18 September 1999
Source: http://www.usia.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=99091701.clt&t=/products/washfile/newsitem.shtml


17 September 1999

Transcript: White House Briefing on Encryption Export

(Proposal allows exports of stronger software) (5880)

The Clinton administration has proposed allowing unrestricted exports
of certain stronger encryption software while giving law enforcement
and national security officers more tools to assist them unscramble
encrypted data, administration officials say.

In a September 16 White House briefing, exactly one year after the
administration's last prior decision on relaxing encryption controls,
top administration officials laid out the new multi-part proposal.

According to Commerce Secretary William Daley, after the Commerce
Department issues its regulations around December 15, U.S. producers
will be able to export mass-market commercial encryption of any
strength, after a one-time review by the U.S. government, to
commercial users in all countries except terrorist-supporting states
like Libya and Iraq.

Licenses will still be required for exports of encryption to
governments, however, he said. Exporters will also have to identify
the purchasers of strong encryption although not the end users, he
added.

Tighter regulation will continue for export of custom-made encryption
products, he said.

Daley said the proposal conforms with U.S. commitments in the
Wassenaar Arrangement, an export-control group comprising 33
countries.

Attorney General Janet Reno and Deputy Secretary of Defense John Hamre
also spoke at the briefing in support of the proposal. According to
Reno, it would require spending for a government-industry research
center to provide law enforcement and national security officers
better tools for investigating data scrambled by strong encryption.

Law-enforcement agencies would not have to disclose any methods they
develop from such research, she said.

The proposal would allow U.S. residents to continue deciding for
themselves whether to hire third parties to hold decryption keys to
unscramble their own data in case they forget a password, Reno said.
If such third-party keys exist, however, law-enforcement officials
would have specific restricted rights to use them in investigations,
she said.

Hamre rebutted media reports that the Defense Department lost a White
House policy battle over encryption.

"I was just handed a wire clipping that basically says that the White
House threw national security and law enforcement overboard in order
to give a concession to the high-tech industry," Hamre said.

"And I've got to tell you, that's just completely wrong," he said.
"The national security establishment -- the Department of Defense, the
intelligence community -- strongly supports this strategy."

Following is transcript of the briefing:

(begin transcript) 

THE WHITE HOUSE

Office of the Press Secretary September 16, 1999

PRESS BRIEFING BY
DEPUTY NATIONAL SECURITY ADVISOR JIM STEINBERG,
ATTORNEY GENERAL JANET RENO,
DEPUTY SECRETARY OF DEFENSE JOHN HAMRE,
UNDER SECRETARY OF COMMERCE BILL REINSCH,
AND CHIEF COUNSELOR FOR PRIVACY AT OMB PETER SWIRE

The Briefing Room

3:25 P.M. EDT

MR. STEINBERG: Anybody left? We're all here. The question is, is there
anybody left there? Or is everybody battening down the hatches for the
hurricane?

Good afternoon. As you all know, we're here today to talk about
encryption. I want to begin by acknowledging and thanking some of my
colleagues who are with us today: the Attorney General, Janet Reno;
Secretary Daley; Deputy Secretary of Defense John Hamre; and Peter
Swire, who is the Chief Counselor for Privacy at OMB [Office of
Management and Budget].

I also want to thank John Podesta, who has been my co-chair in working
this interagency process over the last several years; Barbara
McNamara, the Deputy Director of NSA, who's made an important
contribution to the work that we're going to be discussing today; Bill
Reinsch, Under Secretary of Commerce; Sally Katzen from OMB. And I
want to pay particular thanks to Charlotte Knepper and Bruce
McConnell, who are the two staff people who really made this all
possible, and have done an extraordinary amount of work on an
extraordinarily difficult and technically complex subject.

We're here today to announce a series of actions that will bring new
balance to the four pillars on which our encryption policy rests:
national security, public safety, privacy and commerce. For two years,
John Podesta and I have chaired a high-level interagency process to
fashion policies to achieve these goals.

