U ffiM<* ^1-i.iu,

FEDERAL TELECOMMUNICATIONS

PRIVACY ACT OF 1984 -33^3

^3

HEARING

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES

OF THE

COMMITTEE ON

POST OFFICE AND CIVIL SERVICE

HOUSE OF REPRESENTATIVES

NINETY-EIGHTH CONGRESS

SECOND SESSION

ON

H.R. 4620

A BILL TO PROHIBIT THE RECORDING OF CONVERSATION MADE ON

THE FEDERAL TELECOMMUNICATIONS SYSTEM, AND FOR OTHER

PURPOSES

y

JULY 14, 1984

Serial No. 98-45

Printed for the use of the Committee on Post Office and Civil Service

38-6240

UA GOVERNMENT PRINTING OFFICE

WASHINGTON ! 1984
COMMITTEE ON POST OFFICE AND CIVIL SERVICE

WILLIAM D.

MORRIS K. UDALL, Arizona

WILLIAM (BILL) CLAY, Missouri

PATRICIA SCHROEDER, Colorado

ROBERT GARCIA, New York

MICKEY LELAND, Texas

DON ALBOSTA, Michigan

GUS YATRON, Pennsylvania

MARY ROSE OAKAR, Ohio

KATIE HALL, Indiana

GERRY SIKORSKI, Minnesota

FRANK McCLOSKEY, Indiana

GARY L. ACKERMAN, New York

RON DE LUGO, Virgin Islands

DOUGLAS H. BOSCO, California

MERVYN M. DYMALLY, California

FORD, Michigan, Chairman

GENE TAYLOR, Missouri

BENJAMIN A. GILMAN, New York

TOM CORCORAN, Illinois

JAMES A. COURTER New Jersey

CHARLES PASHAYAN, JR., California

WILLIAM E. DANNEMEYER, California

DANIEL B. CRANE, Illinois

FRANK R. WOLF, Virginia

CONNIE MACK, Florida

TOM DEYULIA, Staff Director

ROBERT E. LOCKHART, General Counsel

PATRICIA F. RIS.SI.KR, Deputy Staff Director and Chief Clerk

JOSEPH A. FISHER, Minority Staff Director

SUBCOMMITTEE ON HUMAN RESOURCES

DON ALBOSTA, Michigan, Chairman

GUS YATRON, Pennsylvania DANIEL B. CRANE, Illinois

DOUGLAS H. BOSCO, California BENJAMIN A. GILMAN, New York

MERVYN M. DYMALLY, California

MICAH GREEN, Subcommittee Staff Director

(II)

//. 66</0f7
5

4k 0^

CONTENTS

Statements of: Page

Hon. Don Albosta, a U.S. Representative in Congress from the State of

Michigan 1

Victoria Toensing, Deputy Assistant Attorney General, Criminal Division,

Department of Justice 2

Mary Lawton, Esq., Counsel for Intelligence Policy, Department of Justice 8

Phillip Coates, Associate Commissioner, Internal Revenue Service, Department of Treasury 23

Paul Newton, legislative director. National Treasury Employees Union 42

Dennis Hays, president, American Foreign Service Association 47

Statement submitted by•

Hon. Jack Brooks, a Representative from the State of Texas 41

David S. Burckman, president, Senior Executives Association 49

(HI)

FEDERAL TELECOMMUNICATIONS PRIVACY

ACT OF 1984

THURSDAY, JUNE 14, 1984

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HUMAN RESOURCES,

COMMITTEE ON POST OFFICE AND CIVIL SERVICE,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m., in room

304, Cannon House Office Building, Hon. Don Albosta (chairman)

presiding.

STATEMENT OF HON. DON ALBOSTA, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MICHIGAN

Mr. ALBOSTA. The Subcommittee on Human Resources will now

consider H.R. 4620, a bill to prevent taping or monitoring of conversations on the Federal Telecommunications System unless authorized by all the persons involved or by law.

When Charles Wick, the Administrator of the U.S. Information

Agency, said that he did not consider the General Services Administration antitaping regulations to be law because they had teeth, it

became very clear that we needed a more an effective law.

The Human Resources Subcommittee has jurisdiction over rights

of privacy of Federal employees, and legislation to make such recording a Federal crime has been reported from other committees.

However, none of the other committees have addressed the problems that Federal employees face in situations where they are

taped or monitored, or ordered to monitor the communications of

others.

People who believe their privacy rights have been invaded should

have effective remedies and Federal employees who have been told

to conduct such monitoring should not be exposed to personal liability.

Therefore, the subcommittee will consider whether to provide

remedies in court and before the Merit Systems Protection Board.

These would provide protection for innocent Federal employees,

and serve as an effective deterrent to the willful and wrongful invasion of privacy and a real remedy for any person whose privacy

has been invaded.

We should be able to say to our constituents that we have protected their privacy and given them a means to protect themselves

from any government agency that unlawfully threatens their privacy.

(l)
It is fitting that we should do this in 1984 as a strong statement

that America is still a country where individual rights and freedoms are protected by law.

Representatives of the National Treasury Employees Union and

the American Foreign Service Association will testify today. The

Justice Department will present the administration position on this

legislation. We will also hear from Treasury Department representatives.

Without objection, we will also submit a statement from the

Senior Executives' Association for the record.

After each member has had a chance to make a statement, I will

recognize our first witness.

Does the gentleman from New York have a statement?

Mr. GILMAN. I have no opening statement, Mr. Chairman. Thank

you.

Our first witness will be the Honorable Victoria Toensing,

Deputy Assistant Attorney General, Criminal Division of the Department of Justice; and, Ms. Mary Lawton, Counsel for Intelligence, Policy, Department of Justice.

You may proceed.

STATEMENT OF VICTORIA TOENSING, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE

Ms. TOENSING. Good morning, Mr. Chairman.

My name is Victoria Toensing. It is a difficult name, more difficult than Albosta to pronounce.

Mr. ALBOSTA. Yes.

Ms. TOENSING. I want to thank you for asking me to testify here

on the administration's views on H.R. 4620.

I have a much longer statement that I have submitted for the

record.

Mr. ALBOSTA. We will put all of your written statement into the

record.

Ms. TOENSING. Thank you.

I would like to comment for a few moments on H.R. 4620, a bill

which criminalizes for only Federal executive branch employees

the interception of telephone conversations.

The Department of Justice strongly opposes this legislation for

two main reasons: No. 1, it unnecessarily burdens law enforcement

since there are presently GSA regulations in effect; and, No. 2, it

unreasonably discriminates against the executive branch Federal

employee.

Before I discuss these points, let me just briefly state where the

law is now regarding the interception of communications, and I

refer to title III of the 1968 omnibus crime bill.

In that bill there is a term "intercept," which is not used in this

legislation, but we're really referring to such kind of activity.

That definition is very broad, Mr. Chairman. It applies to any reporting or listening to any oral communication, including one to

which the person is a party.
3

Congress recognized this as a very broad definition and, because

of that, provided two major exceptions to making it a crime to

intercept communications.

The first exception is where the party is acting under color of

law. There is no crime if a party is acting under color of law, if he

or she is a party to the conversation or a party of the conversation

gives consent.

The second exception is where a person is not acting under color

of law. Again it is no crime if he or she is party to the conversation

or if the party to the conversation has given consent, unless that

interception is for the purpose of committing a crime or a tortious

act.

In sum, title III exempts one-party consensual interception

unless the person is not acting under color of law and intercepts

for a crime or a tort.

As you know, H.R. 4620 would amend title I of the 1949 Federal

Property and Administrative Services Act by making it a crime for

any Federal executive branch employee either, No. 1, to cause or

permit a recording or listening in on telephone conversations conducted on the FTS, the Federal Telecommunications System; or,

No. 2, performance the same kind of activity when conducting business on any kind of telephone. There are certain exceptions which

I will get into in a few moments.

First, let me explain why I think this is a very difficult area to

criminalize. We are taking one specific conduct•the listening in or

recording of a telephone conversation•and in one instance we are

saying to a group of the Federal executive branch employees: this

is a crime. And yet, the same kind of conduct for another group of

executive branch employees is mandatory for them to fulfill their

obligations in law enforcement, in intelligence, in health and safety

or in national security.

So it is a very difficult situation when you have about a 50-50

split in situations where you have to do a certain act and, on the

other hand, where it is a crime.

Generally, Mr. Chairman, there is an understanding, when

people have a conversation that the tone, the inflection, whatever

it is that you are talking about will be kept between those two

people. But I want to point out that there is no constitutional right

to keep the conversation private.

The Supreme Court has said, rather, that intercepting or recording one's own conversation is not an invasion of privacy that violates the fourth amendment. What is being violated in such a situation is a breach of trust between the persons. We have other similar kinds of conduct, Mr. Chairman. For instance, if I told you

something in confidence and said please do not tell it, and you told

someone else, we would not condone that, but we do not pass a law

against it. Such conduct is not a candidate for the Criminal Code.

There are GSA regulations in effect for the executive branch.

These cover one party consensual listening in or recording. Procedually we favor the use of regulations because they provide a flexibility for change instead of waiting for Congress to act. And, substantively, these particular regulations appear to work. These provide the flexibility substantively when the same conduct, either is

to be criminalized or performed.
But our second principal objection, Mr. Chairman, is the discrimination against the Federal executive branch employees; only for

them is this conduct criminalized.

Certainly, if it is a crime for an employee of the Department of

Agriculture, then it should likewise be a crime for a member of the

Senate or the House or an employee of the Senate or the House or

of the Judiciary. Certainly the harm is the same.

Title III, which this legislation generally covers, applies to everybody. If the proponents of this bill genuinely believe, contrary to

the Department's views, that this conduct is so egregious as to subject an executive branch employee to a criminal sanction, I do not

see how they could possibly or moreover, logically, not apply that

same kind of sanction to everybody.

Mr. Chairman, we previously sent a letter to the chairman of the

full committee regarding many of our concerns on this legislation,

but let me just briefly summarize a few of them.

There are drafting problems. For instance, there is no intent requirement in this bill. So a person inadvertently picking up the

telephone when a conversation is going on has technically violated

the act. My secretary commented that concern to me as she was

typing up the statement for me last night.

Although the bill says that there is an exception for law enforcement, it really does not sufficiently cover a number of situations

where we would have law enforcement needs and where consensual

recording would be reasonable and proper.

For example, if a Federal employee suddenly realizes he or she is

being offered a bribe, he or she would have to wait before taping it,

because he or she would not know if all the regulations and procedures were in effect.

Moreover, take that same situation, where the employee realizes

that he or she has been offered a bribe•and I have several criminal cases in mind that I am familiar with, and it is decided the

bribe should be monitored. What if that employee, who is not a

trained law enforcement person, violates one of these regulations; is

then the employee the criminal rather than the briber? And if

there were a trial and the Government wanted to use this recording, is it then suppressed because it might be in technical violation

of one of these regulations?

There are some real law enforcement concerns with this, Mr.

Chairman.

Another problem with the bill is the requirement that all of the

recordings or the transcripts of conversations be kept. There is a

criminal penalty if they are not kept in accordance with 18 U.S.C.

2071, and the criminal penalty is even more than what this bill

provides, 3 years. We now have enhanced the penalty.

This would mean that all conversations recorded for the handicapped, for public safety reasons, fire and ambulance in Federal enclaves would have to be kept and maintained.

Moreover, there is an irony here, Mr. Chairman. If we are truly

concerned about a person's privacy, then shouldn't we be wanting

to dispose of these conversations that were not to be recorded instead of keeping them forever?

I also question why the bill is limited only to phone conversations. Is it not equally an invasion of privacy, if considered to be so,
to record a person's conversation, to wire a person as it is to wire a

telephone conversation?

I don't want my comments about the drafting to be misconstrued. That does not mean we are trying to fix up the bill. The

basis of our argument, the basis of our position here is that this is

not conduct for criminalizing. It is conduct for us to look at it in

the executive branch, to look at the regulations and the particular

flexibilities and the House and the Senate would like to do similarly. I would be glad to answer any questions, Mr. Chairman.

[The full statement of Victoria Toensing follows:]

STATEMENT or VICTORIA TOENSING, DEPUTY ASSISTANT ATTORNEY GENERAL,

CRIMINAL DIVISION

Mr. Chairman and Members of the Subcommittee, I am pleased to be here today

to present the views of the Department of Justice on H.R. 4620, the Federal Telecommunications Privacy Act of 1984. The bill would prohibit federal employees from

recording or causing a listening-in upon any conversation conducted on the Federal

Telecommunications System, or on any other system if the call invoices the conduct

of government business. As you know, the bill has already been reported by the

Committee on Government Operations and my comments today will address the bill

as reported by that Committee.

The Department of justice strongly opposes the enactment of this legislation. It

would seriously interfere with federal law enforcement and national security efforts

without enhancing privacy interests. It also discriminates against federal employees

while leaving unaffected identical conduct by other persons. Moreover, the bill contains a number of drafting problems.

BACKGROUND

Many persons confuse the conduct covered by H.R. 4620•the recording of or listening in on a telephone conversation to which a person is a party without the

knowledge of the other party to the call•with the very different conduct of "wiretapping, which is the surreptitious listening-in or recording of a conversation without the consent or knowledge of either party to it. The criminal code presently

covers wiretapping in some detail, but it does not proscribe the secret recording of a

conversation by one party without the knowledge of the other, unless the recording

was for a criminal, tortious, or otherwise injurious purpose.

Chapter 119 of Title 18, United States Code, sets out a complete scheme for regulating the interception of wire and oral communications. Because Chapter 119 was

originally enacted as Title III of P.L. 90-351, the Omnibus Crime Control and Safe

Streets Act of 1968, the law in this area is commonly referred to as "Title III." Title

III (18 U.S.C. 2511(lXa)) makes it an offense to "intercept" any wire or oral communication. The term "intercept" is defined in Title III (18 U.S.C. 2510(4)) as "the aural

acquisition of the contents of any wire or oral communication through the use of

any electronic, mechanical, or other device." Hence although the work "intercept"

normally brings to mind a surreptitious overhearing of a conversation without the

knowledge or consent of either party to it, the above-quoted definition is so broad

that it applies to any recording of a wire or oral conversation including one to

which the person making the recording is a party. However, as you may know, Title

III was given long and careful consideration by the Congress. As a result it contains

two extremely important exceptions which would be altered by this bill.

The first Title III exception (section 2511(2 KO) states that it is not unlawful under

this chapter "for a person acting under color of law to intercept a wire or oral communication, where such person is a party to the communication or one of the parties to the communication has given permission or consent to such interception."

