IB96039: Encryption Technology:
Congressional Issues
Richard M. Nunno
Resources, Science, and Industry Division
July 14, 2000
CONTENTS
SUMMARY
The controversy over encryption concerns what access the government should have to
encrypted stored computer data or electronic communications (voice and data, wired and
wireless) for law enforcement and national security purposes.
Encryption and decryption are methods of using cryptography to protect the
confidentiality of data and communications. When encrypted, a message only can be
understood by someone with the key to decrypt it. Businesses and consumers want strong
encryption products to protect their information, while the Clinton Administration wants
to ensure the law enforcement community's ability to monitor undesirable activity in the
digital age.
Until recently, the Administration promoted the use of strong encryption (greater than
56 bits) here and abroad, only if it had "key recovery" features where a
"key recovery agent" holds a "spare key" to decrypt the information.
The Administration wanted key recovery agents to make the decryption key available to
authorized federal and state government entities. Privacy advocates argued that law
enforcement entities would have too much access to private information.
Under this policy, the Administration was using the export control process to influence
whether companies develop key recovery encryption products by making it easy to export
products with key recovery, and difficult for those products without. There were no limits
on domestic use or import of any type of encryption, so the Administration tried to
influence what is available for domestic use through export controls since most companies
do not want to create two products--one for U.S. use and another for export. In September
1997, however, FBI Director Louis Freeh raised the possibility of requiring encryption
products manufactured in or imported into the United States to have key recovery features
and opened the possibility that key recovery could be enabled by the manufacturer, not
only the user. U.S. companies argued that U.S. export policies hurt their market share
while helping foreign companies that are not subject to export restrictions. Many
businesses and consumer groups agree that key recovery is desirable when keys are lost,
stolen, or corrupted, but want market forces to drive the development of key recovery
encryption products. They also object to government having any role in determining who can
hold the keys.
All parties agree that encryption is essential to the growth of electronic commerce and
use of the Internet, but there is little consensus beyond that. Seven bills on encryption
or computer security were introduced in the 105th Congress; none were enacted.
Similar encryption legislation (H.R. 850, S. 798) was introduced in
the 106th Congress intended to foster widespread use of the strongest
encryption. While the Administration continued to oppose such legislation, H.R. 850 was marked up by
five Committees, resulting in widely varying and, in places, opposing, legislation. S. 798 passed the Senate
Commerce Committee and awaits further action. In September 1999, the Administration
announced plans to further relax its encryption export policy, and the rules for
implementing that policy were issued by the Department of Commerce on January 14, 2000,
after which, pressure from the industry (but not from privacy rights groups) to enact
encryption legislation decreased.
MOST RECENT DEVELOPMENTS
The regulations implementing the Administration's new encryption export policy were
issued by the Department of Commerce's Bureau of Export Administration (BXA) on January
14. According to the new rules, retail encryption commodities and software of any key
length can be exported without a license to any non-government end user in any country
except the seven state supporters of terrorism, and can be re-exported to anyone
(including Internet and telecommunications service providers). Exports previously allowed
only for a company's internal use can now be used for communication with other firms,
supply chains, and customers. Exports to government end-users still require a license.
Exporters must report to BXA on where the encryption product is exported, and BXA will
determine whether products qualify as retail by reviewing their functionality, sales
volume, and distribution methods. In addition, if source code (computer language
instructions written by programmers) is made publicly available (under "open
source" policies) and no royalty is charged for its use, the code is not subject to
export restrictions, a provision that was not included in an earlier draft and was the
source of criticism by industry and privacy rights groups. The Administration will accept
public comments on the feasability of the regulation for 120 days, after which a final
rule will be issued.
While the computer industry is satisfied with the new rules, some privacy rights
groups (including the American Civil Liberties Union, the Electronic Frontier Foundation,
and the Electronic Privacy Information Center) argue that the remaining ambiguities in the
rules make encryption technology overly cumbersome for individuals to use. Because the
regulations could be reversed by a future Administration, these groups still advocate the
passage of legislation to codify the changes in U.S. encryption policy.
On April 3, the Electronic Privacy Information Center released its third annual
international review of encryption policies, covering 135 countries. The report finds the
relaxation of export controls is continuing, but that law enforcement agencies are seeking
new authority and new funding to gain access to private keys and personal communications.
BACKGROUND AND ANALYSIS
Encryption, Computers, and Electronic Communications
Encryption and decryption are procedures for applying the science of cryptography to
ensure the confidentiality of messages. Technically, the issue discussed here is
cryptography policy, but since encryption is the most controversial application of
cryptography, it is the term used popularly and herein. (There are other methods of using
cryptography to protect confidentiality -- steganography and "chaffing and
winnowing" -- but constraints on the length of this issue brief do not permit
discussion of them.) Also, for a discussion of the specific issues regarding medical
records privacy and security, see CRS Issue Brief IB98002, Medical Records
Confidentiality, updated regularly.
Encrypting messages so they can be understood only by the intended recipient
historically was the province of those protecting military secrets. The burgeoning use of
computers and computer networks, including the Internet, now has focused attention on its
value to a much broader segment of society. Government agencies seeking to protect data
stored in their databases, businesses wanting to guard proprietary data, and consumers
expecting electronic mail to be as private as first class mail, all want access to strong
encryption products. Other users of electronic communications, for example cellular
(wireless) phone users who expect calls to be as private as wireline calls, also are
showing increased interest in encryption. While encryption is uncommon for telephone users
today, the advent of digital telephone services (particularly Personal Communication
Services, PCS, a digital form of cellular telephony) is expected to make encrypted voice
and data communications over telephones more common.
