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22 July 1999 

Thanks to DM.


Source:

http://www.house.gov/hasc/billsandreports/106thcongress/hr850amendment.PDF
Chairman Spence statement; HASC press

release.
  

[Header:] F:\SLS\AS\3H850.SUB   H.L.C.


[Footer:] July 20, 1999 (9:58 a.m.)


AMENDMENT IN THE NATURE OF A SUBSTITUTE


  


  TO H.R. 850


  


  OFFERED BY MR. WELDON OF PENNSYLVANIA,


  


  MR. SISISKY, AND MR. ANDREWS


  


Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE. 1
This Act may be cited as the ‘‘Protection of National Security

and Public Safety Act’’.
SEC. 2. EXPORTS OF ENCRYPTION.
(a) AUTHORITY TO CONTROL EXPORTS.—The President shall control the export

of all dual-use encryption products.
(b) AUTHORITY TO DENY EXPORT FOR NATIONAL SECURITY REASONS.—Notwithstanding

any provision of this Act, the President may deny the export of any encryption

product on the basis that its export is contrary to the national security

interests of the United States.
(c) DECISIONS NOT SUBJECT TO JUDICIAL REVIEW.—Any decision made by the

President or his designee with respect to the export of encryption products

under this Act shall not be subject to judicial review.
SEC. 3. LICENSE EXCEPTION FOR CERTAIN ENCRYPTION PRODUCTS.
Encryption products with encryption strength equal to or less than the level

identified in section 5 shall be eligible for export under a license exception

if—

(1) such encryption product is submitted for a 1-time technical review;

  (2) such encryption product does not require licensing under otherwise applicable

  regulations;

  (3) such encryption product is not intended for a country, end user, or end

  use that is by regulation ineligible to receive such product, and the encryption

  product is otherwise qualified for export; and

  (4) the exporter, at the time of submission of the product for technical

  review, provides the names and addresses of its distribution chain partners.

SEC. 4. ONE-TIME PRODUCT REVIEW.
The President shall specify the information that must be submitted for the

1-time review referred to in section 3.
SEC. 5. ELIGIBILITY LEVELS.
(a) INITIAL ELIGIBILITY LEVEL.—Not later than 180 days after the date

of the enactment of this Act, the President shall notify the Congress of

the maximum level of encryption strength that may be exported from the United

States under license exception pursuant to section 3 without harm to the

national security interests of the United States. Such level shall not become

effective until 30 days after such notification.
(b) PERIODIC REVIEW OF ELIGIBILITY LEVEL.—The President shall, at the

end of each successive 180-day period after the notice provided to the Congress

under sub-section (a), notify the Congress of the maximum level of encryption

strength, which may not be lower than that in effect under this section during

that 180-day period, that may be exported from the United States under a

license exception pursuant to section 3 without harm to the national security

interests of the United States. Such level shall not become effective until

30 days after such notification.
SEC. 6. ENCRYPTION LICENSES REQUIRED.
(a) UNITED STATES PRODUCTS EXCEEDING CERTAIN BIT LENGTH.—An export license

is required for the export of any encryption product designed or manufactured

within the United States with an encryption strength exceeding the maximum

level eligible for a license exception under section 3.
(b) REQUIREMENTS FOR EXPORT LICENSE APPLICATION.—To apply for an export

license, the applicant shall submit—

(1) the product for technical review;

  (2) a certification identifying—

(A) the intended end use of the product; and

    (B) the expected end user of the product;

  (3) in instances where the export is to a distribution chain partner—

(A) proof that the distribution chain partner has contractually agreed to

    abide by all laws and regulations of the United States concerning the export

    and reexport of encryption products designed or manufactured within the United

    States; and

    (B) the name and address of the distribution chain partner; and

  (4) any other information required by the President.

(c) POST-EXPORT REPORTING.—

(1) UNAUTHORIZED USE.—Any exporter of encryption products that are designed

  or manufactured within the United States shall submit a report to the Secretary

  at any time the exporter has reason to believe that any such product exported

  pursuant to this section is being diverted to a use or user not approved

  at the time of export.

