105th CONGRESS      S. 909    
1st Session

To encourage and facilitate the creation of secure public networks for communication, commerce,
education, medicine, and government.

                   ____________________________


                IN THE SENATE OF THE UNITED STATES
Mssrs, McCain, Kerrey, Hollings, and Kerry introduced the following bill; which was read twice
and referred to the Committee on
                  _____________________________

                              A BILL


     Be it enacted by the Senate and the House of Representatives of the United States of
America in Congress assembled,   

Sec. 1. SHORT TITLE; -- This Act may be cited as the  Secure Public Networks Act."

Sec. 2. DECLARATION OF POLICY

     It is the policy of the United States to encourage and facilitate the creation of secure
public networks for communication, commerce, education, research, medicine and government.


              TITLE I - DOMESTIC USES OF ENCRYPTION

SEC. 101.  LAWFUL USE OF ENCRYPTION.  

     Except as otherwise provided by this Act or otherwise provided by law, it shall be lawful
for any person within any State to use any encryption, regardless of encryption algorithm selected,
encryption key length chosen, or implementation technique or medium used.

SEC. 102. PROHIBITION ON MANDATORY THIRD PARTY ESCROW OF KEYS
USED FOR ENCRYPTION OF CERTAIN COMMUNICATIONS.

     Neither the Federal Government nor a State may require the escrow of an encryption key
with a third party in the case of an encryption key used solely to encrypt communications between
private persons within the United States.

SEC. 103. VOLUNTARY PRIVATE SECTOR PARTICIPATION IN KEY
MANAGEMENT STRUCTURE.

     The participation of the private persons in the key management infrastructure enabled by
this Act is voluntary.

SEC. 104. UNLAWFUL USE OF ENCRYPTION

     Whoever knowingly encrypts data or communications in furtherance of the commission of
a criminal offense for which the person may be prosecuted in a court of competent jurisdiction
and may be sentenced to a term of imprisonment of more than one year shall, in addition to any
penalties for the underlying criminal offense, be fined under title 18, United States Code, or
imprisoned not more than five years, or both, for a first conviction or fined under title 18, United
States Code, or imprisoned not more than ten years, or both, for a second or subsequent
conviction.  The mere use of encryption shall not constitute probable cause to believe that a crime
is being or has been committed.

SEC. 105. PRIVACY PROTECTION.

     (a) In General.  It shall be unlawful for any person to intentionally --   

          (1) obtain or use recovery information without lawful authority for the    purpose of decrypting data or communications;

          (2) exceed lawful authority in decrypting data or communications;

          (3) break the encryption code of another person without lawful   authority for
the purpose of violating the privacy, security or property rights     of that person;

          (4) intercept on a public communications network without lawful  authority the
intellectual property of another person for the purpose of
     violating the intellectual property rights of that person;

          (5) impersonate another person for the purpose of obtaining recovery  information of that person without lawful authority;

          (6) issue a key to another person in furtherance of a crime;

          (7) disclose recovery information in violation of a provision of this      Act; or

          (8) publicly disclose without lawful authority the plaintext of  information
that was decrypted using recovery information obtained with or   without lawful authority.

     (b) Criminal Penalty.    Any person who violates this section shall be fined under title 18,
United States Code, or imprisoned not more than five years, or both.

SEC. 106. ACCESS TO ENCRYPTED MESSAGES BY GOVERNMENT        ENTITIES.

     (1) EFFECT ON EXISTING AUTHORITIES - Nothing in this section authorizes a
government entity to obtain recovery information from any key recovery agent unless the
government entity has lawful authority to obtain communications or electronically stored
information apart from this Act.

     (2) LAWFUL PURPOSES - A key recovery agent, whether or not registered by the
Secretary under this Act, shall disclose recovery information:
     
          (a) To a government entity if that entity is authorized to use the recovery
     information to determine the plaintext of information it has obtained or is obtaining
     pursuant to a duly-authorized warrant or court order, a subpoena authorized by Federal or
     State statute or rule, a certification issued by the Attorney General under the Foreign
     Intelligence Surveillance Act, or other lawful authority; or
     
          (b) To a government entity to permit that entity to comply with a request from a
     foreign government that the entity is authorized to execute under United States law.

     (3)  PROCEDURES - A key recovery agent, whether or not registered by the Secretary
under this Act, shall disclose recovery information to a Federal or State government entity, to
permit it to achieve the lawful purposes specified in subsection (2) of this section upon the receipt
of a subpoena described in subsection (4) which is based upon a duly authorized warrant or court
order authorizing interception of wire communications or electronic communications authorized
under chapter 119 of title 18, United States Code, or applicable State statute, or authorizing
access to stored wire and electronic communications and transactional records under chapter 121
of title 18, United States Code, or applicable State statute; a subpoena authorized by or based on
authority established by Federal or State law, statute, precedent or rule; a warrant or court order
or certification issued by the Attorney General authorized under the Foreign Intelligence
Surveillance Act, 50 United State Code 1801 et seq. or other lawful authority, and directing such
key recovery agent to provide assistance.