Whether hardware- or software-based, an encryption product scrambles a message using
mathematical algorithms. A corresponding key is needed to decrypt (unscramble) the
message, and the key itself also may be encrypted. The algorithm is a series of digital
numbers (bits), and the level of difficulty of breaking the code (its
"strength") is usually represented by the number of bits in the key. (There are
other factors that affect a key's strength, but in this debate, bit length is used as a
benchmark.) Unencrypted data are referred to as "plaintext." Encrypted data are
"ciphertext."
The National Institute of Standards and Technology (NIST), in conjunction with
industry, developed an encryption standard using a 56-bit key in 1977. Called the Data
Encryption Standard (DES), it is widely used today in the United States and abroad, often
in an enhanced mode called "3-key triple DES" providing the equivalent of a 112-
bit key. NIST is currently working to establish a new, stronger standard than DES referred
to as the Advanced Encryption Standard (AES). The need for a stronger standard was
underscored in 1997 when DES was broken.
Encryption products are widely available today, including some that use 128-bit keys or
more. Some 128-bit encryption software can be downloaded from the Internet. There are no
limits on the strength of encryption products used in the United States, whether acquired
here or imported. The only limits are on exports. This indirectly influences what is
available domestically, however, since most U.S. companies are reluctant to develop two
products, one for the U.S. market and another for export. For many years, reflecting the
policies of the past three Administrations, the State Department did not allow general
exports of encryption with more than 40-bit keys, except for banking and U.S.-owned
subsidiaries (for a list of exceptions, see CRS Report 96-232). In December 1996, the
Clinton Administration raised the limit to 56 bits for easily exportable encryption
products that do not have key recovery features (see box), and removed bit length limits
entirely for products with key recovery. Breaking a message encrypted with a 40-bit key by
"brute-force" (trying every possible combination of bits until the correct one
is found) is not considered difficult. In January 1997, a 40-bit key was broken in 3.5
hours. In general, for each bit added to the encryption key, the time required to break
the key doubles. Thus it takes 216 (65,536) times longer to break a 56-bit key
than a 40-bit key. In July 1998, a group from the Electronic Freedom Foundation (an
electronic privacy rights group) demonstrated (for less than $250,000) the vulnerability
of 40- and 56-bit keys by using a network of nearly 100,000 PCs on the Internet that broke
a 56-bit key in 22 hours, 15 minutes. The ability to break 128-bit encryption (considered
strong encryption) has not yet been demonstrated in the commercial sector.
In May 1996, the National Research Council (NRC) released a comprehensive report
entitled Cryptography's Role in Securing the Information Society (the
"CRISIS" report). It stressed that national policy should make cryptography
broadly available to all legitimate elements of society, promote continued economic growth
and leadership of key U.S. industries, and ensure public safety and protection against
foreign and domestic threats. Among the recommendations: key escrow is an unproven
technology and the government should experiment with it and work with other nations, but
not aggressively promote it now; export controls should be relaxed progressively, but not
eliminated; and encryption policy issues can be debated adequately in public without
relying upon classified information. The report also recommended that no law should bar
the manufacture, sale or use of any form of encryption within the United States; and
government should promote information security in the private sector. The report
underscored that utilization of strong encryption and law enforcement objectives can be
mutually compatible.
Business and consumer groups consider 56-bit keys inadequate to ensure privacy and
security. They oppose export encryption controls and requirements for key recovery
features. They object to the government using the export process to force the development
of key recovery encryption products, rather than allowing market forces to prevail, and to
the government's role in determining who can serve as key recovery agents. These groups
argue that strong encryption is needed, for example, to enhance the prospects for
electronic commerce and other uses of computer networks. The willingness of consumers to
buy goods via the Internet could be markedly affected by their beliefs as to whether
credit card numbers will be secure. Businesses using computers for either internal or
external communications need to ensure that competitors or other unauthorized parties
cannot gain access to proprietary information. Privacy advocates argue that consumers
should be assured that personal, medical and financial information transmitted by or
stored in computers will be protected. They note that since 128-bit non-key recovery
encryption is available worldwide either by downloading it from the Internet or buying it
from foreign firms, the U.S. government already has lost control of influencing its
availability. A 1997 survey conducted by Trusted Information Systems found 656 foreign
encryption products available from 29 countries (in addition to 963 U.S. products). A 1998
report by the Economic Strategy Institute, Finding the Key, concluded that if the
Administration's current policies remained in effect, the U.S. economy would lose $35-96
billion by 2002 in lost encryption product sales; slower growth in encryption-dependent
industries; foregone cost savings and efficiency gains from the Internet, intranets, and
extranets; and indirect effects throughout the economy.
In June 1999, a study conducted by George Washington University, titled the
"Growing Development of Foreign Encryption Products in the Face of U.S. Export
Regulations," found over 800 encryption products available from 35 foreign countries http://www.seas.gwu.edu/seas/institutes/cpi.
At least 167 of those products were found to use strong encryption. Over 512 companies
either manufacture or distribute cryptographic products (of quality comparable to U.S.
products) in over 70 countries outside the United States. In June 1999, the Electronic
Privacy Information Center produced its second annual report on the encryption policies of
foreign nations and international organizations titled "Cryptography and
Liberty," concluding that "in the vast majority of countries [both developed and
developing] cryptography may be used, manufactured, and sold without restriction."