A year ago today, the Vice President announced significant new steps
we were taking to balance these competing tasks, and called for a
review of our policy in a year. Since then, we have worked closely
with members of Congress from both parties; with industry groups like
the Computer Systems Policy Project and Americans for Computer
Privacy; with members of our law enforcement community; and with our
national security community.

We've found that there's no one-size-fits-all solution to the issue of
encryption; that there are a variety of different solutions that
respond to the different aspects of this challenge. By taking a
pragmatic approach, we've crafted a new strategy that allows industry
to compete effectively with foreign competitors, while protection our
national defense, security and law enforcement interests.

This strategy is outlined in a report to the President, authored by
Secretary Cohen, Attorney General Reno, Secretary Daley and OMB
Director Jack Lew, and a copy of that report we are releasing to you
today.

There are three parts to the strategy that we are launching. First,
the federal government is taking new steps to protect our vital
national security systems from unauthorized access. We will be
securing our own systems with encryption and other security tools, and
we will be partnering with the private sector to develop more tools to
protect our nation's communication infrastructure. In doing so, we
hope to serve as a model for the private sector. In a moment, Deputy
Secretary Hamre will describe this effort in more detail.

Second, we are launching a new framework for export controls that will
allow American companies to export encryption hardware and software
more broadly, while still protecting our vital national security
needs. We will implement this new framework by December 15th, after we
have had an opportunity to consult with U.S. industry, the public and
Congress. Secretary Daley will discuss these changes in detail in a
moment.

Finally, we are taking new steps to ensure the public safety by
helping our law enforcement community stay one step ahead of the
growing sophistication of encryption technology. Given the growing use
of encryption among criminal elements, we must update law
enforcement's legal tools to ensure that it can lawfully access
information during investigations. Today, we will be submitting new
legislation to the Congress called the Cyberspace Electronic Security
Act, that will provide a legal framework for both privacy protections
and legal access to encryption keys. The Attorney General will
describe our effort in this area in more detail.

Finally, we will hear from Peter Swire, who will speak more
specifically about how all of the steps we are taking today will
address America's concerns for privacy.

Before I turn to my colleagues, let me say a word about the pending
encryption decontrol legislation in Congress. We believe that the new
strategy we are presenting today provides a more balanced approach to
the issue than the proposals that are now before Congress. We look
forward to working with Congress to implement a solution that meets
the needs of all those involved.

However, the President will not sign any encryption legislation that
does not protect national security and law enforcement interests. With
that, let me turn to Deputy Secretary Hamre.

DEPUTY SECRETARY HAMRE: Good afternoon. I have a little prepared
speech to give, but I got thrown off here; I was just handed a wire
clipping that basically says that the White House threw national
security and law enforcement overboard in order to give a concession
to the high-tech industry. I've got to tell you, that's just
completely wrong.

The national security establishment -- the Department of Defense, the
intelligence community, strongly supports this strategy. Indeed, we
created the first draft of the strategy and presented it to our
colleagues in the interagency process.

We in the Defense Department did it because I think we feel the
problem more intensely than does anyone else in the United States. We
are the largest single entity that operates in cyberspace. No one is
as large as we are. We are just as vulnerable in cyberspace as is
anybody, and we strongly need the sorts of protections that come with
strong encryption and a key infrastructure that we're calling for in
this strategy.

We also have a responsibility to provide to the President and to
senior decision-makers timely information so that they can protect
this country. And for that reason we needed a very integrated
approach, and these three pillars, which you've heard about -- we can
answer any further questions -- are absolutely essential if we're
going to be able to protect this country in the future. We strongly
agree with this and think it's exactly the right thing to do.

This is a balanced program, but I've got to tell you it's going to
require significant investment on the part of the Department of
Defense and the intelligence community to put all the pieces in place.
We will have to develop new tools to be able to do our job. We will
resource that appropriately in the budget that we prepare that will be
submitted next January.

All three elements of this strategy are essential, and I may
highlight, it's very crucial that the law enforcement element of this
is essential for national security. You cannot distinguish in
cyberspace whether an attack comes inside the United States or from
outside the United States. And only the law enforcement community is
allowed to act inside the United States. We must have that part of
this strategy enacted, and we ask for help in doing that from the
Congress.