     (4) SUBPOENA - The Attorney General shall by rule prescribe the form of a uniform
subpoena and identify the necessary endorsements for such a subpoena to ensure the lawful
disclosure of key recovery information to a Federal or State government entity by a Key Recovery
Agent authorized under subsection (2) of this section.

     (5) AUDITS - The Attorney General shall establish periodic audits of subpoenas issued
under this section to ensure that subpoenas issued are pursuant to lawful authority.  In the event
an audit finds a subpoena issued without lawful authority, the Attorney General shall ensure that
necessary disciplinary, investigatory and prosecutorial steps are taken. 


SEC. 107.  CIVIL RECOVERY.

     (a) IN GENERAL. --  Except as otherwise provided in this Act, any person described in
subsection (b) may in a civil action recover from the United States Government the actual
damages suffered by the person as result of a violation described in that subsection, a reasonable
attorney's fee, and other litigation costs reasonably incurred.

     (b) COVERED PERSONS.    Subsection (a) applies to any person --    

          (1) whose recovery information is knowingly obtained without lawful   authority by an agent of the United States Government from a key recovery  agent or
certificate authority registered under this Act;

          (2) whose recovery information is obtained by an agent of the United  States
Government with lawful authority from a key recovery agent or    certificate authority registered
under this Act and is knowingly used or  disclosed without lawful authority; or

          (3) whose recovery information is obtained by an agent of the United  States
Government with lawful authority from a key recovery agent or    certificate authority registered
under this Act and is used to publicly disclose   decrypted information without lawful
authority.

     (c) LIMITATION.    A civil action under this section shall be commenced not later than
two years after the date on which the claimant first discovers the violation.
  
SEC. 108. USE AND HANDLING OF DECRYPTED INFORMATION.

     (a) AUTHORIZED USE OF DECRYPTED INFORMATION.  A government entity to
which recovery information is released in accordance with this Act may use the plaintext
information obtained with the recovery information only for lawful purposes.

     (b) HANDLING OF DECRYPTED INFORMATION.  Upon completion of the use of
plaintext information obtained with recovery information released under this Act, the government
entity concerned shall handle and protect the privacy of the plaintext information in a manner
consistent with applicable Federal or State statute, law or rule.

SEC. 109. USE AND DESTRUCTION OR RETURN OF RECOVERY INFORMATION.

     (a) AUTHORIZED USE OF RECOVERY INFORMATION. --    

          (1) IN GENERAL. --    A government entity to which recovery      information is
released under this Act may use the recovery information    only for lawful purposes.

          (2) LIMITATION.  --  A government entity may not use recovery    information
obtained under this Act to determine the plaintext of any wire   communication or electronic
communication or of any stored electronic    information unless it has lawful authority to
determine the plaintext under      provisions of law other than this Act.

     (b) RETURN OR DESTRUCTION OF INFORMATION.  --  Upon completion of the
use of recovery information obtained under this Act, the government entity concerned shall unless
otherwise required by law destroy the information or return the information to the key recovery
agent and shall make a record documenting such destruction or return.

     (c ) NOTICE. -- When a government entity destroys a key pursuant to this section, the
government entity shall notify the key recovery agent of such destruction.

SEC. 110. DISCLOSURE OR RELEASE OF RECOVERY INFORMATION.

     Except as otherwise authorized by this Act, a key recovery agent or other person may not
disclose to any person the facts or circumstances of any release of recovery information pursuant
to section 106, or of any requests therefor, unless under an order by a Federal court of competent
jurisdiction,

SEC. 111. NOTIFICATION TO RECIPIENTS OF RECOVERY INFORMATION.

     A key recovery agent or certificate authority, whether or not registered under this Act,
who discloses recovery information shall --    

     (1) notify the recipient that recovery information is being disclosed; and

     (2) specify which part of the information disclosed is recovery information.

                                 
                TITLE II -- GOVERNMENT PROCUREMENT

SEC. 201. POLICY.

     It is the policy of the United States Government to facilitate the creation of secure
networks that permit the public to interact with the government through networks which protect
privacy, the integrity of information, rights in intellectual property, and the personal security of
network users.

SEC. 202. FEDERAL PURCHASES OF ENCRYPTION PRODUCTS.

     Any encryption product purchased or otherwise procured by the United States
Government for use in secure government networks shall be based on a qualified system of key
recovery.