Supporters of en-cryption export controls agree that strong en-cryption is needed but
insist that law enforce-ment and national secu-rity concerns demand that, when authorized,
the government be able to intercept and decrypt electronic communica-tions or decrypt
stored computer data where undesirable activity is suspected. Law enforce-ment and
national se-curity officials want to ensure their ability to access the plaintext of the
information. The method most often discussed is to obtain the key needed to unscramble
encrypted information from key recovery agents. Hence, they support the use of strong
encryption products as long as they include key recovery features, and want to limit the
development of strong non-key recovery products. While conceding some strong non-key
recovery encryption products already are available, they claim use of these products is
not widespread. They argue that while the U.S. government cannot prevent the availability
of strong non-key recovery encryption, at least it can be restrained, and future
generations of encryption products (with key recovery) will displace those now in use.
Although the publicity surrounding the encryption debate so far has centered on access
to stored computer data, electronic communications are equally important to the law
enforcement and national security communities. An Internet message, for example, is stored
data when it resides on a server or an individual's computer, but it is an electronic
communication while it is being transmitted between computers. The encryption export
regulations apply to products for encrypting other electronic communications, not just
those between computers. Telephones, whether wired or wireless (such as cellular phones),
are also covered, for example. The 1994 Communications Assistance to Law Enforcement Act
(CALEA, often called the "Digital Wiretap" Act, P.L. 103-414)
requires telecommunications carriers to ensure their equipment permits the interception of
any electronic communication by law enforcement officials. If the communication is
encrypted, law enforcement agencies want to ensure they can decrypt it, too. (CALEA
requires the telecommunications carrier to provide decrypted information if the carrier
itself is responsible for the encryption, but not if the customer has encrypted it.)
Administration Policy: Gradual Relaxation of Rules
The Clinton Administration has always strongly supported arguments by law enforcement
and national security agencies that the government must be able to gain access to the
plaintext of encrypted electronic data and messages when undesirable activity is
suspected. In addition to international criminal activity, the Administration (notably the
FBI) wants to be able to monitor domestic criminal activity. The Administration has always
permitted use of any strength encryption, without a key recovery requirement, in the
United States. Rather than attempting to change that policy directly, the Administration
used the indirect route of export controls to influence what types of encryption products
were available, both here and abroad.
Initially, the Clinton Administration sought to restrain the development of strong
encryption products by prohibiting export of greater than 40-bit encryption (with a few
exceptions). The Administration also tried several approaches to promote
"voluntary" use of key recovery agents. In April 1993, the Administration
released its "Clipper chip" policy requiring emplacement of special encryption
computer chips (called Clipper, an encryption device used for unclassified but sensitive
government communications) into new government equipment for voice communications, with
two government agencies, NIST and the Department of Treasury, jointly serving as key
escrow agents (each holds part of the key). The Administration implemented this policy in
1994 for sensitive but unclassified voice communications in the federal government through
a Federal Information Processing Standard (FIPS) called the Escrowed Encryption Standard
(EES, or FIPS-185). The Administration hoped that industry would accept the Clipper chip
for its own use, but industry strongly objected to the key escrow provisions, particularly
the fact that government agencies would hold the keys. In July 1994, the Administration
agreed to work with the private sector to develop a "voluntary" key escrow
system for data using "trusted third parties" as escrow agents instead of
government agencies. This proposal was referred to by its detractors as "Clipper
II."
Industry continued to object to the key escrow concept as well as the export controls,
leading to the legislation discussed below. In May 1996, the Administration released a
draft paper on encryption policy, followed by a July statement by Vice President Gore.
Called "Clipper III" by its opponents, these documents outlined policy changes
the Administration was considering. Among other things, the term "key recovery"
replaced "key escrow" to emphasize the positive attributes of key escrow in
providing a means to recover a key that is lost, stolen, or corrupted. Furthermore,
"key escrow" had come to be identified with the concept of the government
holding the key. Under the key recovery policy, a trusted third party or an organization
itself can serve that function ("self escrow") with some restrictions.
On October 1, 1996, Vice President Gore announced the changes to the Administration's
policy, to focus on the need for strong encryption, as long as it included key recovery
features. The key recovery agent would be required to give the key to duly authorized law
enforcement officials if undesirable activity is suspected (the three types most often
cited are drug cartels, child pornographers, and terrorists). The associated executive
order was signed November 15, and the Administration published an "interim
final" regulation on December 30, to last two years, with the following details:
continuation of no restrictions on domestic use or import of any encryption; no key length
restrictions on export of encryption products if a key recovery system was used for that
product; for 56-bit encryption products without key recovery systems, a one-time review
was required before exporting the product, and within two years the exporter must have
developed a key recovery system; export licenses were granted in 6-month increments to
hold exporters to a timetable to ensure the key recovery systems were being developed (if
not, the export license was not renewed); trusted parties served as key recovery agents,
and in some cases, organizations were allowed to escrow keys themselves (self-escrow) if
they met certain requirements; and commercial encryption was removed from the Munitions
List and responsibility for commercial encryption export licensing was transferred from
the State Department to the Commerce Department, with the Department of Justice serving an
advisory role in commercial encryption export decisions. Foreign governments would apply
to U.S. courts to gain access to keys, as they do when seeking other types of evidence.