The second Title in exception (section 2511(2Xd)) states that it is not unlawful "for a

person not acting under color of law to intercept a wire or oral communication

where such person is a party to the communication or where one of the parties to

the communication has given prior consent to such interception unless such communication is is intercepted for the purpose of committing any criminal or tortious act

in violation of the Constitution or laws of laws of the United States or of any State

or for the purpose of committing any other injurious act."

Thus, Title III (subsections 2511(2Xc) and id)) exempts the recording or listening in

on a conversation without the consent of all parties to it from the prohibitions of

38-524 0-84-
6

Chapter 119 unless the person making the recording (1) is not acting under color of

law and (2) intercepts or records for a criminal, tortious, or other injurious purpose.

Otherwise there is no federal statute that prohibits the secret recording of one's

own coversations.

However, the General Services Administration (GSA), pursuant to its authority to

issue government-wide rules relating to the management and disposal of government property set out in 40 U.S.C. 486(c), has promulgated regulations for the use of

the Federal Telecommunications System (FTS). 41 C.F.R. 101-37.311 prohibits, with

certain exceptions, the one-party consensual recording of conversations on the FTS

or any other telephone system approved in accordance with the Federal Property

and Administrative Services Act of 1949.

PROPOSED LEGISLATION

H.R. 4620 would amend Title I of the Federal Property and Administrative Services Act of 1949 by adding a new section 113. In essence, the new section would

codify the above-mentioned GSA regulations and provide for a criminal sanction of

a $10,000 fine and one year's imprisonment for any federal employee who caused or

permitted the recording or listening in upon any telephone conversation conducted

on the federal telecommunications system. It would also prohibit a federal employee

from causing or permitting the recording or listening in upon any telephone conversation between a federal employee and another person if the call "involves the conduct of Government business." The new offense is set out in subsection 113(a).

Subsection 113(b) exempts from the prohibitions found in subsection (a) the recording of or listening in upon a conversation without the consent of any party to it

if the recording or listening in is authorized under Title III, which I have just discussed, or under the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et.

seq.). The purpose of this exemption appears to be to underscore the point that the

new section, which applies to the recording or allowing the listening in upon a conversation by one party to it, is not intended to affect the legitimate interception of

communications for law enforcement or intelligence purposes which are typically

carried out pursuant to a court order without the consent of either party.

Subsection 113(c) permits the recording of or listening in upon a conversation with

the consent of one party to it when the recording or listening in is performed (1) for

law enforcement purposes; (2) for counterintelligence purposes; (3) for military command instructions; (4) for counterterrorism purposes; (5) for public safety purposes;

(6) by a handicapped employee as a tool necessary to that employee's performance of

official duties; or (7) for service monitoring purposes.

Subsection 113(d) permits the recording of or listening in upon a conversation

with the consent of all parties to the conversation. Included within this category are

telephone conferences, secretarial recordings, and other acceptable administrative

practices conducted pursuant to strict supervisory controls to eliminate possible

abuses.

Subsection 113(h) provides that any recording or transcript of a conversation

made under, or in violation of the section shall constitute a record deposited in a

public offense for purposes of section 2071 of title 18. That section, in turn, provides

that any concealment, removal, or destruction of such a record is punishable by a

fine of up to $2,000 and imprisonment for up to three years.

DISCUSSION

Mr. Chairman, we have previously sent to the Chairman of the full Committee a

letter describing our strong objections to H.R. 4620 in some detail. I will briefly summarize our position here. First, the enactment of this bill would cause unnecessary

problems in the law enforcement area and would be disruptive of our authorized

intelligence and counterintelligence activities. Ms. Lawton, Director of the Department's Office of Intelligence Policy and Review will address the intelligence concerns, but let me describe some of the ways H.R. 4620 would impede our law enforcement efforts.

The bill does contain a provision allowing a one party consensual recording or listening-in for law enforcement purposes. But this exception is so narrowly drafted

that it does not cover a number of situations in which a one-party consensual recording would be reasonable and proper. If, for example, a federal employee in good

faith surreptitiously records a telephone conversation in which he is offered a bribe,

but in doing so violates a procedure established by his agency, he would be in violation of the provisions of the bill. Consequently, a court might suppress the recording

and any derivative evidence at the subsequent bribery trial. The law enforcement

exception in subsection (cXD also does not cover situations in which a federal em-
ployee receives a threatening or obscene telephone call, or a call in which he suddenly realizes he is about to be offered a bribe, and records it in an attempt to provide evidence for use against the caller even though time constraints have precluded his complying with procedures established by his agency for making such a recording.

More important, and even if the law enforcement exception were expanded to

cover the above types of situations, the passage of H.R. 4620 would still cause unnecessary burdens for federal law enforcement personnel. Its enactment would be an

overreaction to the highly publicized conduct of one federal official•which we in no

way condone•but which had nothing to do with law enforcement.

Significantly, the Supreme Court has held that intercepting or recording one's

own conversations is not an invasion of privacy that violates the Fourth Amendment.1 What is involved is, at bottom, a breach of trust that the specific words,

tone, and inflection of the conversation are limited to the parties to it, and this

breech of trust arguably does not even occur until a recording of the intercepted

conversation is played for or furnished to a person not a party to it. Therefore, in

our view. Title III struck the correct balance in terms of penal sanctions, in only

prohibiting the intercepting of one's own conversations for a harmful purpose.

As a practical matter, we do not believe that a person who recorded his own conversation should be prosecuted as a criminal unless the recording was made to

commit a tort or a crime, e.g. to blackmail the other party, the very type of one

party consensual interception prohibited by Title III. The recording or listening in

on one's own conversations when done for some other purpose is simply not so serious a matter as to justify the diversion of the Justice Department's scarce investigative and prosecutive resources from other offenses. In short, we believe that any

harm done by a one-party consensual recording (other than for a criminal or injurious purpose) is not a matter warranting the application of penal sanctions and in

the case of an employee of the Executive Branch of the Federal Government is already adequately subject to the application of appropriate administrative sanctions.

Moreover, the bill applies only to a "Federal officer or employee." Proposed section 113(jKD provides that "the term 'Federal officer or employee' includes any officer or employee of a Federal agency." Thus it appears that the bill is intended to

apply only to employees of the Executive Branch of the government. The bill would

apply to an employee of the Department of Agriculture but not, for example, to a

Member of Congress, a Congressional staff aide, or a Supreme Court Justice. Nor

would the bill apply to a businessman, state official, attorney in private practice, or

to anyone else not connected with the federal government. We object to this singling

out of federal employees in the Executive Branch for the conduct of recording or

permitting a listening in on their conversations (conducted on the FTS System or

otherwise discussing government business) while ignoring identical conduct by all

other persons. If the proponents of this bill genuinely believe, contrary to our views,

that the conduct it proscribes does constitute a serious breach of privacy, justifying

the creation of a federal criminal remedy (particularly one with the draconian punishment of forefeiture of public office) then logically any legislation in this area

should apply to secret recordings of telephone conversations on any system and by

any person, not just Executive Branch employees of the federal government.

Another serious problem with the bill is the requirement in section 113(h) that all

recordings or transcripts of concersations made under, or in violation of the section

constitute a record which must be retained or disposed of in accordance with the

procedures of chapter 33 of title 44. This is potentially a very burdensome requirement. It would mean, for example, that all conversations recorded by handicapped

persons and all conversations recorded for public safety purposes•for example

police, fire and ambulance calls in federal enclaves•no matter how routine, would

have to be treated as records and retained until they could be disposed of in

accordance with regulations issued pursuant to chapter 33 of title 44. Moreover, it is

inconsistent with the announced objectives of the bill, the protection of privacy, to

require that such recordings•or for that matter a recording made in violation of the

new statute•be retained. True concern for the privacy of individuals would seem to

dictate that these recordings should be disposed of as quickly as possible, not filed

away in a government office or warehouse.

In addition to these overriding concerns, H.R. 4620 contains additional flaws. We

have discussed many of them in the letter to the Chairman of the full Committee.

One of the problems, however, warrants discussion here. That is that the new crimi1 See, e.g. United States v. White, 401 U.S. 745, 749-750 (1971); Lopez v. United States, 373 U.S.

427 (1963).
8

nal statute which the bill creates does not include a scienter requirement such as a

showing that the defendant acted "willfully" or "knowingly." Thus, it would reach

even unintentional overhearings such as a person's accidentally turning on a recording device or forgetting to get permission from one party to a multi-party conference

call to make a recording.

We also note that the coverage of the bill is limited to recording or allowing the

listening in upon telephone conversations. It seems inconsistent to cover only this

conduct and not the virtually identical situation of a person secretly recording a

face to face conversation.

In sum, we storngly oppose the enactment of H.R. 4620. The bill impacts adversely on legitimate law enforcement and intelligence activities and criminalizes activity that is not deserving of criminal sanctions. The existing GSA regulations adequately cover the recording of or listening in upon telephone conversations by federal employees in the executive branch, and the various agencies are free to adopt and

apply appropriate administrative sanctions for their employees who violate them.

These sanctions could extend to a dismissal. We think this is an adequate deterrent

and punishment for a federal employee who secretly records or allows the listening

in upon his own conversation, and that criminalizing this conduct is simply not necessary or appropriate. And, again, we think it is most unfair for legislation in this

area to discriminate against employees of the Executive Branch while ignoring

secret taping or listening in by persons in the other branches of government and

persons in the private sector.

Mr. Chairman, that concludes my prepared statement and I would be pleased to

answer any questions at this time.

Mr. ALBOSTA. MS. Lawton, do you have anything that you would

like to add to this?

Ms. LAWTON. If I could, Mr. Chairman.

STATEMENT OF MARY LAWTON, COUNSEL FOR INTELLIGENCE

POLICY, DEPARTMENT OF JUSTICE

Ms. LAWTON. I am here not so much as a representative of the

Department, but merely speaking for the intelligence community

with which I conferred about this particular bill.

We have a number of concerns, and actually there is some desire

to correct the record. I do have a short prepared statement, but I

will summarize the main points.

Mr. ALBOSTA. Your full prepared statement will be entered into

the record.

Ms. LAWTON. Thank you.

The Government Operations Committee report on H.R. 4620

found the recording of private conversations to be a violation of

Federal employee ethics. However, the committee's own survey, as

reflected in their report, contained several errors and we would

like to point some of those out.

The appendix to the committee's report states that only 14 out of

71 Government agencies, or roughly 20 percent currently record

and/or monitor Federal telephone communications.

In addition, none of the agencies listed permits the general recording of telephone conversations by its employees, as evidenced

by the reasons recited in the report given by each of these agencies: four agencies monitor for investigative purposes; two for intelligence purposes; three for service monitoring and/or maintenance;

one agency for terrorism purposes; one agency for communications

security purposes; two for purposes of safety investigations; and,

GSA conducts monitoring in order to investigate Federal protection.

All of these are specific, narrow, legitimate reasons for monitoring. And yet, in spite of reciting this in their report, the Govern-
9

ment operations report then suggests that GSA regulations are not

working. We submit that they are.

The appendix to the report also suggests that the CIA, for example, is not in compliance with GSA regulations. Yet, the CIA advised the chairman of the full committee here that it is not subject

to the regulations.

And if I might, for the correction of the record since this report

does concern us, I'd like to submit a copy of that CIA letter to the

committee for its records.

Mr. ALBOSTA. The letter will become part of the committee

record without objection.

Ms. LAWTON. Thank you, Mr. Chairman.

This survey shows that telephone recording within the Federal

Government is not of the magnitude one would suppose based upon

one single, highly publicized example.

Keeping in mind this perspective on the problem, it's easy to see

the deleterious effects that enacting H.R. 4620 would have on legitimate intelligence and related operations currently conducted by

the Government.

As pointed out by the National Security Agency in a letter to

Chairman Brooks of Government Operations, this bill, if enacted,

would be the fourth statute to regulate electronic surveillance; an

already exceedingly complex area of law.

Those statutes, I might add, were 7 to 8 years in the making.

First, activities that fall outside the scope of the Foreign Intelligence Surveillance Act of 1978, but which are nonetheless lawful,

would be affected by this bill.

Contrary to the impression of FISA's provisions created by the

Government Operations' report, FISA most commonly involves foreign intelligence electronic surveillance conducted pursuant to an

order from the FISA court based upon an application certified by

the Attorney General and not solely on the authority of the Attorney General.

FISA permits the surveillance, pursuant to a lawful order, of foreign powers or agents of foreign powers, which may include U.S.

persons.

However, it does not apply to conversations or communications

that take place completely outside the United States. Thus, agencies may conduct monitoring outside the United States without the

necessity of obtaining a court warrant. H.R. 4620 may have a deleterious effect on these activities, as section (cK4) of the bill only

provides an overseas exemption for recording or listening in that is

performed for counterterrorism purposes, not for foreign counterintelligence purposes.

Second, as we stated in the letter to Chairman Brooks, which Ms.

Toensing referred to, H.R. 4620 expressly exempts one party consensual recording for counterintelligence purposes, but fails to

mention positive intelligence.

It is not clear, therefore, whether the bill would authorize an exemption for positive foreign intelligence collection.

Finally, all intelligence agency interception of telecommunications is heavily regulated by regulations approved by the Attorney

General. H.R. 4620 would add an additional layer of regulations to

this preexisting structure, and in one instance requiring case-by-
10

case approval by the Attorney General of monitoring currently

conducted under general guidelines that he has approved. One example would be the Defense Department's communications security monitoring.

Further, under the structure of this bill, the final authority on

electronic interception would be the General Services Administration. And yet, GSA does not have the background or the expertise

to deal in the sensitive areas of intelligence collection. That's one

of the reasons the CIA is exempted from GSA regulations.

There are, in addition, a number of technical problems which are

reflected in the letters from the Department and in the prepared

statements and I won't go into those any further, Mr. Chairman.

But from an intelligence perspective, this bill creates serious and

real problems for the entire intelligence community.

[The full prepared statement of Mary Lawton follows:]

STATEMENT OF MARY LAWTON, COUNSEL FOR INTERLLICENCE POLICY, OFFICE OF

INTELLIGENCE POLICY AND REVIEW

Mr. Chairman and members of the subcommittee, as Counsel for Intelligence

Policy of the Department of Justice, I would like to thank you for inviting me to

testify on behalf of the Intelligence Community regarding H.R. 4620.