SEC. 203. ENCRYPTION PRODUCT PURCHASED WITH FEDERAL FUNDS.

     Any encryption product purchased directly with Federal funds for use in secure public
networks shall be based on a qualified system of key recovery.

SEC. 204. UNITED STATES GOVERNMENT NETWORKS.

     Any communications network established by the United States Government after the date
of enactment of this Act which uses encryption products as part of the network shall use
encryption products based on a qualified system of key recovery.

SEC. 205. NETWORKS ESTABLISHED WITH FEDERAL FUNDS.

     Any encrypted communications network established after the date of enactment of this Act
with the use of Federal funds shall use encryption products based on a qualified system of key
recovery.

SEC. 206. PRODUCT LABELS. 

     An encryption product may be labeled to inform users that the product is authorized for
sale to or for use in transactions and communications with the United States Government under
this title.

SEC. 207. NO PRIVATE MANDATE.

     The United States Government may not mandate the use of encryption standards for the
private sector other than for use with computer systems, networks or other systems of the United
States Government, or systems or networks created using Federal funds. 

SEC. 208. TRANSITION RULES

     The Secretary may though rule provide for the orderly implementation of this section and
the effective use of secure public networks.

SEC. 209. INTEROPERABILITY

     In establishing the criteria for a qualified system of key recovery, the Secretary shall
consider providing for the interoperability of key recovery products procured under this section
with non-key recovery products to ensure that citizens have secure network access to their
government. 

                TITLE III -- EXPORT OF ENCRYPTION

SEC. 301.  THE DEPARTMENT OF COMMERCE.

     The Secretary of Commerce in consultation with other relevant executive branch agencies
shall have jurisdiction over the export of commercial encryption products.  The Secretary shall
have the sole duty to issue export licenses on commercial encryption products.  

SEC. 302.  LICENSE EXCEPTION NON-KEY RECOVERY.

     Exports of encryption products up to and including 56 bit DES or equivalent strength shall
be exportable under a license exception, following a one time review, provided the encryption
product being exported --

     (1) is otherwise qualified for export;
     (2) is otherwise legal;
     (3) does not violate U.S. law; 
     (4) does not violate the intellectual property rights of another; and
     
          (a) the recipient individual is otherwise qualified to receive such
                encryption product; and
          (b) the country to which the encryption product is to be 
                            exported is otherwise qualified to receive the encryption product.      

The Secretary shall complete a license exception review under this section within ten working
days of a properly filed license exception request.

SEC. 303.  PRESIDENTIAL ORDER. 

     The President may by executive order increase the encryption strength for encryption
products which may be exported under section 302 of this Act.  The encryption strength for
encryption products which may be exported under section 302 of this Act shall be reviewed by the
President on an annual basis.  Consistent with other provisions of this Title and Section 901 of
this Act, the President shall take such action as necessary to increase the encryption strength for
encryption products which may be exported if similar products are determined by the President to
be widely available for export from other Nations.  

SEC. 304.  LICENSE EXCEPTION FOR KEY RECOVERY.

     Encryption products may be exported under a license exception, following a one time
review without regard to the encryption algorithm selected or encryption key length chosen when
such encryption product is based on a qualified system of key recovery, provided, the encryption
product being exported --

     (1) is otherwise qualified for export;
     (2) is otherwise legal;
     (3) does not violate U.S. law; 
     (4) does not violate the intellectual property rights of another; and
          
          (a) the recipient individual is otherwise qualified to receive such
                     product; and
          (b) the country to which the encryption product is to be
                            exported is otherwise qualified to receive the encryption product.

The Secretary shall describe the elements of a qualified system of key recovery and the procedures
for establishing compliance with those elements.  The Secretary shall complete a license exception
review under this section within ten working days of a properly filed license exception request.

SEC. 305.  EXPEDITED REVIEW FOR CERTAIN INSTITUTIONS.

     The Secretary in consultation with other relevant executive branch agencies shall establish
a procedure for expedited review of export license applications involving encryption products for
use by  qualified Banks, Financial Institutions and Health Care Providers, subsidiaries of U.S.
Owned and controlled companies or other users authorized by the Secretary.   
          
SEC. 306.  PROHIBITED EXPORTS.

     The export of any encryption product shall be prohibited when the Secretary in
consultation with other agencies finds evidence that the encryption product to be exported would
be used in acts against the national security, the public safety, transportation systems,
communications networks, financial institutions or other essential systems of interstate commerce;
diverted to a military, terrorist or criminal use; or re-exported without authorization.  The
Secretary's decision on the grounds for a prohibition under this section shall not be subject to
judicial review.

SEC. 307 LICENSE REVIEW.