During the next two years, the Commerce Department granted some waivers for banking and
financial services.
On September 3, 1997, FBI Director Louis Freeh testified to the Senate Judiciary
Committee that there was a need for domestic use restrictions on encryption products.
Following that testimony, the existence of legislation proposed by the Administration to
impose domestic use restrictions became widely known among congressional and industry
groups. Vice President Gore later stated that Freeh's comments reflected the FBI's view,
but did not indicate a change in Administration policy. The House Intelligence Committee,
however, later approved an amendment to legislation similar to Freeh's position about the
need for key recovery to be built into encryption products.
In March 1998, Vice President Gore wrote to Senator Daschle restating the
Administration's desire for a "balanced approach" to encryption policy and
seeking to "produce cooperative solutions, rather than seeking to legislate domestic
controls." The discussions would also enable additional steps to relax export
controls on encryption products. On April 15, Secretary of Commerce Daley announced the
release of a new report on electronic commerce wherein he said that although the
Administration's policy was the right one, its implementation was a failure. He urged both
industry and government to strive harder to reach consensus on the issue. In April 1998,
Undersecretary of Commerce for the Bureau of Export Administration (BXA) Reinsch commented
at a Congressional Internet Caucus meeting that the Administration was no longer looking
for a legislative solution to the encryption issue.
Later in 1998, the Administration made further concessions in encryption policy. In
July it declassified two security algorithms used in the Clipper chip. In September it
announced plans to allow the export of 56-bit encryption products without requiring
provisions for key recovery, after a one-time review, to all users outside seven
"terrorist countries." Export of encryption products of any strength was
permitted to 46 designated countries if key recovery or access to plaintext is provided to
a third party. The Administration also supported an FBI proposal to establish a technical
support center to help law enforcement keep abreast of encryption technologies. On
December 31, BXA released interim rules to implement the Administration's export control
policy initiative. The rules allowed for the export of encryption commodities and software
to U.S. companies or subsidiaries in the finance, insurance, health-care and medical
end-users, and electronic commerce industries. (See Most Recent Developments Section for
the latest policy changes).
Industry Reactions
Most participants in the debate agreed that market forces will lead to the development
of key recovery-based encryption products for stored data because companies and
individuals will want to be able to replace lost, stolen or corrupted keys. The debate was
over the government's role in "encouraging" the development of key recovery
products through export regulations and the access government has to the keys. Also of
concern was the government's inclusion of other electronic communications.
While computer companies continued to argue against the Administration's policy, some
also developed key recovery products to satisfy the policy. A group of companies formed
the Key Recovery Alliance http://www.kra.org in 1996 to
identify barriers to the development of marketable key recovery products. On March 4,
1998, a group of more than 100 companies and organizations (some also members of the Key
Recovery Alliance) formed the Americans for Computer Privacy (ACP) coalition http://www.computerprivacy.org to lobby for
enabling the use of strong encryption, against export controls on strong encryption, and
against mandatory key recovery. Among the members are America On Line, Microsoft, Sybase,
the National Rifle Association, the Law Enforcement Alliance of America, and the Business
Software Alliance.
In March 1998, Network Associates announced that it had arranged for a Swiss company to
develop its own software product using specifications in a book by Philip Zimmerman, the
creator of Pretty Good Privacy (PGP). Network Associates bought Mr. Zimmerman's company in
1997. PGP is a 128-bit encryption product that does not have key recovery and hence could
not be exported under the current regulations. (An older version is available via the
Internet, however, which sparked a multi-year Justice Department investigation of Mr.
Zimmerman that resulted in no action against him). Since the book may be exported, and the
Swiss company received no technical assistance from Network Associates, the company
believes no laws were broken. The Swiss product was sold by a Dutch firm under the PGP
name. Opponents of encryption controls pointed to this as evidence that the U.S.
government cannot control the spread of non-key recovery encryption.
In July 1998, as a possible compromise to the Administration, a group of software
companies announced plans to develop a product, "private doorbell", to capture
data that could be given to law enforcement before it is encrypted and sent over the
Internet. While industry groups approved of the Administration's encryption export policy,
they argued that 56-bit encryption had been broken and that stronger encryption was
necessary. Furthermore, the Department of Commerce's rules could render the policy
ineffective in increasing their ability to export encryption products. Privacy rights
groups argued that while the new policy may help big companies, it would not increase the
availability or use of 56-bit or stronger encryption by individual users of Internet
communications.
Action in the 105th Congress
Three bills in the House and four in the Senate concerning encryption were introduced
in the 105th Congress; none were enacted, although one (H.R. 1903) passed the
House. Three (H.R. 695,
S. 376, and S. 377) were versions of
bills considered in the 104th Congress, generally favoring relaxed encryption export
controls. Four new bills were also introduced. S. 909 reflected a
philosophy closer to that of the Clinton Administration than the three previous bills. H.R. 1903 focused
broadly on computer security issues and the role of NIST. H.R. 1964 focused
broadly on computer privacy and security issues. S. 2067 was generally
viewed as pro-industry and pro-privacy. Hearings were held by six House committees
(Commerce, International Relations, Intelligence, Judiciary, National Security, and
Science) and two Senate committees (Judiciary; and Commerce, Science, and Transportation).