Let me begin by saying that the testimony I am about to give has been discussed

and coordinated with the intelligence agencies. For the reasons stated by Ms. Toensing, as well as reasons peculiar to intelligence agency operations, the Department

of Justice opposes the enactment of H.R. 4620 as unnecessary and unreasonable.

H.R. 4620 would impede legitimate, preexisting government programs that protect

the security of highly sensitive and classified information and operations of government.

The Committee report on H.R. 4620 found the recording of private conversations

to be a violation of federal employee ethics. However, the Committee's own survey

of the Executive Branch, although containing several errors, nevertheless undermines its conclusions. The appendix to the Committee report states that only 14 out

of 71 government agencies, or roughly 20%, currently record and/or monitor federal

telephone communications. In addition, none of the agencies listed permit the general recording of telephone conversations by their employees, as evidenced by the reasons given by each of those agencies for recording and/or monitoring telephone

calls; 4 agencies monitored conversations for investigation purposes, 2 agencies for

intelligence purposes; 3 agencies for service monitoring and/or maintenance; one

agency for terrorism purposes; one agency for communications security purposes; 2

agencies recorded for purposes of safety investigations; and the GSA conducts monitoring in order to "investigate federal protection."

This survey shows that telephone recording within the federal government, when

examined closely, is not of the magnitude one would suppose based upon a single,

highly publicized example. On the contrary, the few agencies that monitor telephone conversations do so for perfectly legitimate reasons. The most common reason

tor recording telephone conversations within the government, aside from intelligence or criminal investigative purposes, is to retain an accurate record of what has

transpired during the conversation. This practice is common among journalists, as

well as employees in private industry.

Keeping in mind this perspective on the problem, it is easy to see the deleterious

effects that enacting H.R. 4620 would have on legitimate intelligence and related

operations currently conducted by the government. As pointed out by the National

Security Agency in a letter to the Honorable Jack Brooks concerning H.R. 4620, this

bill, if enacted, would be the fourth statute to regulate electronic surveillance, an

already exceedingly complex area of the law. Three statutes currently regulate electronic surveillance: the Wire Communications Act of 1934; the Omnibus Crime and

Safe Streets Act of 1968; and the Foreign Intelligence Surveillance Act of 1978. The

addition of a fourth statute in this complex area would unnecessarily complicate the

administration of existing, lawful electronic surveillance programs operated by the

intelligence agencies. The following examples demonstrate the effect of H.R. 4620 on

intelligence activities.

First, activities that fall outside the scope of the Foreign Intelligence Surveillance

Act of 1978 (FISA), but which are nonetheless lawful, would be affected. Contrary to
11

the impression of FISA's provisions created by the Committee report, FISA most

commonly involves foreign intelligence electronic surveillance conducted pursuant

to an order from the FISA court based upon an application certified by the Attorney

General. Electronic surveillance without a FISA court order based solely upon the

approval of the Attorney General is rare. FISA permits the surveillance, pursuant

to a lawful order, of foreign powers or agents of foreign powers, which may include

United States persons.

However, FISA does not apply to conversations or communications that take place

completely outside the United States. Thus, agencies may conduct monitoring outside the United States without the necessity of obtaining a FISA "warrant." H.R.

4620 may have a deleterious effect on these activities, as section (cK4) of the bill

only provides an overseas exemption for recording or listening in that is performed

for counterterrorism purposes.

Second, as the Justice Department stated in its May 29, 1984 letter to the Honorable Jack Brooks, H.R. 4620 expressly exempts one-party consensual recording for

counterintelligence purposes, but fails to mention positive intelligence. It is not,

therefore, clear whether the bill would authorize an exemption for positive foreign

intelligence purposes as distinct from counterintelligence activities. The recording

and overhearing by an intelligence agency official, acting within the scope of his

employment, relating to either intelligence-gathering or counterintelligence activities is proper under present law and must continue. For these purposes the proposed

exemption in section (cX2) is simply inadequate.

Finally, all intelligence agency interception of telecommunications is heavily regulated by regulations approved by the Attorney General. H.R. 4620 would add an

additional, unnecessary layer of regulation to this preexisting structure, in some instances requiring case-by-case approval by the Attorney General of monitoring currently conducted under guidelines already approved by the Attorney General. One

example would be the Defense Department's communications security monitoring

procedures.

Furthermore, the Justice Department believes that involving the General Services

Administration in sensitive decisions commonly made concerning ongoing intelligence activities would be highly inappropriate in view of the fact that GSA has no

expertise in intelligence matters.

Lastly, H.R. 4620 has several definitional problems that render it unworkable. For

example, section (cX3) permits the listening in or recording of conversations at "a

military command center." It is not clear from this section whether the bill intended to cover command and intelligence center monitoring, as it is currently regulated

by the Department of Defense. The term "command and intelligence centers" refers

to a broad range of Defense Department activities that include the disposition of

armed forces, the implementation of the Defense Department's foreign intelligence

mission, emergency police and fire reporting, air traffic control, distress calls from

ships and aircraft, and the coordination of actions resulting from bomb threats and

hijacking incidents. Were H.R. 4620 to be interpreted to exclude any of these vital

programs, it could seriously impair current Defense Department operations.

Thank you, Mr. Chairman and Members of the Subcommittee; that concludes my

testimony. I would be happy to respond to any questions you may have.

Mr. ALBOSTA. Thank you both very much for your testimony.

Unlimited recording, according to the Government Operations

Committee report, section 113(d) of the bill, as amended, makes it

clear that any monitoring of telephone conversations that is now

authorized by law, including proper Executive orders, would not be

effected by this bill. And I am disappointed that your written testimony and your oral testimony this morning ignores that fact.

In addition, the Government Operations report states that this

bill would not authorize any monitoring or taping that is not currently authorized by law.

To make this clearer, would it be advisable to amend this section

to simply state that the bill outlaws all monitoring or recording

that is not either consented to by all parties or authorized by law?

Ms. TOENSING. Is it authorized by law if I have a phone call from

someone about to bribe me, and I start intercepting or recording
12

that? It is authorized under title III, and so that is the present

state of the law. It is authorized.

Mr. ALBOSTA. It's authorized if you notify the other person that

you are

Ms. TOENSING. No. Title III allows it; this bill changes that.

Mr. ALBOSTA. Then automatically, the bill wouldn't allow for it.

If it is now allowed in the law, then this does not affect that.

Ms. TOENSING. But the words on the face of the bill say otherwise.

Mr. ALBOSTA. Would you explain to me how you interpret that in

terms of the language of the bill?

Ms. TOENSING. Section 113(aXD: Except as provided in subsections

(b), (c), and (d), no Federal official or employee shall cause or

permit the recording of or listening in upon any conversation conducted on the Federal telecommunications system; and then the

other one says you cannot do it on any telephone if it is Government business.

Mr. ALBOSTA. Woula you read subsection (b), please?

Ms. TOENSING. Yes. Without the consent of any party to a conversation, the recording of, or listening in upon such conversation

may be conducted notwithstanding subsection (a) if such recording

or listening in is authorized under, and conducted in accordance

with the requirements, of the Omnibus Crime Control and Safe

Streets Act.

Mr. ALBOSTA. Would you continue?

Ms. TOENSING. With the consent of one party to a conversation,

the recording of or listening in upon, such conversation may be

conducted notwithstanding subsection (a), if the recording or listening in is performed in accordance with the following

Mr. ALBOSTA. Is that the latest version of the law?

Ms. TOENSING. It's the May 31

Mr. ALBOSTA. We will provide you with a copy of the latest.

Ms. TOENSING. I have the same bill. The problem is, Mr. Chairman, as I see it, you have said very specifically that no one can

listen in on any conversation. Although you refer to other bills,

there is some very specific language here.

Mr. ALBOSTA. Unless there is other applicable law. If there's

other law that says you can, and under the question of national security and under the question of the armed services, under all

kinds of laws that are now on the books that say you can, we say

that we're not affecting that.

Ms. LAWTON. That is true, Mr. Chairman, as to totally unconsented electronic surveillance•that's what is being covered in (b),

where neither party consents to•classic wiretapping•where neither party consents. As long as you're operating under applicable

law, that's fine. But when you get down into the one-party consent,

the sort of thing that Ms. Toensing mentioned, of the individual

employee who records an attempted bribe, there's a different set of

rules, those rules under (c), not the rules under (b), and then that

employee is still in difficulty, or the Federal employee who is being

sexually harassed, knows tbat that's a hard case to prove and,

therefore, wants to prove that case by turning on the recorder and

can't do it.
13

Mr. ALBOSTA. Well, would you recommend that we extend the

law to cover all of those that are authorized now under the law?

Ms. LAWTON. Well, what is authorized now under the law is any

recording with the consent of a party to the conversation. That's

the current law, and that, presumably, is what this bill is designed

to stop.

There is no statute needed for the one-party consent listening, if

you want to continue to allow that. Title HI allows it now•unless

your purpose is criminal, title III allows it.

Mr. ALBOSTA. On remedies and penalties in regard to the criminal penalties; we, too, have noticed that this bill does not now contain a requirement that monitoring be willful or intentional. We

had planned to correct that.

On the other hand, from statements made before the other body

yesterday, and most of those submitted today, it seems that there is

general agreement that there should be effective civil and administrative remedies for people who have been illegally taped.

I asked in my letter that you address the issue of civil and administrative penalties, but your written testimony did not. Am I

correct in assuming that the administration does not oppose such

remedies?

Ms. TOENSING. The administrative remedies are the GSA, and

there are all sorts of personnel actions that people can take if

someone is violating the GSA regulations, Mr. Chairman.

Mr. GILMAN. Would the gentleman yield?

Mr. ALBOSTA. Yes. I yield to the gentleman from New York.

Mr. GILMAN. Has there been any administrative action by GSA

with regard to any prior violations under these rules?

Ms. TOENSING. If the person for GSA were here, he would at

least tell you the following and perhaps he could shed more light

than I am. When I had a conversation with him about how GSA

proceeds on this, Mr. Gilman, he said that they look at it as a

teaching process. These regulations were issued in 1981, and GSA

worked with the various agencies to make sure that tbey understood these regulations. When they had problems they worked to

educate the personnel. If someone violated them, GSA handled it

as a personnel matter. So the person is given a reprimand or a

firing, but within that spectrum. GSA does not look at it as a vindictive "let's get the person and lock them up" situation, but

rather let's help our Federal employees understand what our rules

are.

Mr. GILMAN. Then what you're saying is there really hasn't been

any administrative action by GSA with regard to any violation

except to be instructed.

Ms. TOENSING. Well, if you say "action," I say yes, GSA has done

a lot to educate them. I think it is reassuring to know that the

General Counsel of the USIA was very aware of these rules just 6

weeks after they were issued; that there are a lot of people that are

aware of these rules.

If you will look at the report the Government Operations Committee put out, those who monitored were, for the most part, in

compliance with the GSA regulations.

38-524 0-84-
14

The report is misleading where it says only 14 agencies were in

compliance. There were not that many agencies that actually monitored conversations.

Mr. GILMAN. Well, could we go to this proposed legislation. Do

you see any possibility of working out some of the amendments

that might be needed to exempt the intelligence agencies from any

problem under this bill? That's essentially your major concern, I

take it.

Ms. LAWTON. Well, that is the concern I am addressing today,

yes, sir.

Mr. GILMAN. Isn't there some way of making certain of exempting the intelligence agencies from all of their concerns and still

have some teeth with regard to the civil servants?

Ms. LAWTON. Well, I have a couple of answers to that.

Mr. ALBOSTA. Would the gentleman from New York let me add

something to that.

What, if anything, was done with Charles Wick in his instance

by the administration?

Mr. GILMAN. Mr. Chairman, I understand from the investigations

and from what we found in our committee, the Ferris committee,

and some of the other committees that they found there was no

criminal violation, there had been some civil rules that had been

violated. And again, as the Department of Justice representative

has stated, there isn't any penalty with regard to what had occurred there.

Ms. TOENSING. I think for the most part that the many dedicated

Federal employees are aware of this rule and, if not, can be educated to be aware of it without burdening them with the criminal

sanctions that this bill intends to impose. It is discriminatory to

submit only the Federal executive branch employees to this sanction. If indeed it is an evil, then all people should be subjected to it.

Ms. LAWTON. It should be pointed out, Mr. Gilman, that in this

context, GSA, of course, has no authority to take direct disciplinary

action over employees of any other agency or over Presidential appointees. But individual agencies•and we have not surveyed them

all to see how they react on this, but I do know in the context of

the Foreign Intelligence Surveillance Act and any deviation from

the rules of that which require minimizing extraneous conversations, that there have been disciplinary actions taken by the

agency itself against its own employee for violating the implementing regulations.

You have the general GSA regulations, and then implementing

regulations in each agency, and I do know of instances of disciplinary actions for exceeding those regulations that have been taken

in this context.

Mr. GILMAN. If the gentlewoman would further yield.

Ms. Lawton, the question I asked is, Isn't there some way of revising this bill to protect the intelligence agencies in their information gathering and at the same time perfect a statute that would

protect the right of privacy for individuals communicating with

Government employees?

Ms. LAWTON. It is almost certainly possible to write out•just

flatly say "no agency in the intelligence community is covered by

this statute"; however, we have, as Ms. Toensing suggested, a more
15

fundamental problem with approaching this subject as a criminal

law matter•every time we have worked on this bill, and I have

been at it since February, or variations of it, something new turns

up that we never thought of before and "Oh, my god, we didn't

take care of that problem." I'm afraid that legislatively it is going

to be very difficult to take care of the unforeseen in not just the

intelligence area, but any area. There's always some other perfectly legitimate listening in that isn't covered. We were working on it

concerned about law enforcement and intelligence and we realized

the whole problem of the handicapped which had never been addressed in the early stages of this and now it has been.

Mr. GILMAN. That's the purpose of the hearing.

This regulation at the present time is just a matter of instruction

and nothing more than that, a slap on the wrist, so to speak. Is

there a need for anything more than that?

Ms. LAWTON. Well, it is not just that. Of the agencies that do it•

and there are very few agencies that do it at all, that allow monitoring, they all have internal regulations, and violations of agency

regulations by agency's employees are subject to disciplinary actions•not by GSA, but by the agency itself. The agencies that do it

have regulations governing them, and they have the power to discipline now.

Mr. GILMAN. Well then, why shouldn't there be a standard regulation to all agencies if they're permitting some of the agencies to

do that?

Ms. LAWTON. Because they all have different missions, different

needs, different requirements.

Mr. GILMAN. And we couldn't address that by a standard rule

that covers all?

Ms. LAWTON. It would be very difficult, very difficult.