I, too, would like to say that there continues to be pressure for
legislation in the Congress that would strip away any controls over
encryption products. One of the bills is called the Safe Act. The only
person who would be safe, if that were passed, would be spies, who
would be free to export anything of national security interest without
any surveillance at all. We cannot support that, and the Department
would ask the President to veto it, if it were passed.

We strongly support this strategy. The entire establishment --
national security establishment was instrumental in crafting it. We
would ask the Congress for its help. And I'd also like to thank my
colleagues, who were so instrumental in helping us work through these
problems, and for our colleagues that worked out the fine details when
we went to finalize the strategy.

SECRETARY DALEY: We can all welcome today's update of our encryption
policy. It is a good example of government process that has worked.
The agencies involved, from national security, law enforcement, and
commerce, all had a common objective: to provide the tools to keep our
nation safe, while taking technological advances and market changes
into account.

This may have taken a little longer than some would have liked, but in
our opinion, this outcome is a sound one. This new update continues to
provide the balanced encryption policy that the President wants, and
is a policy that will continue to protect our national security, while
letting us take advantage of the substantial promise of electronic
commerce.

In saying that, I want to be clear that the Commerce Department
supports all three parts of this program: the export control
liberalization is balanced by the additional tools for law
enforcement, and additional resources being devoted to improving the
privacy and security of government information systems. Today's update
continues the three fundamental principles of our policy: one-time
technical review, post-export reporting, and the ability to deny
exports to governments and military end-users.

First, the new regulations will permit any encryption product, or
software, with a key length of 64 bits, to be exported under a license
exception to commercial firms and other non-government end-users in
any country except for the seven state supporters of terrorism. This
means that exporters will be able to ship freely, once Commerce has
reviewed their products and classified them.

We've decided that encryption exports which we previously allowed only
for a company's internal use can now be used for external purposes,
such as communication with other firms, supply chains, and customers.
This step will be very helpful in building electronic commerce.
Additionally, telecommunication and Internet service providers will
now be able to use any encryption commodity or software to provide
services to commercial firms and non-government end-users.

Second, retail products with key lengths over 64 bits, those that do
not require substantial support are sold in tangible form, or have
been specifically designed for individual customer use -- may be
exported under a license exception to all end-users, including
governments, except in the seven state supporters of terrorism. These
regulatory changes basically open the entire commercial sector as a
market for strong U.S. encryption products. Exports to governments can
be approved under a license.

Third, the new regulations will also implement our international
commitments for encryption controls. Last year, the Wassenaar
Arrangement -- 33 countries which have common controls and exports,
includes encryption -- made a number of changes to modernize the
multilateral encryption controls. Among these changes, the U.S. will
decontrol exports of 56 bits, DES and equivalent products, including
tool kits and chips, to all users and destinations except the seven
state supporters of terrorism, after a technical review. In addition,
exports with key lengths of 64 bits or less, including chips, that
fall under the -- arrangements definition of mass market loss will be
decontrolled.

As I mentioned, post-export reporting is a fundamental part of our new
export policy. Reporting will now be required for any export to a
non-U.S. entity of any product above 64 bits. Reporting helps ensure
compliance with our regulations, and also allows us to reduce
licensing requirements. When we draft our regulations, we intend to
consult with industry to ensure that the reporting requirements will
be streamlined to reflect business models and practices and will be
based on what companies normally collect. We hope to have their
implementing regulations published in the Federal Register before
December 15th. This approach will provide the framework for U.S.
industry to construct a new global network for electronic commerce
while maintaining reasonable national security safeguards.

ATTORNEY GENERAL RENO: The President, today, is transmitting to the
Congress a legislative proposal entitled, the Cyberspace Electronic
Security Act of 1999, better known as CESA. The Department of Justice
developed this legislation with the assistance of numerous agencies
within the government. Legislation would support the use of encryption
by legitimate citizens to protect their privacy and address the
growing use of encryption by criminals using it to hide evidence.