     In evaluating applications for export licenses for encryption products not based on a
qualified key recovery system, in strengths above the level described in Section 302, the following
factors shall be among those considered by the Secretary:

     (1) whether an encryption product is generally available and is designed for 
           installation without alteration by purchaser;
     (2) whether the encryption product is generally available in the country
           to which the encryption product would be exported; 
     (3) whether encryption products offering comparable security and level of
           encryption is available in the country to which the encryption product 
           would be  exported; or 
     (4) whether the encryption product will be imminently available in the               
country to which the product would be exported.

The Secretary shall complete a license review under this section within thirty working days of a
properly filed license request.  The Secretary's decision on the grounds for the grant or denial of
licenses shall not be subject to judicial review.  
      

SEC. 308.  CRIMINAL PENALTIES.

     Any person who exports an encryption product in violation of this Title shall be fined
under Title 18, United States Code or imprisoned for not more than five years. 

TITLE IV -- VOLUNTARY REGISTRATION 
                              SYSTEM


SEC. 401. VOLUNTARY USE OF CERTIFICATE AUTHORITIES AND KEY
RECOVERY AGENTS.
 
     Except as provided in Title II of this Act, nothing in this Act may be construed to require
a person, in communications between private persons within the United States, to   -- 

          (1) use an encryption product with a key recovery feature;

          (2) use a public key issued by a certificate authority registered under this Act;   or

          (3) entrust key recovery information with a key recovery agent   registered
under this Act.

SEC. 402. REGISTRATION OF CERTIFICATE AUTHORITIES.

     (a) AUTHORITY TO REGISTER.   --  The Secretary or the Secretary's designee may
register any private person, entity,  government entity, or foreign government agency to act as a
certificate authority if the Secretary determines that the person,  entity or agency meets such
standards relating to security in and performance of the activities     of a certificate authority
registered under this Act.

     (b) AUTHORIZED ACTIVITIES OF REGISTERED CERTIFICATE --
AUTHORITIES.  -- 

          (1) A certificate authority registered under this section may issue public key
     certificates which may be used to verify the identity of a person engaged in encrypted
     communications for such purposes as authentication, integrity, nonrepudiation, digital
     signature, and other similar purposes.

          (2) A certificate authority registered under this section may issue public key
     certificates which may be used for encryption.

          (3) The Secretary shall not, as a condition of registration under this Act, require
     any certificate authority to store with a third party information used solely for the
     purposes in subparagraph (b)(1) of this section.

     (c) CONDITION, MODIFICATION AND REVOCATION OF REGISTRATION.   The
Secretary may condition, modify or revoke the registration of a certificate authority under this
section if the Secretary determines that the certificate authority has violated any provision of this
Act, or any regulations thereunder, or for any other reason specified in such regulations.

     (d) REGULATIONS. --    

          (1) REQUIREMENT.  -- The Secretary in consultation with other relevant
executive branch agencies shall prescribe regulations relating to certificate authorities registered
under this section. The regulations     shall be consistent with the purposes of this Act.

            (2) ELEMENTS.  --  The regulations prescribed under this subsection      shall --  


               (A) establish requirements relating to the practices of certificate        authorities, including the basis for the modification or revocation of          registration under subsection (c);

                 (B) specify reasonable requirements for public key        certificates
issued by certificate authorities which requirements shall       meet generally accepted standards
for such certificates;

               (C) specify reasonable requirements for record keeping by        certificate authorities;

               (D) specify reasonable requirements for the content, form, and        sources of information in disclosure records of certificate authorities,             including the updating and timeliness of such information, and for         other practices and
policies relating to such disclosure records; and

               (E) otherwise give effect to and implement the provisions of this          Act relating to certificate authorities.

SEC. 403. REGISTRATION OF KEY RECOVERY AGENTS.

     (a) AUTHORITY TO REGISTER.  --   The Secretary or the Secretary's designee may
register a private person, entity, or government entity to act as a key recovery agent if the
Secretary determines that the person or entity possesses the capability, competency,
trustworthiness, and resources to    

          (1) safeguard sensitive information;

          (2) carry out the responsibilities set forth in subsection (b); and

          (3) comply with such regulations relating to the practices of key     recovery
agents as the Secretary shall prescribe.

     (b) RESPONSIBILITIES OF KEY RECOVERY AGENTS.  --  A key recovery agent
registered under subsection (a) shall, consistent with any regulations prescribed under subsection
(a), establish procedures and take other appropriate steps to --   

           (1) ensure the confidentiality, integrity, availability, and timely release    of
recovery information held by the key recovery agent;

          (2) protect the confidentiality of the identity of the person or persons   for
whom the key recovery agent holds recovery information;

          (3) protect the confidentiality of lawful requests for recovery  information,
including the identity of the individual or government entity    requesting recovery information
and information concerning access to and     use of recovery information by the individual or
entity; and

          (4) carry out the responsibilities of key recovery agents set forth in this     Act
and the regulations thereunder.

