr. and Mrs. Lee's cooperation with 
     the government. Mrs. Lee agreed to the FBI's request that she 
     assists it as a volunteer without pay in the FBI's efforts to 
     monitor Chinese scientists. She agreed to help the FBI with 
     the full knowledge and approval of Dr. Lee and continued to 
     do so for a number of years.
       ``At the request of the FBI, Dr. Lee's wife attended the 
     1986 conference with him, where she voluntarily provided 
     background information on Chinese scientists. Dr. and Mrs. 
     Lee supported and agreed with the FBI's request that Mrs. Lee 
     assist it in obtaining background information on Chinese 
     scientists. It simply defies logic for critics to now allege 
     that Dr. Lee was engaged in improper activities in Mainland 
     China while he and his wife were there.
       ``At no time during or after the pre-approved 1986 or 1988 
     trips did Dr. Lee ever provide any classified information 
     whatsoever to any representative of Mainland China, nor has 
     he ever given any classified information to any unauthorized 
     persons. As was anticipated and approved by the U.S. 
     government, Dr. Lee and his wife socialized with Chinese 
     scientists. It was fully understood by the Department of 
     Energy and the Los Alamos Laboratory that the conferences 
     included social events with the participants.'' \313\
       Had the case gone to trial, the government would have had 
     to confront the issue of its relationship with Dr. and Mrs. 
     Lee over a long period of time. As previously noted, Dr. Lee 
     assisted the FBI in a 1983-1984 investigation of a Lawrence 
     Livermore scientist. Notwithstanding the FBI's denial of any 
     assistance when the FISA request went forward in 1997, Dr. 
     Lee had, in fact, helped the FBI. Mrs. Lee's relationship 
     with the government would have been a substantially more 
     difficult matter to contend with.
       In one discovery request, Dr. Lee's defense team asked for, 
     among other things, all information related to ``Sylvia Lee's 
     Cooperation with the FBI and CIA.'' Citing grand jury 
     testimony of the FBI case agent on the Wen Ho Lee matter, the 
     defense memorandum said that:
       ``Sylvia Lee served as an FBI ``Information Asset'' between 
     1985 and 1991 in connection with visits to LANL by PRC 
     scientists. Her principal FBI contact was FBI Special Agent 
     David Bibb. On at least two occasions, Dr. Lee attended 
     meetings between Sylvia Lee and her FBI contact. Sylvia Lee 
     also met with [name redacted] and representatives of the LANL 
     internal security office to provide information concerning 
     PRC scientists.'' \315\
       In its response, the government claimed that it had 
     produced all documents related to Lee's cooperation with the 
     FBI. Further, the government argued that while Dr. Lee's 
     purported assistance to the government might be relevant to a 
     jury in considering his criminal intent pursuant to the 
     Atomic Energy Act counts, Mrs. Lee's ``affiliation with the 
     FBI and/or the CIA has no bearing on Lee's criminal intent.'' 
     \316\
       In a July 13, 2000 order, Judge Parker said that he would 
     address this issue by reviewing, in camera: (1) documents 
     reflecting Sylvia Lee's cooperation with the Federal Bureau 
     of Investigation (FBI), Central Intelligence Agency (CIA), 
     and the Department of Energy (DOE), and (2) certain FBI 
     memoranda regarding the propriety of prosecuting the 
     Defendant.\317\ After reviewing this information, the judge 
     ruled that it contained information relevant to the defense 
     in several categories of exculpatory information:
       1. [redacted];
       2. The Defendant's cooperation with and provision of 
     information to Government agencies;
       3. The Government agencies' assessments of cooperation by 
     and reliability of Sylvia Lee and the Defendant;
       4. The Defendant's actions that may be perceived to be 
     inconsistent with an intent to secure an advantage for a 
     foreign nation; and
       5. The Government agencies' conclusions about the 
     Defendant's motives.\318\
       The relationship between the government and the Lees would 
     not likely have been a major part of any trial, but it 
     certainly had the potential to embarrass the government. The 
     laws on intelligence oversight set out strict procedures for 
     establishing a reporting relationship or an asset 
     relationship with an American citizen. Press reports suggest, 
     for example, that Mrs. Lee provided information to both the 
     FBI and the CIA, including repeated contacts in the mid-1980s 
     where a CIA agent was present for the meetings and paid for 
     the hotel room where the meetings took place.\319\ If the 
     government had failed to conform to any of the laws or 
     regulations in these matters, it could expect the defense to 
     bring them up at trial.
       The Plea Agreement
       After Judge Parker ruled that Dr. Lee had to be released 
     pending trial, the landscape shifted markedly. By September 
     13, the government reached the plea agreement which has been 
     previously described. When the judge accepted the plea 
     agreement, Dr. Lee was set free, subject only to the 
     requirement that he undergo three weeks of intense 
     debriefing, subject himself to a polygraph on questions 
     related to the case, and remain available to cooperate with 
     the FBI for a period of one year.
       During the plea hearing, Judge Parker asked the government 
     to explain why the government considered the agreement to be 
     in the best interest of the nation. The government's lead 
     prosecutor, Mr. Stamboulidis, answered that the plea provided 
     the ``best chance to find out with confidence precisely what 
     happened to the classified material and data'' on the missing 
     tapes, which he said had been the government's ``transcending 
     concern.'' \320\ He also explained that the cooperation 
     agreement would allow the government to verify Dr. Lee's 
     statements, and that Dr. Lee would be at great risk if he 
     failed to fully cooperate or to be truthful. And, finally, 
     Mr. Stamboulidis said, ``this disposition avoids the public 
     dissemination of certain nuclear secrets which would have 
     necessarily occurred on the way towards proceeding towards 
     conviction in this case at trial.'' \321\

[[Page 27676]]

       The judge was not entirely convinced, asking ``why the 
     government argued so vehemently that Dr. Lee's release 
     earlier would have been an extreme danger to the government 
     at this time he, under the agreement, will be released 
     without any restrictions?'' \322\
       Referring to two sworn statements Dr. Lee had provided on 
     the morning of the plea hearing, Mr. Stamboulidis said that 
     Dr. Lee had finally, ``for the first time, given us these 
     assurances that he never intended any harm to our nation by 
     his mishandling these materials in an unlawful way and that 
     he never allowed them to fall into harm's way and compromise 
     national security.'' \323\
       Again, the judge was not persuaded, saying, ``Throughout 
     this case, the government has repeatedly questioned the 
     veracity of Dr. Lee. You're saying now, simply because he has 
     given a statement under oath, the government no longer 
     believes he is a threat to national security?'' \324\
       The judge appeared to be not so much concerned that the 
     plea agreement was inappropriate, but that it could have been 
     reached much sooner. He noted that the government had 
     rejected a written offer from Dr. Lee's attorneys to have Dr. 
     Lee explain the missing tapes under polygraph exam, which was 
     essentially the same deal the government got in the end 
     (minus the felony count). Judge Parker also reminded counsel 
     for both sides that at the December detention hearing he had 
     asked the parties to pursue the offer made by Mr. Holscher, 
     but nothing came of it. Mr. Stamboulidis took issue with the 
     judge, saying that after the indictment, the offer had been 
     withdrawn, to which Judge Parker replied:
       ``Nothing came of it, and I was saddened by the fact that 
     nothing came of it. I did read the letters that were sent and 
     exchanged. I think I commented one time that I think both 
     sides prepared their letters primarily for use by the media 
     and not by me. Notwithstanding that, I thought my request was 
     not taken seriously into consideration.'' \325\
       The net effect of Judge Parker's questions and the 
     government's apparent reversal on the matter of the threat 
     posed by Dr. Lee created the impression that the case had 
     collapsed. This led to some sharp questions to the Attorney 
     General and FBI Director Freeh at the September 2000 hearing. 
     Director Freeh explained that serious negotiations about a 
     plea agreement had begun during the summer at the direction 
     of Judge Parker, and reiterated that the over-arching reason 
     for the government's decision to make the agreement was to 
     find out what happened to the tapes.\326\
       After noting that he and the Attorney General were in total 
     agreement with the decision on the plea deal, Director Freeh 
     outlined five other factors which figured into the 
     government's decision which are summarized below:
       1. Judge Parker's strong suggestion that the case was 
     appropriate for mediation rather than trial;
       2. Judge Parker's rulings in favor of the defendant in 
     initial proceedings under CIPA, which made it appear that Dr. 
     Lee might succeed in his attempt at graymail because the 
     judge's reasoning left little room to expect that the 
     government would prevail;
       3. Judge Parker's August ruling (although stayed by the 
     Tenth Circuit) that created the ``very real prospect that Dr. 
     Lee would soon be released in any event under conditions that 
     we pointed out to the judge were inadequate to prevent Dr. 
     Lee's communications with others.''
       4. The potential that the trial would become a ``battle of 
     the experts'' with regard to the classification level and 
     importance of the material on the tapes; and
       5. The fact that ``the FBI's lead case agent had had to 
     correct erroneous testimony from the initial detention 
     hearing,'' including the agent's misstatement about Dr. Lee 
     telling another scientist he wanted to use his computer to 
     download a resume (when Dr. Lee had actually said he wanted 
     to download some files), and the agent's overstatement of 
     evidence relating to whether Dr. Lee had sent letters to find 
     outside employment.\327\
       Director Freeh's statements provide a compelling rationale 
     for the government's decision to accept the plea agreement. 
     What has not been adequately explained, however, is the 
     decision to keep Dr. Lee in such onerous conditions of 
     pretrial confinement. After careful review, it becomes 
     apparent that the government was right to reach a plea 
     agreement with Dr. Lee, whose actions did constitute a 
     serious threat to the national security, but was wrong to 
     hold him virtually incommunicado in pretrial confinement for 
     more than nine months.


                                Endnotes

       1. ``Plea and Disposition Agreement,'' United States vs. 
     Wen Ho Lee, Criminal No. 99-1417 JP, 13 September 2000: 2.
       2. Although the request that was rejected by the Department 
     of Justice's Office of Intelligence Policy and Review did not 
     ask for computer surveillance, both the FBI and the DoJ 
     acknowledge that this would have become part of any approved 
     surveillance plan.
       3. House of Representatives, ``Report of the Select 
     Committee on U.S. National Security and Military/Commercial 
     Concerns with the People's Republic of China,'' 105th 
     Congress, 2d Session, Report 105-851, 25 May 1999. [Hereafter 
     Cox Committee Report]
       4. Carla Anne Robbins, ``China Got Secret Data on U.S. 
     Warhead,'' Wall Street Journal, January 7, 1999: 1.
       5. Robbins, 1.
       6. Robbins, 1.
       7. James Risen and Jeff Gerth, ``Breach at Los Alamos: A 
     Special Report,'' New York Times, March 5, 1999: A1.
       8. Risen and Gerth, 1.
       9. Risen and Gerth, 1. It should be noted that the New York 
     Times, generally, and Risen and Gerth specifically, came 
     under fierce attack for their original article, which was 
     said to have vastly overstated the case against Dr. Lee. 
     Shortly after Dr. Lee was freed in September 2000, the NYT 
     published a statement finding fault with its coverage of the 
     case, and promising a thorough review of the matter, which 
     was published in a two-article series in February 2001. See 
     Matthew Purdy, ``The Making of a Suspect: The Case of Wen Ho 
     Lee,'' New York Times, February 4, 2001: 1, and Matthew Purdy 
     and James Sterngold, ``The Prosecution Unravels: The Case of 
     Wen Ho Lee,'' New York Times, February 5, 2001: 1.
       10. Risen and Gerth, 1.
       11. Josef Hebert, ``Government scientist involved in probe 
     is fired,'' Associated Press, March 8, 1999: 1.
       12. James Risen, ``U.S. Fires Scientist Suspected of Giving 
     China Bomb Data,'' New York Times, March 9, 1999: A1.
       13. Risen, 1.
       14. See Cox Committee Report, Volume I, 90-91.
       15. See ``Science at its Best, Security at its Worst: A 
     Report on Security Problems at the U.S. Department of 
     Energy,'' A Special Investigative Panel of the President's 
     Foreign Intelligence Advisory Board, June 1999.
       16. Senate Governmental Affairs Committee Chairman Fred 
     Thompson (R-TN) and Ranking Minority Member Joseph Lieberman 
     (D-CT), statement, ``Department of Energy, FBI, and 
     Department of Justice Handling of the Espionage Investigation 
     into the Compromise of Design Information on the W-88 
     Warhead,'' August 5, 1999: 1.
       17. The initial plan was to commission a Task Force, which 
     I would chair. By October, Senator Hatch had prepared a 
     resolution transferring me from the Constitution Subcommittee 
     to the subcommittee on Administrative Oversight and the 
     Courts, and spelling out the areas of inquiry and special 
     procedures applicable to the investigation. In the end, the 
     subcommittee's investigation was conducted pursuant to two 
     subpoena resolutions which spelled out, in general terms, the 
     investigative mandate. The first subpoena resolution, adopted 
     by a vote of 18-0 on October 14, 1999, authorized the 
     charirman, in consultation with the ranking member, to issue 
     a subpoena requiring the Attorney General to produce certain 
     documents if they were not delivered voluntarily. The second 
     resolution, authorizing subpoenas in 38 categories for 
     individuals and documents, was approved (not unanimously) on 
     November 17, after a narrower proposal by Senator Leahy was 
     rejected.
       18. The indictment alleged violations of the following 
     sections of the U.S. Code: 42 USC 2276, 42 USC, 2275, 18 USC 
     793(c), and 18 USC 793(e).
       19. The term ``Restricted Data'' means all data concerning: 
     (1) the design, manufacture or utilization of atomic weapons: 
     (2) the production of special nuclear material; or (3) the 
     use of special nuclear material in the production of energy. 
     42 U.S.C. Sec. 2014(y).
       20. United States Senate, ``Joint Hearing on the Wen Ho Lee 
     Case,'' before the United States Senate Select Committee on 
     Intelligence and Committee on the Judiciary. 106th Congress, 
     2nd Session, September 26, 2000: 38. Testimony of FBI 
     Director Louis Freeh. [Hereafter ``Joint Hearing'']
       21. Stephen Younger, ``Transcript of Proceedings, Detention 
     Hearing in the case of United States vs. Wen Ho Lee,'' 
     December 13, 1999: 38. [Hereafter, Transcript of Proceedings, 
     Detention Hearing, December 13, 1999]
       22. Transcript of Proceedings, Detention Hearing, December 
     13, 1999, 38.
       23. Transcript of an in camera proceeding held on December 
     29, 1999, United States v. Wen Ho Lee, 59.
       24. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     5, 2001, online edition.
       25. Transcript of Proceedings before The Honorable James A. 
     Parker, U.S. v. Wen Ho Lee, September 13, 2000: 55 [Hereafter 
     Plea Hearing, September 13, 2000]
       26. Plea Hearing, September 13, 2000: 58.
       27. ``President Clinton calls Lee case `troubling' '', CNN 
     website September 14, 2000.
       28. Transcript of Proceedings, Motion Hearing, December 27, 
     1999: 49. [Hereafter Motion Hearing].
       29. This information was drawn from Dr. Lee's web site at 
     http://wenholee.org/whois.htm.
       30. Michael W. Lowe, ``Application and Affidavit for Search 
     Warrant,'' April 9, 1999: 1-2.
       31. United States of America, ``Response to Defendant Wen 
     Ho Lee's Motion to Revoke Judge Svet's Order of Detention,'' 
     December 23, 1999: 10. See also, United States Senate, 
     Committee on the Judiciary, Redacted Transcript of Closed 
     Hearing with Attorney General Janet Reno Regarding the FISA 
     Process in the Wen Ho Lee Case, June 8, 1999: 14-16.