In brief, the advent and eventual widespread use of encryption poses
significant challenges to law enforcement and to public safety. Under
existing law, investigators have a variety of legal tools to collect
evidence of crime in such forms as communications restored data on
computers. These tools are rendered useless when encryption is used to
scramble the evidence so that law enforcement cannot decode it in a
timely manner.

If, at all, when stopping a terrorist attack or seeking to recover a
kidnapped child, encountering encryption may mean the difference
between success and catastrophic failures. At the same time,
encryption is critically important for protecting our privacy and our
security, and the administration, the Department of Justice and the
FBI strongly support the use of encryption by our law-abiding citizens
for these purposes.

CESA, therefore, balances the needs of privacy and public safety that
establishes significant new protections for the privacy of persons who
use encryption legally. But it also assists law enforcement efforts to
maintain its current ability to obtain useable evidence as encryption
becomes more common.

CESA contains a number of key provisions. First it provides special
protections for decryption keys stored with third-party recovery
agents, and it establishes limitations on government use and
disclosure of decryption keys obtained by court processes. These new
provisions significantly protect privacy.

However, CESA does not limit in any way an individual's choice about
whether to use a recovery agent. A person may use a recovery agent, or
not, as he or she chooses.

CESA also authorizes appropriations for the Technical Support Center
in the FBI, a center which will serve as a centralized technical
source for federal, state and local law enforcement in responding to
increasing use of encryption by criminals. Law enforcement throughout
our nation will depend upon this center to find ways to obtain useable
evidence under existing law despite the use of encryption by criminals
and terrorists.

Finally, CESA protects the confidentiality of government techniques
used to obtain useable evidence such as techniques developed by the
Technical Support Center, and ensures that industry proprietary
information can be protected in criminal trials. Open disclosure of
law enforcement techniques, for example, can jeopardize future
investigations and severely hamper law enforcement.

I believe that in adopting this policy the administration has
fundamentally altered the encryption debate. The administration is
working towards a number of important goals, ensuring that American
industry remains competitive, that our citizens have the strongest
protection available for their data and their communications, and that
law enforcement maintains its ability to protect public safety from
criminals and terrorists.

Of course, we continue to be concerned that criminals and terrorists
will benefit from the widespread use of strong encryption which will
allow them to cloak their communications and other evidence of illicit
activities from authorized law enforcement investigations. We must
recognize that the policy the administration is announcing today will
result in greater availability of encryption, which will mean that
more terrorists and criminals will use encryption. We must deal
responsibly with that result by attempting to assist law enforcement
in its efforts to protect public safety through the passage of CESA.

That said, this legislation does not provide any new authority for law
enforcement to be able to obtain useable evidence from criminals.
Instead, we will continue to operate under our existing authorities
and attempt to meet the threat of the criminal use of encryption. We
are hopeful that these existing authorities will prove sufficient.

In conclusion, we must have a balanced policy that reflects the needs
of privacy, electronic commerce, national security and public safety.
Today's announcement substantially relaxes export controls, allowing
American industry to compete fairly in the international marketplace,
while maintaining those minimal controls that are essential for
national security. At the same time, by transmitting CESA to Congress
and urging its enactment, the President is addressing the needs of
public safety. Thus, the administration is taking a substantial step,
a very substantial step to address the needs of all stakeholders.

MR. SWIRE: My name is Peter Swire. I'm the Chief Counsel for Privacy
at OMB. I'm here to underscore that today's announcement reflects the
Clinton administration's full support for the use of encryption and
other new technologies to provide privacy and security to law-abiding
citizens in the digital age. The encryption measures announced today
properly balance all of the competing interests, including privacy,
electronic commerce, and public safety. Encryption itself is a privacy
and security enhancing technology. Especially for open networks such
as the Internet, encryption is needed to make sure that the intended
recipients can read a message, but that hackers and other third
parties cannot. Today's announcement will broaden the use of strong
mass marketing encryption for individuals and businesses.

In the part of today's announcement that updates the rules for law
enforcement, the Cyberspace Electronic Security Act retains all of the
existing legal protections for information in a home or business. It
goes beyond current law and provides new privacy protections for
individuals and businesses who choose to store key information with an
outside company.