Mr. ALBOSTA. If the gentleman would yield.

Would you support establishing any mandatory administrative

penalties for officials found in violation of the law?

Ms. TOENSING. Which law?

Mr. ALBOSTA. Well, this law would be one and the other laws or

rules that apply that would become law?

Ms. TOENSING. We would support disciplinary action under a regulation because that provides the necessary procedural flexibility

to deal with the employee depending on what the situation is.

Under this bill right now if you accidentally pick up the telephone and there are two people talking, you are in violation of the

law. I do not think there should be a mandatory punishment for

that person.

Mr. ALBOSTA. But under this law you would be exempt; if you

picked up the telephone and accidentally overheard that particular

call, you would be exempt.

Ms. TOENSING. There's no intent requirement, but you said that

you would fix that in the

Mr. ALBOSTA. There would be no intent statement.

Ms. TOENSING. But it would seem that there are different situations where somebody who had inadvertently or technically violated something

Mr. ALBOSTA. Well, what about the case of congressional telephone calls being monitored?
16

Ms. TOENSING. You mean taking notes?

Mr. ALBOSTA. Monitored and typed.

Ms. TOENSING. When I was in the SenateMr. ALBOSTA. Isn't Communication Security Monitoring intercepting congressional telephone calls?

Ms. LAWTON. Not quite, Mr. Chairman, Communication Security

Monitoring [Comsec] is not aimed at the content, it is aimed at

electronic emissions in order to determine whether another foreign

power is capable of picking up those emissions.

What we're trying to determine in Comsec monitoring is security

of the transmission lines, not the content of the communication.

Mr. ALBOSTA. NO records were ever kept of any of those calls?

Ms. LAWTON. Logs of where monitoring occurred and of the finding are kept until the report is issued by the agency, then the logs

are destroyed.

Mr. ALBOSTA. Does that include congressional telephone monitoring?

Ms. LAWTON. If Congress requested Comsec monitoring it would.

I don't know if the intelligence committees, for example, have ever

requested it for the security of their telephones, normally it's the

executive branch. We would not do a Comsec monitoring for the

Congress unless it requested it. We have done other security procedures at congressional request, but this is primarily the executive

branch because it may include contractors, I used the word "primarily."

Mr. ALBOSTA. Does the gentleman from New York have any further questions, or the gentleman from Illinois?

Mr. CRANE. Approximately how many States•does anybody

know•have some kind of law in violation of taping a conversation?

Ms. TOENSING. It's my understanding that most of the States'

laws are similar to title III, exempting the one-party consensual.

There are a few States, about 13 or 14, somewhere in there, that

limit even the one-party-consent situation. A good many States

have electronic surveillance law like title III that exempt one-party

consent but bar the unconsented, the true wiretapping.

Mr. CRANE. HOW many States are in that category, if you know?

Ms. TOENSING. I don't know.

Ms. LAWTON. I think there are only two to four that don't authorize it at all. I think most States have some authorized wiretapping for law enforcement.

Mr. GILMAN. For law enforcement, but how about the prohibition

of unauthorized

Ms. LAWTON. Most of them follow title III, which exempts oneparty-consent situations.

Mr. GILMAN. When you say "most," roughly what are we talking

about? Is that virtually every State?

Ms. LAWTON. We could find out. I'd hate to take a guess on something like that.

Mr. GILMAN. Could you present to our committee a breakdown

on how other States have addressed this problem.

Mr. Chairman, I would like to ask that a response be made a

part of our record at this point.
17

Mr. ALBOSTA. Without objection, we will make that a part of the

record and we will enter it into the record as soon as we receive

the response from the Justice Department.

Mr. ALBOSTA. There are, by our staffs calculations, 13 States

that have rules similar to what this law would be.

Ms. TOENSING. Could I make a point along that line, Mr. Chairman, because I lived in Michigan before moving to Washington. In

Michigan, law enforcement is not allowed to wire another party

under case law in Michigan. So it made it very difficult for narcotic

cases•we are talking about law enforcement, because one could

not have an undercover officer wired to talk to a dope dealer. What

would happen is that all those cases would be brought to Federal

courts. So in those States there was not such an impact on law enforcement because they went to the U.S. attorney. I worked as an

assistant U.S. attorney in Michigan, and we would take the cases

not in accord with the State law.

Mr. ALBOSTA. I think in Michigan, though, you can get a court

order for that wiretap if you have evidence that there is the sale

and distribution of drugs.

Ms. TOENSING. Well, it takes probable cause and the foundation

that you cannot get the information in any other way. That is very

difficult. That's to limit the intercepting to a very, very few. So

usually they came to Federal court, Mr. Chairman. Also, intelligence matters would not be affected by the individual States laws.

Mr. ALBOSTA. I believe there's no other questions by any of the

other members. I don't have any further questions.

Does the gentleman from New York have any further questions?

Mr. OILMAN. I have no further questions.

Mr. ALBOSTA. Then we appreciate the witnesses being here this

morning.

For the record, we will appreciate your providing the committee

with the requests from the gentleman from New York. Thank you

very much.

Ms. TOENSING. Thank you.

Ms. LAWTON. Thank you.

Mr. ALBOSTA. Our next witness will be the Honorable Phillip

Coates, Associate Commissioner, Internal Revenue Service, Department of the Treasury.

Good morning, Mr. Coates. Thank you for coming before the committee today.

You can summarize, if you will, your testimony. Your written

testimony will be put in the record in its entirety. You can read it

if you so choose.

Mr. COATES. I'm going to read an abbreviated version of it, Mr.

Chairman.

Mr. ALBOSTA. We would appreciate that.

[The response from the Justice Department follows:]
18

l.S, Deparlmenl or Justice

Cnmin.i! Division

Office of the Deputy AaisUnt Attorney General WnhinKton. D.C. 20S30

JULlt. 1984

Honorable Donald J. Albosta

Chairman, Subcommittee on Human Resources

Committee on The Post Office And Civil Service

House of Representatives

Washington, D.C. 20515

Dear Mr. Chairman:

During my June 11, 1981! testimony on H.R. 4620 before your

Subcommittee, Representatives Oilman and Crane raised questions

concerning state laws regulating the Interception of communications. They were particularly concerned about the number of

states that have statutes prohibiting the recording of a conversation without the consent or knowledge of all parties to It, the

principal activity which H.R. 1620 seeks to prohibit. If done by

federal employees.

In researching this question, we have drawn to some extent

on a January 15, 1981, publication of the Congressional Research

Service of the Library of Congress entitled "Taps and Bugs: A

Compilation of Federal and State Statutes Concerning the

Interception of Wire and Oral Communications." This Is the

second time In the last decade that the CRS has prepared such a

compilation. See also "Wiretapping and Electronic Surveillance:

Federal and State Statutes," July 25, 1971. Of the fifty states,

the CRS categorized 26 as "one party consensual" states and 9 as

"all party consensual" states as of January 15, 1981.1

1 As I explained In my testimony, the terms "one party

consensual" and "all party consensual" are derived from the

present federal statute regulating the Interception of

communications, Title III of the Omnibus Crime Control and

Sare Streets Act of 1968 (18 U.S.C. 2510 et. seq.). Title

III defines the term "Intercept" as "the aural acquisition of

the contents of any wire or oral communication through the

use of any electronic, mechanical or other device." The term

thus includes the recording of a conversation by one of the

parties to It as well as the "tapping" Into a telephone

conversation without the consent of either party to It.

Because the Congress felt that the former type of conduct did
19

The 26 one party consensual states are: Alabama, Alaska,

Arizona, Colorado, Connecticut, Georgia, Idaho, Iowa, Kansas,

Kentucky, Louisiana, Maine, Minnesota, Nebraska, Nevada, New

Hampshire, New Jersey, New Mexico, New York, North Dakota,

Oregon, Rhode Island, South Dakota, Utah, Virginia, and

Wisconsin.

The nine all party consensual states are California,

Florida, Hawaii, Illinois, Maryland, Massachusetts, Michigan,

Pennsylvania, and Washington.

In the Interests of providing a timely response to the

Subcommittee, we have not ourselves researched the laws of the 35

above states to see If they have been changed In the past three

years, and It Is concelveable that a very few of them may have

been revised. We have, however, examined the statutes of the

fifteen other states that could not be neatly categorized by the

CRS as one party consensual or all party consensual states.

Two of these states, Oklahoma, and Texas, have recently

enacted new statutes which closely follow Title III and allow one

party consensual Interceptions. See $176.1 of chapter 13 of the

Laws of Oklahoma (enacted In 1982) and §16.02 of Vernon's Penal

Code of Texas (enacted In 1981). In addition, four states appear

to have no laws prohibiting wiretapping or recording at all.

They are Mississippi, Missouri, South Carolina, and Vermont. Two

other states, Indiana and West Virginia, are for all Intents and

purposes In this same category since their statutes dealing with

the overhearing of conversations are very narrowly drafted.

Indiana Code S35-**5-2-* prohibits only an employee of a telephone

or telegraph company from disclosing the contents of a message

and does not prohibit the actual overhearing or recording. West

Virginia Code S6l-3-2')(c) rorblds a person, firm, or corporation

from Intercepting or monitoring a conversation between an

employee or agent of the person, firm, or corporation and a

customer without taking various steps to notify both the firm's

employees and customers that monitoring Is being conducted. The

terms "Intercept" and "monitor" are not defined and arguably may

not Include a recording. Even If they do, the statute Is very

limited. Thus, except In the very limited situations covered by

the Indiana and West Virginia statutes, the recording of one's

own conversation without the knowledge of the other party to It

would not be Illegal In these eight states, bringing the total of

such states to at least 34.

not warrant criminal sanctions, Title III was specifically

made Inapplicable to Interceptions (I.e. recordings) made

with the consent of one party to the conversation, unless the

Interception was for a criminal, tortlous, or otherwise

Injurious purpose.
20

On the other hand, while Delaware hae a statute that closely

approximates Title III In format, It Is drafted In such a manner

that Interception of a conversation with the consent of only one

party Is allowed only If done under color of law. In other

situations, Delaware Is a two-party consensual state. See

Delaware Code Title 11 §1336. Moreover, §45-8.213 of the Montana

Code provides In essence that a person commits the offense of

violation of privacy In communications If he records a conversation by means of a "hidden" electronic or mechanical device

without the consent of all parties to the conversation. Presumably the term "hidden" Is Intended to mean that the presence or

the device Is not known to the party on the other end of the

line.

In addition, §4931.28 of the Ohio Revised Code provides:

"No person shall willfully and maliciously

cut, break, tap, or make connection with a

telegraph or telephone wire or read or copy

In an unauthorized manner, a telegraphic

message or communication from or upon a

telegraph or telephone line, wire, or cable,

so cut or tapped, or make unauthorized use

thereof, or willfully and maliciously

prevent, obstruct, or delay the sending,

conveyance, or delivery of an authorized

telegraphic message or communication by or

through a line, cable, or wire under the

control of a telegraph or telephone

company."

This statute would appear on its face to apply only to a classical wiretapping situation. However, the Supreme Court of Ohio

has construed this provision In a case in which a police

Informant, in the presence of a police sergeant, recorded a

telephone call to a former accomplice who made admissions about

his part In a series of crimes. In ruling the recording admissible in evidence, the court "assume[dj ... that the actions of

[the informant] and the sergeant fell afoul of these authorized

under R.C. 4931.28," but refused to apply the exclusionary rule.

See State v. Geraldo, 129 N.E. 2d 111, 117 (Sup. Ct. of Ohio,

1981TI Thus, In at least 12 States, it is unlawful for a person

to secretly record his own telephone conversations.

The remaining four states have statutory schemes somewhat

similar to Ohio's but at least one, Tennessee's, has been ruled

not to apply to one party consensual interceptions. Tennessee

has two relevant statutes. §39-3-132" of the Tennessee Code

provides that it is a felony "to tap, cut, burn, break down.

Injure, or destroy, or otherwise to interrupt or interfere with

the current, lines, cables, poles, towers, fixtures, or appliances utilized to furnish service to the general public by any

telephone, or telegraph company, or electric light or power
21

company ... " $65-21-110 provides that It Is "unlawful for any

person to damage or obstruct any telegraph or telephone poles,

wires, rixtures, or other apparatus or appliances, or to Impede

or Impair the service of any telegraph or telephone line; or to

connect by wire, or other means, with any such line so as to hear

... messages going over said lines or lines without first

procuring the consent of the owner or owners of said line ..."

The Tennessee Court of Criminal Appeals has examined these

provisions and held that "[t]aken together, these statutes

authorise, by Implication, the recording of a telephone conversation where one party to the conversation consents to the

recording." Stroup v. State, 522 S.W. 2d 118, 120 (1977).

The reasoning of the Tennessee court would appear to apply

also to the statutes In two of the remaining three states which

are clearly aimed at wiretapping and ignore the question of a one

party consensual recording. $37-12-122 of the Wyoming Code

provides in part that "[whoever] shall willfully and maliciously,

cut, break, tap, or make any connection with, or read, or copy by

use of telegraph or telephone Instruments, or otherwise, in any

unauthorized manner, any message ... from any telegraph or

telephone line, wire, or cable, so unlawfully cut or tapped ...

shall be deemed guilty of a felony ..." $H-155 of the North

Carolina Code makes It "unlawful for any person to tap or make

any connection with any wire or apparatus of any telephone or

telegraph company ... except such connection as may be authorized

by the person or corporation operating such wire or apparatus."

However, it is an open question as to whether courts In these

states would follow the Stroup decision In Tennessee or the

Oeraldo case from Ohio.

Finally, $73-1810 of the Arkansas code provides: "If any

person without authority intercept (sic) a dispatch or message

transmitted by telegraph or telephone, or wilfully destroys or

injures any telegraph or telephone, pole, wire, cable or fixture,

he Is guilty of a misdemeanor." It Is likely that this statute,

first enacted in 1885, applies only to wiretapping and not to one

party consensual recording, but we are unaware of any Arkansas

case construing It. Hence, It is possible that a court would

ascribe the same meaning to the term "Intercept" as was provided

by the Congress In enacting Title III and rule that this statute

applied to one party consensual recordings.