The Security and Freedom Through Encryption (SAFE) Act (H.R. 695, Goodlatte), as
introduced, sought to relax export controls on encryption, although versions of H.R. 695 as reported from
various committees had substantially different provisions. The bill was eventually
considered by the Committees on Judiciary, International Relations, Commerce, National
Security, and Intelligence. Amendments adopted by the latter two committees reversed some
of the provisions of the original bill by maintaining or increasing restrictions on export
controls of encryption. The Rules Committee did not take action on the bills.
The Encrypted Communication Privacy Act of 1997 (S. 376, Leahy) prohibited
mandatory use of key recovery but allowed law enforcement to access the key under court
order if key recovery is used; codified existing domestic use policy; gave the Secretary
of Commerce exclusive jurisdiction over commercial encryption exports; liberalized export
controls; made it a crime to use encryption to obstruct justice; and established liability
protection and penalties for "key holders." The bill also established procedures
for foreign governments to access keys or decryption assistance.
The Promotion of Commerce On-Line in the Digital Era (PRO-CODE) Act of 1997 (S. 377, Burns) prohibited
mandatory key recovery and established an Information Security Board as a forum to foster
communication and coordination between industry and government. The bill also codified
existing domestic use policy and gives the Secretary of Commerce exclusive jurisdiction
over commercial encryption exports. It liberalized export controls but required the
publisher or manufacturer of encryption software or hardware to report to the Secretary of
Commerce within 30 days after exporting a product on the product's encryption
capabilities. The report would have included the same information required under the
December 30, 1996 regulations, but would be provided after export instead of as a
condition of obtaining a license.
The Secure Public Networks Act (S. 909, McCain et. al.)
codified existing domestic use policy; established penalties for use of encryption in
commission of a crime; encouraged but did not require use of key recovery; established
procedures for government approval of key recovery agents and certificate authorities;
required key recovery agents, whether or not registered by the government, to disclose
recovery information to lawfully authorized federal or state government entities; provided
liability protection for key recovery agents acting pursuant to the Act; permitted export
of 56-bit encryption products without key recovery if they meet certain conditions;
permitted export of any strength encryption product if it is based on a qualified key
recovery system and meets certain other conditions; and allowed the President to waive
provisions of the bill for national security or domestic safety and security reasons.
During and after markup, the committee adopted amendments establishing an Encryption
Export Advisory Board (EEAB) with four government (CIA, FBI, NSA and the White House) and
eight industry representatives to make recommendations on whether export exemptions should
be granted for non-key recovery products stronger than 56-bits. The committee ordered the
bill reported, but the report was never filed.
The Senate Judiciary Committee requested sequential referral of S. 909, and held a hearing
on July 9, 1997 where FBI Director Louis Freeh expressed reservations about the bill
because it allowed widespread use of strong encryption within the United States regardless
of whether it has key recovery. Freeh amplified his concerns at a September 3 hearing
before the Subcommittee on Technology, Terrorism, and Government Information. He stated
that he wanted U.S. manufacturers to be required to build key recovery into encryption
products, and that imported encryption products also be required to include key recovery.
He further stated that achieving the goal of immediate lawful decryption "could be
done in a mandatory manner. It could be done in an involuntary manner. ..." He later
added that he thought legislation should first include the requirement that key recovery
be built into encryption products and "then take up the more complex discussion about
how that's enabled...." He also stated that Internet service providers should be
required to be able to decrypt communications immediately.
The Encryption Protects the Rights of Individuals from Violation and Abuse in
Cyberspace (E-PRIVACY) Act (S.
2067, Ashcroft, et. al.) prohibited federal or state agencies from linking the use of
encryption for authentication or identification to the use of encryption for
confidentiality purposes; required that the use of encryption products be voluntary and
market-driven; outlined procedures for U.S. and foreign law enforcement agencies to access
decryption keys or assistance in decrypting electronic communications or stored data;
established a National Electronic Technologies (NET) Center in the Department of Justice
to help law enforcement keep pace with encryption technology; made the use of encryption
to obstruct justice a crime; established an Encryption Export Advisory Board to determine
whether comparable foreign products are commercially available; maintained the President's
authority to prohibit export of encryption products to countries that support
international terrorism or to impose embargoes on exports to or imports from a specific
country; made electronic records in networked storage be treated in law as though the
record had remained in the possession of the person who created the record; and set the
circumstances under which the government may require a mobile electronic communication
service to reveal the real-time physical location of a subscriber, and may obtain
information from pen register and trap and trace devices.
The Computer Security Enhancement Act (H.R. 1903,
Sensenbrenner) amended and updated the Computer Security Act of 1987, enhancing the role
of the National Institute of Standards and Technology (NIST). As passed by the House (H.Rept. 105-243),
the bill required NIST to promote the use of commercial-off-the-shelf encryption products
by civilian government agencies; clarified that NIST standards and guidelines are not
intended as restrictions on the production or use of encryption by the private sector;
provided funding for computer security fellowships at NIST; and required the National
Research Council to conduct a study of public key infrastructures. A section requiring
NIST to develop standardized tests and procedures to evaluate the strength of foreign
encryption products was removed before passage. The bill passed the House and was reported
without amendment by the Senate Commerce Committee October 13, 1998 (S.Rept. 105-412).
The Communications Privacy and Consumer Empowerment Act (H.R. 1964, Markey)
covered a range of computer privacy and security issues. With regard to encryption, the
bill codified existing domestic use policy, prohibited the government (federal or state)
from conditioning the issuance of certificates of authentication or certificates of
authority upon use of key recovery systems, and prohibited the government (federal or
state) from establishing a licensing, labeling or other regulatory scheme that requires
key escrow as a condition of licensing or regulatory approval. The bill also required the
National Telecommunications and Information Administration (NTIA) to conduct a study on,
inter alia, how data security issues affect electronic commerce, including identification
of generally available technologies (including encryption) for improving data security.