Think of your bank ATM card. What would it be like if you forgot your
password and could not obtain access to the money in your account.
That is precisely what can happen with strong encryption. If you lose
the password, then all that encrypted material is scrambled forever
and lost. Because encryption has become so unbreakable, prudent people
need backups. Under CESA, if you decide to give your key or password
to an outside company, then law enforcement has to meet strict new,
judicially supervised standards to get that information. With this
proposed legislation, it would be a civil and criminal violation for
the company to release the information improperly, and also a
violation for law enforcement officers to try to get that information
without a court order.

Similarly, for added security and to prevent misuse of your private
key information, if this proposal becomes law there would be
restrictions on selling information regarding encryption customers to
other private parties.

With that said, I want to be clear about what CESA does not do. CESA
is technology neutral and does not regulate the hardware or software
used for encryption. CESA does not require anyone to use key escrow,
nor does it regulate how key escrow might develop in the private
sector. The only effect of CESA on key escrow is to provide privacy
assurances for those who freely choose to give their backups of their
key information to others. Some information stored outside of your
home deserves to be carefully protected.

In sum, the announcement today shows the commitment of the
administration to real protections for privacy in the information age,
while balancing with the important other public interests we have all
been discussing.

Q: Ms. Reno, you said that just a moment ago that you hoped that this
legislation will give existing authorities -- that the existing
authorities will be sufficient in getting access to the decryption
keys. It seems to me there's a big space between hope and will.

ATTORNEY GENERAL RENO: Based on our experience, our conversations with
industry, with all concerned, we think the existing authorities will
be sufficient. And we look forward to working with industry in that
effort.

Q: Mr. Hamre, you've testified on the Hill, and others in the
administration, many times, opposing the Safe Act. At those times, you
laid out the exact scenarios that the Attorney General says will now
come to pass, and said they were unspeakable dangers that should be
avoided. Now, this policy is called a "balanced" policy. What's
shifted in the last few months?

DEPUTY SECRETARY HAMRE: Well, maybe you should go back and look at the
testimony, because what was objectionable to us in the Safe Act and in
the Protect Act, these two bills, was that it stripped away the things
that are essential for national security: a meaningful technical
review of encryption products before they're exported, and reporting
about where they have gone and how they've been installed after the
fact. That was essential, if we're going to be able to protect the
country. And that was stripped away by the Protect Act and the Safe
Act. So they're very different.

Q: Will the policy include end-user reporting for where a mass-market
product is sold?

DEPUTY SECRETARY HAMRE: We're still in the final stages of working
through the details. I can defer to Secretary Daley, or to Under
Secretary Reinsch to talk about the specifics. We will promulgate
those regulations later here, within weeks. And then you'll see it at
that time.

We are going to try very much to follow the industry norms for
software, for example, between mass-market and non-mass-market
products.

Q: What is the big push behind this? Is it the market, and is it these
corporations putting pressure on the administration?

DEPUTY SECRETARY HAMRE: No. When you raised the question earlier, you
talked about the big push for relaxation. We don't -- first of all,
that's only taking --

Q: Isn't it relaxation?

DEPUTY SECRETARY HAMRE: Actually, I don't think so. I think it's a
very different approach to the export problem. The path that we were
on before was a very complex path. There were certain countries that
were allowed, certain countries weren't. Certain sectors were allowed,
certain sectors weren't. Certain strength levels and above one
strength level, it had a different set of rules than others.

Certain trading partners were allowed and certain trading partners
weren't. It was enormously complex, and in that kind of environment,
lots of mistakes are made and, frankly, security risks abound in that
sort of an environment. We decided we needed to promote a very
different approach with very, very simple rules that everyone could
understand and give us a chance -- we're still going to have to do a
lot of work -- we in the national security establishment, to live in
this kind of an environment. It's going to take a good deal of
research, we'll have to develop new tools and techniques. This is part
of the job. But we were going to have to do that anyway, and we think
this is going to be a much better process for us. It's not a
relaxation, it's really a very different approach.