In sum, it appears that one party consensual recording of

telephone conversations Is allowed in 35 states and prohibited In

12. In the remaining three, the question appears to be In doubt

The fact that nearly three quarters of the states do not criminalize this conduct should underscore the unfairness of making

it a crime for federal employees to do so, while Ignoring the

same activity by everyone else.
I would also like to elaborate on another problem with

H.R. 4620 which we discussed to some extent at the hearing. As I

mentioned, equipping an Informant with a recording or transmitting device for the purpose of providing a verbal record of a

criminal transaction is a common police tactic. For example, the

police frequently "wire" an informant or undercover officer

before sending him to buy narcotics. The recording of the money

and drugs changing hands provides powerful evidence and

frequently prevents defendants from fabricating an entrapment

defense. Another common tactic is to request a criminal who has

been arrested and who has expressed a desire to cooperate with

the authorities to make a recorded telephone call to an accomplice. If the accomplice admits his part In the crime, a

recording of the conversation is strong evidence of his guilt.

The present federal law (Title III) allows the above types of

Interceptions and does not require a warrant before making them.

The enactment of H.R. 1620 would make this procedure much

more difficult for the Drug Enforcement Administration, the FBI

and all other federal law enforcement agencies. The bill (In

proposed subsection 113(2)(b)) only exempts recordings and

llstenlngs-ln made under Title III and other applicable federal

law if the interception is made without the consent of any party

to the conversation. Interceptions made with the consent of one

of the parties, like those described above, would be governed by

proposed subsection 113(c)(1) which provides that the general

prohibition against recording or listening in does not apply when

these activities are performed for law enforcement purposes "In

accordance with procedures established by the agency head, as

required by the Attorney Oeneral's guidelines for the administration of the Omnibus Crime Control and Safe Streets Act of 1968,

and In accordance with procedures established by the Attorney

General." As we discussed in our letter on H.R. 4620, no such

Attorney General Guidelines exist. More important, a system

which requires the many federal agencies to establish their own

guidelines could be so cumbersome and unwieldy that law enforcement agencies would be reluctant to use the technique of making

one party consensual recordings. For example, some states allow

one party consensual Interceptions for law enforcement purposes

but only if a warrant is obtained.2It has been our experience

In states with atrlngent warrant requirements or other complicated reporting provisions for one party consensuals that state

law enforcement efforts are so hampered that their officers

present their cases, In which there Is concurrent federal-state

Jurisdiction, to federal prosecutors for prosecution In federal

court. We can envision a similar unnecessary impairment of

federal law enforcement If H.R. 4620 were enacted.

I hope that the above information is of assistance to the

subcommittee.

Sincerely,

Victoria Toenslng

Deputy Assistant Attorney General

Criminal Division

For a compilation of state statutes, see Flshman, Wiretapping

and Eavesdropping. 1978, S8, and the December, 1983 Cumulative Supplement thereto.
STATEMENT OF PHILLIP COATES, ASSOCIATE COMMISSIONER,

INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY

Mr. COATES. I do have with me this morning, Mr. Chairman, Mr.

John Rankin, who is our Deputy Assistant Commissioner for Criminal Investigation; Mr. William Wauben, Deputy Assistant Commissioner for Collection; Mr. Walter Alt, our Director of Taxpayer

Service Division, all of whom have an interest in the bill and will

be here to answer any questions that you may have.

We are here to talk about H.R. 4620. You have already heard

from the Justice Department, Mr. Chairman. And to the extent

that IRS operations are like those of the law-enforcement agencies,

our comments will substantially follow those already provided.

I will, however, mention some law-enforcement-related issues

that may arise under the bill. In addition, the Service also has

civil-enforcement responsibilities. My testimony will also cover the

effect that H.R. 4620 has on the Internal Revenue Service's civil

enforcement of the tax laws.

On June 1, the Treasury Department provided comments on H.R.

4620 to Chairman Ford. Those comments will be submitted with

my written statement.

The Internal Revenue Service is a Federal agency, Mr. Chairman, charged with the administration of tax laws. Tax administration in the United States is primarily based on a voluntary self-assessment system of collection.

In our efforts to administer a very complex system, we perform

both the functions of an educator and tax collector.

In the role of educator, we employ a wide range of programs to

alert taxpayers to their obligations under the internal revenue law.

And, of course, you are familiar with the tax package that comes

out each January and the variety of publications available from

the Service.

In addition, our taxpayer-service function responds to both oral

and written inquiries about tax questions. Each year our contacts

total more than 50 million.

In the area of tax collector, we use a wide variety of collection

techniques, many of which are dependent upon telecommunications

network. In the administration of tax laws, the Service listens in to

and records a limited number of communications for a number of

different reasons.

It is our view that H.R. 4620 would negatively affect our ability

to efficiently perform our educational and collection responsibilities.

The Service's taxpayer-service function does record certain telephone conversations. Taxpayers may request Federal tax forms by

leaving a message with what is essentially a telephone-answering

machine.

Presumably this type of recording would be permissible under

the consent of all-parties exemption to the general rule of H.R.

4620; however, it is not clear from the legislation how that consent

is to be obtained. The question of consent to monitoring a relatively

simple question under these facts may present more difficult issues

in other contexts.
24

If a person continues a telephone conversation after being informed of the possibility of monitoring, then consent must be implied.

The taxpayer-service program also provides answers over the

telephone to taxpayers' questions. On a limited basis, answers

given to taxpayers are monitored to determine the accuracy of the

information given and the need for additional or modified training

programs.

In many areas, the tax law is extremely complex, and this monitoring system is necessary to assure the taxpayers are given accurate information.

Congress and the GAO in the past have been critical of our taxpayer-service-accuracy rates, and in the past have specifically encouraged an increased use of monitoring in the taxpayer-service

area.

It should be noted that the identity of the caller is usually unknown to the assistant, unless the taxpayer's account must be researched or the call requires a call back.

A relatively small, but statistically valid sample of answers given

to taxpayers are monitored to determine the accuracy of the information given and the need for additional or modified training.

Unfortunately, it is not clear that the exception to service monitoring found in subsection (cX7) extends to this type of monitoring.

In the House report to H.R. 4620, the Service monitoring exception is limited to situations involving the accuracy of information

or the manner in which the information is given. Although closely

related to the accuracy aspect, we think it would be appropriate to

include general-management purposes in the exception; and, in addition to pure-accuracy concerns, monitoring may be used to determine if a particular method of providing information is working

well if such monitoring may identify training needs or provide an

overall evaluation of the project.

The Service also provides information to taxpayers through a teletax system. Under this system, a taxpayer calls a general number

and then requests•either by voice or push-button telephone•a recorded message dealing with his or her particular problem.

After the message, we ask the taxpayers to evaluate the response. Most frequently, we ask the taxpayer to push a button on

the phone that corresponds to how he evaluates the response to the

question that he has posed. Our recordation of these impulses

would appear to be a violation of the recording provision of the bill.

In the collection area, Mr. Chairman, the vast majority of the

taxpayers pay their taxes due in a timely manner. We must make

every reasonable effort to perform this collection function, the

actual tax collection function in the most efficient manner possible.

Consistent with our responsibility as a public agency, the Service

employs the most up to date and sophisticated techniques to collect

outstanding balances of taxes due.

An example of this technique is an automated collection system;

a relatively new system. Under this system, a computer stores the

relevant information about a balance due from a taxpayer, and

automatically telephones taxpayers.
25

When the taxpayer answers, a Service employee will discuss the

account while the computer displays the relevant account data to

our employee.

During the telephone conversation, the Service employee will

enter or record data provided by the taxpayer.

We are concerned that this recordation of data on a telecommunication system may violate the rules of H.R. 4620.

Under the automated collection system, a significant amount of

supervisory monitoring takes place. Again, the House report on

H.R. 4620 seems to limit the service monitoring exception in subsection (cX7) to activities designed to determine whether the information provided to the public by employees is accurate and given

in a polite and cordial manner.

In the instance of automated collection system's monitoring and

other similar situations, the monitoring is also performed for other

purposes; to determine whether our employee is using the system

properly and employing appropriate collection techniques when

dealing with taxpayers.

It is not clear whether the service monitoring exception would

cover these activities.

The service monitoring exception requires that the monitoring

party may not record data identifying the caller. In the Automated

Collection System instance, data identifying the caller is an intregal part of the conversation. This is not a situation where we are

providing advice to the general public. Rather, we are collecting a

tax due from a particular taxpayer.

In fact, the major function of the Automated Collection Tax

System is to initiate calls to taxpayers.

As I have mentioned at the outset of my statement, the service

does have law enforcement responsibilities similar to those of other

Federal law enforcement agencies.

We are extremely concerned about 4620's law enforcement exceptions in section 113(cXD may fail to provide an adequate exception.

The bill's exception for law enforcement purposes read as follows:

The recording or listening in is performed for law enforcement purposes in accordance procedures established by the agency head, as required by the Attorney

General's for the administration of Chapter 119 of Title 18, United States Code, and

in accordance with procedures established by the Attorney General.

Despite the statute's reference to title 18, the Justice Department has noted that nothing in that chapter specifically requires

or authorizes the Attorney General to establish guidelines or procedures for one-party consensual monitoring. Currently, there are no

such procedures and, as a result, the bill may not provide a currently operative law enforcement exception.

Furthermore, the specific enumeration of crimes in chapter 119

raise the question of whether proceedings relating to crimes can

qualify under the law enforcement exception.

Under the bill's existing language, some very basic and necessary

procedures are potentially jeopardized. The following are a few examples:
26

EMPLOYEE SAFETY

An employee is assigned an investigation audit involving a

known tax protestor. There is reason to believe that the employee's

safety will be jeopardized. To protect the employee, monitored telephone calls will be made to the taxpayer.

TITLE 26, SECTION 7214(A) (2) CRIMES

This section of the IRC enumerates crimes by IRS employees

such as extortion, conspiracy, fraud, false statements, failure to

report, and acceptance of gratuities. Since title 26 crimes are not

mentioned in title 18, chapter 119•section 2510, et cetera•the use

of monitored telephone calls as an investigative technique may not

be allowable, for example, a taxpayer alleges that an IRS employee

has made a false statement in a report. A monitored telephone call

between the taxpayer and the IRS employee will be made to substantiate the taxpayer's allegations.

IMPERSONATION OF AN IRS EMPLOYEE

Unscrupulous individuals and confidence men will impersonate

IRS employees for fraudulent purposes. Monitored telephone calls

will be used to gather evidence. Since title 18, section 972•impersonation•is not mentioned in chapter 119 of title 18, it is questionable whether this investigative technique would be allowable.

The service has a series of problems with the proposed limitations on the recording and listening-in or telephone conversations.

We believe that the limited use of recording and listening adds

significantly to the efficiency with which the service can perform

its goals.

The example I have provided may be only the tip of the iceberg

of those monitoring programs that may be prohibited under 4620.

Before any restrictive legislation is enacted, further study of the

extent of the problem and the scope of any solution should be undertaken.

In particular, it would be worthwhile to attempt to determine

whether existing agency safeguards are adequate to address the

problem.

We will submit for the record a series of policy statements adopted by the Service regarding our monitoring procedures. A number

of these adopt the safeguards of H.R. 4620.

We believe that mechanisms such as these effectively protect the

individual's right to freedom from government intrusion into private communications. My associates and I would be happy to

answer any questions you may have.

[The materials identified in the following list were retained in

the subcommittee files. The views of the Department of the Treasury, letter dated June 1, 1984, follow:]
27

POLICY STATEMENT AND INTERNAL REVENUE MANUAL MATERIALS

GOVERNING QUALITY REVIEW TELEPHONE MONITORING

(1) Policy Statement P-l-44 • Monitoring of Taxpayer Service,

Collection Office Function, and Service Center Collection

Function Telephone Conversations.

(2) Internal Revenue Manual Handbook 6541, Chapter 410 --

Monitoring

(3) Internal Revenue Manual Handbook 6542, Chapter 120 •

Ban on Recording Taxpayer Identification During Phone

Monitoring

(4) Internal Revenue Manual Handbook 6560, Chapter 250 --

Telephone Service Quality Review

(5) Internal Revenue Manual 5187 and Exhibit 5100-27 --

Monitoring Telephone Calls

(6) Internal Revenue Manual 5(19)12, Chapter 500 --

Telephone Monitoring in ACS (Automated Collection System)
28

DEPARTMENT OF THE TREASURY

WASHINGTON. D.C. 20220

ASSISTANT SCCHETARY

JUN -11984

Dear Mr. Chairman:

The Department of Treasury wishes to submit its views

on H.R. 4620, the "Federal Telecommunications Privacy Act of

1984". In general the bill prohibits Federal officers and

employees from causing or permitting the recording of or

listening in on conversations conducted on the Federal or

other telecommunications systems, with some exceptions. The

Department strongly opposes H.R. 4620 because we do not

think that legislation is needed in this area and, even if a

need did exist, we doubt that this bill can be amended to

remedy our significant reservations.

Our initial concerns relate to the scope of the

restrictions, which do not differentiate between recording

and listening in where effected through a mechanical or

electronic instrumentality, on the one hand, and through

stenographic recording or listening in where a speaker phone

is used, on the other. The bill makes the latter type of

recording or eavesdropping criminally punishable. We

believe this is harsh and beyond the scope of activity which

legislation should limit. In addition, H.R. 4620 gives the

GSA new authority over matters peculiar to each agency's

mission and expertise which would be better left to the

agency.

Section 113(g) provides fine and imprisonment sanctions

for violations of the bill. There are no corresponding provisions for civil penalties even though the preceding

subsections require GSA to take steps to obtain agency

compliance. Thus, while there appear to be administrative

duties required, there are no procedures for ensuring

administrative compliance with those duties, and the

criminal penalties theoretically encompass any failure of

compliance under the bill.

Further, there is no requirement that a person have

knowingly violated the bill's provisions for the criminal

penalties to be imposed. For example, if an agency employee

failed to document or improperly documented a telecommunications device which permitted another agency employee to

monitor a conversation, both employees could be charged with
violations. However, the official who failed to document

the device might be administratively sanctioned, and the

employee who actually monitored could be subject

to criminal penalties, even if he were unaware of the first

employee's administrative failure and believed his conversation to be legal.

Similarly, a secretary who walked into an office where

a speaker phone conversation was underway, and inadvertently

overheard a conversation, might be subject to criminal prosecution. While an extreme example, this highlights our

problems with the bill's poorly drafted criminal sanctions

which have no requirement that action have been taken

knowingly, nor that the illegal listening in have damaged

the government or any individual.