[[Page 27677]]


       32. USA, ``Response,'' 10. See also, United States Senate, 
     Committee on the Judiciary. Redacted Transcript of Closed 
     Hearing with Attorney General Janet Reno Regarding the FISA 
     Process in the Wen Ho Lee Case, June 8, 1999: 15. [Hereafter, 
     Redacted Transcript]
       33. Redacted Transcript, 15.
       34. Redacted Transcript, 15.
       35. ``Response to Defendant Wen Ho Lee's Motion to Revoke 
     Judge Svet's Order of Detention,'' December 23, 1999: 13, 
     footnote 4.
       36. Ian Hoffman, ``Agent: Lee Admitted Lying,'' Albuquerque 
     Journal, January 18, 2000, online edition.
       37. Redacted Transcript, 16.
       38. The FBI could tell from the text of the intercepted 
     call that Dr. Lee had heard of the other scientist through a 
     mutual friend. What the FBI could not learn from that call, 
     and what Dr. Lee did not fully explain until sometime later, 
     was that he had learned about the other scientist when he 
     visited LLNL in October, 1982. His actions upon learning 
     about the other scientist's situation are of particular 
     importance.
       39. See declassified transcript of closed portion of 
     detention hearing on December 29, 1999, during which FBI 
     Special Agent Robert Messemer characterizes the fact that Dr. 
     Lee called the Coordination Council of North America at the 
     same time he was calling the LLNL scientist as more troubling 
     then the fact that he lied to the FBI about having called the 
     LLNL scientist.
       40. United States Senate, Joint Hearing before the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2001: 72.
       41. Draft #3 of the 1997 FISA request, 10.
       42. Redacted Transcript, 16-17; Thompson and Lieberman 
     Statement, 6, 16.
       43. James Risen and David Johnston. ``U.S. Will Broaden 
     Investigation of China Nuclear Secrets Case,'' New York 
     Times, September 23, 1999, Online Edition.
       44. FBI Director Freeh testified at a joint hearing of the 
     Senate Judiciary and Select Intelligence Committees on 
     September 26, 2000 that ``the FBI's investigation into this 
     1994 matter was still ongoing when Dr. Lee emerged as a 
     potential subject in the 1996 administrative inquiry.  .  .  
     . Being aware of the potential interest in Dr. Lee, and not 
     wanting to take any steps that would interfere with the 
     inquiry or expose the FBI's interest in him, FBI headquarters 
     and FBI Albuquerque agreed to hold the investigation of the 
     1994 investigation in abeyance.'' See hearing transcript, 46-
     47. At another hearing the following week, Mr. Trulock 
     testified, however, that ``The DOE/FBI's team's first visit 
     to the laboratory occurred in 1996.  .  .  . DOE first 
     learned of Dr. Wen Ho Lee when he was brought to our 
     attention by Robert Vrooman in January of 1996.  .  .  .'' 
     See Judiciary Committee hearing, October 3, 2000: 43.
       45. Thompson and Lieberman Statement, 6, footnote 14.
       46. Redacted Transcript, 108-109.
       47. Redacted Transcript, 109.
       48. Redacted Transcript, 109.
       49. Ian Hoffman, ``Lawyer: Lee's Intent in Question,'' 
     Albuquerque Journal, Jan- 
     uary 5, 2000, at http://wenholee.org/ABQJournal010500.htm.
       50. For a discussion of this issue, see Motion Hearing, 
     147-157.
       51. Motion Hearing, 152-153.
       52. DOE Assistant Secretary for Congressional and 
     Intergovernmental Affairs John C. Angell, letter to Senator 
     Charles Grassley of December 20, 2000, responding to written 
     questions submitted by Senator Arlen Specter following a 
     September 27, 2000, hearing of the Senate Judiciary 
     Subcommittee on Administrative Oversight and the Courts: 21.
       53. See John Angell's December 20, 2000 letter to Senator 
     Grassley, 20.
       54. Even if DOE computer personnel and counterintelligence 
     were unaware that Dr. Lee was under investigation by the FBI, 
     and that would have been possible in 1994, it would not have 
     been inappropriate for DOE to share records of systems like 
     NADIR with the FBI. This has the benefit of allowing the FBI 
     to find out if any individuals are being flagged by security 
     and monitoring systems, without alerting computer personnel 
     to the investigation.
       55. United States of America, ``Response to Defendant Wen 
     Ho Lee's Motion to Revoke Judge Svet's Order of Detention,'' 
     December 23, 1999.
       56. The ``walk-in'' document is so named because an 
     individual provided this information to the United States 
     without being solicited for it, in other words, he ``walked-
     in'' with the information. The documents he provided 
     contained classified nuclear weapons information.
       57. Energy Secretary William Richardson, letter to FBI 
     Director Louis J. Freeh, of October 29, 1999L 1.
       58. For example, a September 16, 1996 FBI 302 from an 
     interview of a scientist says that in September 1995 the KSAG 
     met and ``there was no disagreement that `Restricted Data' 
     information had been acquired by the Chinese. The only 
     disagreement was over how valuable the information was.''
       59. DOE Administrative Inquiry, 38.
       60. DOE Administrative Inquiry, 36.
       61. DOE Administrative Inquiry, 38.
       62. See FBI 302 dated September 2, 1999, from an interview 
     of the FBI agent who was detailed to assist with the AI, 4.
       63. FBI teletype from FBIHQ to FBI-AQ, dated August 20, 
     1996: 3.
       64. FBI 302 dated 9/16/96 (from an interview on 9/13/96) of 
     a LANL scientist, 2.
       65. William Broad, ``Spies Versus Sweat: The Debate Over 
     China's Nuclear Advance,'' New York Times, September 7, 1999, 
     Online Edition.
       66. Vernon Loeb and Walter Pincus. ``China Prefers the Sand 
     to the Moles,'' Washington Post, December 12, 1999, A02.
       67. United States House of Representatives, Report of the 
     Select Committee on U.S. National Security and Military/
     Commercial Concerns With the People's Republic of China, May 
     25, 1999: Volume 1, 83-84. [Hereinafter, Cox Report] A 
     ``walk-in'' is an individual who voluntarily offers to 
     conduct espionage.
       68. President's Foreign Intelligence Advisory Board. 
     Science at its Best; Security at its Worst, June 1999, 30-31.
       69. Thompson and Lieberman Statement, 6-7.
       70. X-Division Open LAN Rules of Use, Executed by Dr. Wen 
     Ho Lee on April 19, 1995.
       71. United States Senate, Senate Select Committee on 
     Intelligence, testimony of FBI Director Louis J. Freeh at a 
     ``Closed Hearing,'' May 19, 1999: 34.
       72. Thompson and Lieberman Statement, 9.
       73. ``Richardson Announces Results of Inquiries Related to 
     Espionage Investigation,'' Department of Energy News Release, 
     August 12, 1999.
       74. Thompson and Lieberman Statement, 9.
       75. This list has been extracted from the August 5, 1999, 
     Statement by Senate Governmental Affairs Committee Chairman 
     Fred Thompson and Ranking Minority Member Joseph Lieberman, 
     Department of Energy, FBI, and Department of Justice Handling 
     of Espionage Investigation into the Compromise of Design 
     Information on the W-88 Warhead, 14-17.
       76. Hydrodynamics is a science that is relevant to the 
     development of nuclear weapons designs.
       77. See Redacted Transcript, 35 and 88.
       78. Bellows Report, 482.
       79. Redacted Transcript, 118-119.
       80. Redacted Transcript, 52. In a March 6, 2000 letter from 
     Assistant Attorney General Robert Rabin to Senator Hatch, the 
     Department of Justice takes issue with this statement, and 
     quotes Senator Kyl's testimony on the subject: ``So it would 
     be your view that [the language quoted in the draft report] 
     is a summary that probably overstates the Justice 
     Department's requirements for the FBI? The Attorney General 
     responded: ``That is correct.'' Transcript of June 8, 1999 at 
     49.'' [sic] For the actual exchange, see page 53 of the June 
     8, 1999 transcript.
       81. Redacted Transcript, 52.
       82. Redacted Transcript, 52.
       83. Unclassified excerpt of Mr. Seikaly's testimony before 
     the Senate Select Committee on Intelligence, May 1999.
       84. Bellows Report, 548.
       85. Redacted Transcript, 49.
       86. Redacted Transcript, 49.
       87. Redacted Transcript, 24-25.
       88. Redacted Transcript, 39.
       89. Redacted Transcript, 39.
       90. Bellows Report, 549.
       91. Redacted Transcript, 40.
       92. Redacted Transcript, 36.
       93. Redacted Transcript, 56.
       94. Redacted Transcript, 117.
       95. Redacted Transcript, 117.
       96. Bellows Report, 541.
       97. Motion Hearing, 85. See also Pete Carey, ``Los Alamos 
     Suspect May Have Been Doing His Job: Rerouting Files Common 
     at Lab,'' Florida Times-Union, June 20, 1999, G-8.
       98. ``With Intent to Injure the U.S.'' Washington Times, 
     editorial, December 4 1999, A16.
       99. United States of America, ``Response to Defendant Wen 
     Ho Lee's Motion to Revoke Judge Svet's Order of Detention,'' 
     December 23, 1999, 3-4.
       100. Hoffman.
       101. Thompson and Lieberman Statement, 23-24.
       102. Unclassified summary of the December 19, 1997, FBIHQ 
     teletype to Albuquerque, provided by FBI Office of Public and 
     Congressional Affairs, December 3, 1999.
       103. FISA Request, November 10, 1998: 11.
       104. FISA Request, November 10, 1998: 11.
       105. FISA Request, November 10, 1998: 11.
       106. FISA Request, November 10, 1998: 11.
       107. FISA Request, November 10, 1998: 11.
       108. FISA Request, November 10, 1998: 11-12.
       109. FISA Request, November 10, 1998: 12.
       110. FBI memorandum, [title redacted], from FBI National 
     Security Division to FBI-AQ, dated December 10, 1998: 1-2.
       111. PFIAB, 34.
       112. See the undated, unsigned memorandum provided to the 
     subcommittee by the FBI Office of Congressional Affairs in 
     December 1999.
       113. See the undated, unsigned memorandum provided to the 
     subcommittee by the FBI Office of Congressional Affairs in 
     December 1999.
       114. See the undated, unsigned memorandum provided to the 
     subcommittee by the FBI Office of Congressional Affairs in 
     December 1999.

[[Page 27678]]


       115. FBI EC from Albuquerque to FBIHQ, dated December 8, 
     1998: 1.
       116. See the letter of DOE Assistant Secretary for 
     Congressional and Intergovernmental Affairs John Angell to 
     Senator Arlen Specter of December 20, 2000, which encloses 
     answers prepared by Mr. Curran to follow-up questions from 
     the September 27, 2000 hearings of the Judiciary Subcommittee 
     on Administrative Oversight and the Courts.
       117. It is troubling that the level of attention paid to 
     Dr. Lee's activities in 1998 was so low, and the coordination 
     between DOE and FBI was so poor, that counterintelligence 
     personnel did not even learn of his previous trip to Taiwan, 
     in March-April 1998, until after he was already out of the 
     United States.
       118. See the letter of DOE Assistant Secretary for 
     Congressional and Intergovernmental Affairs John Angell to 
     Senator Arlen Specter of December 20, 2000, which encloses 
     answers prepared by Mr. Curran to follow-up questions from 
     the September 27, 2000 hearing of the Judiciary Subcommittee 
     on Administrative Oversight and the Courts.
       119. See the letter of DOE Assistant Secretary for 
     Congressional and Intergovernmental Affairs John Angell to 
     Senator Arlen Specter of December 20, 2000, which encloses 
     answers prepared by Mr. Curran to follow-up questions from 
     the September 27, 2000 hearing of the Judiciary Subcommittee 
     on Administrative Oversight and the Courts.
       120. See 1999 Report of DOE Inspector General regarding Dr. 
     Lee's clearance and access, 101.
       121. At the December 14, 1999 meeting in which Director 
     Freeh asked the subcommittee to suspend its oversight of the 
     Wen Ho Lee case, Mr. Curran was asked about an FBI memo from 
     February 1999 which claimed that Mr. Curran had instructed 
     his personnel not to share the charts and videotape of the 
     December 1998 polygraph with the FBI. After seeing an early 
     draft of the interim report. Mr. Curran wrote a letter on 
     January 31, 2000, denying the information in the FBI report. 
     He also sent a copy of a letter he had received from FBI 
     Assistant Director Neil Gallagher, which described the memo 
     in question as a ``blind memo'', not intended to capture 
     actual witness statements.
       122. Ed Curran, Director, DOE Office of 
     Counterintelligence, letter to Senator Arlen Specter, January 
     31, 2000: 2-3.
       123. See the letter of 20 December 2000 from John C. 
     Angell, Assistant Secretary of Congressional and 
     Intergovernmental Affairs, Department of Energy to Senator 
     Charles Grassley, which enclosed responses from Mr. Curran to 
     22 questions from Senator Specter.
       Wackenhut is a private company that has a contract with DOE 
     to perform security related polygraphs.
       125. Matthew Purdy, ``The Making of a Suspect: The Case of 
     Wen Ho Lee,'' New York Times, February 4, 2001, online 
     edition.
       126. ``Department of Energy Chronology,'' May 6, 1999: 7-8.
       127. United States Senate, Subcommittee on Administrative 
     Oversight and the Courts of the Committee on the Judiciary, 
     ``Continuation of Oversight of the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, 27 September 2000: 62. [Hereafter, 27 
     September 2000 hearing]
       128. 27 September 2000 hearing: 62-63.
       129. FBI Assistant Director for National Security Neil 
     Gallagher, Memorandum of 18 December 1998: 1.
       130. 27 September 2000 hearing: 32.
       131. United States Senate, Senate Select Committee on 
     Intelligence, ``Closed Hearing,'' 106th Congress, 2nd 
     Session, May 19, 1999: 7.
       132. FBI Supervisory Special Agent C.H. Middleton to Ms. 
     Horan, dated January 21, 1999: 2.
       133. DOE IG Gregory H. Friedman, letter to Senator Arlen 
     Specter of October 2, 2000, enclosing a declassified segment 
     of a 1999 Report by the IG. This information comes from page 
     113 of the full report.
       134. DOE IG Gregory H. Friedman, letter to Senator Arlen 
     Specter of October 2, 2000, enclosing a declassified segment 
     of a 1999 Report by the IG. This information comes from page 
     115 of the full report.
       135. DOE IG Gregory H. Friedman, letter to Senator Arlen 
     Specter of October 2, 2000, enclosing a declassified segment 
     of a 1999 Report by the IG. This information comes from page 
     116 of the full report.
       136. Deposition of Supervisory Special Agent Craig Schmidt 
     by Mr. Eric George of the Senate Committee on the Judiciary 
     staff, 29 July 1999: 91.
       137. U.S. Department of Energy Psychophysiological 
     Detection of Deception (PDD) Examination Report, File #99-2A-
     003, December 23, 1998, statement of Wolfgang Vinskey.
       138. U.S. Department of Energy Psychophysiological 
     Detection of Deception (PDD) Examination Report, File #99-2A-
     003, December 23, 1998, statement of John P. Mata.
       139. John P. Mata, memorandum ``Psychophysiological 
     Detection of Deception (PDD) Examination of Wen Ho Lee,'' for 
     Edward Curran, December 28, 1998: 3-4.
       140. This memo was undoubtedly after Mr. Mata received a 
     call from Ed Curran who was told on December 14, 1999 of an 
     FBI document which said that the FBI had not initially been 
     able to get access to the charts, per instructions from Ed 
     Curran.
       141. John P. Mata, Memorandum for the Record, 
     ``Recollection of Events Regarding DOE Polygraph Examination 
     of Wen Ho Lee, December 23, 1998,'' December 21, 1999: 2.
       142. John P. Mata, Memorandum for the Record, 
     ``Recollection of Events Regarding DOE Polygraph Examination 
     of Wen Ho Lee, December 23, 1998,'' December 21, 1999: 2.
       143. John P. Mata, Memorandum for the Record, 
     ``Recollection of Events Regarding DOE Polygraph Examination 
     of Wen Ho Lee, December 23, 1998,'' December 21, 1999: 2.
       144. OCI Polygraph Program Manager David M. Renzleman, 
     Polygraph Program Record of Quality Assurance, undated, 1.
       145. OCI Polygraph Program Manager David M. Renzleman, 
     Polygraph Program Record of Quality Assurance, undated, 2.
       146. See FBI Headquarters internal memo dated February 2, 
     1999 and or February 6, 1999 on the same subject.
       147. United States Senate, Committee on Governmental 
     Affairs, Testimony from June 9, 1999 closed hearing: 145.
       148. Undated FBI response to questions for the record 
     submitted by Senator Arlen Specter following the Senate 
     Judiciary Subcommittee on Department of Justice Oversight 
     hearing, ``Continuation of Oversight on the Wen Ho Lee 
     Case,'' on September 27, 2000: 1.
       149. FBI ASAC William Lueckenhoff, memorandum to DAD Sheila 
     Horan, February 26, 1999: 1.
       150. DOE IG Gregory H. Friedman, letter to Senator Arlen 
     Specter of October 2, 2000, enclosing a declassified segment 
     of a 1999 Report by the IG. This information comes from page 
     116 of the full report.
       151. FBI Assistant Director Neil J. Gallagher, letter to 
     Mr. Edward J. Curran of January 4, 2000: 1.
       152. Ian Hoffman, ``Lee Denied Bail; Court Cites Risk,'' 
     Albuquerque Journal, December 30, 1999: A1.
       153. Sharyl Attkisson, ``Wen Ho Lee's Problematic 
     Polygraph,'' February 4, 2000, accessed at http://
www.cbsnews.com/now/story/0,1597,157220-412,00.shtml. 
     [Hereafter, ``Wen Ho Lee's Problematic Polygraph'']
       154. ``Wen Ho Lee's Problematic Polygraph.''
       155. ``Wen Ho Lee's Problematic Polygraph.''
       156. ``Wen Ho Lee's Problematic Polygraph.''
       157. Dr. Michael Capps, Deputy Director of Developmental 
     Programs, Defense Security Service, letter to Senator Arlen 
     Specter of June 25, 2001: 1. [Hereafter, Capps letter]
       158. Capps letter, 2-3.
       159. Capps letter, 3.
       160. Capps letter, 4.
       161. Richard W. Keifer, letter to Senator Arlen Specter of 
     June 26, 2001, ``Your letter of May 22, 2001 regarding the 
     Dr. Wen Ho Lee polygraph Examination on December 23, 1998,'' 
     1. [Hereafter, Keifer letter.]
       162. Keifer letter, 3.
       163. Keifer letter, 3.
       164. Keifer letter, 5.
       165. Assistant Attorney General Daniel J. Bryant, letter to 
     Senator Patrick Leahy and Senator Arlen Specter of June 28, 
     2001.
       166. FBI ``Chronology of Significant Events Between 12/23/
     98 and 2/10/99,'' prepared for use by FBI Director Louis 
     Freeh at a joint hearing of the Senate Select Committee on 
     Intelligence and the Senate Judiciary Committee on September 
     26, 2000: 1. [Hereafter, FBI Unclassified Chronology.]
       167. DOE IG Gregory H. Friedman, letter to Senator Arlen 
     Specter of October 2, 2000, enclosing a declassified segment 
     of a 1999 Report by the IG. This information comes from page 
     116 of the full report.
       168. Assistant Secretary of Energy for Congressional and 
     Intergovernmental Affairs John Angell, letter to Senator 
     Grassley responding to questions from Senator Arlen Specter 
     after a hearing before the Judiciary Subcommittee on 
     Administrative Oversight and the Courts on September 27, 
     2000: 17.
       169. Undated FBI response to questions for the record from 
     Senator Arlen Specter following a hearing of the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' of 
     September 27, 2000: 1.
       170. FBI Chronology of Wen Ho Lee Investigation 1999-2000: 
     12.
       171. Transcript of Proceedings, 118.
       172. For a detailed discussion of Dr. Lee's deletions and 
     his call to the computer help line, see ``Transcript of 
     Proceedings, Motion Hearing, December 27, 1999,'' United 
     States of America vs. Wen Ho Lee, pages 132-138.
       173. Transcript of Proceedings, 146.
       174. Thompson and Lieberman Statement, 26.
       175. For a detailed discussion of the computer code issue, 
     see the transcript of Attorney General Reno's testimony 
     before the Senate Judiciary Committee on June 8, 1999, 108-
     109 {as numbered in the lower-right-hand corner}.
       176. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     5, 2001, online edition.
       177. Matthew Purdy, ``The Making of a Suspect: The Case of 
     Wen Ho Lee,'' New York Times, February 4, 2001, online 
     edition. Unless otherwise noted, the description of the 
     government's actions in the first week of March 1999 is taken 
     from this article.