Q: Have you talked to Chairman Spence or Chairman Goss [chairmen of
U.S. House of Representatives military and intelligence committees]
about this yet? If so, what kind of reaction did you get?

DEPUTY SECRETARY HAMRE: I have spoken with both Chairman Goss and
Chairman Spence. Both of them were very strong in agreeing with us in
our request to protect us from legislation that would have really
stripped away any national security protection against strong
encryption. Both of them support what we're doing, both of them have
very specific questions that we're going to need to answer. They, too,
want to know a lot of the details that the rest of you are interested
in.

We believe that we will be able to demonstrate to them we can protect
the country with this new framework. But let me again emphasize -- all
three parts of this framework are essential. We must have a strong
commitment to security products, security infrastructure. We need to
buy that. We have to have a new regime for export control, and we also
need to have stronger tools for law enforcement.

Q: Where are the stronger tools? I mean, Ms. Reno's saying in her
comments this legislation does not provide any new authority for law
enforcement. We've got some extra funding; where are the stronger
tools?

ATTORNEY GENERAL RENO: The stronger tools lie in the technical support
center, because what we're trying to do is not create a new authority,
we're trying to match technology to the existing authority, and we
think after conversation with industry and the working relationship
that we've developed with them that, through this technical support
center, we will be able to do so.

Q: Beyond the extra funding, is there anything specific you can point
to in here that's new?

ATTORNEY GENERAL RENO: One, for example, is the protection of methods
used so that as we will not have to reveal them in one matter and be
prevented, therefore, from using them in the next matter that comes
along.

Q: Ms. Reno, would you describe this as a relaxing of restrictions,
and if so, how can you possibly support it after having opposed it all
this time?

ATTORNEY GENERAL RENO: What we did, approximately a year ago, is to
meet with industry. We talked to them in a very full and frank way. We
said, together, let's look at it. They sympathized with our law
enforcement responsibilities and they said if we can work together,
they suggested the concept of a Technical Support Center, we can, I
think, according to the people that were there, address the problem.
In the interim, we have had the opportunity to have those discussions,
to expand on that dialogue, and I think we will be able to.

Q: How closely was the Vice President involved in this effort? Did he
meet with you regularly, receive draft reports, that sort of thing?

ATTORNEY GENERAL RENO: I would have to let his office speak for it,
but I can remember approximately two meetings with the Vice President.

Q: Would you consider this a relaxing of restrictions on encryption?

ATTORNEY GENERAL RENO: No.

Q: Mr. Daley, why the decision to maintain export licenses for
government sales, assuming that a lot of governments still own
telecommunication companies and high-tech agencies?

SECRETARY DALEY: We want to make sure that the foreign policy
considerations are taken into impact, as we move forward.

DEPUTY SECRETARY HAMRE: Because we insisted on it.

SECRETARY DALEY: That was a simpler answer.

Q: How does this comply with Wassenaar?

UNDER SECRETARY REINSCH: What the Wassenaar partners decided to do
last December was set up certain rules that said in some cases,
encryption was decontrolled, and in other cases, it had to be
controlled via the national laws and systems of each of the individual
partners. This action is consistent with that because we are
decontrolling, that is, removing from our system lower-level
encryption consistent with the Wassenaar levels which are 56 or 64
bits, depending upon what you're talking about.

Above that level, we are preventing the encryption to be exported
following a technical review and subject to a license exception, which
is a process that we use that's consistent with international
licensing regimes and the Wassenaar standards.

Q: So below 64, you don't need a technical review?

UNDER SECRETARY REINSCH: No, I didn't say that. Technical reviews are
required, but it's a one-time technical review. When we reviewed the
product once, we don't need to review it every time. And for the
low-level products, which are primarily the older products, many of
those reviews have already been conducted, and I don't think that
we're necessarily going to have to do that all over again.

Q: So what's the difference in the technical review between the higher
encryption products and the lower --

UNDER SECRETARY REINSCH: I don't think there's a difference in the
review. I'm saying there are some cases where we've already done it,
and this is a very fast-moving sector, and there are new products
every week, and we're going to have to review each of the products as
they come up and as people want to export them.