Section 113(c)(1) (relating to monitoring with the

consent of one party) establishes conditions on law

enforcement monitoring which rely on "Attorney General

guidelines for the administration of the Omnibus Control

and Safe Streets Act of 1968". First, there are no Attorney

General guidelines for the administration of that Act,

raising the question of whether the law enforcement

exception is operative at all. Second, the Attorney

General's procedures for telephone monitoring require agency

heads to adopt rules for their agencies, but do not

promulgate government-wide rules. In addition, as presently

worded, the law enforcement exemption contained in this

section may be read so as to preclude adequate coverage of

all necessary law enforcement activities, some of which are

not directed towards criminal activity.

Section 113(c)(5) of the bill excepts from the general

prohibition, monitoring with the consent of one party for

public safety needs. The section would, however, require

such monitoring to be documented by written determination of

the agency head or his designee citing the particular need

and identifying the segment of the public needing protection

and citing examples of the danger. These requirements may

actually delay or hinder public safety measures already in

place under strict safeguards in this agency.

The exemption in Section 113(c)(7) of the bill for

service monitoring would also cause problems. The bill does

not make clear whether this exemption includes monitoring

for purposes other than ensuring the proper functioning of

telephone equipment. The Treasury would prefer a specific

exemption for monitoring to evaluate employee telephone

performance and to identify other personnel-related

problems. Such monitoring should also be controlled by the
30

treasury, which is familiar with its particular agency needs

and procedures.

Under 113(d), monitoring and listening in would be

permitted with the consent of all parties. However, this

monitoring would be controlled by GSA, removing agency

discretion even in the most routine administrative situations, such as speaker phones, telephone conference calls

and the like.

Finally, because the Internal Revenue Service has its

own serious concerns with the bill, I am enclosing their

separate comments, which have been endorsed by the

Commissioner of Internal Revenue, Roscoe Egger.

In sum, while the Treasury recognizes Congress' concerns with potential abuse of telecommunication systems, we

believe these concerns are not properly addressed by this

legislation. We believe that potential abuses can be more

effectively addressed administratively by individual

agencies, rather than by government-wide legislation.

The Office of Management and Budget has advised that

there is no objection from the standpoint of the

Administration's program to the submission of this report to

your committee.

Sincerely,

/

bhn M. Nalker, Jr.

Assistant Secretary

(Enforcement and Operations)

The Honorable

William Ford, Chairman

Committee of Post Office

and Civil Service

House of Representatives

Washington, D.C. 20515

Enclosure
31

Internal Revenue Service Comments

Federal Telecommunication Privacy Act of 1984

Enactment of H.R. 4620, Federal Telecommunications

Privacy Act of 1984, would endanger valuable practices and

procedures that have already been designed to protect

taxpayers. In particular, the bill raises the following

specific problems:

Law Enforcement Purposes Exception

New proposed section 113(c)(1) fails to provide an

adequate law enforcement exception. The bill's exception

for law enforcement purposes reads as follows:

"The recording or listening in is performed

for law enforcement purposes in accordance with

procedures established by the agency head, as

required by the Attorney General's guidelines for

the administration of the Omnibus Crime Control

and Safe Streets Act of 1968, and in accordance

with procedures established by the Attorney

General."

Despite the statute's reference to the requirements of

the 1968 Act, the Justice Department contends that nothing

in the Act specifically requires or authorizes the Attorney

General to establish guidelines or procedures for one-party

consensual monitoring. Currently, there are no such

procedures and as a result the bill may not provide a

currently operative law enforcement exception.

In addition, there is the definitional question of what

is a "law enforcement purpose". Law enforcement purposes

may not include civil enforcement proceedings.

Consequently, the sophisticated collection programs which

involve recording taxpayer commitments would be prohibited.

This problem is not limited to the Service. Due to the

experience that the IRS has in being a creditor, a large

number of Federal agencies look to us for expertise in
32

collection matters. The Service is constantly upgrading

practices to provide efficient collection of delinquent

accounts. As we move toward the most sophisticated

collection techniques in the coming "paperless age", we have

found that recording taxpayer commitments to pay delinquent

accounts has been an effective tool. Other agencies have

expressed interest in our collection programs.

Also, we believe that there is a definitional problem

with the word "recording". The legislation might prohibit

stenographic recording or even note taking • such a

construction would lead to absurd results. For example, we

could take a telephone complaint from a taxpayer but could

not write down his name.

Service Monitoring Exception

In proposed Section 113(c)(7) the bill would provide an

exception if:

"The recording or listening in is performed

by any Federal agency for service monitoring but

only after analysis of alternatives and a

determination by the agency head or the agency

head's designee that monitoring is required to

effectively perform the agency mission. Strict

controls shall be established and adhered to for

this type of monitoring."

Even if this exception permitted monitoring similar to

that now done in Taxpayer Service and Collection, which is

not at all clear, the bill provides a set of controls and

hurdles in Section 113(e) that significantly complicate

administration of the program. An inadvertent failure could

jeopardize the whole program.

Disclosure Problems

In new Section 113(f), the proposed legislation would

provide GSA with access to monitored information. Since

this information may be "return information" under Section

6103 of the Internal Revenue Code, such access should not be

permitted.

Conclusion

The enactment of H.R. 4620 would prohibit the use of

monitoring for civil enforcement proceedings. The bill's

exception for law enforcement proceedings is insufficiently

defined. While there is an exception for taxpayer

service-type monitoring, that exception is complex and

-unwieldy. The statute also poses problems with section 6103

of the Internal Revenue Code concerning disclosure of

returns and return information. In sum, the statute would

endanger valuable practices and procedures that have already

been designed to protect taxpayers.
Mr. ALBOSTA. Thank you very much for your testimony, Mr.

Coates.

I know that the monitoring by IRS is not intended to catch tax

evaders, but I would like to know if the IRS warns every person

who calls for taxpayer advice that what they say is being monitored and it may also be used against them even if not monitored

by a third party?

Mr. COATES. Mr. Chairman, when we receive calls from taxpayers, we don't inquire as to their name or their identity, and we receive thousands and millions of calls in the course of a year. They

are not informed that the call may be monitored. I will check with

Mr. Alt to confirm this, but we do not identify the taxpayer. We do

not have any need to know who the taxpayer is that s calling, because they're simply calling for information.

Our employees on the receiving end are well aware that the conversation may be monitored, and our phones are appropriately labeled that are used for telephone taxpayer assistance.

Mr. Alt may have some further comment.

Mr. ALT. We also mention in the tax package that the calls may

be monitored, and in any publicity that we give out. It's a known

fact that we do monitor a certain number of calls.

Mr. OILMAN. Would the gentleman yield. In addition to that,

when a caller calls in, do you also remind him of that?

Mr. ALT. NO, we don't.

Mr. COATES. They're reminded in the tax package and are aware

of it; but the fact that they do not have to identify themselves,

there is no specific

Mr. CRANE. Would the gentleman yield for one moment on that,

please.

You mentioned that you monitor for the determination of accuracy of information. Is that strictly the accuracy of information

from your end, or are you determining the accuracy of information

of the individual calling?

Mr. COATES. NO, Mr. Crane. The accuracy of the information that

we are providing the taxpayer who is calling for information with a

specific problem, whether or not our assistors are providing accurate

Mr. CRANE. So in no way are you checking to find out if the

caller has conformed with

Mr. COATES. NO. We don't even know who the caller is when they

call for information. They may pose the usual question of as simple

as "where do I file my return, what are the due dates," or may be

talking about capital gain, a multitude of questions, and our assistors are there to provide those types of answers.

Mr. ALBOSTA. Would it be difficult for you to include in your recording "your statement will be recorded' ? It would take that long,

1 second, 2 seconds.

Mr. COATES. The point is, Mr. Chairman, that the call is not recorded and very few•a small, small percentage•are monitored.

Walter, do you want to go ahead?

Mr. ALBOSTA. Well, we could change the word to "monitored".

Would that be difficult?

Mr. ALT. Well, the only thing, we answer approximately 40 million calls every year. By making a statement of that nature at the
34

outset may raise additional questions which would have to be addressed and just lengthen the call. It is not in our view cost effective.

We feel that the methods that we use are known. We have been

doing it for a number of years, it's a well-known aspect of the service that we provide, and we limit it to a very small number. It's a

valid sampling on a nationwide basis. It's less than one-half of 1

percent of the total number of calls that we get. It's well known.

It's in the tax package, it's in our publicity, it's in any brochures

that we have. We're not hiding the fact.

Mr. COATES. And, Mr. Chairman, the employee is aware of the

monitoring.

Mr. ALT. Yes. The phones are labeled and the employees are

aware.

Mr. ALBOSTA. I'm troubled by the letter from the Department

that you monitor calls in order to see if there are personal problems. Your letter said that. This is a very dangerous practice. Why,

if it doesn't mean anything, do you say in your letter that you

monitor these calls to see if there's personal problems?

Mr. COATES. That's personnel.

Mr. ALBOSTA. Personnel problems. OK.

Mr. COATES. Well, in monitoring the call to see if there are personnel problems, that would be a very remote situation. In fact, I

can't come up with a specific example that we would monitor for

that.

Mr. ALT. We monitor to validate the accuracy of the answers.

Mr. ALBOSTA. YOU mean the personnel that's answering the telephone?

Mr. ALT. The accuracy of answering the question.

Mr. ALBOSTA. Of the taxpayer?

Mr. ALT. Right. Is it an accurate answer or a correct answer.

Then if we get a trend, we can highlight the error in training or

what have you.

Mr. COATES. We just want to be absolutely sure.

Mr. ALBOSTA. How many millions of these calls did you say you

receive?

Mr. ALT. We receive approximately 40 million. In 1983, we answered approximately 39.8 million calls.

Mr. ALBOSTA. HOW many of those do you check for personnel

problems?

Mr. ALT. Not personnel problems. Again, Mr. Chairman, on a nationwide basis in 1983, we monitored approximately 73,000 calls.

It's a statistically valid sample on a nationwide basis.

Mr. COATES. We would, Mr. Chairman, be interested in if an employee is consistently giving improper information, consistently not

providing correct information in dealing with the taxpayer. It

would be a personnel problem and, obviously, we would want to

know.

Mr. ALBOSTA. Does your employee know that you are doing this?

Mr. COATES. Absolutely. And the phones that they are using are

clearly labeled, indicating that this phone may be monitored.

Mr. CRANE. YOU mentioned your 40 million, and then you get

down to 73,000. I think, as the chairman mentioned earlier, what

would be the problem with just making a brief statement that
35

we're recording 73,000 and just initially get it over with, because I

feel that those that you're monitoring, it would be worthwhile to

notify the individual at the other end because•and I want to ask

you this specific question: What if the individual at the other end

gives their name, address, or whatever, and you haven't even notified them that they're being monitored, or you do know the identity of that taxpayer that you're taping or monitoring or whatever

you want to call it?

Mr. ALT. NO; because the calls are selected on a random basis.

The individual at that particular time is unaware that they're

being monitored. The monitoring is done on a random sampling

basis.

If the monitor does record any identifying information which

may come about if it's a tax account question, we have the rules in

the manual that after they validate the response•which may have

to be looked up on the computer or what have you, that the identifying information is destroyed within 24 hours.

Mr. CRANE. Have you ever monitored any telephone call for any

other reason other than a random basis?

Mr. ALT. Not to my knowledge.

Mr. CoATES. That would violate our own internal rules and regulations, Mr. Crane, and would not be done.

Mr. CRANE. So what you're saying is you have never done that.

Mr. COATES. In that we're speaking now in the context of the taxpayer service programs of calls being received from taxpayers, the

monitoring is simply to determine the quality and accuracy and

the tone and cordiality, the whole management that we would be

interested in in a program of that kind.

Mr. CRANE. What if you got information on one of your personnel that you thought was more likely than another to be making

mistakes, do you go monitor that individual?

You're mentioning randomly selecting anybody, but if somebody

came in and say "hey, I think Joe Smith here is making a heck of

a lot of mistakes, not giving proper information," do you monitor

that individual?

Mr. ALT. The manager of that individual may monitor that individual to try to help that individual, to more or less give that individual specific training in the areas where they may be the weakest.

Mr. CRANE. So what you're saying is that that individual is not

randomly selected.

Mr. ALT. That may not be in the case of a manager monitoring.

Mr. ALBOSTA. I'd like to read from page 2 of your written statement•the letter of June 1. It's page 2, last paragraph, the sentence that starts with "The Treasury would prefer specific exemption for monitoring to evaluate employee telephone performance

and to identify other personnel-related problems".

Would you think that in our legislation that we would be able to

find some way of being able to permit or allow you to do that

under the legislation?

Mr. COATES. It's possible, Mr. Chairman, that you could draft legislation that could cover that point.

Mr. ALBOSTA. Would you, for the purpose of the record, for the

committee's help, provide us with what you think would be proper
36

language to be able to relate to the personnel problems but not to

the taxpayer, if there's a way that you could do that?

Mr. COATES. We would be happy to. We will try, yes, sir. That

would come, I think, primarily, Mr. Chairman, in our automated

collection area and taxpayer service.

Bill, do you have some thoughts on that?

Mr. WAUBEN. I think it would be very easy to do. We're primarily interested in the automated collection system to ascertain how

our employees are effectively dealing with that taxpayer. The taxpayer problems are, of course, pulled into that, but we're not primarily interested in the taxpayer's problems, per se, during that

type of monitorning.

Mr. ALBOSTA. Well, if you would be able to give us that so that

we would still be able to protect the employees' rights with this.

We do not want language that would violate the civil service employees' rights. Obviously, that would be your intent also.

Does the gentleman from New York have questions?

Mr. GILMAN. Thank you, Mr. Chairman.

Apparently your major concerns is monitoring of the quality of

the work that you perform in your own office. It would seem to me

we ought to be able to provide some language in this kind of a bill

to protect that situation that as long as it is not for a use in any

investigatory manner. Then with regard to any of the criminal aspects, I think the general provisions certainly can be provided to

take care of any criminal investigation.

Aside from monitoring in your criminal responsibilities, are

there any other concerns either of you would have about a measure

of this nature if we were able to evolve language to protect your

quality observations of the workplace and included an exemption

for any of your criminal investigation violation of the law? Would

you have any other concern about this legislation?

Mr. COATES. I guess, Mr. Gilman, my answer would be like this:

We would be very concerned in law enforcement areas. We spelled

that out, as well as did the Department of Justice. In the other

area, we just don't know how many specific situations might be

identified that would be involved.

As I pointed out, maybe the three, four, or five examples we

mentioned might be the tip of the iceberg. We just haven't had

time to sit down and study completely what all would be involved.