[[Page 27679]]


       178. Matthew Purdy, ``The Making of a Suspect: The Case of 
     Wen Ho Lee,'' New York Times, February 4, 2001, online 
     edition.


       179. In his written statement to the Joint Hearing of the 
     Senate Select Committee on Intelligence and the Judiciary 
     Committee on September 26, 2000, Director Freeh said, ``One 
     approach that was taken during that interview was not 
     consistent with the conduct expected of agents during an 
     interview. Specifically, Dr. Lee was reminded of the fate of 
     Julius and Ethel Rosenberg, who were executed for espionage. 
     Confrontational interviews often call for tough statements by 
     investigators, but that implication was inappropriate. Again, 
     Dr. Lee ended the interview without providing any useful 
     information and without giving any indication of the actions 
     to which he has now pled guilty.'' When asked by Senator 
     Specter at the September 26 hearing about the Rosenberg 
     reference and the harsh conditions of confinement and the 
     inference that these measures might be intended to coerce a 
     confession, Director Freeh responded, ``I would disagree very 
     strongly with the suggestion or the notion that anything was 
     done with respect to confinement, or anything else in this 
     case, to improperly or unfairly treat Dr. Lee.'' See hearing 
     transcript, 81.
       180. For a discussion of the issue of how Dr. Lee's name 
     was leaked to the press, see pages 53, 54, 64 and 65 of the 
     transcript of the Senate Judiciary Subcommittee on Department 
     of Justice Oversight hearing on October 3, 2000, during which 
     Mr. Trulock says that NYT reporter James Risen told him that 
     Energy Secretary Richardson leaked Dr. Lee's name to the 
     media. Secretary Richardson vehemently denied being the 
     source of the leak, both in a letter to Senator Hatch on 
     October 3, 2000, in which he said he had received a letter 
     from Senator Specter requesting a hearing on the basis of Mr. 
     Trulock's statement. In reply, Secretary Richardson said, 
     ``Mr. Risen has denied that he made this statement to Mr. 
     Trulock, and I categorically deny that I shared Mr. Lee's 
     name with Mr. Risen.'' Secretary Richardson made the same 
     denials to Senator Specter in a meeting on October 5, 2000, 
     but a review of the articles in question shows that Secretary 
     Richardson gave an on the record interview in which he named 
     Dr. Lee and made several comments about his lack of 
     cooperation. Although Dr. Lee's name had first appeared in 
     the press in an AP article the day before, Secretary 
     Richardson confirmed on the record that Dr. Lee was the 
     individual who had been fired for security violations.
       181. See, for example, the September 28, 1999 press release 
     from the FBI National Press Office which states that Special 
     Agent in Charge Steve Dillard ``has been appointed as 
     Inspector in Charge of a task force composed of FBI Special 
     Agents and analysts that will investigate the possible theft 
     or compromise of classified information from United States 
     nuclear laboratories. . . .'' The full text of the press 
     release is available at http://www.fbi.gov/pressrm/pressrel/
dillard.htm.
       182. Attorney General Janet Reno and FBI Director Louis 
     Freeh, letter to Senator Orrin Hatch, October 1, 1999: 1.
       183. FBI Albuquerque EC to FBI HQ of January 22, 1999: 2.
       184. FBI Albuquerque EC to FBI HQ of January 22, 1999: 3-4.
       185. He made similar representations in other briefings 
     provided to Senate staff.
       186. Gallagher, letter of November 10, 1.
       187. Gallagher, letter of November 10, 2.
       188. Robert H. Hast, Managing Director of the General 
     Accounting Office's Office of Special Investigations, letter 
     to Senators Arlen Specter, Charles Grassley and Robert 
     Torricelli, ``Subject: FBI Official's Congressional Testimony 
     Was Inaccurate Because He Failed to Present Certain 
     Information That Had Been Made Available to Him About the Wen 
     Ho Lee Investigation,'' of June 28, 2001: 1.
       189. FBI Albuquerque, ``Changed: FBI-DOE National 
     Laboratory Assessment. . . .'' July 9, 1999: 6.
       190. FBI Albuquerque, ``Changed: FBI-DOE National 
     Laboratory Assessment. . . .'' August 26, 1999: 6-7.
       191. See ``DCI Statement on Damage Assessment,'' at http://
www.cia.gov/cia/public_affairs/press_release/ps042199.html, 
     and the ``Key Findings'' at http://www.cia.gov/cia/
public_affairs/press_release/0421kf.html.
       192. Cox Committee Report, Vol 1, 68.
       193. Cox Committee Report, Vol 1, 83-84.
       194. According to a chronology prepared by the Justice 
     Department, the discovery occurred on March 23, 1999. That it 
     took more than two weeks after Dr. Lee had been dismissed 
     from LANL (and nearly three weeks after he gave permission to 
     search his office) to find this document is very troubling.
       195. United States Senate, Joint Hearing of the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2000: 52.
       196. FBI Director Louis J. Freeh, ``STATEMENT BY FBI 
     DIRECTOR LOUIS J. FREEH,'' September 13, 2000: 2.
       197. Transcript of Proceedings, United States v. Wen Ho 
     Lee, September 13, 2000: 34-37.
       198. Transcript of Proceedings, United States v. Wen Ho 
     Lee, September 13, 2000: 48-50.
       199. Although the subcommittee has not had access to the 
     files from the criminal case against Dr. Lee, it should be 
     noted that none of the information otherwise available 
     suggests that the government applied for a Title III wiretap 
     between March and December 1999. If the government was 
     concerned that he might somehow communicate the existence of 
     the tapes to a third party, it should have requested a 
     wiretap. It may be that the wiretap was requested and 
     received, but the absence of any such request would strongly 
     undermine the government's claim that restricting his 
     communications was necessary to protect the tapes.
       200. Unless otherwise noted, all the information in this 
     section is drawn from a chronology prepared by the Department 
     of Justice and forwarded to the Senate Judiciary Committee on 
     June 22, 2001.
       201. Mark Holscher, letter to Robert Gorence and John 
     Hudenko, of March 10, 1999: 1. [DOJ-WHL-00001-00002]
       202. FBI Chronology of Wen Ho Lee investigation from 1999-
     2000: 2.
       203. Mark Holscher, letter to John Kelly, of March 19, 
     1999: 1-2. [DOJ-WHL-00005-00006]
       204. The Chronology of Wen Ho Lee investigation from 1999-
     2000 says this is discovered on March 21, 1999. See 
     Chronology, 2.
       205. Mark Holscher, letter to John Kelly, of March 23, 
     1999: 1-2. [DOJ-WHL-00009-00010]
       206. Mark Holscher, letter to FBI Director Louis J. Freeh, 
     of March 23, 1999: 1-3. [DOJ-WHL-00011-00013]
       207. Mark Holscher, letter to Robert Gorence, of March 29, 
     1999: 1. [DOJ-WHL-00014]
       208. For a discussion of the debate between FBI and DOJ 
     after Lee's computer was searched, see Thompson and Lieberman 
     Statement, 27-29.
       209. Thompson and Lieberman Statement, 28-29.
       210. Thompson and Lieberman Statement, 28.
       211. In view of DOJ's assertion that it never had any sort 
     of wiretap on Dr. Lee, this likely refers to FISA material 
     from the investigation of the other scientist to whom Dr. Lee 
     spoke by telephone in December 1982.
       212. John Kelly and Robert Gorence, letter to Mark Holscher 
     of April 16, 1999: 1-2. [DOJ-WHL-00015-00016]
       213. FBI Chronology of Wen Ho Lee investigation from 1999-
     2000: 5.
       214. FBI Chronology of Wen Ho Lee Investigation from 1999-
     2000: 6.
       215. John Kelly and Paula Burnett, letter to Brian Sun, of 
     May 5, 1999: 1-2. [DOJ-WHL-0017-0018]
       216. Brian Sun, letter to John Kelly and Paula Burnett, of 
     May 6, 1999: 1-2. [DOJ-WHL-00021-00022]
       217. FBI Chronology of Wen Ho Lee investigation from 1999-
     2000: 7.
       218. John Kelly, letter to Mark Holscher, of June 15, 1999: 
     1-2. [DOJ-WHL-00030-00031]
       219. FBI Chronology of Wen Ho Lee investigation from 1999-
     2000: 8-9.
       220. No subpoenas were issued pursuant to these resolutions 
     because the investigation into the Wen Ho Lee case was 
     suspended in December at the request of Director Freeh and 
     the Department of Justice. The resolutions were intended as 
     temporary measures to ensure that the subcommittee could 
     continue its work during the congressional recess. When the 
     Senate returned the following January, several other 
     individual subpoenas on matters under investigation by the 
     subcommittee were, in fact, debated and voted on. No subpoena 
     requested by the subcommittee was defeated in the full 
     committee.
       221. Walter Pincus and David A. Vise, ``Blunders Undermined 
     Lee Case,'' Washington Post, September 24, 2000: Al.
       222. Senator Arlen Specter, letter to FBI Director Louis J. 
     Freeh of December 7, 1999. 1-2.
       223. FBI Director Louis J. Freeh, letter to Senator Arlen 
     Specter of December 10, 1999: 1.
       224. Director Freeh letter of December 10, 1999: 1-2.
       225. United States Senate, Joint Hearing before the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2000: 63.
       226. There are a number of other issues that raise 
     questions as to whether the government fully pursued all the 
     information it had available during the course of its 
     investigation. These questions were identified in a June 27, 
     2001 letter from senators Patrick Leahy and Arlen Specter to 
     Attorney General Ashcroft. With the exception of confirming 
     that Dr. Lee has told investigators that the tapes were still 
     in his office as of December 23, 1998, however, the 
     Department continues to refuse to answer these questions on 
     the ground that the case is still open.
       227. United States Senate, Joint Hearing before the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2000: 83.
       228. In response to a question from staff on July 5, 2001, 
     Sheryl Walter of DOJ's Office of Legislative Affairs 
     confirmed that Dr. Lee had never been the target of 
     electronic surveillance.

[[Page 27680]]


       229. Transcript of a closed Detention hearing on December 
     29, 1999, United States v. Wen Ho Lee, 59.
       230. FBI Chronology of Investigation from 1999-2000: 6.
       231. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 7.
       232. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 7.
       233. Robert J. Gorence, ``RESPONSE TO DEFENDANT WEN HO 
     LEE'S MOTION TO REVOKE JUDGE SVET'S ORDER OF DETENTION,'' 
     United States v. Wen Ho Lee, December 23, 1999: 18.
       234. Robert J. Gorence, ``RESPONSE TO DEFENDANT WEN HO 
     LEE'S MOTION TO REVOKE JUDGE SVET'S ORDER OF DETENTION,'' 
     United States v. Wen Ho Lee, December 23, 1999: 7-8.
       235. Robert J. Gorence, ``RESPONSE TO DEFENDANT WEN HO 
     LEE'S MOTION TO REVOKE JUDGE SVET'S ORDER OF DETENTION,'' 
     United States v. Wen Ho Lee, December 23, 1999: 14.
       236. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 1.
       237. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 10.
       238. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 10-
     11.
       239. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 12-
     13.
       240. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 13.
       241. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 14.
       242. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 14.
       243. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 16.
       244. Judge James A. Parker, ``MEMORANDUM OPINION AND 
     ORDER,'' United States v. Wen Ho Lee, December 30, 1999: 19.
       245. Taken from the ``Overview'' section of the website, 
     http://wenholee.org/
 246. Memorandum from Lawrence Barreras, Senior Warden to 
     Rick Ploof, Supervisor Deputy United States Marshal For 
     Prisoner Operations dated December 14, 1999 re: High Security 
     Supervision.
       247. Memorandum from Lawrence Barreras, Senior Warden to 
     Rick Ploof dated January 4, 2000 re: Segregation Inmates.
       248. Mark Holscher, letter to John Kelly and Robert 
     Gorence, ``Re: Dr. Wen Ho Les,'' of December 21, 1999: 1.
       249. Energy Secretary William Richardson, letter to 
     Attorney General Janet Reno, ``Re: United States v. Wen Ho 
     Lee,'' of December 27, 1999: 1.
       250. United States Marshal John S. Sanchez, letter to 
     Warden Lawrence Barreras, ``Re: Federal Inmate Wen Ho Lee,'' 
     of January 6, 2000: 1-2.
       251. Mr. John D. Cline, letter to Mr. Robert Gorence, ``Re: 
     United States v. Wen Ho Lee,'' of January 6, 2000: 1.
       252. Principal Associate Deputy Attorney General Gary G. 
     Grindler, ``MEMORANDUM FOR THE ATTORNEY GENERAL and THE 
     DEPUTY ATTORNEY GENERAL,'' January 12, 2000: 1.
       253. See Attorney General Janet Reno, ``MEMORANDUM FOR JOHN 
     W. MARSHALL, SUBJECT: Origination of Special Administrative 
     Measures of Confinement Conditions on Federal Government Pre-
     Trial Detainee Wen Ho Lee,'' of January 13, 2000: 1.
       254. Energy Secretary Bill Richardson, letter to Attorney 
     General Janet Reno of May 4, 2000: 1.
       255. FBI Special Agent in Charge David V. Kitchen, letter 
     to Norman C. Bay of May 2, 2000: 1.
       256. See the letter of Warden Barreras to Mr. Stamboulidis 
     of July 18, 2000, in which he notes that per their telephone 
     conversation and the letter of July 17 from Mr. Stamboulidis, 
     the Warden has removed Dr. Lee's restraints during exercise, 
     but has declined to allow weekend recreation time as it will 
     involve additional staff costs.
       257. See, for example, the letter of Mr. John Cline to Mr. 
     Stamboulidis of July 26, 2000, in which Mr. John Kline says 
     that in the two weeks since Mr. Stamboulidis claimed in open 
     court that Dr. Lee would be permitted to exercise without 
     restraints, Dr. Lee had not, in fact been allowed to do so.
       258. Warden Lawrence Barreras, letter to Mel George 
     Stamboulidis of August 1, 2000.
       259. United States Attorney Norman C. Bay, letter to 
     Attorney General Janet Reno of September 7, 2000: 2.
       260. United States Senate, Joint Hearing of the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2000: 75.
       261. United States Senate, Judiciary Subcommittee on 
     Department of Justice Oversight, ``Continuation of Oversight 
     on the Wen Ho Lee Case,'' 106th Congress, 2nd Session, 
     October 3, 2000: 73.
       See United States Senate, Joint Hearing of the Senate 
     Select Committee on Intelligence and the Senate Judiciary 
     Committee, ``Joint Hearing of the Wen H. Lee Case,'' 106th 
     Congress, 2nd Session, September 26, 2000: 79-80, where 
     Attorney General Reno read Mr. Cisneros' letter into the 
     record.
       263. Assistant Attorney General Robert Raben, letter to 
     Senators Leahy, Graham, Hatch And Shelby, of January 20, 
     2001: 1.
       264. Assistant Attorney General Robert Ruben, letter to 
     Senators Leahy, Graham, Hatch and Shelby, of January 20, 
     2001: 2.
       265. Assistant Attorney General Robert Ruben, letter to 
     Senators Leahy, Graham, Hatch and Shelby, of January 20, 
     2001: 2.
       66. Plea Hearing transcript, September 13, 2000: 55.
       267. Transcript of Proceedings, United States v. Wen Ho 
     Lee, August 16, 2000: 13.
       268. Transcript of Proceedings, United States v. Wen Ho 
     Lee, August 17, 2000: 12.
       269. Transcript of Proceedings, United States v. Wen Ho 
     Lee, August 17, 2000: 92.
       270. Judge James A. Parker, ``MEMORANDUM OPINION,'' United 
     States v. Wen Ho Lee, August 31, 2000: 3.
       271. Judge James A. Parker, ``MEMORANDUM OPINION,'' United 
     States v. Wen Ho Lee, August 31, 2000: 10.
       272. Judge James A. Parker, ``MEMORANDUM OPINION,'' United 
     States v. Wen Ho Lee, August 31, 2000: 14-15.
       273. ``STATEMENT OF THE FACTS,'' from the Government's 
     public filing in response to the defense appeal of Judge 
     Parker's initial denial of bail, undated, 3-6.
       274. Transcript of Proceedings, United States v. Wen Ho 
     Lee, August 16, 2000: 142.
       275. Transcript of Proceedings, United States v. Wen Ho 
     Lee, August 16, 2000: 150.
       276. United States Senate, Hearing before the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, October 3, 2000: 17.
       277. United States Senate, Hearing before the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, October 3, 2000: 24.
       278. United States Senate, Hearing before the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, October 3, 2000: 26.
       279. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     4, 2001: online edition.
       280. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     4, 2001: online edition.
       281. United States Senate, Hearing before the Judiciary 
     Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 27, 2000: 57.
       282. United States Senate, Hearing before the Judiciary 
     Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' 106th 
     Congress, 2nd Session, September 27, 2000: 58.
       283. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     5, 2001, online edition. See also, MEMORANDUM CONCERNING THE 
     USE, RELEVANCE, AND ADMISSIBILITY OF THE INFORMATION LISTED 
     IN DR. WEN HO LEE'S FIRST NOTICE UNDER SECTION 5 OF THE 
     CLASSIFIED INFORMATION PROCEDURES ACT.
       284 Judge James A. Parker, ``COURT DETERMINATIONS AND ORDER 
     ON FIRST NOTICE OF DR. WEN HO LEE UNDER SECTION 5 OF THE 
     CLASSIFIED INFORMATION PROCEDURES ACT,'' August 1, 2000: 3.
       285. Judge James A. Parker, ``COURT DETERMINATIONS AND 
     ORDER ON FIRST NOTICE OF DR. WEN HO LEE UNDER SECTION 5 OF 
     THE CLASSIFIED INFORMATION PROCEDURES ACT,'' August 1, 2000: 
     4.
       286. Judge James A. Parker, ``COURT DETERMINATIONS AND 
     ORDER ON FIRST NOTICE OF DR. WEN HO LEE UNDER SECTION 5 OF 
     THE CLASSIFIED INFORMATION PROCEDURES ACT,'' AUGUST 1, 2000: 
     5.
       287. MOTION FOR DISCOVERY OF MATERIALS RELATED TO SELECTIVE 
     PROSECUTION, United States v. Wen Ho Lee, June 25, 2000: 1.
       288. MEMORANDUM IN SUPPORT OF MOTION FOR DISCOVERY OF 
     MATERIALS RELATED TO SELECTIVE PROSECUTION, United States v. 
     Wen Ho Lee, June 25, 2000: 1. [Hereafter Selective 
     Prosecution Memorandum]
       289. Selective Prosecution Memorandum, 2.
       290. Selective Prosecution Memorandum, 2-3.
       291. Plea Hearing, September 13, 2000: 50.
       292. See DOE press release, ``Richardson Releases Task 
     Force Against Racial Profiling Report and Announces 8 
     Immediate Actions,'' January 19, 2001. Richardson said that 
     the Task Force had made several general observations, 
     including ``that some employees believed that 
     counterintelligence efforts were targeting employees of 
     Chinese ethnicity,'' but offered no direct proof of any such 
     profiling.
       293. Department of Energy Inspector General Gregory 
     Friedman, Memorandum for the

