Lofgren Seeks Revisions to Draft Encryption Export Regulations

(December 8, 1999) Rep. Zoe Lofgren wrote a letter to President Clinton on December 6 in which she stated that she is distressed with the draft encryption regulations released by the administration on November 23. She wants to see many changes in the final regulations, which the administration has promised by December 15.

Related Pages
Lofgren Letter to Clinton, 12/6/99.
Draft Regulations, 11/23/99.
Tech Law Journal Summary of Encryption Bills in the 106th Congress.

Rep. Zoe Lofgren (D-CA) and Rep. Bob Goodlatte (R-VA) are the lead sponsors of the Security and Freedom through Encryption (SAFE) Act, HR 850, a bill that would liberalize the existing export restraints, and guarantee Americans the right to use encryption products.

The administration has long opposed this bill. However, there has been considerable support for the bill from industry, privacy groups, and other encryption proponents. Over half of the House membership is a cosponsor of the bill. Also, the House was close to taking the bill up on the House floor.

Then, on September 16, administration officials announced that changes would be made in encryption export policies, and that the changes would be embodied in regulations to be released on or before December 15. The announcements were short on details. However, the White House press office released a statement to the Congress and two fact sheets.

Also, William Reinsch, the Administration's point man on encryption export policy at the Department of Commerce, has given several presentations on Capitol Hill on the new policy. See, transcripts of his Internet Caucus briefing and ITAA briefing.

Encryption proponents, such as Rep. Lofgren, were optimistic that this signaled a real change in the administration's approach. However, when the administration released the first draft of these regulations on November 23, many encryption proponents were deeply disappointed.

Rep. Lofgren wrote in her December 6 letter to President Clinton:

"I remain distressed that we've strayed from our original worthy purpose, our legitimate security concerns, and we are now in danger of compromising the ability of US firms to compete with off-shore companies that are distributing robust encryption. I'm hoping that this correspondence, as well as the earlier correspondence I forwarded with Congressman Bob Goodlatte, and those other comments the Administration is no doubt receiving will get this effort back on track."

Rep. Lofgren also held a meeting to discuss encryption reform with representatives of the Information Technology Association of America (ITAA) and members of the press on Tuesday, December 7.

Rep. Zoe

Rep. Lofgren identified several problems with the draft regulations in her letter. First, "under these draft regulations, one may sell an encryption product at a "retail" outlet, but not on the web. That makes no sense. There is no valid national security or law enforcement objective advanced by this artificial distinction."

"This retail/non-retail dichotomy is therefore not well-suited to the legitimate purpose of export controls," wrote Rep. Lofgren. "We should be looking at a definition of mass market. We should consider whether the encryption product at issue is "widely available" -- as this is a test that bears directly on the security questions we purport to be addressing by these regulations, whether the encryption product is available independent of whether we export it or not."

"That is the approach we followed in the SAFE Act, HR 850, when we considered among other indicia, whether the encryption products were "generally available," said Lofgren.

Definition of Foreign Government Entity in Draft Regulations

Foreign Government Entity (as applied to encryption items). A foreign government entity is (a) any government department, agency, or other entity performing governmental functions; e.g., Finance Ministry, Ministry of Defense, Ministry of Health, including governmental corporations, quasi-government agencies and State enterprises;

(b) this term does not include the following public entities: utilities, banks, transportation, broadcast, non-research educational facilities, non-military health organizations and manufacturing or industrial entities, except those public manufacturing or industrial entities or their separate business units (as defined in part 772 of the EAR) who are engaged in the manufacture or distribution of items or services controlled on the Wassenaar Munitions List.

Rep. Lofgren also took issue with definition of foreign government entity. "As the draft regulations are written presently, the definition of a government entity is vague and complex including not only "government corporations, [but also] quasi government agencies and State enterprises."

She continued that "Telecom Italia is owned in part (4%) by the Italian government. Is Telecom Italia a "quasi-government agency" or "state enterprise"? What percentage ownership would make it a "foreign government entity"?"

She concluded that "If the Administration intends that Telecom companies and ISPs should be included, then I most respectfully disagree."

The ITAA's Bob Cohen asked whether she was surprised when she saw the draft regulations. "I was surprised as well as disappointed with the draft regulations," said Rep. Lofgren.

She also said that "I am in frequent contact with the White House." She singled out John Podesta for praise; he "really does get it."

However, she deflected a question about fighting within the administration on this subject. She stated only that "the same push and pull that has existed around this issue for years and years still exists."

"The SAFE bill is still introduced," said Rep. Lofgren in her opening comments, "available to move in the next session."

Art Brodsky, of Communications Daily, asked why she does not try to move the bill to get the administration's attention. Rep. Lofgren responded that "we needed as a show of good faith with the administration to work with them."

She also added that passing the bill could be difficult. "It is not an easy thing to move legislation all the way to the President's desk."

She spoke with President Clinton "about ten days ago." He is "committed to making this work."

"I am committed to working through all of this," concluded Lofgren. "I am optimistic."

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