     (c) CONDITION, MODIFICATION OR REVOCATION OF REGISTRATION. --   The
Secretary may condition, modify or revoke the registration of a key recovery agent under this
section if the Secretary determines that the key recovery agent has violated any provision of this
Act, or any regulations thereunder, or for any other reason specified in such regulations.

     (d) REGULATIONS.  -- The Secretary in consultation with other relevant executive
branch agencies shall prescribe regulations  relating to key recovery agents registered under this
section.  The regulations shall be consistent with the purposes of this Act.


 SEC. 404. DUAL REGISTRATION AS KEY RECOVERY AGENT AND CERTIFICATE
AUTHORITY.

     Nothing in this Act shall be construed to prohibit the registration as a certificate authority
under section 402 of a person or entity registered as a key recovery agent under section 403.

SEC. 405.  PUBLIC KEY CERTIFICATES FOR ENCRYPTION KEYS.

     The Secretary or a Certificate Authority for Public Keys registered under  this Act may
issue to a person a public key certificate that certifies a public key that can be used for encryption
only if the person:

          (1) stores with a Key Recovery Agent registered under this Act sufficient
     information, as specified by the Secretary in regulations, to allow timely lawful recovery of
     the plaintext of that person's encrypted data and communications; or

          (2) makes other arrangements, approved by the Secretary pursuant to regulations
     promulgated in concurrence with the Attorney General, that assure that lawful recovery of
     the plaintext of encrypted data and communications can be accomplished in a timely
     fashion and, unless authorized under Section 110 of this Act, without disclosing that data
     or communications are being recovered pursuant to a government request.

SEC. 406. DISCLOSURE OF RECOVERY INFORMATION.

     A key recovery agent, whether or not registered under this Act, may not disclose recovery
information stored with the key recovery agent by a person unless the disclosure is -- 

          (1) to the person, or an authorized agent thereof;

          (2) with the consent of the person, including pursuant to a contract  entered
into with the person;

          (3) pursuant to a court order upon a showing of compelling need for   the
information that cannot be accommodated by any other means if    

               (A) the person who supplied the information is given   reasonable
notice, by the person seeking the disclosure, of the court  proceeding relevant to the issuance
of the court order; and

               (B) the person who supplied the information is afforded the      opportunity to appear in the court proceeding and contest the claim of the           person seeking the
disclosure;

          (4) pursuant to a determination by a court of competent jurisdiction  that
another person is lawfully entitled to hold such recovery information,     including
determinations arising from legal proceedings associated with the     incapacity, death, or
dissolution of any person; or

            (5) otherwise permitted by a provision of this Act or otherwise     permitted by
law.

SEC. 407. CRIMINAL ACTS.

     (a) IN GENERAL.  --   It shall be unlawful for --   

          (1) a certificate authority registered under this Act, or an officer,      employee, or
agent thereof, to intentionally issue a public key certificate in     violation of this Act;

          (2) any person to intentionally issue what purports to be a public key     certificate issued by a certificate authority registered under this Act when such    person is not a
certificate authority registered under this Act;

          (3) any person to fail to revoke what purports to be a public key     certificate
issued by a certificate authority registered under this Act when such      person knows that the
issuing person is not such a certificate authority and      have the power to revoke a public
key certificate;

          (4) any person to intentionally issue a public key certificate to a person      who
does not meet the requirements of this Act or the regulations prescribed   thereunder; or

          (5) any person to intentionally apply for or obtain a public key      certificate
under this Act knowing that the person to be identified in the   public key certificate does not meet
the requirements of this Act or the     regulations thereunder.

     (b) CRIMINAL PENALTY. --    Any person who violates this section shall be fined under
title 18, United States Code, or imprisoned not more than five years, or both.


                 TITLE V -- LIABILITY LIMITATIONS

SEC. 501. NO CAUSE OF ACTION FOR COMPLYING WITH GOVERNMENT
REQUESTS.

     No civil or criminal liability under this Act, or under any other provision of law, shall
attach to any key recovery agent, or any officer, employee, or agent thereof, or any other persons
specified by the Secretary in regulations, for disclosing recovery information or providing other
assistance to a government entity in accordance with sections 106 and 406 of this Act.

SEC. 502. COMPLIANCE DEFENSE.

     Compliance with the provisions of this Act and the regulations thereunder is a complete
defense for certificate authorities and key recovery agents registered under this Act to any
noncontractual civil action for damages based upon activities regulated by this Act.