[[Page 27681]]

     Secretary, ``Special Review of Profiling Concerns at the 
     Department of Energy,'' April 3, 2001: 1.
       294. Selective Prosecution Memorandum, 5.
       295. Selective Prosecution Memorandum, 5.
       296. For a discussion of the timing and reasons for Mr. 
     Trulock's departure from DOE, see James Risen, ``Official Who 
     Led Inquiry Into China's Reputed Theft of Nuclear Secrets 
     Quits,'' New York Times, August 24, 1999, online edition.
       297. Selective Prosecution Memorandum, 6.
       298. Matthew Purdy and James Sterngold, ``The Prosecution 
     Unravels: The Case of Wen Ho Lee,'' New York Times, February 
     5, 2001, online edition.
       299. When questioned in an October 3, 2000 hearing about an 
     August 1995 FBI document quoting Mr. Vrooman as saying that 
     ``a `smoking gun' had been found,'' Mr. Vrooman testified 
     that he did not know what the memo referred to. After the 
     hearing, Mr. Vrooman refreshed his recollection and wrote to 
     me that the ``smoking gun'' quote referred to the analytical 
     team headed by Mr. Michael Henderson, otherwise known as the 
     Kindred Spirit Analytical Group.
       300. United States Senate, Hearing before the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' October 
     3, 2000: 65.
       301. United States Senate, Hearing before the Senate 
     Judiciary Subcommittee on Department of Justice Oversight, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' October 
     3, 2000: 66.
       302. Mr. Vrooman furnished this retirement date in his 
     written testimony to the subcommittee on October 3, 2000. He 
     obviously stayed in touch with the lab and may have consulted 
     on certain security issues, but his contact with the case 
     would have been less than during his tenure at the lab.
       303. See Department of Energy Press Release, ``Richardson 
     Announces Results of Inquiries Related to Espionage 
     Investigation,'' August 12, 1999. The release says that a DOE 
     counterintelligence official had been told in October 1997 
     that an espionage suspect [Dr. Lee] should be moved but 
     decided to leave the suspect in place without consulting with 
     senior management. The DOE press release does not name Mr. 
     Vrooman or the others who were disciplined, but an August 13, 
     1999 story by Vernon Loeb in the Washington Post identifies 
     the three officials as Sig Hecker, Robert Vrooman, and Terry 
     Craig. See Vernon Loeb, ``Richardson Recommends Discipline 
     for 3 in Los Alamos Case,'' Washington Post, August 13, 1999: 
     A9.
       304. United States Senate, Subcommittee on Administrative 
     Oversight and the Courts of the Committee on the Judiciary, 
     ``Continuation of Oversight on the Wen Ho Lee Case,'' October 
     3, 2000: 52-53.
       305. FBI memorandum from Albuquerque Division to FBI HQ, 
     ``Request for: (1) FISA Court Order authorizing the 
     interception of signals emanating from the residence of 
     captioned subject; (2) Application for ELSUR (FISA and MISUR 
     coverage) at subject's residence and business location,'' 
     November 10, 1998: 4. [Hereafter, FISA Request, November 10, 
     1998]
       306. FISA Request, November 10, 1998: 4.
       307. FISA Request, November 10, 1998: 5.
       308. FISA Request, November 10, 1998: 5.
       309. FISA Request, November 10, 1998: 5.
       310. Selective Prosecution Memorandum, 7.
       311. FBI Special Agent Michael W. Lowe, ``APPLICATION AND 
     AFFADIVIT FOR SEARCH WARRANT,'' April 9, 1999: 1.
       312. See RESPONSE TO DEFENDANT WEN HO LEE'S MOTION FOR 
     DISCOVERY OF MATERIALS RELATED TO SELECTIVE PROSECUTION, 
     United States v. Wen Ho Lee, July 21, 2000: 11-12.
       313. ``A Reply to Misleading Press Reports Concerning Dr. 
     Wen Ho Lee,'' May 6, 2000.
       314. This is item D. of the ``Memorandum in Support of 
     Motion to Compel Discovery on Issues other Than Selective 
     Prosecution,'' filed May 10, 2000. Note that the declassified 
     version of this document redacts must of Item D, including 
     the header, but the Government's response spells out the 
     materials in question.
       315. ``Memorandum in Support of Motion to Compel Discovery 
     on Issues Other Than Selective Prosecution,'' United States 
     v. Wen Ho Lee, May 10, 20001: 14.
       316. ``Response to Defendant Wen Ho Lee's Motion to Compel 
     Discovery on Issues Other than Selective Prosecution, United 
     States v. Wen Ho Lee, June 9, 2000: 6.
       317. Judge James A. Parker, ``ORDER,'' July 13, 2000: 3. 
     [Docket number 107 on the case docket]
       318. Judge James A. Parker, ``ORDER,'' August 9, 2000: 1-2. 
     [Docket number 130]
       319. Matthew Purdy, ``The Making of a Suspect: The Case of 
     Wen Ho Lee,'' New York Times, February 4, 2001: online 
     edition.
       320. Transcript of Proceedings, Plea Hearing, United States 
     v. Wen Ho Lee, September 13, 2000: 34.
       321. Transcript of Proceedings, Plea Hearing, United States 
     v. Wen Ho Lee, September 13, 2000: 34-36.
       322. Transcript of Proceedings, Plea Hearing, United States 
     v. Wen Ho Lee, September 13, 2000: 36.
       323. Transcript of Proceedings, Plea Hearing, United States 
     v. Wen Ho Lee, September 13, 2000: 37.
       324. Transcript of Proceedings, Plea Hearing, United States 
     v. Wen Ho Lee, September 13, 2000: 37.
       325. Plea Hearing transcript, September 13, 2000: 56-57,
       326. United States, Joint Hearing Before the Senate Select 
     Committee on Intelligence and the Judiciary Committee, 
     ``Joint Hearing on the Wen Ho Lee Case,'' 106th Congress, 2nd 
     Session, September 26, 2000: 41.
       327. United States Senate, Joint Hearing Before the Senate 
     Select Committee on Intelligence and the Judiciary Committee, 
     ``Joint Hearing on the Wen Ho Lee Case,'' 106th Congress, 2nd 
     Session, September 26, 2000: 41-43.

  Mr. SPECTER. Mr. President, I now turn to the report on the handling 
of the espionage case against Dr. Peter H. Lee: Again, I intend to read 
only a sentence or two, as I have been advised that a sentence or two 
would be sufficient to have the remainder of the report printed in the 
Record.

       On October 7th and 8th, 1997, Dr. Peter Hoong-Yee Lee 
     confessed to the FBI that he had provided classified nuclear 
     weapons design and testing information to scientists of the 
     People's Republic of China on two occasions in 1985 and had 
     given classified antisubmarine information to the Chinese in 
     May of 1997. The 1985 revelations, which occurred during 
     discussions with, and lectures to, PRC scientists in Beijing 
     hotel rooms, involved his work on hohlraums, devices used to 
     simulate nuclear detonations in a process called Inertial 
     Confinement Fusion, or ICF.\1\ According to a 17 February 
     1998 ``Impact Statement'' prepared by experts from the 
     Department of Energy,
       ``the ICF data provided by Dr. 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.'' \2\
       The ``Impact Statement'' further notes that ``the ICF 
     Program, when developed in conjunction with an already 
     existing nuclear program, could assist in the design of more 
     sophisticated nuclear weapons.'' \3\
       Dr. Lee's 1997 disclosures came in two lectures to PRC 
     scientists, again in China, where he discussed his work on 
     the joint U.S./U.K. Radar Ocean Imaging (ROI) project. The 
     objective of the project, which has been carried out over 
     several years at the cost of more than $100 million, is to 
     study the feasibility of using radars to detect submerged 
     submarines. After viewing videotapes of Dr. Lee's confession, 
     Dr. Richard Twogood, former Technical Program Leader for the 
     ROI project, stated that Dr. Lee's disclosures contained 
     classified information at the SECRET level which went right 
     to the heart of the most significant technical achievement of 
     the U.S./U.K. program up until 1995.\4\ Although Dr. Lee was 
     not charged for the 1997 disclosures of classified 
     information, a 9 March 2000 review by the Department of 
     Defense concluded that Dr. Lee's anti-submarine warfare 
     revelations were classified at the CONFIDENTIAL level,\5\ 
     which, by definition, would damage U.S. national security.\6\ 
     According to the Cox Committee Report, ``this research, if 
     successfully completed, could enable the [Chinese military] 
     to threaten previously invulnerable U.S. nuclear 
     submarines.'' \7\
       Dr. Lee's confessed crimes caused serious harm to U.S. 
     national security, yet he was offered a plea bargain which 
     resulted in a sentence amounting to one year in a half-way 
     house, 3,000 hours of community service and a $20,000 fine. 
     Considering the magnitude of Dr. Lee's offenses and his 
     failure to adhere to the terms of the plea agreement which 
     called for complete cooperation and truthfulness, the 
     interests of the United States were not well served by this 
     outcome.
       During the 106th Congress, I chaired a special subcommittee 
     of the Senate Judiciary Committee for the purposes of 
     conducting oversight on the Department of Justice's handling 
     of this case and several other matters. The Subcommittee's 
     review of the Dr. Peter Lee case identified a number of 
     shortcomings in existing procedures for handling espionage 
     investigations and prosecutions, particularly in cases where 
     highly technical classified information is revealed verbally 
     rather than through the transfer of documents. Communications 
     between and within the Department of Justice and other 
     Executive Branch organizations appear to have broken down at 
     critical points during the Peter Lee case, with the result 
     that several key decisions were made on the basis of 
     incomplete or incorrect information. Had this case been 
     handled more formally and deliberately, with more of the 
     critical information being communicated in writing, the 
     opportunities for misunderstandings would have been greatly 
     reduced, and the chances of Dr. Lee receiving a long prison 
     sentence commensurate with his crimes would have been greatly 
     increased. Specifically, the Subcommittee's investigation 
     showed that:
       The classified nuclear weapons design and anti-submarine 
     warfare information that Dr. Lee revealed in 1985, 1997, and 
     on other occasions may have merited prosecution under 18 USC 
     794, the most serious of the espionage statutes.

[[Page 27682]]