Action in the 106th Congress
On February 25, 1999, Representative Goodlatte introduced a new version of SAFE (H.R. 850), similar to the
bill introduced in the 105th Congress, with a new provision directing the
Attorney General to compile examples in which encryption has interfered with law
enforcement. The bill was reported by the Judiciary Committee on April 27, and was
referred jointly and sequentially to Committees on International Relations, Commerce,
Armed Services, and Intelligence. Hearings were held by the Committees on Commerce (May 5
and 25), International Relations (May 18) and Intelligence (June 9 and July 14), Armed
Services (July 1 and 13), . The bill has gained 257 co-sponsors, with a majority of both
Republican and Democratic leadership. The bill was reported (amended) by the Committee on
Commerce. (H.Rept.
106-117, Part II) on July 2, and by the remaining three committees (parts III, IV, and
V) on July 23.
The five versions of H.R.
850 differ significantly. The versions passed by the Committees on the Judiciary,
Commerce, and International Relations codify the regulations for unrestricted domestic use
and sale of encryption, prohibit the government from mandating key escrow practices for
the public, and liberalize the controls governing the export of strong encryption. One of
the amendments passed by the Commerce Committee made it a crime to fail to decrypt
information upon court orders, raising opposition from privacy rights advocates. The Armed
Services and Intelligence Committee versions, in contrast, have minimal or no mention of
domestic use of encryption, and increase the authority of the President in restricting the
controls governing the export of strong encryption. All of the bills, except for the
version by the Armed Services Committee, establish criminal penalties for the use of
encryption in the furtherance of a criminal act. The Intelligence Committee bill, however,
provides greater details than the others for criminalizing the use of encryption in a
criminal act. In addition, each Committee added provisions for specific agencies and
circumstances. For example, the Commerce Committee established a National Electronic
Technologies (NET) Center in the Department of Commerce to promote the exchange of
information regarding data security techniques and technologies, and the International
Relations Committee directed the Secretary of Commerce to consult with the Attorney
General, the Federal Bureau of Investigation, and the Drug Enforcement Administration
before approving any license to export encryption products to any country identified as
being a major drug producer. The Intelligence Committee bill authorizes appropriations for
the Technical Support Center, at the FBI. The bill was sent to the House Rules Committee
for further action on July 23.
In the Senate, On April 14, Senators McCain, Burns, Wyden, and Leahy introduced S. 798, the Promote
Reliable Transactions to Encourage Commerce and Trade (PROTECT) Act. The bill would
immediately raise the maximum exportable key length of encryption products to 64 bits; S. 798 also sets a deadline
of January 1, 2002 for the federal adoption of the Advanced Encryption Standard (which
uses a 128 bit key length) and allows the export of products employing AES at that date. S. 798 allows the export of
strong (greater than 64 bit) encryption products with key recovery features, as well as
the export of strong encryption products to "legitimate and responsible
entities," including publicly traded firms, U.S. corporate subsidiaries or
affiliates, firms required by law to maintain plaintext records, and others. S. 798 does not contain
criminal provisions for the use of encryption in the furtherance of a crime (unlike H.R. 850), and prohibits
domestic controls and mandatory plaintext access. The Senate Commerce Committee held a
hearing on the bill on June 10. The Senate Commerce Committee approved S. 798 on June 23.
Deep divisions remain between those who oppose liberalizing encryption policy and those
who advocate it. While the computer industry, and privacy and consumer advocacy groups
generally favor both bills, H.R. 850 is considered
more pro-industry because of its greater liberalization of encryption export controls. The
Administration remains opposed to both bills, arguing that the current export restrictions
are necessary to prevent the use of encryption by undesirable groups, and has increased
its efforts to maintain the status quo on encryption policy. Reaching a compromise on some
of the differences (such as key escrow and export policies) may be a difficult task. In
addition, on July 27, Representative Goss introduced two more bills on encryption policy: H.R. 2616 (which
reflects House Intelligence Committee mark-up of H.R. 850), and H.R. 2617 (which
proposes tax incentives for the nation's encryption software manufacturers to develop
products with key recovery). The prospects for enacting legislation are further
complicated by a possible veto by President Clinton if the final bill passed by Congress
is not supported by officials in the Defense and Justice Departments.
Three other bills have been introduced containing provisions regarding encryption. On
April 21, Senator Leahy introduced S. 854, which includes
provisions that promote the use of encryption by (1) prohibiting government requirements
for non-federal use of key recovery or plaintext access practices, (2) prohibiting federal
agencies from requiring non-federal entities to use specific encryption products to
receive services, (3) prohibiting federal encryption products that interact with
commercial systems from interfering with the encryption capabilities of the commercial
products, and (4) prohibiting the disclosure of decryption assistance to foreign
governments without a court order. The bill was referred to the Committee on the
Judiciary. On June 9, Representative Sensenbrenner introduced H.R. 2086, which
includes a provision directing the National Science Foundation to undertake a study
comparing the availability of encryption technologies in foreign countries to those
subject to U.S. export restrictions. On July 1, Representative Sensenbrenner introduced H.R. 2413, which
contains provisions for establishment of a public key management infrastructure and
encryption standards for federal computers.