Mr. GILMAN. Well, we're certainly not marking up the measure

today, and that is the purpose of these hearings, to give you an opportunity to take a look at it, and we hope you would take a look

at it, and if you have some constructive suggestions, we would welcome it as we consider the legislation. Or if there is something that

is very serious about the impact of a measure of this nature, then

let us know. Now is your time to be heard. We're not saying to do

it today, you certainly have some time to look this over.

Mr. COATES. All right, sir.

Mr. ALBOSTA. I think the gentleman's suggestion is very well

taken by this chairman. We would hope you would look over all

the present laws and see if you don't have the leeway to do your

criminal investigative work, or whatever other activities now are

permitted under the law to make sure that your agency operates

and functions properly. So if you could, check out all those areas
37

and come back to the committee with a statement as soon as is possible.

As the gentleman from New York says, we're not marking up

this bill today or tomorrow or next week. We hope to be able to

continue hearings on this bill. It's something that's been around,

and we share this responsibility with several other committees and

we would hope that, because there is an apparent need at least for

some type of legislation, that we could get the legislation into its

proper form so it would not damage any agency s operation and

still would give us the kind of protection for the taxpayers in your

case and other people that might use telecommunications or any of

our communicating systems to know that if we are going to monitor them that we're not going to be a Nation that operates somewhat like the Soviet Union where no one knows what's going on

except the Government itself. We're trying to perfect those rights,

yet we do not want to interfere in any way with security interests,

defense interests, or criminal types of investigations.

Mr. COATES. I would hasten to point out, Mr. Chairman, that all

of our rules, regulations, policy statements, and guidelines are published in our manuals, in our directive, and are all public information. So anything that we are doing is well known, not only to our

employees, but to the public in general. If they want to take the

time, and have the interest to look, there is nothing that isn't published and that isn't available for anybody that wants to see it.

And we feel that our regulations, rules, guidelines, and policy

statements are completely accurate in dealing with the situation in

protecting the taxpayers' privacy and our employees.

Mr. ALBOSTA. I would probably venture to say and not be too inaccurate that most taxpayers do not read all the rules that pertain

to the Internal Revenue Service.

We don't want conversations of unsuspecting taxpayers being

monitored, if you will, without their knowledge. And most of them

are well-intentioned, are not trying to beat the Government out of

their taxes. The information that they would want in most cases

would be information that would help them. And I think that service is a valuable service to the taxpayers, by the way. And I, as a

Member of Congress, have supported the idea that we continue to

have these people available in the IRS for information to the individual taxpayer, but, at the same time, I'm troubled by the fact

that it's possible for their conversations to be monitored without

their knowledge.

I appreciate your being here this morning.

Mr. CRANE. If the gentleman would yield.

Mr. ALBOSTA. The gentleman from Illinois.

Mr. CRANE. I have just one or two more questions, Mr. Chairman. You mentioned in your statement on page 2 that the Internal

Revenue Service listens in to and records a limited number of communications for a number of different reasons.

Can you give me some more of your reasons why you monitor

your own personnel?

Mr. COATES. Primarily I can cite, Mr. Crane, some specific examples. Again, the telephone answering device that we use for forms.

A taxpayer calls in and asks for forms. That isn't actual monitor-
38

ing, but we do record the information and the taxpayer's name and

address.

In the taxpayer service area, we monitor telephone calls coming

in requesting taxpayer service. Another very important one is the

Automated Collection System in which our data on delinquent accounts is stored in the computer, and the computer actually makes

the phone call. We are, in that instance, initiating the phone call,

and it's very important in one like that, that the taxpayer•well,

an integral part of the system is a record of the taxpayer's identity.

We're actually calling about a delinquent account. Now, there's no

paper at all in that operation. An employee who is talking to the

taxpayer is addressing a computer screen with a keyboard and the

information is recorded•it's put into the computer.

It's almost on the cutting edge on the technology in terms of collection of delinquent accounts. We fear that this legislation might

create a problem for us in that particular collection technique.

Bill?

Mr. WAUBEN. We have a number of small offices that are not

manned all day during the normal work hours and we will put a

recording device there hooked up to the phone, so if the taxpayer

calls in looking for someone answering the phone, they will get a

recording that they will be back at 3 o'clock, if you care to call

back then, or leave your name and number and we will call you

back.

Mr. CRANE. YOU mentioned your computer system when you're

initiating the phone call. Then you're not notifying the individual,

that taxpayer, that you're recording. Is that correct?

Mr. COATES. We do not notify the taxpayer that we're recording.

Actually what we are doing, we are recording any information we

receive from the taxpayer on the so-called history sheet of the taxpayer who owes the delinquent tax. In the past, that recording may

have been by pencil and paper; today, it's by keyboard and goes

into the computer where the taxpayer's account is displayed. But

in terms of notifying the taxpayer that that's the procedure that

we're using in recording the information we're getting, no, sir.

Mr. CRANE. DO you, or have you ever taped a taxpayer when you

initiate the phone call with some area other than the computer

system?

Mr. COATES. John, go ahead.

Mr. RANKIN. Well, in an instance where a tax examiner or a revenue agent or revenue officer may be assigned a civil enforcement

matter regarding an illegal tax protester or someone else that has

made threats or where we have reason to believe that person may

make threats, it may not be a criminal investigation at that

point•it's still a civil matter.

Mr. CRANE. What do you mean "threats"?

Mr. RANKIN. Threats with regard to the employee's safety. It is

mentioned on page 8 as an example, but that's a situation where it

may be determined that it's necessary to monitor a telephone conversation to protect that employee's safety in recording that

threats were made. Those are very difficult cases to prosecute without having a direct recording of the threat, because if it's not recorded, then you have one person's word against another.
39

Mr. CRANE. But you're not notifying the other individual that

he's being taped?

Mr. COATES. No; it's one individual, the party that is called, is

aware of it, it's a one-party. We could cite several examples, Mr.

Crane, along those lines in terms of an alleged employee bribe, that

the telephone again would be used to verify that type of thing, and

some of those examples are cited in my statement. But again,

that's consensual, or one-party approval, one party knows that the

recording is taking place.

Mr. CRANE. NO further questions. Thank you.

Mr. OILMAN. Just one other question.

I was looking ahead at some of the proposed testimony by the

National Treasury Employees Union, and while they recognize the

need to monitor the service aspects, they are concerned about the

privacy aspects. They are concerned about the atmosphere, and

they make a statement that Service monitoring may be a genuine

activity, but there is an increasing necessity to safeguard their protection from abusive authority. Without such safeguards they fear

the result of providing service monitoring authority would soon

lead to employees and perhaps the innocent members of the public

to suffer a chilling effect of working in a think-speak environment.

Do you want to make any comment with regard to that situation?

I assume now you are monitoring employee internal conversations within your own agency with regard to work of the employees.

Mr. COATES. With regard to the Automated Collection System,

that

Mr. GILMAN. Well, beyond the Automated Collection System.

Mr. COATES. And the taxpayer service.

Mr. GILMAN. You're monitoring for service purposes, but I

assume you're also monitoring whether there's any violation by

any of your employees from time to time. Is that correct?

Mr. COATES. We would be monitoring again for accuracy in terms

of tone, cordiality and that type of thing.

Mr. GILMAN. What about beyond quality? Do you monitor occasionally to see if

Mr. COATES. For performance?

Mr. GILMAN. Yes.

Mr. COATES. Yes, for performance, particually in ACS. And to my

understanding, Bill, that has been a negotiated

Mr. WAUBEN. Negotiated agreement with MT on that.

Mr. GILMAN. DO you think this should be subject then to collective bargaining to discuss the guidelines for any internal monitoring of employees?

Mr. COATES. Well, we have recently with the Automated Collection System, which is a new system. We did negotiate with the National Treasury

Mr. GILMAN. I'm not talking now about the Automated Collection System. I'm talking about internal monitoring of an employee's manner of performance, whether he's performing something

properly or illegally.

Mr. CRANE. What about a bribe?
40

Mr. GILMAN. And potentially of any crime. Should the employee

be placed on notice?

Mr. COATES. Let me see if I can set the bribe situation that

you're speaking of.

Ordinarly when there's an overture or an offer of a bribe, our

employee comes and reports that to his supervisor. Really, he reports it to our inspection service, and the inspection service does

the investigating, but that employee is well aware that if there is a

phone call made from that employee back to the taxpayer or to the

practitioner who makes that overture, the employee is aware of it.

Mr. CRANE. What if the employee is working within the bribe

and doesn't come and notify you, do you then go through a taping

process?

Mr. COATES. If the employee doesn't come forward and notifyMr. CRANE. Assuming the employee has been bribed and is

taking a bribe, what do you do then?

Mr. RANKIN. If we have an allegation and there is a subsequent

conversation between the bribor and the employee and the employee does not consent, then you have an interception that comes

under title III of the Omnibus Crime Control Act. Title 26 violations were not included under that act, and thus•well, we don't do

that type of nonconsensual monitoring.

Mr. GILMAN. YOU don't do nonconsensual monitoring of an employee performance?

Mr. RANKIN. Well, now, you're talking about two different

things, employee performance versus the criminal.

Mr. GILMAN. Let's assume that there's no allegation of a crime.

Do you do any nonconsensual taping or monitoring of internal affairs?

Mr. COATES. With respect to an employee's performance, outside

the area we've talked about, I'm not aware of any, Mr. Gilman.

Mr. RANKIN. I'm with criminal investigation, I'm not with inspection.

Mr. COATES. Again, getting back to the specific example that Mr.

Alt raised that occasionally a supervisor might, if an employee had

been identified as not really measuring up, that there might be

some monitoring.

Mr. GILMAN. YOU do that kind of monitoring?

Mr. COATES. Walt, am I correct in making that statement?

Mr. ALT. That's part of the manager's responsibility, if there is

that problem, to see if there is a way to help that employee with

training or what have you, they could monitor some of the individual's calls.

Mr. GILMAN. YOU make that actually a responsibility of the manager then?

Mr. ALT. Yes, sir, the manager of the individual.

Mr. WAUBEN. Let me respond further to your question.

I was in one or our collection sites in Philadelphia Tuesday

morning, extensive monitoring is going on in there. I sat in on a

training session there where several managers who had been monitoring telephone calls had gotten about a dozen employees together

and had a list of problems they had been hearing on the phone of

not being responsive to taxpayers' questions, not using proper procedures. And what they did for about 30 minutes was to go through
41

this and say "folks, this is what we're hearing in the monitoring

going on." Most of our monitoring would be aimed at that type of

thing.

There's another telephone conversation I monitored where one of

our employees plainly didn't understand what he was there for. In

talking with the managers, they said they had monitored him

enough and had already identified him and in fact had made a decision to recycle him back through some training to bring his performance up to an acceptable level. That is within the ACS site

itself.

Mr. GILMAN. Are your employees then on notice that they will be

monitored from time to time in all functions that they perform?

Mr. ALT. The phones are actually labeled that this phone may be

monitored.

Mr. GILMAN. All of your phones are labeled?

Mr. ALT. Where we do the monitoring, yes, every one is labeled.

Mr. COATES. Only where the monitoring takes place.

Mr. ALT. Yes, every one is labeled.

Mr. GILMAN. Only where the monitoring is.

Do you monitor in other areas where you don't place them on

notice?

Mr. ALT. NO, not in my division.

Mr. COATES. I'm not aware of any monitoring would take place

where the employee is not aware of it or it's a matter of course

that monitoring takes place.

Mr. GILMAN. Thank you.

Mr. ALBOSTA. Thank you, gentlemen, for being here with us this

morning. We sure appreciate your testimony and look forward to

the answers that we have requested for our guidance. Thank you

very much.

The committee will take a short recess of about 3 minutes.

And our next witness will be Mr. Paul Newton, who is legislative

director of the National Treasury Employees Union.

I ask for unanimous consent before we recess that we enter into

the record a statement by Mr. Jack Brooks, who is chairman of the

Government Operation Committee and shares our convictions on

this legislation with us.

Without objection, Mr. Brooks statement will be entered into the

record.

{The full statement of Hon. Jack Brooks follows:]

STATEMENT OF CONGRESSMAN JACK BROOKS

Mr. Chairman, I want to take this opportunity to present my views to the Subcommittee on Human Resources regarding H.R. 4620, the Federal Telecommunications Privacy Act of 1984, which I authored. These hearings offer a further opportunity to review agency practices in secretly recording private conversations and I

commend your efforts in this area. As you know H.R. 4620 is a result of public disclosures that the Director of the U.S. Information Agency (USIA) established a

system to record his telephone conversations•often without the consent of other

parties.

Subsequently, an investigations undertaken by the Committee on Government Operations found that regulations promulgated by the General Services Administration (GSA) prohibiting this type of activity were being largely ignored by Federal

agencies. Although advised of these regulations, the Director of the USIA publicly

stated that he decided to ignore them since they had no teeth. Clearly, without enforcement provisions, these regulations are not a deterrent against secret recording
42

by Federal officials. Notwithstanding, such activity without the consent of all parties violates the mutual trust and confidentiality implicit in any private conversation. In my view, it is an improper activity and a violation of the ethical standards

expected of all government employees and cannot and should not be condoned.

II.R. 4620 provides a remedy to this problem by making these activities a criminal

offense except under very limited and well defined circumstances. To briefly summarize the bill, it allows the listening-in upon or recording of conversations when

the prior consent of all parties is obtained. It also allows such activity with the consent of one part when conducted for the purposes of law enforcement, counterintelligence, military command center monitoring, counter-terrorism outside the United

States, public safety, assisting handicapped employees and service monitoring.

Federal officials who violate the provisions of this bill would be liable for (1) fines

not exceeding $10,000 and/or imprisonment for not more than one year, and (2) loss

of employment. The bill also makes each recorded conversation a Federal record

and, under current law, any unauthorized removal, destruction, of alteration of a

Federal record is punishable by a fine of up to $2,000, imprisonment of up to three

years, forfeiture of public office and disqualification from holding any further office.

Although hearings were held by Government Operations Committee over three

months ago, I understand some agencies are just now coming forward to criticize

the bill. These agencies are asserting that this legislation is not needed•that they

need more flexibility. Well, I want to point out that this legislation is based upon

the GSA regulations which have been in effect for over three years, since March of

1981. Prior to that, the regulations were subject to close scrutiny by these same

agencies through a lengthy and thorough review process. Further, H.R. 4620 provides the necessary exemption for those legitimate activities that are authorized and

conducted in accordance with applicable law. H.R. 4620 does not, however, in any

way authorize or provide any statutory support for any activity not conducted

within the scope of of current law. Given the assertions that have been made, perhaps a further investigation of these agencies is needed to determine what, if any,

activities are being conducted outside of current law.