       Senior DoJ officials, including the Attorney General and 
     the Deputy Attorney General, were not sufficiently involved 
     in or aware of the case. Principal Deputy Assistant Attorney 
     General John Keeney, the official with final approval 
     authority in the case, advised that he would not have 
     approved the plea bargain had he known the trial prosecutor 
     would ask for only a short period of incarceration and would 
     charge only an attempt to transmit classified information.\8\
       The Department of Justice's ability to seek a tougher plea 
     agreement or to prosecute Dr. Lee under section 794 was 
     hampered by its failure to fully understand the 
     classification level of, and the damage to national security 
     from, Dr. Lee's nuclear weapons design revelations prior to 
     offering him a plea agreement.
       DoJ failed to inform the court that Dr. Lee repeatedly 
     confessed to disclosing classified information to the PRC in 
     1997, allowing the defense to convince the judge during 
     sentencing that the only time Dr. Lee intentionally passed 
     classified information was more than 13 years prior.
       DoJ did not have the DoE's ``Impact Statement,'' which 
     stated that Dr. Lee had provided significant material 
     assistance to the PRC nuclear weapons program, until February 
     1998, well after the plea agreement was concluded.
       The reluctance of the Department of Defense, and the Navy 
     in particular, to support the prosecution of Dr. Lee for his 
     anti-submarine warfare revelations had an adverse impact on 
     the case.
       The ambiguity of the 14 November 1997 memorandum authored 
     by Mr. J.G. Schuster, head of the Navy's Science and 
     Technology Branch, seriously undermined DoJ efforts to 
     prosecute Dr. Lee. This memorandum was based on incomplete 
     information, without knowing the details of what Dr. Lee 
     confessed to disclosing to PRC scientists.
       DoJ prematurely determined that Dr. Lee could not be 
     prosecuted for the 1997 revelations, and the explanation that 
     the information Dr. Lee revealed was already in the public 
     domain is contradicted by two classified memoranda from 
     Lawrence Livermore National Laboratory which show that the 
     disclosures extended beyond what was publicly available.
       DoJ's failure to prosecute on the 1997 disclosures, or at 
     least to add them as a separate count to the plea agreement, 
     had a material adverse effect on the disposition of the case. 
     Coupling the 1997 disclosures with the 1985 revelations would 
     have demonstrated that Dr. Lee's classified disclosures were 
     not limited to a single incident long ago, but were ongoing. 
     Obtaining a conviction on the 1997 disclosures would not have 
     been a foregone conclusion--pushing the matter risked 
     disclosing certain information that the FBI and the 
     prosecutor wanted very much to protect, and the Navy was 
     reluctant to assist in the prosecution--but these were not 
     insurmountable obstacles. At a minimum, an effort should have 
     been made to add a separate count to the plea agreement to 
     address these disclosures.
       DoJ communications were confused on the critical question 
     of what authority the trial prosecutor had with regard to a 
     charge under Section 794. DoJ officials advised that the 
     Internal Security Section would have reconsidered a 
     prosecution under Section 794 if the plea agreement broke 
     down,\9\ which was unknown to the trial prosecutor who 
     thought he could only take the watered-down plea bargain or 
     get nothing at all.\10\
       The fact that Dr. Lee was an espionage suspect while 
     working on the Joint U.S./U.K. Radar Ocean Imaging project 
     was not disclosed to the program's sponsors within the Office 
     of the Assistant Secretary of Defense/Command, Control, 
     Communications and Intelligence (OASD/C3I).\11\
       Electronic surveillance under the Foreign Intelligence 
     Surveillance Act was terminated at a critical juncture in 
     September 1997, just when the FBI was stepping up its 
     activity with regard to Dr. Lee and electronic surveillance 
     could have yielded important counter-intelligence 
     information. Although the listening device in Dr. Lee's home 
     had been discovered in July, thereby decreasing the utility 
     of that particular device, the FBI Field Office felt strongly 
     enough about the need for continued surveillance to make a 
     verbal renewal request to FBI Headquarters in August, but not 
     strongly enough to ensure the request was granted.
       The problems which affected this case were serious enough 
     to require remedial steps. The Counterintelligence Reform Act 
     of 2000 (S.2089), which became law on 27 December 2000 as 
     Title VI of Public Law 106-567 (H.R. 5630), contained a 
     provision that will address many of the shortcomings in the 
     way the DoJ handled this case. That provision, Section 607, 
     amended the Classified Information Procedures Act (CIPA) to 
     require that the Assistant Attorney General for the Criminal 
     Division and the appropriate United States attorney provide 
     briefings to senior agency officials from the victim agency 
     in cases involving classified information. The section 
     further required that these briefings occur as soon as 
     practicable after the Department of Justice and the United 
     States attorney concerned determine that a prosecution could 
     result and at such other times thereafter as are necessary to 
     keep the affected agency fully and currently informed of the 
     status of the prosecution.
       The Subcommittee's investigation revealed other problems 
     that have not yet been addressed through legislation, 
     primarily because it was not possible to reach a consensus on 
     how best to solve them. The Counterintelligence Reform Act 
     moved through the Judiciary Committee and the Senate Select 
     Committee on Intelligence without a single vote in 
     opposition. The Judiciary Committee reported the measure 
     favorably on 23 May 2000 and the Intelligence Committee did 
     the same on 20 July 2000. As the bill's chief sponsor, I 
     opted to work toward a consensus measure to ensure that the 
     important reforms we had identified during oversight on this 
     case and the Dr. Wen Ho Lee case could be implemented in a 
     timely fashion. Rather than wait until we could work out 
     acceptable language on other proposals arising from the Peter 
     Lee case, I felt it more important to accomplish what could 
     be done in the time available and address the more difficult 
     matters later. I also withheld publication of this report 
     during the last Congress so as not to inject it into the 
     presidential election. Now that the election is over and the 
     107th Congress is well underway, it is appropriate to release 
     this report and begin working on legislation to solve the 
     other problems identified by our oversight but upon which we 
     were unable to achieve consensus.
       Specifically, I am introducing legislation to require 
     victim agencies--the agencies whose classified information is 
     lost--to produce a written ``damage statement'' which 
     specifies the level of classification of the material alleged 
     to have been revealed, and justifies the classification level 
     by describing the potential harm to national security from 
     such revelations. The legislation further requires the 
     prosecution team to consider the ``damage statement'' before 
     any final decision is made as to whether the case should be 
     taken to trial or a plea bargain should be offered. I also 
     strongly believe, but will not attempt to mandate through 
     legislation, that key instructions from Main Justice 
     (Internal Security Section, etc.) to the U.S. Attorney's 
     Office with responsibility for prosecuting the case, 
     including charging authority and plea bargain authority, 
     should be in writing. These written instructions should be 
     shared with the investigating agency or agencies and the 
     victim agency so they have an opportunity for input before 
     any final decisions are made.
       The findings and recommendations included in this report 
     are based on a review of more than 6,000 pages of documents 
     from the FBI, the Department of Defense and its sub- 
     components, the Department of Justice and information 
     submitted to the court during the sentencing process. The 
     Subcommittee conducted three open hearings, three closed 
     hearings, two ``on-the-record'' Senators' briefings, and 
     numerous staff interviews, which resulted in hearing from 
     more than 30 individuals who played key roles in the conduct 
     of the case. The information presented here is derived from 
     unclassified documents and testimony, or relies upon 
     unclassified extracts from classified documents.


           summary of dr. peter h. lee's espionage activities

       Dr. Peter Lee is a naturalized U.S. citizen who worked for 
     TRW Inc., a contractor to Lawrence Livermore National 
     Laboratory, from 1973 to 1976. Dr. Lee worked at Lawrence 
     Livermore from 1976 to 1984, and at Los Alamos National 
     Laboratory from 1984 to 1991. He returned to TRW from 1991 
     until December 1997, when he was dismissed in the wake of his 
     plea agreement for passing classified information to the 
     Chinese.\12\
       According to his October 1997 confession to the FBI, Dr. 
     Lee traveled to China from 22 December 1984 to 19 January 
     1985 (while he was employed by Los Alamos National 
     Laboratory).\13\ On 9 January 1985, Dr. Lee met with Chen 
     Nengkuan, a PRC scientist employed by the China Academy of 
     Engineering Physics (CAEP), in a hotel room in Beijing. Chen 
     told Dr. Lee that he had classified questions to ask, and 
     that Dr. Lee could answer just by nodding his head yes or 
     no.\14\ Chen drew a diagram of a hohlraum (a device in which 
     lasers are fired at a glass globe to ``create a small nuclear 
     detonation which is then studied and used in the design of 
     nuclear weapons),'' \15\ and asked the classified questions, 
     which Dr. Lee, by his own admission, knew were classified but 
     answered anyway.\16\
       The following day, Dr. Lee accompanied Chen to a hotel in 
     Beijing where another group of PRC scientists was waiting. 
     These scientists were also from the China Academy of 
     Engineering Physics, which is ``responsible for all aspects 
     of the PRC's nuclear weapons program.'' \17\ Among the 
     scientists Dr. Lee briefed was Yu Min, who has been called 
     ``the `Edward Teller' of the PRC nuclear weapons program.'' 
     \18\ For two hours, Dr. Lee answered questions and drew 
     diagrams, including several hohlraums. Dr. Lee also 
     ``discussed problems the U.S. was having in its nuclear 
     weapons testing program.'' \19\ Dr. Lee further admitted 
     discussing with the Chinese scientists at least one portion 
     of a classified document he authored in 1982. Although the 
     document, titled ``An Explanation for the Viewing Angle 
     Dependence of

[[Page 27683]]

     Temperature from Cairn Targets,'' was subsequently 
     declassified in 1996,\20\ revealing its contents in 1985 was 
     an illegal act that could be expected to provide substantial 
     assistance to the Chinese from 1985 to 1996 and to harm U.S. 
     national security.
       Dr. Lee again visited China, while he was employed by TRW, 
     from 30 April to 22 May 1997.\21\ Although Dr. Lee claimed on 
     his travel request form, and in a 25 June 1997 interview with 
     FBI Agent Gilbert Cordova, that the visit to China had been a 
     pleasure trip for which he paid all his own expenses, the 
     truth was that Dr. Lee traveled as a guest of the Chinese 
     Institute of Applied Physics and Computational Mathematics 
     (IAPCM), which is part of the China Academy of Engineering 
     Physics.\22\
       During this May 1997 trip, Dr. Lee gave a lecture at the 
     PRC Institute of Applied Physics and Computational 
     Mathematics in Beijing. The lecture covered his work for TRW 
     in support of the Radar Ocean Imaging Project, and was 
     attended by nearly 30 top PRC scientists.\23\ When asked 
     about the applicability of his work to anti-submarine 
     warfare, Dr. Lee showed the scientists a surface ship wake 
     image (which he had brought from the U.S. to show them), drew 
     a graph, explained the physics underlying his work, and told 
     the Chinese where to filter the data within the graph to 
     enhance the ability to locate the ocean wake of a vessel.\24\ 
     A few days later, Dr. Lee gave the same lecture in another 
     city, using the graphs that the Chinese had saved from his 
     first lecture and had brought to the second lecture for his 
     use.\25\
       Upon his return from the PRC, Dr. Lee filled out a TRW 
     Post-Travel Questionnaire in which he denied that there 
     ``were any requests from Foreign Nationals for technical 
     information,'' and denied that there were any attempts to 
     persuade him to reveal or discuss classified information.\26\
       On 5 August and 14 August 1997, Peter Lee was interviewed 
     by FBI agents at a Santa Barbara, California, hotel. During 
     these interviews, Dr. Lee admitted that he had lied on his 
     travel form about the purpose of his trip to China in May, 
     and that he had lied about receiving requests for technical 
     information. However, he continued to insist that he had paid 
     for the trip to the PRC with his own money.\27\
       After the two FBI interviews, Dr. Lee contacted a Chinese 
     official named Gou Hong by e- mail on 25 August 1997, and 
     requested that Gou provide Lee with receipts indicating that 
     Lee had paid for the trip to the PRC, that the receipts 
     contain the names of Lee and his wife in English, and that 
     they show that Lee paid cash for the trip.\28\ On 3 September 
     1997, Dr. Lee provided the FBI with copies of hotel and 
     airline receipts for the May 1997 trip which stated that Lee 
     had paid for the trip in cash. Based on a review of e-mail 
     transmissions and telephone conversations between Lee and 
     Gou, however, the FBI concluded that these receipts were 
     false.\29\
       On 7 October 1997, Dr. Lee was interviewed and polygraphed 
     by the FBI. The polygraph examiner believed that Lee showed 
     deception when he answered ``no'' to the following questions: 
     (A) Have you ever deliberately been involved in espionage 
     against the United States? (B) Have you ever provided 
     classified information to persons unauthorized to receive it? 
     (C) Have you deliberately withheld any contacts with any non-
     U.S. intelligence service from the FBI? \30\ After being told 
     that he had failed the polygraph on these questions, Dr. Lee 
     made a videotaped confession in which he admitted ``having 
     passed classified national defense information to the PRC 
     twice in 1985, and to lying on his post-travel questionnaire 
     in 1997.'' \31\
       During this same interview, Dr. Lee also repeatedly 
     confessed that he intentionally revealed classified 
     information during his 1997 anti-submarine lectures in China. 
     Dr. Lee was not prosecuted for these revelations, and the 
     judge was not adequately informed of these admissions at 
     sentencing.
       On 8 December 1997, Dr. Lee pleaded guilty to a two count 
     information that he violated: (1) 18 USC 793(d)--Attempt to 
     communicate national defense information to a person not 
     entitled to receive it, and (2) 18 USC 1001--False statement 
     to a government agency.\32\ According to the press release 
     from the office of U.S. Attorney Nora Manella, Dr. Lee 
     ``admitted that he knew the information was classified, and 
     that by transmitting the information he intended to help the 
     Chinese.'' \33\ The offenses to which Lee pleaded guilty 
     could have resulted in a maximum sentence of 15 years in 
     federal prison and a fine of $250,000. Under the terms of the 
     agreement, the Government asked for a ``short period of 
     incarceration,'' a formulation that was negotiated by the 
     trial attorney and approved by Mr. John Dion in the Internal 
     Security Section, but was not approved by Principal Deputy 
     Assistant Attorney General Keeney, the DoJ official with 
     final authority, who advised the Subcommittee that he would 
     not have approved the plea agreement had he known that it 
     would request only a short period of incarceration as an 
     opening position.\34\
       On 26 March 1998, Dr. Lee was sentenced by U.S. District 
     Court Judge Terry Hatter to one year in a community 
     corrections facility, three years of probation, 3,000 hours 
     of community service, and a $20,000 fine. The sentence was 
     based upon a sealed plea agreement from 8 December 1997.\35\ 
     The plea agreement and other key documents in the case were 
     unsealed at the request of the Subcommittee in late 1999.\36\
       Every DoJ official interviewed by the Subcommittee expected 
     Dr. Lee to receive jail time, during which they planned to 
     seek his further cooperation. When he received no jail time, 
     all leverage was lost by the government.
     Analysis of the Nuclear Weapons Design Revelations
       The importance of Dr. Lee's 1985 disclosures is highlighted 
     by the 17 February 1998 ``Impact Statement'' from the 
     Department of Energy which concludes that:
       ``the [Inertial Confinement Fusion] data provided by Dr. 
     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.'' \37\
       The ``Impact Statement'' further notes that ``the ICF 
     Program, when developed in conjunction with an already 
     existing nuclear program, could assist in the design of more 
     sophisticated nuclear weapons.'' \38\
       The trial attorney wanted to prosecute under Section 794 
     for the 1985 revelations, but was overruled by Main Justice 
     as well as his supervising attorney.\39\ In his 12 April 2000 
     written statement to the Subcommittee, the Internal Security 
     Section (ISS) line attorney with primary responsibility for 
     the Peter Lee case, explained why he did not feel it 
     appropriate to pursue a 794 charge on the 1985 disclosures.
       ``In my estimation, both then and now, the sole weakness in 
     the case was the questionable significance of the information 
     Lee compromised, both in 1985 and in 1997. As to Lee's 1985 
     disclosure, I knew, for instance, that the Department had 
     never prosecuted a case under 794 where the compromised 
     information, as in the case of Lee's 1985 disclosure, had 
     been declassified prior to the crime being discovered. Let me 
     emphasize this: the information Lee admitted disclosing in 
     1985 had been declassified.'' \40\
       This analysis may be correct as far as it goes, but there 
     were other factors and issues that should have been 
     considered. Dr. Lee's confession, though carefully crafted to 
     limit his exposure, simply confirmed much, but not all, of 
     what the FBI already knew about his espionage activities. The 
     FBI knew well before they confronted Dr. Lee that he had 
     likely been compromising anti-submarine information since the 
     early 1990s,\41\ and that in the early 1980s Dr. Lee had 
     allegedly given the Chinese classified information that 
     greatly assisted their nuclear weapons program.\42\ One 
     scientist the FBI consulted in trying to evaluate the extent 
     of Dr. Lee's revelations said, ``It seems likely that Peter 
     Lee at least partially compromised every project, classified 
     or unclassified, he was involved with at Livermore, [Los 
     Alamos National Laboratory], and TRW.'' \43\
       At a later stage of the proceeding, Dr. Lee admitted that 
     he had given the PRC scientists additional information which 
     had not been declassified. Had the Internal Security Section 
     awaited fuller development of the facts, it might not have 
     declined prosecution under 794 on grounds of subsequent 
     declassification. The Government would have been able to 
     corroborate Dr. Lee's confession and to prove that he had 
     done more than he confessed to. As the prosecuting attorney 
     noted during his 5 April 2000 appearance before the 
     Subcommittee, ``. . . in the many cases I had with a 
     cooperating defendant or a defendant who pled guilty who was 
     debriefed, I never had the kind of information to corroborate 
     what was said as I did in this case.'' \44\
       The ISS line attorney's statement regarding the 
     ``questionable significance of the information Lee 
     compromised'' in 1985 is flatly contradicted by the DoE 
     ``Impact Statement'' of 17 February 1998 which states that 
     Dr. Lee did serious harm to U.S. national security. Had the 
     ISS line attorney waited for the experts to evaluate the 
     case, he would have known that a 794 charge should be given 
     much greater consideration than it got.
       During testimony before the Subcommittee, the ISS line 
     attorney who handled the case stated that it would have been 
     impractical to wait for a damage assessment which, in his 
     experience, normally takes more than a year. In fact, 
     however, there were two assessments available within less 
     than 90 days of the start of plea negotiations. Dr. Thomas 
     Cook's ``Declaration of Technical Damage to United States 
     National Security Assessed in Support of United States v. 
     Peter Hoong-Yee Lee'' was available in February 1998, as was 
     the Department of Energy ``Impact Statement.''
       The Government had spent six years and considerable amounts 
     of money investigating Dr. Lee's espionage activities, had 
     obtained a confession that substantiated much of the 
     information it already had from other sources, and had not 
     charged Dr. Lee with a crime and therefore did not have a 
     speedy trial issue to contend with. Consequently, there was 
     no reason why the Government could not wait for a complete 
     analysis by competent experts of Dr. Lee's espionage 
     activities. The failure to obtain such an