SEC. 503. REASONABLE CARE DEFENSE.

     The use by any person of a certificate authority or key recovery agent registered under this
Act shall be treated as evidence of reasonable care or due diligence in any judicial or
administrative proceeding where the reasonableness of the selection of the authority or agent, as
the case may be, or of encryption products, is a material issue.

SEC. 504. GOOD FAITH DEFENSE.

     A good faith reliance on legal authority requiring or authorizing access to recovery
information under this Act, or any regulations thereunder, is a complete defense to any criminal
action brought under this Act or any civil action.

SEC. 505. LIMITATION ON FEDERAL GOVERNMENT LIABILITY.

     Except as otherwise provided in this Act, the United States shall not be liable for any loss
incurred by any  individual or entity resulting from any violation of this Act or the performance or
nonperformance of any duties under any regulation or procedure established by or under this Act,
nor resulting from any action by any person who is not an official or employee of the United
States.

SEC. 506.  CIVIL ACTION

     Civil action may be brought against a key recovery agent, a certificate authority or other
person who violates or acts in a manner which is inconsistent with this Act.

               TITLE VI -- INTERNATIONAL AGREEMENTS

     The President shall conduct negotiations with other countries for the purpose of mutual
recognition of key recovery agents and certificate authorities; and to safeguard privacy and
prevent commercial espionage.  The President shall consider a country's refusal to negotiate such
mutual recognition agreements when considering the participation of the United States in any
cooperation or assistance program with that country.  The President shall report to the Congress
if negotiations are not complete by the end of 1999.  

             TITLE VII -- GENERAL AUTHORITY AND CIVIL
                            PENALTIES
 
 SEC. 701. GENERAL AUTHORITY AND CIVIL REMEDIES.

     (a) AUTHORITY TO SECURE INFORMATION.  --  To the extent necessary or
appropriate to the enforcement of this Act or any regulations thereunder, the Secretary may make
investigations, obtain information, take sworn testimony, and require reports or the keeping of
records by and make inspection of the books, records, and other writings, premises or property of
any person.

     (b) INVESTIGATIONS.  --  

          (1) APPLICABLE AUTHORITIES.  -- In conducting investigations     under
subsection (a)the Secretary may, to the extent necessary or appropriate    to the enforcement of
this Act and subject to such requirements as the  Attorney General shall prescribe, exercise
such authorities as are conferred  upon the Secretary by other laws of the United States.

          (2) ADDITIONAL AUTHORITY.  --  In conducting such investigations,     the
Secretary may administer oaths or affirmations and may by subpoena    require any person to
appear and testify or to appear and produce books,     records, and other writings, or both.

          (3) WITNESSES AND DOCUMENTS.  -- 

               (A) IN GENERAL --   The attendance of witnesses and the          production of documents provided for in this subsection may be                       required in any
State at any designated place.

               (B) WITNESS FEES --  Witnesses summoned shall be paid the        same fees and mileage that are paid to witnesses in the courts of the                United
States.

          (4) ORDERS TO APPEAR.  --   In the case of contumacy by, or refusal to     obey a subpoena issued to any person pursuant to this subsection, the district  court
of the United States for the district in which such person is found,  resides, or transacts business,
upon application by the United States and after   notice to such person, shall have jurisdiction
to issue an order requiring such   person to appear and give testimony before the Secretary or
to appear and  produce documents before the Secretary, or both, and any failure to obey such   order of the court may be punished by such court as a contempt thereof.

  SEC. 702. CIVIL PENALTIES.

     (a) AUTHORITY TO IMPOSE CIVIL PENALTIES.    

          (1) IN GENERAL.  --  The Secretary may, after notice and an      opportunity
for an agency hearing on the record in accordance with sections  554 through 557 of title 5,
United States Code, impose a civil penalty of not      more than $100,000 for each violation of this
Act or any regulation    thereunder either in addition to or in lieu of any other liability or penalty   which may be imposed for such violation.

          (2) CONSIDERATION REGARDING AMOUNT.  --   In determining    the
amount of the penalty, the Secretary shall consider the risk of harm to law     enforcement, public
safety, and national security, the risk of harm to affected      persons, the gross receipts of the
charged party, and the willfulness of the    violation.

          (3) LIMITATION.  --  Any proceeding in which a civil penalty is sought     under
this subsection may not be initiated more than 5 years after the date of   the violation.

          (4) JUDICIAL REVIEW.  --   The imposition of a civil penalty under paragraph
(1) shall be subject to judicial review in accordance with sections 701 through 706 of title 5,
United States Code.