  (2) DISTRIBUTION CHAIN PARTNERS.—All exporters of encryption products

  that are designed and manufactured within the United States, and all distribution

  chain partners of such exporters, shall submit to the Secretary a report

  which shall specify—

(A) the particular product sold;

    (B) the name and address of the end user of the product; and

    (C) the intended use of the product sold.

SEC. 7. WAIVER AUTHORITY.
(a) IN GENERAL.—The President may by Executive order waive the applicability

of any provision of section 3 to a person or entity if the President determines

that the waiver is necessary to protect the national security interests of

the United States. The President shall, not later than 15 days after making

such determination, submit a report to the committees referred to in subsection

(c) that includes the factual basis upon which such determination was made.

The report may be in classified format.
(b) WAIVERS FOR CERTAIN CLASSES OF END USERS.—The President may by Executive

order waive the licensing requirements of section 6 for specific classes

of end users identified as being eligible for receipt of encryption commodities

and software under license exception in section 740.17 of title 15, Code

of Federal Regulations, as in effect on July 17, 1999. The President shall,

not later than 15 days after issuing such a waiver, submit a report to the

committees referred to in subsection (c) that includes the factual basis

upon which such waiver was made. The report may be in classified format.
(c) COMMITTEES.—The committees referred to in subsections (a) and (b)

are the Committee on International Relations, the Committee on Armed Services,

and the Permanent Select Committee on Intelligence of the House of

Representatives, and the Committee on Foreign Relations, the Committee on

Armed Services, and the Select Committee on Intelligence of the Senate.
SEC. 8. ENCRYPTION INDUSTRY AND INFORMATION SECURITY BOARD. 
(a) ENCRYPTION INDUSTRY AND INFORMATION SECURITY BOARD ESTABLISHED.—There

is hereby established an Encryption Industry and Information Security Board.

The Board shall undertake an advisory role for the President on the matter

of foreign availability of encryption products.
(b) MEMBERSHIP.—

(1) The Board shall be composed of 12 members, as follows:

(A) The Secretary, or the Secretary’s designee.

    (B) The Attorney General, or his or her designee.

    (C) The Secretary of Defense, or his or her designee.

    (D) The Director of Central Intelligence, or his or her designee.

    (E) The Director of the Federal Bureau of Investigation, or his or her designee.

    (F) The Special Assistant to the President for National Security Affairs,

    or his or her designee, who shall chair the Board.

    (G) Six representatives from the private sector who have expertise in the

    development, operation, marketing, law, or public policy relating to information

    security or technology. Members under this sub-paragraph shall each serve

    for 5-year terms.

  (2) The six private sector representatives described in paragraph (1)(G)

  shall be appointed as follows:

(A) Two by the Speaker of the House of Representatives.

    (B) One by the Minority Leader of the House of Representatives.

    (C) Two by the Majority Leader of the Senate.

    (D) One by the Minority Leader of the Senate.

(c) MEETINGS.—The Board shall meet at such times and in such places

as the Secretary may prescribe, but not less frequently than every four months.
(d) FINDINGS AND RECOMMENDATIONS.—The chair of the Board shall convey

the findings and recommendations of the Board to the President and to the

Congress within 30 days after each meeting of the Board. The recommendations

of the Board are not binding upon the President.
(e) LIMITATION.—The Board shall have no authority to review any export

determination made pursuant to this Act.
(f) TERMINATION.—This section shall cease to be effective 10 years after

the date of the enactment of this Act.
SEC. 9. MARKET SHARE SURVEY. 
The Secretary shall, at least once every 6 months, conduct a market share

survey of foreign markets for encryption products. The Secretary shall publish

the results of the survey in the Federal Register. The publication shall

include an assessment of the market share of each foreign encryption product

in each market surveyed and a description of the general characteristics

of each encryption product.
SEC. 10. DEFINITIONS. 
In this Act:

(1) ENCRYPTION.—The term ‘‘encryption’’ means the

  transformation or scrambling of data, for the purpose of protecting such

  data, from plaintext to an unreadable or incomprehensible format, regardless

  of the techniques used for such transformation or scrambling and regardless

  of the medium in which such data occur or can be found.

