1996 Congressional Hearings
Intelligence and Security

ON H.R. 3011,
SEPTEMBER 25, 1996

Today the Committee considers H.R. 3011, the "Security and Freedom Through Encryption Act."

Encryption is the process of encoding data or communications in a form that only the intended recipient can understand. Once the exclusive domain of the national security agencies, encryption has become increasingly important to persons and companies in the private sector -- for example, to protect intellectual property and other forms of proprietary information that are stored and transmitted in digital formats.

The encryption debate encompasses two main issues. The first is whether there should be any restrictions on the domestic use and sale of encryption technology, and in particular, whether domestic users must place their keys in escrow with the government or some neutral third party. Current law does not have any such restrictions.

The second issue is whether there should be restrictions on the export of encryption technology. Current law regulates the export of encryption technology in the same manner as military technology. To date, the State Department has generally only allowed the export of relatively weak encryption technology.

With respect to the domestic use of encryption, the Administration generally favors a key escrow system, and its representatives will explain more about this proposal shortly. The law enforcement and national security agencies believe that a key escrow system is necessary to maintain their ability to perform lawful wiretaps and to read computer data obtained through lawful means.

The computer industry, the larger business community, and privacy groups oppose any mandatory key escrow system. They believe that a mandatory system would unnecessarily invade the privacy of users and that law enforcement can solve its problems by acquiring better technology to decode encrypted materials. They argue that the benefits of preventing crime through the widespread use of encryption outweigh any harm to law enforcement caused by that use.

With respect to the export control issue, the Administration has to date generally opposed the lifting of the current export controls. It argues that the controls are still effective and that our allies would be distressed about the damage to law enforcement efforts if we lifted the controls.

The computer industry and the privacy groups argue that the controls ought to be substantially relaxed, if not eliminated. They argue that the controls are easily evaded because many encryption products are already available to anyone over the Internet and because it is legal for anyone to come into the United States, buy encryption products, and take them out of the country. If the situation does not change, they believe that Americans will no longer dominate this field.

We have a number of excellent witnesses with us today, and I look forward to hearing from all of them. I will now recognize Mr. Conyers for an opening statement. If other members have opening statements, they will be placed in the record. We have a number of witnesses this morning, so your cooperation in moving the hearing along is appreciated.