[[Page 27684]]

     analysis prior to entering a plea agreement seriously 
     undermined the Government's ability to prosecute Dr. Lee 
     under section 794, and was a major factor in the 
     unsatisfactory disposition of the case.
       In his testimony before the Subcommittee on 12 April 2000, 
     the ISS line attorney who handled the Lee case further argued 
     that the Government would have had a hard time proving that 
     the classified nuclear weapons design information that Dr. 
     Lee provided to the Chinese was related to the national 
     defense, an element of proof that would have been necessary 
     to sustain a charge under 18 USC 794. In response to a 
     question from Senator Sessions, the attorney said that the 
     information Dr. Lee revealed in 1985 ``was classified SECRET, 
     but I'm not sure it would have been ultimately found to be 
     national defense information at the time he compromised it.''
       When pressed by Senator Sessions to explain how nuclear 
     weapons design information could be deemed not related to the 
     national defense, the attorney referred to the Supreme 
     Court's opinion in Gorin v. United States.\46\ Any reliance 
     on the Gorin decision in the context of the Peter Lee case is 
     misplaced. The Gorin case was decided in January 1941, well 
     before the advent of nuclear weapons. The Court's opinion, 
     written by Justice Reed, makes clear that the information in 
     the Lee case would have been found to be ``national defense 
     information.'' In the words of the Court:
       ``National defense, the Government maintains, ``is a 
     generic concept of broad connotations, referring to the 
     military and naval establishments and the related activities 
     of national preparedness.'' We agree that the words 
     ``national defense'' in the Espionage Act carry that 
     meaning.'' \47\
       When the Supreme Court held, as it did in Gorin, that 
     reports ``as to the movements of fishing boats, suspected of 
     espionage and as to the taking of photographs of American war 
     vessels'' \48\ constituted national defense information, 
     there can be no doubt that nuclear weapons design information 
     would be encompassed by the term.
       The DoJ attorney also cited the decision of the Second 
     Circuit Court of Appeals in United States v. Heine.\49\ That 
     case has no applicability to this matter since all the 
     information given to a German automobile corporation was 
     publicly available at the time of disclosure.\50\
       During the sentencing hearing, Dr. Lee's lawyer, Mr. James 
     Henderson, tried to downplay the significance of the 1985 
     revelations through character witnesses who claimed that the 
     disclosures were not related to nuclear weapons but to energy 
     production.\51\ These witnesses did not have access to the 
     text or tape of Dr. Lee's confession which detailed the 
     extent of his revelations.\52\ Dr. Cook and the authors of 
     the 17 February 1998 DoE ``Impact Statement'' had access to 
     Dr. Lee's confession and were in a position to evaluate the 
     extent of damage and of the espionage. In view of these facts 
     it was surprising that the ISS attorney advanced the 
     argument:
       ``that Lee could claim that he made the disclosures to 
     encourage China not to conduct nuclear weapons tests in the 
     field, and he would likely be supported by internal 
     Government documents or even testimony of former U.S. 
     Government or Livermore officials that that was actually one 
     of the reasons the U.S. Government declassified the 
     information beginning in 1990.
       ``In other words, Lee would have been able to credibly 
     argue that his actions were in the national interest.'' \53\
       Any claim by Dr. Lee that his actions were in the national 
     interest would be totally unfounded. Individual scientists do 
     not have the latitude to make determinations--during the 
     course of lectures in Beijing hotel rooms--as to whether or 
     not it is in the national interest to help the Chinese 
     develop more sophisticated nuclear weapons.
       The prosecuting attorney made this very point at the 
     sentencing hearing when he said, ``It is not up to the whim 
     of an individual scientist to determine if something is 
     classified. . . . This is one of the nation's top scientists 
     from one of the nation's top research nuclear weapons 
     facilities giving a two hour lecture regarding classified 
     information to the top nuclear scientists of China.'' \54\
       Dr. Lee very likely could have been prosecuted under 18 USC 
     794, the harshest of the espionage statutes, for his nuclear 
     weapons design revelations. As Senator Sessions said at the 
     Subcommittee's 5 April 2000 hearing:
       ``I don't think [the prosecuting attorney] would have had a 
     problem getting a conviction on that. [Dr. Lee] confessed to 
     it, number one. Number two, I don't think any jury is going 
     to believe that he was there for his health and a casual 
     conversation to have two different meetings in Beijing hotel 
     rooms with top Chinese scientists. There is no business for 
     that, and anyone with common sense would understand it.'' 
     \55\
       In the context of the prosecuting attorney's efforts to 
     proceed under 794 and Senator Sessions' strongly expressed 
     views, there is a strong argument that a 794 prosecution 
     should have been brought.
     Internal DoJ Mis-communication and a Lack of High Level 
         Supervision
       Unfortunately, the case never went to trial. By late 
     November 1997, the Internal Security Section attorney had 
     completed his analysis of the case, concluding that Dr. Lee 
     should be offered a plea under 18 USC 793 or section 224(b) 
     of the Atomic Energy Act of 1954 for the 1985 compromise, in 
     combination with a charge under section 1001 for the false 
     statements on his travel form.\56\ When it became apparent 
     that ``Lee was balking at a plea with a potential 10-year 
     exposure for the 1985 incident,'' the attorney recommended to 
     Mr. Dion that ``although the section 794 case for that 
     incident in 1985 had problems, it was sufficiently robust 
     that we could ethically use it as leverage.'' \57\ Mr. Dion 
     testified that he called the prosecuting attorney and 
     authorized him to:
       ``seek a plea of guilty by Lee to a violation of 18 USC 
     Section 793(d) for his 1985 disclosures and to a violation of 
     the false statement statute, 18 USC Section 1001. As such a 
     plea would require Lee to waive the 10-year statute of 
     limitations, [the prosecuting attorney] was authorized to 
     advise counsel that no final decision had been made as to the 
     prospect of charging Lee with a violation of Section 794.'' 
     \58\
       The prosecutor, who was emphatic in his testimony that his 
     instructions were to accept a plea under 793 and 1001, or 
     nothing,\59\ obtained a plea on both counts, but had to 
     concede to only a ``short period of incarceration'' to secure 
     Dr. Lee's agreement.\60\ Principal Deputy Assistant Attorney 
     General John Keeney told the Subcommittee that, ``. . . I was 
     not aware, so far as I recall, that it would call for only a 
     short period of incarceration or would charge only an 
     attempted 793 charge. Had this been our opening position in 
     plea negotiations, I doubt that I would have approved it, 
     particularly, the `short period of incarceration.' '' \61\ He 
     then tried to justify DoJ's handling of the case by saying 
     that ``this was the best that could be hoped for given the 
     sentencing practices of the courts in the Central District of 
     California.'' \62\
       Had Dr. Lee cooperated, as he was required to do under the 
     plea agreement, it might have been possible to achieve an 
     acceptable disposition in the case even with the weak plea 
     agreement. Had Dr. Lee told the whole truth and provided 
     whatever counter-intelligence information he knew, that would 
     mitigate the need to punish him with a long sentence. It 
     might have been acceptable to balance counterintelligence 
     information gained from a cooperating defendant against the 
     need to punish wrongdoing. However, there is no benefit in 
     accepting a plea contingent upon the defendant's cooperation 
     and then not getting that cooperation. Dr. Lee did not live 
     up to his obligation to be truthful. The ``Position with 
     Respect to Sentencing Factors'' that the Government submitted 
     to the court acknowledged ``concerns that defendant has still 
     not been completely forthcoming about the nature, quality and 
     extent of his improper contacts with scientists of the PRC.'' 
     \63\ Dr. Lee's lack of cooperation was further highlighted in 
     the February 1998 DoE ``Impact Statement'' where the authors 
     note that:
       ``[W]e do not believe that Dr. Lee has been fully 
     cooperative in identifying or describing other classified 
     information he may have compromised. We believe that Dr. Lee 
     confessed to compromising selected classified information in 
     the hope his other, more damaging activities would not be 
     discovered or fully investigated.'' \64\
       On 26 February 1998, Dr. Lee failed an FBI-administered 
     polygraph where he was asked whether he had lied to the FBI 
     since his last polygraph examination regarding passing 
     classified information.\65\ When interviewed by DoE 
     scientists in March 1998, Dr. Lee again failed to cooperate 
     fully. As Dr. Thomas Cook pointed out during his testimony 
     before the Subcommittee on 29 March 2000, when asked 
     questions about what he had done, Dr. Lee ``repeatedly denied 
     any knowledge or any interest in classified programs and 
     publications. He was, however, the author and/or the 
     technical editor of some of these publications which he 
     denied knowledge of.'' \66\ In view of these repeated lies 
     and lack of cooperation, there should be no doubt that Dr. 
     Lee did not comply with the terms of the plea agreement, and 
     the Government could have successfully sought to breach it.
       When asked by Senator Specter why he did not breach the 
     plea agreement in view of this lack of cooperation, the 
     prosecuting attorney explained that he could not abrogate the 
     deal because he had nothing to fall back on,\67\ and because 
     doing so risked exposing extremely sensitive classified 
     information he had been instructed to protect.\68\ The 
     prosecutor advised that he was told that if there was a risk 
     of certain evidence coming out, he would have to drop the 
     case. As the case unfolded, however, there was no risk of 
     that evidence being disclosed. In the absence of any problem 
     as to disclosure of the sensitive information, and had the 
     prosecutor known he could have, or at least might have been 
     able to proceed with the 794 prosecution, then the better 
     course would have been to have abrogated the plea agreement 
     on the basis of Peter Lee's failure to cooperate which could 
     have been established without disclosing any classified 
     information.
       Due to the significance of the sensitive information about 
     which the prosecutor was concerned, and the restrictions it 
     placed on the prosecution of the case, it is troubling

[[Page 27685]]

     that at no time during the course of the Subcommittee's 
     review of the case did Mr. Dion or anyone else from DoJ ever 
     brief Congress about the information until after the 
     prosecuting attorney raised the subject in the context of 
     explaining why he had not sought to abrogate the plea 
     agreement. The Classified Information Procedures Act (CIPA) 
     specifically provides procedures whereby the Government can 
     deal with the risks of exposing such information, even to the 
     extent of permitting the Attorney General to decline 
     prosecution if the risk of exposing classified information is 
     too high. There is no evidence that the Department of Justice 
     formally considered this sensitive information in the CIPA 
     context.
       The prosecutor's understanding of his limited authority was 
     caused by a breakdown of communications. As he understood his 
     authority, since Dr. Lee had waived the statute of 
     limitations on the 793 count to accept the plea, breaching 
     the plea would leave the Government with only the 1001 count, 
     which was also in the plea. Therefore, the prosecutor felt he 
     had to stick with the plea agreement because it was that or 
     nothing.\69\ Even though the prosecutor knew Dr. Lee was 
     lying and was not cooperating, he felt he could not abrogate 
     the plea agreement because he thought he could not charge Dr. 
     Lee under Section 794 due to constraints imposed by the 
     Internal Security Section at Main Justice.
       Mr. Dion conceded at the Subcommittee's 12 April 2000 
     hearing that he did not recall discussing with the 
     prosecuting attorney that he (Dion) might reconsider a 794 
     prosecution if the proposed plea agreement fell through:

       Senator Specter: You say no final decision had been made . 
     . . as to whether he would be charged with 794?
       Mr. Dion: That's correct, sir. . . .
       Senator Specter: . . . Mr. Dion, when you say no decision 
     had been made and I interrupted you at that point as to what 
     would happen if the plea bargain broke down, [the prosecuting 
     attorney] testified very emphatically that he wanted to 
     proceed with 794 but was told that all he could do was do the 
     best he could under the authorized plea bargain, so that is 
     why he proceeded as he did, asking for only a short period of 
     incarceration and not taking action when Dr. Lee lied on his 
     polygraph and did not give further answers. But are you 
     suggesting, if that plea bargain had broken down, that you 
     might have reconsidered and authorized a 794 prosecution?

       Mr. Dion: We definitely would have reconsidered our course 
     of action, sir.
       Senator Specter: Well, did you tell [the prosecutor] that?
       Mr. Dion: I don't recall specifically if we discussed that 
     or not. We did discuss that no final decision had been made 
     on the 794 and that he should proceed with plea negotiations 
     on that basis.\70\

       In the face of the prosecuting attorney's testimony that he 
     was authorized only to take the weak plea agreement or 
     nothing, it seems clear that he was correct on what authority 
     was communicated to him.
       The prosecuting attorney was not the only one who did not 
     understand the Internal Security Section's position with 
     regard to a charge under Section 794. An FBI e-mail of 25 
     November 1997, from an attorney in the National Security Law 
     Unit, to an FBI Supervisory Special Agent in the National 
     Security Division, noted in relevant part that ``According to 
     [the FBI Supervisory Special Agent], ISS/Dion said that if 
     [Dr. Lee] doesn't accept the plea proffer, then he gets 
     charged with 18 USC 794, the heftier charge.''
       The Secretary of Defense was told the same thing. On 26 
     November 1997, Colonel Dan Baur prepared a memorandum for the 
     Secretary of Defense and the Deputy Secretary of Defense, in 
     which he relayed information on the case he had received from 
     the FBI. Colonel Baur's memo stated that DoJ had granted the 
     U.S. Attorney authority to offer to let Lee plead guilty 
     under 18 USC 793 and 18 USC 1001 to avoid being charged under 
     Section 794.\72\ Furthermore, the memo noted that ``should 
     Lee decline the offer, the U.S. Attorney will seek an 
     indictment against him for violation of Section 794.'' When 
     read relevant portions of these communications at the 
     Subcommittee's 12 April 2000 hearing, however, Mr. John Dion 
     stated that they were incorrect.\73\ Clearly there was a mis-
     communication on this very important issue, both within the 
     Department of Justice and between DoJ and DoD.
       It is surprising and disturbing that a critical piece of 
     information in the case exactly what the Assistant U.S. 
     Attorney was authorized to do and under what terms he was 
     authorized to do it could be subject to such differing 
     interpretations and understandings. In an effort to 
     understand how such a fundamental point could be 
     misunderstood, the Subcommittee traced the information that 
     appeared in Colonel Baur's memo to Secretary Cohen back to 
     its origins. It appears that Mr. Dion spoke to the 
     prosecutor, who then spoke to the Los Angles case Agents. 
     Sometime thereafter, the FBI Supervisory Special Agent in Los 
     Angles was briefed by one of the two case agents, or by both. 
     One of these agents relayed the information to the attorney 
     in National Security Law Unit, who passed it on to the FBIHQ 
     Supervisory Special Agent, for subsequent relay to Colonel 
     Baur. Whatever the actual path of the information--and 
     wherever the mis-communication was introduced--it is clear 
     that the information did not pass, as one might expect, from 
     the Internal Security Section to the Department of Defense. 
     The ISS line attorney handling the case testified that he 
     never spoke to anyone in DoD about the plea discussions. As a 
     consequence of this failure to communicate, the victim agency 
     and officials within the Department of Justice were acting 
     without a clear understanding of the actual decisions that 
     had been made.
       It is obvious that the case would have benefitted from more 
     direct supervision by high level Justice Department 
     officials, which would have likely reduced the confusion 
     within the Department of Justice and between DoJ and the 
     Department of Defense. Attorney General Reno was provided 
     with three ``Urgent Reports'' informing her of ``(1) Peter 
     Lee's admission on October 7, 1997, (2) his entry of a guilty 
     plea on December 9, 1997, and (3) the court's imposition of 
     sentence on March 26, 1998.'' \75\ On 31 October 1997, as 
     required by law, she also signed the document authorizing the 
     use of FISA-derived information for law-enforcement purposes. 
     She was not otherwise involved in the case, leaving the 
     matter to subordinates. The Deputy Attorney General, Mr. 
     Holder, was also uninvolved in the case.
       Mr. John Dion was the supervisory attorney in the Internal 
     Security Section, but one of his subordinates made the 
     substantive decisions in this case. When questioned about 
     allegations that Dr. Lee's revelations extended beyond what 
     he confessed to, for example, Mr. Dion deferred, saying that 
     one of his subordinate attorneys was ``more directly familiar 
     with that information than I am. . . .'' \76\ More direct 
     supervision by key DoJ personnel may have ensured a better 
     outcome in this important espionage case.
     Analysis of the Anti-Submarine Warfare Revelations
       It also appears that Dr. Lee should have been prosecuted in 
     relation to the information he revealed in his May 11, 1997 
     briefing of Chinese scientists. Charges should have been 
     filed under Section 794(a) which applies to ``any other major 
     weapons system or major element of defense strategy.'' The 
     U.S. nuclear submarine fleet, which comprises one leg of the 
     nation's strategic triad, would qualify as a major weapons 
     system. The potential harm from Dr. Lee's 1997 revelations 
     was described by the Cox Committee Report:
       ``Lee admitted to the FBI that, in 1997, he passed to PRC 
     weapons scientists classified research into the detection of 
     enemy submarines under water. This research, if successfully 
     completed, could enable the PLA to threaten previously 
     invulnerable U.S. nuclear submarines.'' \77\
       To determine whether or not the information Dr. Lee 
     revealed would qualify for prosecution under section 794, the 
     Government first needed to get an assessment of that 
     information. On 14 October 1997, the Assistant U.S. Attorney 
     handling the case in Los Angeles contacted a representative 
     of the Defense Criminal Investigative Service. He was 
     referred to Dr. Donna Kulla in the Intelligence Systems 
     Support Office where she dealt with the Radar Ocean Imaging 
     (ROI) project on which Peter Lee worked. Dr. Kulla informed 
     the prosecuting attorney that the information that Dr. Lee 
     had revealed was classified CONFIDENTIAL.\78\
       In mid-October, the FBI also contacted Dr. Richard Twogood, 
     of Lawrence Livermore National Laboratory (LLNL), and asked 
     for his opinion on the level of classification of Dr. Lee's 
     revelations. Dr. Twogood was the Deputy Associate Director 
     for Electronics Engineering at LLNL, and from 1988 until 1996 
     had been the Program Leader for the Imaging and Detection 
     Program at LLNL. The Joint U.S./U.K. Radar Ocean Imaging 
     Program, for which Dr. Twogood was the Technical Program 
     Leader from 1990 through 1995, was the single largest 
     component of LLNL's Imaging and Detection Program, and it was 
     the one where Dr. Peter Lee worked and where he would have 
     had access at the DoD SECRET level to the important 
     discoveries and significant advances in the development of 
     methods to detect submarine signatures with remote sensing 
     radars.\79\
       Dr. Twogood is an authorized derivative classifier, which 
     means that he can make appropriate judgements about 
     classification based on guidance written by others. Although 
     the Navy had primary jurisdiction over the anti-submarine 
     warfare information that Dr. Lee revealed to the Chinese, Dr. 
     Twogood had personally written some of the classification 
     guidance being used in the Joint U.S./U.K. program, and was 
     therefore familiar with the importance of the information. 
     When he reviewed the videotaped confession on 15 October 
     1997, Dr. Twogood noted that Dr. Lee himself admitted that he 
     had passed CONFIDENTIAL information. Furthermore, Dr. Twogood 
     informed the FBI that the information was at least 
     CONFIDENTIAL and likely DoD SECRET. More importantly, in Dr. 
     Twogood's view, Dr. Lee's disclosures went right to the heart 
     of the most significant technical achievement of the U.S./
     U.K. program up until 1995.\80\
       The prosecuting attorney was concerned that Dr. Twogood's 
     position could be said to have evolved, from saying it was 
     CONFIDENTIAL when first asked, to the later position