  (2) EXPORT AND EXPORTER.—The term ‘‘export’’ includes

  reexport, the term ‘‘exporter’’ includes

  ‘‘reexporter’’.

  (3) SECRETARY.—The term ‘‘Secretary’’ means the

  Secretary of Commerce.

  

http://www.house.gov/hasc/openingstatementsandpressreleases/106thcongress/99-07-21spence.pdf
  

PRESS RELEASE

House Armed Services Committee

2120 Rayburn House Office Building • Washington, DC 20515 Committee

Webpage Address

HTTP://www.house.gov/hasc
Floyd D. Spence, Chairman
FOR IMMEDIATE RELEASE
July 21, 1999
CONTACT: Maureen Cragin; Ryan Vaart


(202) 225-2539
STATEMENT OF CHAIRMAN FLOYD D. SPENCE


MARK UP OF HR 850
Today the committee meets to mark up H.R. 850, the Security and Freedom Through

Encryption (SAFE) Act. This bill was referred to 5 committees, including

the Armed Services Committee. With the Intelligence and International Relations

committees having acted last week, our committee is the last to act before

our referral period expires on Friday.
For many members of the committee, today’s proceedings and debate will

sound familiar. The policy and process issues we confront on this legislation

today are nearly identical to those we faced two years ago in the 105th Congress,

on a very similar bill.
Like then, we mark up this bill today after four other committees have acted,

all which have taken varying positions in support of or opposition to the

introduced bill.
Like then, we mark up this bill after having heard compelling testimony from

the most senior law enforcement and national security officials of the United

States that this legislation would seriously damage national security and

place public safety at risk.
Like then, we are being asked once again to render judgment on the difficult

question of how best to balance the commercial interests of industry against

the national security challenges facing the United States in a dangerous

world.
And like then, this committee will stand as one of the last hurdles that

proponents of this legislation must clear before bringing legislation to

the House floor that could dramatically alter how our nation conducts its

law enforcement and national security functions.
This legislation has two principal components. The first would effectively

ban the government from mandating the use of a certain type of encryption

technology, even though the Department of Defense and others have testified

that such technology is essential to the safe and secure operation of their

agencies.
The second part would effectively outlaw the use of export controls by the

government necessary to regulate the flow of the most sophisticated encryption

technology around the world. Think about it for a moment. This bill proposes

to have Congress prevent any President from acting on the sound and expert

advice of the intelligence, defense and law enforcement communities to keep

certain encryption products out of the hands of drug traffickers, terrorists,

and potential adversaries of the United States.
After the revelations contained in the Cox and Rumsfeld reports, it frankly

amazes me, that we are (1) even having this debate and (2), that those of

us arguing on behalf of law enforcement and national security are the underdogs.
For these reasons, I have been working with Mr. Skelton, Mr. Weldon, Mr.

Sisisky, Mr. Andrews, Mr. Abercrombie and others to find an alternative approach

to H.R. 850. Our objective was to arrive at a mechanism that recognizes the

fast pace of change in technology and the global marketplace, but errs on

the side of ensuring that any President maintains sufficient authority to

protect law enforcement and national security interests.
I believe that the substitute amendment that will be considered in a few

minutes does just that. It will make sure that the federal government is

not arbitrarily handicapped in its ability to protect public safety and national

security. But it also recognizes the need for flexibility in this fast changing

technological sector by giving the President the tools necessary to strike

a balanced national policy.
I commend our colleagues for their interest and leadership in bringing forward

their amendment and for their commitment to ensuring that we maintain a balanced

but prudent security-based policy on encryption.
I strongly support the Weldon-Sisisky-Andrews amendment and urge all of our

colleagues to support it.
Let me now recognize the committee’s Ranking Democrat, Mr. Skelton,

for any opening remarks he may wish to make.
  