Q: What do you look for in a technical review?

UNDER SECRETARY REINSCH: There's a number of things that we look for.
I think the main one that I mentioned in this forum is that Secretary
Daley said we are putting products essentially into two categories:
retail products, and he provided a definition of what that was, and
essentially custom products, if you will, the other kind of product.
One of the most important elements of the technical review is simply
deciding which it is, because there are differences in the way it's
going to be treated, and it's not immediately obvious simply from
looking at the external product which, in the case of software, is
just a diskette, what it is.

So one of the purposes of the review is to study it, to examine it,
and to find out into which category it falls.

Q: In other words, if it's in a box that you get at CompUSA, you can
pretty much assume that it's like a retail thing?

UNDER SECRETARY REINSCH: You can make that assumption, but it's going
to be more complicated than that. One of the things we're going to do
in our consultation process with industry is to discuss that
definition and try to get a better handle on exactly what constitutes
a retail product and what does not.

We're trying to get out your sort of shrink-wrapped products, but one
of the things we've learned in the process of learning more about the
market over the last year is that these products take many different
forms. They're marketed in many different ways, and we want to make
sure we have a clear understanding from industry as to what those
different models are before we finish drafting the regulation.

Q: Does law enforcement and the intelligence community believe that it
can, if it needs to, say, decode a terrorist message that's encrypted
in something higher than 64-bit? And if not, then how could you
support this?

ATTORNEY GENERAL RENO: I'm obviously not going to tell you how I think
I can obtain evidence under existing authorities, but I -- we have
carefully looked at this, and think that it is going to be possible.

DEPUTY SECRETARY HAMRE: But we are going to have a fairly significant
research and development program that lies ahead of us. This is a very
complex environment; it's going to change every day. It's going to
take us a fair amount of effort to stay ahead of the problem.

Q: Mr. Hamre or perhaps Mr. Reinsch, can you tell us, what's the main
point of a post-export review? If the company's sent something out,
why do you care where it's gone if it's already out of the country?
What do you hope to learn from that?

DEPUTY SECRETARY HAMRE: Again, we need to have some understanding of
the environment, both technically and operationally, so that we're
able then to undertake the research and development it takes to
develop the tools for us to be able to stay ahead of the problem.

Q: -- cost to do this encryption at the Defense Department?

DEPUTY SECRETARY HAMRE: We're just in the process of building our
budget. Some parts of the budget, of which you may be interested, I
can't discuss.

Q: Were the President's Export Council Subcommittee on Encryption,
which came up with a list of recommendations, I guess it was at the
beginning of this month -- were taken into consideration?

SECRETARY DALEY: We have a meeting next week.

Q: Mr. Daley, will there be a time deadline for the technical review?

SECRETARY DALEY: We hope to complete them, probably, within a month of
when they're submitted.

DEPUTY SECRETARY HAMRE: But did you ask about when this regulation
comes out, or the normal technical review?

SECRETARY DALEY: Technical review.

Q: The technical review of each of --

DEPUTY SECRETARY HAMRE: Can I just say, we obviously don't -- we're
not interested in a lengthy process. But it does require good
insights. And this does mean that companies have to come in with more
than just a brochure. I mean, too much of what we get is simply
marketing proposals, not real technical information.

Q: What else are you looking for in the technical review, aside from
the distinction between commercial product and non-mass-market
product?

SECRETARY DALEY: That will be developed over the next number of weeks.

Q: What sort of reaction have you gotten to the CESA legislation? And
when information about that legislation was first revealed, there was
a provision allowing for a delayed notice of a court order, along for
a search. And why was that taken out?

ATTORNEY GENERAL RENO: That was an original draft. We have had further
discussion, and feel like, that under existing authorities, with the
technical support center funded by the existing authorities, that we
can address the issue, and ensure our abilities to continue our law
enforcement responsibilities.

MR. LEAVY: Okay, thank you.  Appreciate it.

END 4:00 P.M. EDT
(end transcript)