     (b) RECOVERY.  --   

          (1) IN GENERAL. --  A civil penalty under this section, plus interest at   the
currently prevailing rates from the date of the final order, may be   recovered in an action
brought by the Attorney General on behalf of the  United States in the appropriate district court
of the United States. In such      action, the validity and appropriateness of the final order imposing
the civil      penalty shall not be subject to review.

          (2) LIMITATION. --   No action under this subsection may be commenced more
than 5 years after the order imposing the civil penalty concerned becomes final.

SEC. 703. INJUNCTIONS.

     The Attorney General may bring an action to enjoin any person from committing any
violation of any provision of this Act or any regulation thereunder.


SEC. 704. JURISDICTION.

     The district courts of the United States shall have original jurisdiction over any action
brought by the Attorney General under this title.


              TITLE VIII -- RESEARCH AND MONITORING
                                 
SEC. 801. INFORMATION SECURITY BOARD.

     (a) REQUIREMENT TO ESTABLISH.   --  The President shall establish an advisory
board to be known as the Information Security Board (in this section referred to as the ``Board'').

     (b) MEMBERSHIP.  --  The Board shall be composed of   --

          (1) such number of members as the President shall appoint from   among the
officers or employees of the Federal Government involved in the  formation of United States
policy regarding secure public networks, including     United States policy on exports of products
with information security     features; and

          (2) a number of members equal to the number of members under     paragraph (1)
appointed by the President from among individuals in the    private sector having an expertise in
information technology or in law or     policy relating to such technology.

     (c) MEETINGS.  --  The Board shall meet not less often than once each      year.

     (d) DUTIES.  --  The Board shall review available information and make
recommendations to the President and Congress on appropriate policies to ensure -- 

          (1) the security of networks;

          (2) the protection of intellectual property rights in information and products
          accessible through computer networks;

          (3) the promotion of exports of software produced in the United States;

          (4) the national security, effective law enforcement,  and public safety interests of
          the United States related to communications networks; and

          (5) The protection of the interests of Americans in the privacy of data and
          communications.


SEC. 802. COORDINATION OF ACTIVITIES ON SECURE PUBLIC NETWORKS.

     In order to meet the purposes of this Act, the President shall --   

          (1) ensure a high level of cooperation and coordination between the   departments and agencies of the Federal Government in the formation and    discharge of United
States policy regarding secure public networks; and

          (2) encourage cooperation and coordination between the Federal   Government
and State and local governments in the formation and   discharge of such policy.

SEC. 803. NETWORK RESEARCH.

     It shall be a priority of the Federal Government to encourage research to facilitate the
creation of secure public networks which satisfy privacy concerns, national security interests,
effective law enforcement requirements, and public safety needs.

SEC. 804. ANNUAL REPORT.

     (a) REQUIREMENT.  --  The National Telecommunications and Information
Administration shall, in consultation with other Federal departments and agencies, submit to
Congress and the President each year a report on developments in the creation of secure public
networks in the United States.

     (b) ELEMENTS.  --  The report shall discuss developments in encryption, authentication,
identification, and security on communications networks during the year preceding the submittal
of the report and may include recommendations on improvements in United States policy to such
matters.

SEC. 805.   NATIONAL PERFORMANCE REVIEW

     The National Performance Review shall evaluate the progress of federal efforts to migrate
government services and operations to secure public networks. 

SEC. 806.   EDUCATION NETWORKS

     The Department of Education, in cooperation the National Telecommunications and
Information Administration and the Federal Communications Commission and the Joint Board
established by the Federal Communications Commission and State Departments of Education
shall evaluate technical, educational, legal and regulatory standards for distance learning via
secure public networks.        

                                 
                  TITLE IX --  WAIVER AUTHORITY

SEC. 901. WAIVER AUTHORITY.

     (a) AUTHORITY TO WAIVE. --  The President may by executive order waive 
provisions of this Act, or the applicability of any such provision to a person or entity, if the
President determines that the waiver is in the interests of national security, or domestic safety and
security.

     (b) REPORT. -- Not later than 15 days after each exercise of authority provided in
subsection (a), the President shall submit to Congress a report on the exercise of the authority,
including the determination providing the basis of the exercise of the authority.  The report shall
explain the grounds of the President's action with specificity and be submitted in unclassified and
classified form.

              TITLE X -- MISCELLANEOUS PROVISIONS   

SEC. 1001. REGULATION AND FEES.

     (a) REGULATIONS.  --  The Secretary shall, in consultation with the Secretary of State,
the Secretary of Defense, and the Attorney General and after notice to the public and opportunity
for comment, prescribe any regulations necessary to carry out this Act.

     (b) FEES. -- The Secretary may provide in the regulations prescribed under subsection (a)
for the imposition and collection of such fees as the Secretary considers appropriate for purposes
of this Act.