On September 16, the Administration announced changes to its encryption policy, to make
encryption products of any key length, after a technical review, exportable without a
license to users in any country except seven "terrorist countries" (Cuba, Iran,
Iraq, Libya, North Korea, Syria, and Sudan). Exporters must report to the government on
where the encryption product is exported, reflecting industry business models and
distribution channels.
The release of details of the implementation of the new policy by the Department of
Commerce were expected on December 15, but were postponed after draft rules met with
opposition from industry and privacy rights groups.
On September 21, the President sent to Congress proposed legislation that would ensure
that law enforcement maintains its ability to access decryption information stored with
third parties, and is allowed to withhold information in courtrooms on its techniques used
in decryption. The bill would also authorize $80 million over four years for the FBI
Technical Support Center, which will serve as a technical resource in responding to the
use of encryption by criminals. To date, no Member has introduced that legislation.
Issues
Key Recovery
Key recovery is the fundamental tenet of the Clinton Administration policy. The
Administration wants law enforcement access to keys for encrypted data stored by
computers, transmitted between computers, or other types of electronic communications. Not
only does the Administration view this as critical for U.S. users, but it seeks creation
of a global key management infrastructure (KMI, now referred to as public key
infrastructure, or PKI) to ensure confidentiality for the growth of global electronic
commerce, and monitoring undesirable activity (by terrorists, drug cartels, or child
pornographers, for example).
Many opponents of encryption controls agree that key recovery has advantages for
recovering a lost, stolen, or corrupted key, but believe market forces will drive the
development of a KMI for stored computer data without government involvement. Less likely
is a market-driven demand for key recovery products for electronic communications. In any
case, opponents of controls insist that the government should have no role in choosing who
holds the keys. They fear the government will have unfettered access to private files and
communications, though the Clinton Administration stresses that proper legal authorization
will be required. Liability protection for proper release of keys, and penalties for
improper use or release of keys, is an important aspect of Administration policy.
Questions about technical vulnerabilities that could be introduced if key recovery is
incorporated into computer systems were raised in a report (updated June 1998), The
Risks of Key Recovery, Key Escrow, and Trusted Third Party Encryption, by an ad hoc
group of cryptographers and computer scientists. They concluded that key recovery
"introduces a new and vulnerable path to the unauthorized recovery of data" and
the "massive deployment of key-recovery-based infrastructures to meet law
enforcement's specifications will require significant sacrifices in security and
convenience and substantially increased costs...."
The Administration acknowledges that global agreement on key recovery and KMI policy is
essential to its policy and has been working with the Organization for Economic
Cooperation and Development (OECD) to develop guidelines for a global KMI. In 1997, the
OECD released those guidelines, which state that "national cryptography policies may
allow lawful access to plaintext, or cryptographic keys, or encrypted data" (emphasis
added). Hence, OECD neither endorsed nor rejected the concept of law enforcement access to
decryption keys. The European Commission published a communication in October 1997 that
noted the need for strong encryption to advance electronic commerce and expressed strong
reservations about regulating encryption (by requiring key recovery, for example). Since
then, Canada, Finland, Germany, France, and Taiwan have announced a relaxation or
elimination of their key recovery laws. Lacking international consensus, many believe it
is unlikely that mandated key recovery will survive.
Export Restrictions
Using the export process to influence the type of encryption products that are
available in the United States and abroad is one strategy of the Administration's policy.
The Administration points to threats to national security and public safety that would
arise if criminals and terrorists used encryption that the U.S. government could not
decrypt. Administration representatives argue that NSA, for example, has been able to
thwart criminals and terrorists because NSA intercepted communications in time; if those
communications had been encrypted with strong encryption, their task would have been much
more difficult. NSA opposes passing a law that does not require companies to notify the
government of what encryption products are being exported and to whom. Others point to
difficulties in stopping future attacks in an era when terrorists could use strong
encryption.
Opponents of the Administration's policy counter that the United States, through export
controls, cannot prevent access to strong non-key recovery encryption by criminals and
terrorists because it is already available elsewhere in the world. They further point out
that the current policy of no restrictions on domestic use or import of encryption means
that domestic threats would not be affected.
Until its September 1999 announcement, the Administration was using the export process
to encourage companies to develop products with key recovery features. There were no
limits on the strength of encryption products that can be exported if they include key
recovery. Opponents of export controls object to the government mandating the use of key
recovery, arguing that foreign companies are not bound by such restrictions. They argue
that customers who do not want U.S. law enforcement or national security agencies having
access to decryption keys will buy encryption products from foreign suppliers. They insist
that the U.S. government cannot control the availability of strong non-key recovery
encryption products, since they already can be procured from foreign suppliers, or
downloaded from the Internet. They assert U.S. policies simply ensure that U.S. companies
will lose market share to foreign competitors and will not achieve the overall objective
of assuring law enforcement access to encrypted information of criminal groups. They point
out that drug cartels, for example, could develop their own encryption products rather
than buying commercially available products that would allow governments to access the
keys.
Proponents of export controls concede that some criminal groups may develop their own
encryption, but insist that at some point they will have to interact with mainstream
companies (such as banks or airlines). If the mainstream companies are using key
recovery-based systems, this would provide an opportunity for law enforcement to access at
least some of the groups' activities. They also point out that even though law enforcement
agencies have been allowed to tap telephone lines for decades, criminals still use
telephones because the infrastructure is already in place, easily used, and less costly
than building an alternative system for their own use. As for foreign competition,
proponents argue that although some strong non-key recovery products are available from
the Internet or foreign suppliers, they are not widely used and some are not as strong as
their advertisements claim.