  

Source:

http://www.house.gov/hasc/openingstatementsandpressreleases/106thcongress/99-07-21HR850markup.pdf
  

PRESS RELEASE

House Armed Services Committee

2120 Rayburn House Office Building • Washington, DC 20515 Committee

Webpage Address

HTTP://www.house.gov/hasc
Floyd D. Spence, Chairman
FOR IMMEDIATE RELEASE
July 21, 1999
CONTACT: Maureen Cragin; Ryan Vaart


(202) 225-2539
ARMED SERVICES COMMITTEE ADOPTS AMENDMENT TO ENCRYPTION BILL ENSURING

THAT NATIONAL SECURITY, LAW ENFORCEMENT REMAIN PRIORITY
Today, the House Armed Services Committee adopted an amended version of

legislation governing the export of encryption technology.
By a vote of 47 to 6, the committee passed a bipartisan substitute to H.R.

850, the Security and Freedom Through Encryption Act, that ensures the President

maintains sufficient authority to protect law enforcement and national security

interests while, at the same time, recognizing the fast pace of change in

technology and the global marketplace.
“All members of Congress and particularly those of us on the Armed Services

Committee, have a responsibility to protect the security of the American

people and the nation’s interests,” said Committee Chairman Floyd

Spence. “The committee’s action today is intended to ensure that

the federal government is not arbitrarily handicapped in its ability to protect

public safety and national security. But it also recognizes the need for

flexibility in this fast changing technological sector by giving the President

the tools necessary to strike a balanced national policy while also protecting

national security.”
Spence and a number of other committee members cited testimony by senior

government officials at the Departments of Defense, Justice and Commerce

before the Armed Services Committee in recent weeks warning that if H.R.

850 was left unchanged, it would allow encryption exports that would pose

a serious threat to U.S. military and intelligence assets and would cost

lives on future battlefields.
Deputy Secretary of Defense John Hamre testified that H.R. 850 would lead

to “a tidal wave that would crush your national security and law enforcement

agencies that are protecting this country.” With respect to the bill’s

national security implications, Hamre also testified that the “unregulated

release of the strongest encryption is going to do one thing: put more

troops’ lives at risk. Period.” Barbara McNamara, Deputy Director

of the National Security Agency (NSA), testified that H.R. 850 will harm

national security by making our job of providing critical, actionable

intelligence to our leaders and military commanders difficult, if not impossible,

thus putting our Nation’s security at considerable risk.”
Attorney General Janet Reno stated that “the immediate decontrol of

all export controls through the SAFE Act is not in the national interest.”

And FBI Director Louis Freeh asserted that H.R. 850 “will harm law

enforcement, will harm public safety, will harm national security, and lives

will be lost….”
In recent Armed Services committee hearings, Spence also expressed concern

that H.R. 850 would decontrol the export of encryption software and lift

controls on the export of computers that contain encryption software, thereby

undoing the tightened restrictions Congress mandated two years ago on the

export of supercomputers to potentially dangerous end-users like China.
“I continue to believe that the unrestricted export of sophisticated

encryption products, which is exactly what H.R. 850 would allow, carries

serious national security risks for our nation,” said Spence. “In

the context of the recent Cox committee report and growing concerns over

the transfer of sophisticated U.S. technologies to countries of proliferation

concern, H.R. 850’s decontrol of encryption and some computer exports

makes no sense to me.”
The substitute amendment adopted by the committee was authored by Reps. Curt

Weldon (R-PA), chairman of the committee’s Research and Development

subcommittee, Norman Sisisky (D-VA), ranking member on committee’s

Procurement subcommittee, and Rob Andrews (D-NJ). Provisions of the committee

approved Weldon-Sisisky-Andrews amendment would:

  

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