SEC. 1002  INTERPRETATION. 

     Nothing contained in this Title shall be deemed to:

     (1) pre-empt or otherwise affect the application of the Arms Export Control Act (22
U.S.C. 2751 et seq.), the Export Administration Act of 1979, as amended (50 U-S.C. app. 2401-2420), and the International Emergency Economic Powers        Act (50 U.S-C. 1701-1706), or any
regulations promulgated thereunder;

     (2) affect intelligence activities outside the United States; 

     (3) or weaken any intellectual property protection.

SEC. 1003.  SEVERABILITY.

     If any provision of this Act, or the application thereof, to any person or circumstances is
held invalid, the remainder of this Act, and the application thereof, to other persons or
circumstances shall not he affected thereby.

SEC. 1004.  AUTHORIZATION OF APPROPRIATIONS.

     There are hereby authorized to be appropriated to the Secretary of Commerce for fiscal
years 1998, 1999, 2000, 2001, and 2002 such sums as may be necessary to carry out
responsibilities under this Act.

SEC. 1005. DEFINITIONS.

     For purposes of this Act:

  
     (1) CERTIFICATE AUTHORITY.  -- The term ``certificate authority'' means a person
trusted by one or more persons to create and assign public key certificates.

     (2) DECRYPTION. -- The term ``decryption'' means the electronic retransformation of
data (including communications) that has been encrypted into the data's original form. To
``decrypt'' is to perform decryption.

     (3) ELECTRONIC COMMUNICATION. -- The term ``electronic communication'' has
the meaning given such term in section 2510(12) of title 18, United States Code.

     (4) ELECTRONIC INFORMATION. --The term ``electronic information'' includes voice
communications, texts, messages, recordings, images, or documents in any electronic,
electromagnetic, photoelectronic, photooptical, or digitally encoded computer-readable form.

     (5) ELECTRONIC STORAGE. -- The term ``electronic storage'' has the meaning given
that term in section 2510(17) of title 18, United States Code.

     (6) ENCRYPTION. -- The term ``encryption'' means the electronic transformation of data
(including communications) in order to hide its information content. To ``encrypt'' is to perform
encryption.

     (7) ENCRYPTION PRODUCT. --  The term  encryption product" includes any product,
software, or technology used to encrypt and decrypt electronic messages and any product
software or technology with encryption capabilities.

     (8) KEY.  -- The term ``key'' means a parameter, or a component thereof, used with an
algorithm to validate, authenticate, encrypt, or decrypt data or communications.

     (9) KEY RECOVERY AGENT.  --

               (A) IN GENERAL.-- The term ``key recovery agent'' means a        person trusted by one or more persons to hold and maintain sufficient                information to allow access to the data or communications of the                person or persons for
whom that information is held, and who holds           and maintains that information as a
business or governmental           practice, whether or not for profit.

               (B) INCLUSION. --The term ``key recovery agent'' includes any         person who holds the person's own recovery information.

          (10) PERSON. -- The term ``person'' means any individual,   corporation,   company, association, firm, partnership, society, or joint stock      company.
 
          (11) PLAINTEXT. -- The term ``plaintext'' refers to data (including   communications) that has not been encrypted or, if encrypted, has been     decrypted.

          (12) PUBLIC KEY. -- The term ``public key'' means, for cryptographic  systems that use different keys for encryption and decryption, the key that is       intended to be
publicly known.

          (13) PUBLIC KEY CERTIFICATE. -- The term ``public key certificate''   means
information about a public key and its user, particularly including   information that identifies that
public key with its user, which has been     digitally signed by the person issuing the public key
certificate, using a private  key of the issuer.

          (14) QUALIFIED SYSTEM OF KEY RECOVERY.  -- The term ``qualified  system of key recovery'' means a method of encryption which meets the           criteria
established by the Secretary and provides for the recovery of keys and     may include the use of
split keys, multiple key systems or other system  approved by the Secretary, or a system
which otherwise provides for the   timely and lawful access to plaintext, and meets the criteria
established by the  Secretary.

          (15) RECOVERY INFORMATION.  -- The term ``recovery     information''
means a key or other information provided to a key recovery      agent by a person that can be used
to decrypt the data or communications of     the person.

          (16) SECRETARY. -- The term ``Secretary'' means the Secretary of      Commerce.

          (17) STATE. -- The term ``State'' has the meaning given the term in   section
2510(3) of title 18, United States Code.

          (18) STORED ELECTRONIC INFORMATION. --The term ``stored     electronic information'' means any wire communication or electronic                  communication that is
in electronic storage.

          (19) WIRE COMMUNICATION. --  The term ``wire communication''     has the
meaning given that term in section 2510(1) of title 18, United States      Code.