Some cases involving encryption export controls have been the basis for legal action.
One involves University of Illinois Professor Daniel Bernstein and his attempts to
publish, both in print and on the Internet, the source code for his Snuffle encryption
algorithm. The government argued that the export required a license under the Arms Export
Control Act (AECA) and the International Traffic in Arms Regulations (ITAR) through which
AECA is implemented. On April 15, 1996, U.S. District Judge Marilyn Patel ruled that
computer source code is "speech" and protected under the Constitution. On
December 18, she further ruled that ITAR represents an unconstitutional prior restraint on
free speech. Following the December 30, 1996 shift in jurisdiction over commercial export
products from the State Department to the Commerce Department, Bernstein's lawyers asked
her to review the new regulations. On August 25, 1997 she ruled that the new regulations
also violate the First Amendment. On June 21, 1999, the Department of Justice filed a
petition with a federal appeals court for reconsideration in the Bernstein case, which on
May 6 upheld a ruling that encryption source code is scientific expression protected by
the First Amendment.
An opposite ruling was made in March 1996 by Judge Charles Richey in a case involving
Philip Karn. Mr. Karn was denied permission to export source code on diskette even though
the source code had been published in a book and hence was in the public domain. The State
Department designated the diskette as a "defense article" under AECA and denied
its export. Judge Richey dismissed the complaint because the AECA does not permit judicial
review of what is designated by the President as a "defense article." Mr. Karn
appealed the ruling, but by the time the appeal was heard in January 1997, the export
regulations had changed so the case was remanded back to DC District Court. On July 7,
1998, U.S. District Judge James Gwin ruled that an individual could not challenge
encryption export restrictions on the grounds that they abridge his right to free speech
on the Internet.
Domestic Use
The focus of the encryption debate has at times shifted to include potential changes to
domestic use policy. Current U.S. policy allows any type of encryption to be used in or
imported into the United States. Administration concerns that attempting to change this
policy would be unsuccessful was a factor in its choice of using export controls to
influence what encryption products are available for domestic use. FBI Director Freeh's
testimony to the Senate Judiciary Committee on September 3, 1997 heralded a shift in the
debate toward the possibility of requiring that key recovery be built into products
manufactured in or imported into the United States, and possibly enabled by the
manufacturer, not only the user. The Administration's policy, however, has not changed on
this issue.
In September 1999, questions were raised over the discovery of a software element,
labeled NSAKey, in the security code of the Microsoft Windows operating system. Microsoft
stated that the element was a back-up used for authentication of encryption components if
the first key is damaged. Some question whether the key might enable the National Security
Agency (NSA) to gain access to Windows operating systems. While it is unlikely that
Microsoft would collaborate surreptitiously with NSA, the dispute highlights the level of
tension between industry and privacy rights groups over key recovery practices.
LEGISLATION
H.R. 850
(Goodlatte)
Security and Freedom Through Encryption (SAFE) Act. Similar to H.R. 695 from 105th
Congress, with changes including creating criminal penalties for the use of encryption to
conceal criminal conduct, and directing the Attorney General to compile examples in which
encryption has interfered with law enforcement. Introduced February 25, 1999; referred to
Committees on Judiciary and on International Relations; referred to Subcommittee on Courts
and Intellectual Property March 3; Committee mark-up March 24; reported by Committee (H.Rept. 106-117,
Part I) April 27 without amendment; referred jointly and sequentially to Committees on
Armed Services, Commerce, and Intelligence, for a period ending not later than July 2
(later extended to July 23); reported by Committees on Commerce June 23 (H.Rept. 106-117,
Part II); International Relations July 19 (H.Rept. 106-117,
Part III); Armed Services and Intelligence July 23 (Parts IV and V). Placed on the Union
Calendar July 23.
H.R. 2086
(Sensenbrenner)
Networking and Information Technology Research and Development Act. Contains provision for
an NSF study comparing availability of encryption technologies in foreign countries to
such technologies subject to export restrictions in the United States. Introduced June 9,
1999; reported (amended) by the Committee on Science (H.Rept. 106-472,
Part I) November 16; referred to Committee on Ways and Means.
H.R. 2413
(Sensenbrenner)
Computer Security Enhancement Act. Contains provisions for establishment of a public Key
Management Infrastructure and encryption standards for federal computers. Introduced July
1, 1999; referred to Committee on Science.
S. 798
(McCain)
Promote Reliable On-Line Transactions to Encourage Commerce and Trade (PROTECT) Act of
1999. Intended to promote electronic commerce by encouraging and facilitating the use of
encryption in interstate commerce consistent with the protection of national security.
Introduced April 14, 1999; referred to Committee on Commerce, Science, and Transportation;
ordered to be reported June 23 without amendment; report filed August 5 (S.Rept. 106-142).
S. 854
(Leahy)
Electronic Rights for the 21st Century Act. Intended to protect the privacy and
constitutional rights of Americans, to establish standards and procedures regarding law
enforcement access to location information, decryption assistance for encrypted
communications and stored electronic information, and other private information, and to
affirm the rights of Americans to use and sell encryption products as a tool for
protecting their online privacy. Introduced April 21, 1999; referred to Committee on the
Judiciary.
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