[[Page 27686]]

     that the information was SECRET. The prosecutor was also 
     aware that the defense would be able to find competent 
     scientists who would take a different view about the level of 
     classification due to the similarity of some of the 
     information to what was already in the public domain. These 
     are legitimate concerns, but are not outside the realm of 
     what prosecutors contend with in all espionage cases. They 
     are, by no means, sufficient to justify not going forward 
     with the prosecution.
       On 28 October 1997, the ISS attorney handling the case 
     attended a meeting with DoD officials for the purpose of 
     determining whether there was publicly available information 
     that could undermine an espionage prosecution for the 1997 
     compromise.\81\ At the meeting, the DoJ attorney provided DoD 
     officials with the draft Cordova affidavit, and made them 
     aware that the confession had been videotaped, but he did not 
     provide copies of the tapes and no DoD officials asked for 
     them.\82\ When asked about why he had not provided copies of 
     the tapes to DoD personnel, the ISS attorney replied:
       ``Because at that point, at the initial meeting, the 
     purpose was not to get a final classification determination 
     or even a preliminary classification determination on this 
     information. It was only to find out one of two things: what 
     publicly available information might be out there that could 
     potentially compromise a Section 794 prosecution on the 1997 
     compromise, and what could we say about the program 
     generally, as we have here today, in an open trial setting.'' 
     \83\
       By 3 November 1997, the Department of Defense had compiled 
     an extensive list of publicly available information on the 
     topic of radar ocean imaging and provided it to the Internal 
     Security Section. Among the documents was a printout from a 
     LLNL website titled ``Radar Ocean Imaging,'' and prepared 
     remarks that Dr. Twogood had presented in open session before 
     the House Armed Services Committee in April 1994. Both of 
     these documents contained general information about the use 
     of radars to detect submarines.\84\ Based on his assessment 
     of these documents, the ISS attorney concluded that Dr. Lee 
     could not be prosecuted under section 794 for the 1997 
     compromise. As he put it in his 12 April 2000 appearance 
     before the Subcommittee:
       ``The Web site and Dr. Twogood's testimony, coupled with 
     the fact that the underlying 1995 document was only 
     classified under a mosaic theory, convinced me that there was 
     no section 794 case on the 1997 compromise. In my opinion, 
     Senators, it was not even a close call.''\85\
       The ISS line attorney was wrong in concluding that the 
     information was already publicly available.\86\ Subsequent 
     analysis showed that Dr. Lee's anti-submarine warfare 
     revelations extended beyond what was in the public domain and 
     therefore remained classified.
       On 10 November 1997, in response to a 30 October request 
     from the prosecuting attorney, Lawrence Livermore employee Al 
     Heiman provided an FBI Special Agent with a copy of the 
     Security Plan covering the detection results in the U.K./U.S. 
     Radar Ocean Imaging program. The enclosed memorandum from Dr. 
     Twogood described the classification guidelines established 
     for the program. Paragraph 3 of Appendix A of the 
     classification guideline--indicating that ``processing 
     techniques which, when applied to unclassified or classified 
     data, yield a significant enhancement in signature 
     detectability which might apply to the submarine case'' 
     should be classified SECRET--was directly applicable to the 
     information that Dr. Lee revealed to the Chinese.\87\
       On 14 November 1997, Mr. John G. Schuster, Jr., wrote the 
     following memorandum for Navy Captain Earl Dewispelaere:
       ``The signal analysis techniques briefed by the subject are 
     UNCLASSIFIED when applied to environmental data and they have 
     been presented and published in several unclassified forums. 
     Any application of the technique to submarine wake 
     signatures, however, would be classified at the SECRET level, 
     as called out in current classification guides.
       ``The material that was briefed appears to have been 
     extracted from a CONFIDENTIAL document. This classification 
     was applied based on concern that the document, taken as a 
     whole, might suggest a submarine application even though it 
     was not explicitly stated. Given that the CONFIDENTIAL 
     classification cannot be explicitly supported by the 
     classification guides and that material similar to that 
     briefed by the subject has been discussed in unclassified 
     briefings and publications, it is difficult to make a case 
     that significant damage has occurred. Further, bringing 
     attention to our sensitivity concerning this subject in a 
     public forum could cause more damage to national security 
     than the original disclosure.
       ``Based on the above, it is recommended that the disclosure 
     of this material should not be considered as the sole or 
     primary basis for further legal action.'' \88\
       On 19 November 1997, the Schuster memorandum was sent to 
     Mr. Dion from Navy General Counsel Steven S. Honigman, who 
     stated that he and the Vice Chief of Naval Operations 
     concurred with Mr. Schuster's conclusions. The Schuster memo 
     has been described by various DoJ officials as a ``body 
     blow'' to the prosecution because of their view that it might 
     be ``Brady material'' or in some way exculpatory as to Dr. 
     Lee. At minimum, it seriously complicated DoJ's case.
       The ambiguous Schuster memorandum was apparently designed 
     to later enable the Navy to take virtually any position: the 
     signal analysis techniques are unclassified; they could be 
     classified SECRET; the material was extracted from a 
     CONFIDENTIAL document; significant damage may not be 
     provable; bringing the issue to a public forum could damage 
     national security; avoid legal action. When Mr. Schuster was 
     questioned by the Subcommittee, he was unable to explain why 
     the memo was written as it was or what it meant. The most 
     charitable view of the Schuster memo is that it was 
     misleading and should never have been written.
       The Schuster memo was based on incomplete information since 
     neither Mr. Schuster nor any other Navy or DoD personnel 
     reviewed the video or audio tapes of Dr. Lee's confession. 
     When that confession was reviewed at the Subcommittee's 
     request, Mr. Schuster, along with Dr. Donna Kulla and Wayne 
     Wilson, signed a memorandum dated 9 March 2000 stating that 
     Dr. Lee's disclosures should have been classified 
     CONFIDENTIAL.
       Two additional memoranda were made available to the 
     Department of Justice regarding Dr. Lee's 1997 disclosures, 
     but were apparently insufficient to change the view of the 
     ISS line attorney handling the case. A classified 17 November 
     1997 memorandum, referencing a conversation with Dr. Twogood, 
     stated that, contrary to Mr. Schuster's opinion, what Dr. Lee 
     revealed to the Chinese in 1997 should be considered SECRET. 
     The memo provides substantial technical detail to make the 
     case that Mr. Schuster was incorrect in his analysis. 
     Lawrence Livermore followed up with another classified 
     memorandum on 21 November 1997, citing the opinions of both 
     Dr. Twogood and Mr. Jim Brase, who was also knowledgeable of 
     the Radar Ocean Imaging project. Most importantly, these 
     memoranda explain, in considerable scientific detail, how the 
     information Dr. Lee provided to the Chinese differed in ways 
     that made it classified from what had been on the LLNL Web 
     site, in Dr. Lee's 1995 article, and in Dr. Twogood's April 
     1994 House Armed Services Committee testimony.
       When questioned at a Subcommittee hearing on 29 March 2000, 
     Mr. Schuster conceded that Dr. Twogood was the person to 
     accurately evaluate Dr. Lee's disclosures:

       Senator Specter: Dr. Twogood testified that [Dr. Lee] gave 
     away the heart, the core . . . of the information. Would you 
     disagree with that?
       Mr. Schuster: He was talking about the information in the 
     program. That is not my program and I don't know that I could 
     speak to the heart or core of that program.
       Senator Specter: So that is beyond the purview of your 
     expertise or knowledge?
       Mr. Schuster: Yes, sir, relative to the program.
       Senator Specter: So based on your knowledge, you wouldn't 
     have a basis for disagreeing with what Dr. Twogood said?
       Mr. Schuster: Not in that sense. I couldn't comment.\89\
       Mr. Schuster sought to explain his 14 November 1997 memo by 
     saying that it was his intent to give his assessment to 
     Captain Dewispeleare and not to the Department of 
     Justice.\90\
       Mr. Schuster testified that he never talked to anyone in 
     the Department of Justice and had never been briefed as to 
     how sensitive Navy and DoD information could be protected by 
     the Classified Information Procedures Act.\91\ This is in 
     contrast to the prosecuting attorney, who testified, ``We 
     assured the Navy that we could very confidently protect any 
     classified information primarily because it was my analysis 
     that the stuff was less classified, less dangerous.'' \92\
       On 21 May 1999, the Navy again weighed in on the subject, 
     writing to the Cox Committee to assert that ``the draft 
     report mischaracterizes the substance and significance of the 
     disclosure made by Lee during his trip to Beijing in 1997.'' 
     \93\ The letter further takes issue with the Cox Committee 
     Report draft for creating the:
       ``erroneous impression that the technology Lee discussed 
     during his 1997 Beijing trip was highly sensitive and 
     previously unknown, and that his disclosure to the PRC caused 
     grave harm to the national security, imperiling our submarine 
     forces. In the considered judgement of the Navy, fortunately 
     that is not the case.'' \94\
       When questioned about this letter, Mr. Preston had no facts 
     to support his disagreement with the conclusions of the Cox 
     Committee Report. He conceded that none of the individuals 
     who had been involved in responding to the Cox Committee 
     Report had ever had access to the tapes or transcripts of Dr. 
     Lee's confession, had made no effort to obtain them, and 
     therefore did not know the full extent of what he 
     revealed.\95\
     FISA Issues
       The loss of electronic surveillance on Dr. Lee occurred at 
     a critical juncture that may have seriously hampered the 
     Government's ability to collect important counter-
     intelligence information. When the Foreign Intelligence 
     Surveillance Act (FISA) court order

[[Page 27687]]

     expired on 3 September 1997, it was not renewed. The FBI 
     stated during testimony on 29 March 2000 that the FISA had 
     not been renewed for several reasons, including concerns 
     within the DoJ's Office of Intelligence Policy and Review 
     (OIPR) that the information on Dr. Lee was ``too stale,'' 
     \96\ but OIPR disagrees with the FBI's characterization of 
     what happened.\97\ In view of the disagreement as to what 
     actually happened with the FISA request, it is only possible 
     to conclude that the FBI should have pursued the matter by 
     making a formal written request. The Counterintelligence 
     Reform Act, which became law at the end of the 106th 
     Congress, will prevent future disputes over who is 
     responsible for the loss of FISA coverage by providing a 
     mechanism for the Director of the FBI to raise the matter 
     directly with the Attorney General, who will be required to 
     reply in writing. In this way, senior officials in both the 
     FBI and the Department of Justice can be held accountable for 
     their judgements on important espionage cases.
     Additional issues
       In addition to the disclosures of classified information 
     for which Dr. Lee was charged, the Government knew that: (1) 
     Dr. Lee asked for and received falsified travel documents 
     from the Chinese, which he presented to the FBI on 3 
     September 1997,\98\ (2) that his travel expenses in China 
     were paid for by the Chinese,\99\ (3) that he enlisted the 
     assistance of Chinese officials associated with the CAEP in 
     his attempt to deceive the FBI, and (4) that he confessed on 
     videotape to intentionally passing classified information 
     during his 1997 trip to China.'' \100\ The only charge 
     arising from the events of 1997, however, pertained to Dr. 
     Lee's false statements on his Post-Travel Questionnaire 
     submitted to TRW.\101\
       It seems apparent that obtaining false documents from a 
     Chinese official would have warranted a separate count under 
     18 USC 1001, and would have shown that Dr. Lee's 1997 
     transgressions extended beyond his lies to his employer. The 
     Government's failure to highlight Dr. Lee's collusion with 
     officials from the Chinese institutes where he visited 
     resulted in an inaccurate portrait of his activities, one 
     that was significantly less sinister than the reality of his 
     conduct. Had this case enjoyed better communication within 
     DoJ and better cooperation from the Navy, and a more 
     aggressive approach by senior DoJ officials, Dr. Lee should 
     have been charged or required to plead to at least four 
     counts: (1) a 794 charge for the 1985 hohlraum revelations, 
     (2) a 794 charge for the 1997 anti-submarine warfare 
     revelations, (3) a false statements charge under 18 USC 1001 
     for his lies on the TRW Post-Travel questionnaire, and (4) a 
     1001 charge for submitting false travel documents that he got 
     from the Chinese. Had these charges been filed, there is 
     little doubt that the extent of Dr. Lee's espionage and 
     attempted cover-up would have been made known. As it 
     happened, the full range of Dr. Lee's felonious conduct was 
     never presented to the Court.
       It should be noted that Judge Hatter could have requested 
     additional information to gain a better understanding of the 
     case, but he did not. DoE witnesses were present and prepared 
     to testify in camera at the sentencing hearing regarding Dr. 
     Lee's 1985 revelations. Had the Judge heard from these expert 
     witnesses, the harm done by Dr. Lee's significant material 
     assistance to the PRC nuclear weapons program could have been 
     made clear to the Court.


                            recommendations

       The single greatest problem the Government faced was its 
     failure to come to terms with the significance of the 
     information that Dr. Lee revealed to the PRC, both in 1985 
     and in 1997. Important were decisions were made without an 
     adequate understanding of exactly what Dr. Lee had revealed 
     and what were the consequences of those revelations. To 
     prevent these problems from happening again, I am introducing 
     legislation that would require victim agencies to produce a 
     written ``damage statement'' which states the level of 
     classification of the material alleged to have been revealed, 
     and describes in detail the potential harm to national 
     security from such revelations. The prosecution team should 
     consider the ``damage statement'' before any decision is made 
     as to whether the case should be taken to trial or a plea 
     bargain should be offered.
       The Department of Justice and the victim agency may wish to 
     consult informally before the damage assessment is reduced to 
     writing so that the victim agency will not unwittingly and 
     incorrectly create Brady \102\ problems and hamper any 
     ultimate prosecution. The risks of creating potential Brady 
     material--as might happen if an initial classification 
     assessment were later reviewed and changed--are obvious, but 
     the risks of proceeding to a plea without a clear written 
     statement, made by competent officials, as to the level of 
     classification of the material in question are even greater.
       As noted previously, the Counterintelligence Reform Act, 
     which became law in December 2000, contains a provision 
     requiring that the Justice Department provide briefings to 
     victim agency officials regarding the manner in which the 
     Classified Information Procedures Act enables a prosecution 
     to go forward without revealing additional secrets. 
     Contemporaneous written records, particularly the Schuster 
     memo, make it clear that the Navy was reluctant to proceed 
     with a prosecution due to sensitivity about a public 
     discussion of anti-submarine warfare, but the process 
     established by CIPA could have ensured that no sensitive 
     information was disclosed. In the absence of any risk of 
     disclosing classified information, the Navy's general 
     unwillingness to have anti-submarine warfare discussed in a 
     public proceeding should have had no bearing on the 
     Government's decision to proceed with a prosecution. The 
     briefing process established by the Counterintelligence 
     Reform Act will ensure that any legitimate concerns of the 
     victim agency are addressed, and that the Justice Department 
     will be able to distinguish between real security concerns 
     and a general unwillingness to support a prosecution.
       Although I do not intend to introduce legislation requiring 
     it, I believe that key instructions from Main Justice 
     (Internal Security Section, etc.) to the U.S. Attorney's 
     Office with responsibility for prosecuting the case, 
     including charging authority and plea bargain authority, 
     should be in writing. These written instructions should be 
     shared with the FBI and the victim agency so they have an 
     opportunity for input before any final decisions are made. 
     There can be no doubt that key officials in this case were 
     operating under severe misunderstandings. The prosecuting 
     attorney thought his instructions were that he had to accept 
     a plea under Sections 793 and 1001 or nothing, while the 
     Internal Security Section claimed that it was still open to a 
     possible 794 prosecution. Key officials within the Department 
     of Defense, up to and including the Secretary, were informed 
     that if Dr. Lee refused the plea agreement, he would be 
     prosecuted under Section 794. With so much misunderstanding, 
     it is surprising that the prosecution did not suffer even 
     more.


                               conclusion

       This was an important espionage case, yet remarkably little 
     was documented during the key weeks leading up to the plea 
     agreement in late 1997. Decision-makers within the Department 
     of Justice and the Department of Defense clearly have 
     discretion in executing their responsibilities, and should 
     not be second-guessed at every turn. However, the need to 
     strike a balance between protecting the national security--
     which can conceivably be achieved by not prosecuting in 
     certain circumstances--and the equal application of the laws 
     to ensure justice is done, requires that when judgements are 
     made for which the reasons are not immediately apparent, the 
     decision-makers must offer some explanation for their 
     actions. In the absence of such a documented rationale for 
     what may be necessary exceptions, the result is what appears 
     to be arbitrary application of the laws, an outcome which 
     protects neither the national security nor the law. The 
     Government's handling of the Dr. Peter Lee case demonstrates 
     clearly that ongoing, thorough congressional oversight is 
     essential.


                                Endnotes

       1. Gilbert Cordova, ``Affidavit in Support of Complaint, 
     Arrest Warrant and Search Warrants: United States v. Peter 
     Hoong-Yee Lee,'' undated: 16.
       2. Robin Staffin, Deputy Assistant Secretary for Research 
     and Development, Office of Defense Programs, Department of 
     Energy, Notra Trulock III, Senior Intelligence Officer, 
     Office of Energy Intelligence; and Joseph S. Mahaley, 
     Director, Office of Security Affairs, ``Impact Statement'', 
     17 February 1998: 2. [DoJ Bates number 00116]
       3. Robin Staffin, Deputy Assistant Secretary for Research 
     and Development, Office of Defense Programs, Department of 
     Energy; Notra Trulock III, Senior Intelligence Officer, 
     Office of Energy Intelligence; and Joseph S. Mahaley, 
     Director, Office of Security Affairs, ``Impact Statement'', 
     17 February 1998: 2. [DoJ Bates number 00116]
       4. Transcript of Proceedings (first draft), hearing before 
     the Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts regarding the Dr. Peter Lee Case, 29 March 
     2000: 52-53.
       5. Wayne Wilson, John G. Schuster, and Donna Kulla, 
     ``MEMORANDUM FOR THE GENERAL COUNSEL OF THE DEPARTMENT OF 
     DEFENSE,'' 9 March 2000: 1.
       6. According to Section 1.3 of Executive Order 12958 (April 
     17, 1995, which superseded Executive Order 12356 of April 6, 
     1982), information is to be classified as ``CONFIDENTIAL'' if 
     ``the unauthorized disclosure of which reasonable could be 
     expected to cause damage to the national security.  .  .  .''
       7. Cox Committee Report, Vol. 1, 88.
       8. John C. Keeney, Principal Deputy Assistant Attorney 
     General, Criminal Division, Department of Justice, prepared 
     statement submitted to the Senate Judiciary Subcommittee on 
     Administrative Oversight and the Courts Concerning the Peter 
     Lee Espionage Case,'' 12 April 2000: 6.
       9. See Transcript of Proceedings (first draft), Hearing 
     before the Senate Judiciary Subcommittee on Administrative 
     Oversight and the Courts regarding the Dr. Peter Lee Case, 12 
     April 2000: 14, 38-39 and 87-89.
       10. Prosecuting Attorney, Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     73-74.
       11. Donna Kulla, interviewed by Charlie Battaglia in 
     Washington, DC on January 2000.

[[Page 27688]]


       12. Bruce Lake, e-mail to Dobie McArthur of January 28, 
     2000. Lists the following as dates of Peter Lee was employed 
     by TRW: Original hire date: 06/18/73 to 10/08/76 Rehire date: 
     04/29/91 to 12/08/97 Retired eff.: 12/30/97. See also House 
     of Representatives, Report of the United States House of 
     Representatives Select Committee on U.S. National Security 
     and Military/Commercial Concerns with the People's Republic 
     of China, May 25, 1999, Vol. 1, 87-88. [Hereinafter, Cox 
     Committee Report]
       13. Gilbert Cordova, Declaration in the Matter of United 
     States vs. Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 
     February 1998: 13. [DoJ Bates number 000085]
       14. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 13-
     14 [DoJ Bates number 000085-000086]
       15. Reporter's Transcript of Proceedings, United States of 
     America, vs. Peter Lee, 26 March 1998: 20. [DoJ Bates number 
     000023]
       16. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 13-
     14. [DoJ Bates number 000085-000086]
       17. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 2. 
     [DoJ Bates number 000074]
       18. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 16. 
     [DoJ Bates number 000088]
       19. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 14. 
     [DoJ Bates number 000086]
       20. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 14-
     15. [DoJ Bates number 000086-000087]
       21. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 7. 
     [DoJ Bates number 000079]
       22. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 7. 
     [DoJ Bates number 000079]
       23. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 16-
     17. [DoJ Bates number 000088-000089]
       24. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 1. 
     [DoJ Bates number 000089]
       25. See Transcript of Proceedings (first draft), Hearing 
     before the Senate Judiciary Subcommittee on Administrative 
     Oversight and the Courts regarding the Dr. Peter Lee Case, 29 
     March 2000: 39.
       26. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 10. 
     [DoJ Bates number 000082]
       27. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 10-
     11. [DoJ Bates number 000082-000083]
       28. Cordova, Declaration in the Manner of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 11-
     12 [DoJ Bates number 000083-000084]
       29. Cordova, Declaration in the Manner of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 11-
     12 [DoJ Bates number 000083-000084]
       30. Cordova, Declaration in the Manner of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 12. 
     [DoJ Bates number 000084]
       31. Cordova, Declaration in the Manner of United States vs. 
     Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 February 1998: 13. 
     [DoJ Bates number 000085] See also Government's Response to 
     Defendant's Position with respect to Sentencing Factors; 
     Declarations of [Prosecuting Attorney], 23 March 1998: 5. 
     [DoJ Bates number 000069]
       32. INFORMATION, [18 USC 793 (d): Attempt to Communicate 
     National Defense Information to A Person Not Entitled To 
     Receive It; 18 USC 1001: False Statement to Government 
     Agency], undated, 1-3 [DoJ Bates number 000001-000003]
       33. Nora M. Manella, Physicist Pleads Guilty to 
     Transmitting Classified Defense Information to 
     Representatives of the People's Republic of China, News 
     Release, 8 December 1997: 1. [DoJ Bates number 000096]
       34. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 90.
       35. Nora M. Manella, Nuclear Physicist Sentenced to One 
     Year in Custody for Passing Classified Defense Information to 
     Scientists of the People's Republic of China, News Release, 
     26 March 1998: 1. [DoJ Bates number 000098]
       36. See, for example, GOVERNMENT'S EX PARTE APPLICATION FOR 
     ORDER UNSEALING PLEA AGREEMENT, 22 October 1999 [DoJ Bates 
     number 00235-00240], and GOVERNMENT'S EX PARTE APPLICATION 
     FOR ORDERING UNSEALING GOVERNMENT'S SENTENCING POSITION AND 
     GOVERNMENT'S FILING OF DEPARTMENT OF ENERGY ``Impact 
     Statement'', 25 October 1999 [DoJ Bates numbers 00252-00260]
       37. Robin Staffin, Deputy Assistant Secretary for Research 
     and Development, Office of Defense Programs, Department of 
     Energy; Notra Trulock III, Senior Intelligence Officer, 
     Office of Energy Intelligence; and Joseph S. Mahaley, 
     Director, Office of Security Affairs, ``Impact Statement'', 
     17 February 1998: 2. [DoJ Bates number 00116]
       38. Robin Staffin, Deputy Assistant Secretary for Research 
     and Development, Office of Defense Programs, Department of 
     Energy; Notra Trulock III, Senior Intelligence Officer, 
     Office of Energy Intelligence; and Joseph S. Mahaley, 
     Director, Office of Security Affairs, ``Impact Statement'', 
     17 February 1998: 2. [DoJ Bates number 00116]
       39. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Court Hearing regarding the Dr. Peter Lee Case, 5 April 2000: 
     53.
       40. ISS Line Attorney, Prepared Statement submitted to the 
     Senate Judiciary Subcommittee on Administrative Oversight and 
     the Courts Concerning the Peter Lee Espionage Case, 12 April 
     2000: 7.
       41. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearings regarding the Dr. Peter Lee Case, 29 March 
     2000: 37.
       42. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 38.
       43. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 39.
       44. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 5 April 
     2000: 66.
       45. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 67.
       46. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 67-68.
       47. See the opinion of Mr. Justice Reed, in Gorin v. United 
     States, 312 U.S. 19; 61 S. Ct. 429, 1941 U.S. Lexis 1033; 85 
     L. Ed 488: at 14-15.
       48. See the opinion of Mr. Justice Reed, in Gorin v. United 
     States, 312 U.S. 19; 61 S. Ct. 429; 1941 U.S. Lexis 1033; 85 
     Ed. 488; at 5.
       49. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 68.
       50. See the opinion of Circuit Judge L. Hand, in United 
     States v. Heine, 151 F.2nd 813; 1945 U.S. App. Lexis 3049: at 
     8.
       51. Reporter's Transcript or Proceedings, United States of 
     America, vs. Peter Lee, 26 March 1998: 14. [DOJ Bates number 
     000017]
       52. Reporter's Transcript of Proceedings, United States of 
     America, vs. Peter Lee, 26 March 1998: 25. [DOJ Bates number 
     000028]. See also Cordova, Declaration in the Matter of 
     United States vs. Peter Hoong-Yee Lee CR No. 97-1181-TJH, 27 
     February 1998: 18. [DOJ Bates number 000090]
       53. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 29.
       54. Reporters Transcript of Proceedings, United States of 
     America, vs. Peter Lee, 26 March 1998: 21-22. [DOJ Bates 
     number 000024-000025]
       55. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 5 April 
     2000: 15. See also Transcript of Proceedings (first draft), 
     ``Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts Hearing regarding the Dr. Peter Lee Case, 12 
     April 2000: 73.
       56. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 34-35.
       57. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 36.
       58. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 86.
       59. Prosecuting Attorney Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     70-71. See also, Transcript of Proceedings (first draft), 
     ``Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts Hearing regarding the Dr. Peter Lee Case, 5 
     April 2000: 41,48.
       60. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 90.
       61. John C. Keeney, Principal Deputy Assistant Attorney 
     General, Criminal Division, Department of Justice, prepared 
     statement

[[Page 27689]]

     submitted to the Senate Judiciary Subcommittee on 
     Administrative Oversight and the Courts Concerning the Peter 
     Lee Espionage Case,'' 12 April 2000: 6.
       62. John C. Keeney, Principal Deputy Assistant Attorney 
     General, Criminal Division, Department of Justice, prepared 
     statement submitted to the Senate Judiciary Subcommittee on 
     Administrative Oversight and the Courts Concerning the Peter 
     Lee Espionage Case,'' 12 April 2000: 6.
       63. Prosecuting Attorney, ``Government's Position With 
     Respect to Sentencing Factors: Declarations of [Prosecuting 
     Attorney],'' 27 February 1998: 7.
       64. Department of Energy, ``Impact Statement,'' 17 February 
     1998: 3: [DoJ Bates number 00117]
       65. Gilbert Cordova, ``Declaration of Gilbert R. Cordova,'' 
     23 March 1998; 2.
       66. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 61.
       67. Prosecuting Attorney, Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     72.
       68. Prosecuting Attorney, Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     76.
       69. Prosecuting Attorney, Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     72.
       70. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 87-88.
       71. SSA, National Security Law Unit, ``Royal Tourist,'' e-
     mail to FBIHQ Supervisory Special Agent, 25 November 1997: 1.
       72. Dan Bauer, Colonel, US Army, ``Possible Espionage 
     Arrest Update (U)--INFORMATION MEMORANDUM,'' MEMORANDUM FOR 
     THE SECRETARY OF DEFENSE, DEPUTY SECRETARY OF DEFENSE, 26 
     November 1997: 1.
       73. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 92-93.
       74. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 40.
       75. Jon P. Jennings, letter to Senator Orrin G. Hatch, 18 
     April 2000: 2.
       76. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 93-94.
       77. Cox Committee Report, Vol. 1, 88.
       78. Defense Criminal Investigative Service, ``Report of 
     Investigation,'' 11 September 1998: 2. [DoD Bates number 
     D001003]
       79. Transcript of Proceedings (first draft), Hearing before 
     the Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts regarding the Dr. Peter Lee Case, 29 March 
     2000: 51.
       80. Transcript of Proceedings (first draft), Hearing before 
     the Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts regarding the Dr. Peter Lee Case, 29 March 
     2000: 52-53.
       81. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 31.
       82. Transcript of Proceedings (first draft), Hearing before 
     the Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts regarding the Dr. Peter Lee Case, 12 April 
     2000: 58.
       83. Transcript of Proceedings (first draft), Hearing before 
     the Senate Judiciary Subcommittee on Administrative Oversight 
     and the Courts regarding the Dr. Peter Lee Case, 12 April 
     2000: 58-59.
       84. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 32-33.
       85. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 34.
       86. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 12 April 
     2000: 34.
       87. See Al Heiman, fax cover sheet of November 10, 1997 to 
     FBI Special Agent Dave LeSueur, and Dr. Richard Twogood, 
     memorandum to Bill Cleveland and Al Heiman, ``Classification 
     Guidelines'', November 10, 1997.
       88. J.G. Schuster, Jr., ``REQUEST FOR CLASSIFICATION 
     GUIDANCE,'' 14 November 1997.
       89. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 100.
       90. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 105-107.
       91. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 106-107.
       92. Prosecuting Attorney, Transcript of Interview with 
     Senator Arlen Specter in Los Angeles, CA, 15 February 2000: 
     63.
       93 Stephen Preston, General Counsel of the Navy, letter to 
     the Cox Committee, 21 May 1999: 1.
       94 Stephen Preston, General Counsel of the Navy, letter to 
     the Cox Committee, 21 May 1999: 2.
       95. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 79.
       96. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 29 March 
     2000: 24-25.
       97. Transcript of Proceedings (first draft), ``Senate 
     Judiciary Subcommittee on Administrative Oversight and the 
     Courts Hearing regarding the Dr. Peter Lee Case, 5 April 
     2000: 11.
       98. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee CR No. 97 1181-TJH, 27 February 1998: 12. 
     [DoJ Bates number 000084]
       99. Cordova, Declaration in the Matter of United States vs. 
     Peter Hoong-Yee Lee CR No. 97 1181-TJH, 27 February 1998: 7. 
     [DoJ Bates number 000079]
       101. INFORMATION, United States of America v. Peter Lee, 
     filed 5 December 1997:3. [DoJ Bates number 000003]
       102. See Brady v. Maryland 373 U.S. 83 (1963), in which the 
     Supreme Court declared that, regardless of the good faith or 
     bad faith of the prosecution, the suppression of evidence 
     favorable to the accused violated due process where the 
     evidence is material to either guilt or punishment. This 
     court ruling imposes an obligation on the Government to 
     provide to the defense any evidence or information in its 
     possession which could be favorable to the accused.

  Mr. SPECTER. Mr. President, I ask unanimous consent that two letters 
from the Justice Department be printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                       U.S. Department of Justice,


                              Federal Bureau of Investigation,

                                Washington, DC, December 19, 2001.
     Hon. Arlen Specter,
     U.S. Senate, Washington, DC.
       Dear Senator Specter: We have no objection on national 
     security grounds to publication of your final report on the 
     Wen Ho Lee investigation. We have not reviewed the report for 
     the accuracy of the facts or conclusions reflected therein.
           Sincerely,
     John E. Collingwood,
       Assistant Director, Officer of Public and Congressional 
     Affairs.
                                  ____

                                       U.S. Department of Justice,


                              Federal Bureau of Investigation,

                                Washington, DC, December 20, 2001.
     Hon Arlen Specter,
     U.S. Senate, Washington, DC.
       Dear Senator Specter: We have no objection on national 
     security grounds to publication of your final report on the 
     Peter lee investigation. We have not reviewed the report for 
     the accuracy of the facts or conclusions reflected therein.
           Sincerely,
     John E. Collingwood,
       Assistant Director, Office of Public and Congressional 
     Affairs.

  Mr. SPECTER. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. One minute.
  Mr. SPECTER. As promised, I yield back the remainder of my time.


            Vote On Conference Report Accompanying H.R. 3061

  The PRESIDING OFFICER. All time having expired, the question occurs 
on agreeing to the conference report to accompany H.R. 3061.
  Mr. SPECTER. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. REID. I announce that the Senator from Hawaii (Mr. Akaka) is 
necessarily absent.
  Mr. NICKLES. I announce that the Senator from North Carolina (Mr. 
Helms) and the Senator from Nevada (Mr. Ensign) are necessarily absent.

[[Page 27690]]

  The PRESIDING OFFICER (Mrs. Clinton). Are there any other Sentors in 
the Chamber desiring to vote?
  The result was announced--yeas 90, nays 7, as follows:

                      [Rollcall Vote No. 378 Leg.]

                                YEAS--90

     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feinstein
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wellstone
     Wyden

                                NAYS--7

     Allard
     Feingold
     Fitzgerald
     McCain
     Nickles
     Smith (NH)
     Voinovich

                             NOT VOTING--3

     Akaka
     Ensign
     Helms
  The conference report was agreed to.
  Mr. DURBIN. Madam President, I move to reconsider the vote.
  Mr. LEAHY. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Madam President, I yield to the Senator from 
Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Madam President, I congratulate all those who worked on 
this bill.
  I have already extended my congratulations to my distinguished 
colleague, Senator Harkin. I also thank Senator Byrd and Senator 
Stevens. We have a very devoted staff. I would like to thank them. For 
the majority: Ellen Murray who is the majority clerk and an 
extraordinary worker; Jim Sourwine, Mark Laisch, Erik Fatemi, Lisa 
Bernhardt, Adrienne Hallett, Adam Gluck, and Carole Geagley. I did not 
know the majority had so many more than we do. On the minority staff, 
Bettilou Taylor--Senator Taylor--Mary Dietrich, Sudip Parikh, and Emma 
Ashburn.
  This was an extraordinary bill, very complicated, $123 billion, lots 
of requests, lots of pages, lots of proofreading, and we are glad it is 
finished.
  I yield the floor.

                          ____________________