Clearly, there is a major distinction between recording conversations for law enforcement and other established purposes and the recording of conversations by Federal officials for their own use or for unauthorized illegal activities. In this regard, I

firmly believe that H.R. 4620 provides the necessary strong measures to ensure that

Federal officials do not resort to the abusive practice of secretly recording telephone

conversations.

Mr. ALBOSTA. Our next witness is Mr. Paul Newton, legislative

director for the National Treasury Employees Union.

Mr. Newton, we will be glad to hear your testimony this morning. You can read your full text, or you can summarize your testimony.

STATEMENT OF PAUL NEWTON, LEGISLATIVE DIRECTOR,

NATIONAL TREASURY EMPLOYEES UNION

Mr. NEWTON. Thank you, Mr. Chairman.

I will highlight my brief statement in the interest of time, and

just really carry on the discussion of the previous witnesses in

terms of our concerns regarding service monitoring.

For the record, I am Paul Newton, director of legislation from

the National Treasury Employees Union.

NTEU is the exclusive representative of over 120,000 Federal employees, including all the employees of the Internal Revenue Service.

It is a pleasure to appear before you today to discuss H.R. 4620.

The NTEU strongly supports the enactment of H.R. 4620, and we

generally agree with the Committee on Government Operations,

that the listening in upon and recording of private conversations is

improper and a violation of ethical standards normally expected of

all Government employees.
43

We do have some concerns with certain provisions of the bill that

relate to the work environment and the protection of employees

from abuse.

While the emphasis of the bill is on law enforcement and intelligence activities, we are particularly concerned with a seemingly innocuous exemption for Service monitoring.

Without adequate controls and enforcement mechanisms, the

monitoring of employees' telephone conversations for whatever

purpose could lead to abuse.

The bill allows Service monitoring after an agency head or designee analyzes alternatives, determines in writing that such monitoring is required to effectively perform the agency mission, designates monitors in writing, and issues minimum written policies for

monitors to follow.

We believe there is a legitimate purpose for Service monitoring;

and, indeed, reference was made by the earlier witness that in our

negotiated contract with the Revenue Service, it is part of our negotiated contract in terms of monitoring the employees in the taxpayer service and, indeed, specific terms in our contract on the

automated collection systems.

Our concerns in enacting this legislation goes to the basic law

that would be enacted and fully protecting the employees from potential and possible abuse, though we are saying that it has been

abused in the past.

We believe there is legitimate purpose for Service monitoring.

Such Service monitoring is adequately described in a note in House

Report 98-815, part 1: "An agency monitors telephone conversations to ensure information provided to the public by its employees

is accurate and given in a polite and cordial manner."

Now, our concern that this legitimate purpose be adequately

safeguarded is highlighted by the comment of the Department of

the Treasury on this particular section of the bill where they state:

The Treasury would prefer a specific exemption for monitoring to evaluate employee telephone performance, and to identify other personnel-related problems.

Now, the not-so-subtle distinction is the preference to monitor

employees, to evaluate performance and to identify other personnel-related problems and not just to monitor service as described by

the House report.

Though we agree with the Service-monitoring requirements of

the bill, we recommend that they be more inclusive by requiring a

notice in writing to each employee whose telephone conversations

may be subject to monitoring, and that the agency's written policies, as proposed in the legislation for Service monitoring, be subject to collective bargaining.

Finally, we are concerned that the bill only provides for criminal

penalties for violations of the prohibitions. Because of our concern

over protections for employees who could be harmed by violations,

we urge the subcommittee to consider specific authority to sue for

monitor and equitable relief in a civil action which is similar to

remedies available under the Privacy Act.

That concludes my testimony, Mr. Chairman. I would be happy

to answer any questions you may have.

[The full statement of Paul Newton follows:]
44

STATEMENT OF PAUL NEWTON

Mr. Chairman and members of the subcommittee, I am Mr. Paul W. Newton, Director of Legislation of the National Treasury Employees Union. NTEU is the exclusive representative of over 120,000 Federal employees, including virtually all employees of the Internal Revenue Service. It is a pleasure to appear before you today

to discuss H.R. 4620, a bill to prohibit the recording of conversations made on the

Federal telecommunications system and for other purposes.

H.R. 4620 would amend the Federal Property, and Administrative Service Act of

1949 by adding a new section to Title I that would prohibit the listening-in upon or

the recording of telephone conversations by Federal officers and employees without

the consent of all parties. The bill does, however, allow for the listening-in upon or

recording of telephone conversations with the consent of only one party when it is

conducted for the purposes of, interalia, assisting handicapped employees and "service monitoring." In allowing these activities, the bill requires strict administrative

an procedural requirements for agencies to follow when the consent of only one

party to the conversation has been given. Finally, H.R. 4620 provides that any Federal officer or employee who violates the prohibition shall be fined not more than

$10,000 or imprisoned for more than one year, or both, and shall forfeit employment

with the United States.

Mr. Chairman, the NTEU strongly supports the enactment of H.R. 4620 (yet at

the same time, it is a sad commentary on the integrity of government officials that

this legislation must be considered at all). We agree with the Committee on Government Operations that the listening-in upon or recording of private conversation is

improper and a violation of ethical standards normally expected of all government

employees.

We do have some concerns with certain provisions of the bill that relate to the

work environment and protection of employees from abuse. While the emphasis of

the bill is on law enforcement and intelligence activities, we are particularly concerned with the seemingly innocuous exemption for "service monitoring". Without

adequate controls and enforcement mechanisms the monitoring of employee telephone conversations for whatever purpose could lead to abuse. The bill allows "service monitoring" after an Agency head (or designee) (1) analyzes alternatives; (2) determines in writing that such monitoring is required to effectively perform the

agency mission; (3) designates monitors in writing, and; (4) issues minimum written

policies for monitors to follow.

We believe there is a legitimate purpose for "service monitoring". Such service

monitoring was adequately described in a note in House Report 98-815, Part 1 as

". . . when an agency monitors telephone conversations to ensure information provided to the public by its employees is accurate and given in a polite and cordial

manner." Our concern that this legitimate purpose be adequately safeguarded is

highlighted by the comment of the Department of the Treasury on this particular

section of the bill where they state: "The Treasury would prefer a specific exemption for monitoring to evaluate employee telephone performance and identify other

personnel-related porblems." (emphasis added) The not so subtle distinction is the

preference to monitor employees to evaluate performance and to identify other personnel related problems and not just to monitor service as described in House Report

98-815, Part 1.

Though we agree with the service monitoring requirements of the bill, we recommend that they be more inclusive by requiring a notice in writing to each employee

whose telephone conversation may be subject to monitoring and that the agency's

written policies for service monitoring be subject to collective bargaining.

Finally, we are concerned that the bill only provides for criminal penalties for a

violation of the prohibitions. Because of our concern over protections for employees

who could be harmed by violations, we urge the Subcommittee to consider specific

authority to sue for monetary and equitable relief in a civil action similar to remedies available under the Privacy Act.

In summary, let me conclude by saying that "service monitoring" may be a legitimate activity but there is an increasing necessity for safeguards and protection from

abuse of authority. Without such safeguards I'm afraid the result of providing service monitoring authority could soon lead to employees, and perhaps the innocent

members of the public, suffering the chilling effect of working in a "thinkspeak"

environment.

Mr. Chairman, this concludes my testimony. I would be happy to answer any

questions.

Mr. ALBOSTA. Thank you very much, Mr. Newton.
45

You indicated that you favor remedies such as those provided in

the Priva . • Act.

Does that mean you would oppose other approaches to try to

reach the same end?

Mr. NEWTON. NO, we would not oppose other approaches. There

may be, in terms of investigatory matters and the end result in an

investigation, administrative procedures where an employee believing they have been harmed by a monitoring of their telephone conversation filed a complaint or a grievance that followed the normal

administrative grievance procedures, either an agency's grievance

procedures or a negotiated grievance procedures or going before

the Merit System Protection Board, we would not oppose administrative remedies.

Mr. ALBOSTA. Thank you very much. Do any members have any

questions?

Mr. CRANE. I'd like to ask one question.

You were concerned over the fact that it might lead to abuse?

Mr. NEWTON. Yes.

Mr. CRANE. And I think you went on to say that you did not

know of any abuses that had taken place. Is that correct?

Mr. NEWTON. Yes.

Mr. CRANE. SO to this point you feel that no abuses have taken

place?

Mr. NEWTON. That's correct.

The taxpayer service monitoring that is going on now, there is

approximately 4 percent of the telephone conversations that are

being monitored. We know of no abuses of that monitoring.

Our testimony is, when you are framing a statute you want to

cover all of the bases in terms of the potential for abuse. We are

not alleging there are abuses that have occurred.

Mr. CRANE. I think you made mention you had some concern

over the reasons for personal reasons to monitor.

Can you give any specifics or anything of great concern along

those lines?

Mr. NEWTON. From a standpoint that many of the employees in

the taxpayer service are union employees, are members of the bargaining unit and subject to the contract, we would be concerned if

there were monitoring of telephone conversations that related to

union business, where employees having had their telephone conversations monitored would be talking about union business or

something that related to the union that would be used against

them by the agency.

There would be other instances, I believe, of possibly building a

case file on an employee, where they would pay particular attention to a single employee, to monitor that person's phone conversations to build a file. It is that kind of intent and other related personnel problems that we see the potential, as the department has

written, that we think ought to be pre-prescribed.

Mr. ALBOSTA. The gentleman from California, Mr. Bosco.

Mr. Bosco. Thank you, Mr. Chairman.

I have just a couple of questions. I wasn't clear in your testimony

what you thought should be subject to collective bargaining.
46

Mr. NEWTON. Yes; in the bill itself, one of the requirements of

the agency would be to issue written policies, written policies for

the monitors to follow.

There are some minimum requirements; one of which is that the

phone itself be labeled•this is specified in the legislation. We believe that the policies as an agency policy, an agency regulation

that relates to the working environment, working conditions of the

employees, that those policies ought to be subject to collective bargaining, and that the written policies of the agencies be negotiated

as part of our contract as opposed to just an agency regulation that

would be implemented.

It is those agency policies, written policies that monitors have to

follow that we would be, in our testimony, that we would believe

would be subject to those requirements.

Mr. Bosco. So that in the collective-bargaining process you could

decide what telephones were subject to privacy and which ones

weren't and under what circumstances?

Mr. NEWTON. We would be more concerned with the extent to

which employees' performance would be rated based on monitoring. We would be concerned with what constitutes the statistically

valid sample of monitoring in terms of numbers of phone calls to

get a broad scope of all employees and the information that they

were providing.

We would not be so much concerned with the numbers of telephones, that would be a management decision, or the numbers of

monitors that they would have. It would be more the use to which

they make of the monitoring.

Mr. Bosco. Nor would you be concerned with eliminating monitoring altogether, I assume?

Mr. NEWTON. NO, we would not be concerned with that.

Mr. Bosco. Just the nature of how that information is used and

under what circumstances?

Mr. NEWTON. That's right.

Mr. Bosco. Thank you.

Mr. ALBOSTA. I would remind the members that we do have a

vote on the House floor and that we have a 5-minute vote to follow

that and that we have one more witness. Are there any more questions of the gentleman?

Mr. CRANE. May I have one more question?

Mr. ALBOSTA. The gentleman from Illinois.

Mr. CRANE. DO you have any concerns of GSA oversight responsibility to monitor?

Mr. NEWTON. Not to monitor in the sense that where the bill

provides GSA monitoring the agency's program every 2 years.

I would have concerns as far as GSA being the investigative body

of violations of the policies. That does concern us. But not in terms

of GSA having oversight of making sure the agencies are following

the right guidelines.

Mr. CRANE. NO further questions. Thank you.

Mr. ALBOSTA. We thank you, Mr. Newton, for your testimony. We

appreciate it very much.

Mr. NEWTON. Thank you.

Mr. ALBOSTA. We will have our next witness, Dennis Hays, President of American Foreign Service Association.
47

If you could summarize your testimony, I will try to get over to

make my vote.

STATEMENT OF DENNIS HAYS, PRESIDENT, AMERICAN FOREIGN

SERVICE ASSOCIATION

Mr. HAYS. Thank you, Mr. Chairman.

With your permission, I will submit my written statement and

very briefly summarize.

Mr. ALBOSTA. Without objection, your full statement will be entered into the record.

Mr. HAYS. Thank you.

Very quickly, I have a number of things that were brought up

today that I would like to comment on. First is the allegation that

this bill discriminates against Federal employees.

As Mr. Newton said, and certainly as far as the 12,000 men and

women in the Foreign Service are concerned, we support this testimony wholeheartedly. We see this as protection.

Second, I think that there was a lot of, quite frankly, nitpicking

going on by some of the administration witnesses.

The question here is not whether someone is trying to stop legitimate concerns, it's illegitimate concerns that we are worried about.

I don't believe that anyone could characterize the sorts of events

that led up to these hearings as being legitimate, and that's what

we're trying to focus on and prevent.

Third, the existing regulations that GSA has in place that we

have heard so much about, quite frankly do not work. They're not

effective, they did not prevent this sort of action from happening in

the past and they won't prevent them in the future. We feel that

further legislation, such as this bill, is required, is mandatory.

Fourth, there was also an analogy made that this is a breach of

trust, that it's similar to telling a secret to somebody and then

having them tell on you. Well, we reject that, if for no other reason

than that private conversation is deniable, it's reliance on a person's memory.

A tape is something that's very different again; it's there, it's

your voice, it's hard evidence.

For instance, yesterday, I heard Ms. Toensing, if my memory

serves me correct, say that they supported legislation that would

apply only to phone conversations. Today, it seemed to me that she

said that they wanted to extend it past phone conversations. That

may be faulty memory. We will get the transcript and find out. But

that's exactly the point that I'm making, that it's not a question of

memory here, it's a question of something that's there on tape and

it's not deniable.

The last point that I will make is that from our perspective, as

members of the Foreign Service, we feel that the United States has

an initiative; we represent a free and open society based on respect

and trust for our fellowman, and that an operation like this seriously damages us, damages us both with our own people, our own

American citizens, and particularly damages us overseas.

In the last couple of days, we have asked our people overseas to

try to collect news stories or editorials which have played up these

events and how they reflect on the United States as a whole. And,
48

certainly, I'd like an opportunity when we get to that to submit

that for the record.

Mr. ALBOSTA. We would appreciate that, and we would make

those editorials or whatever the articles are a part of the record.

Mr. HAYS. Yes, sir. Thank you.

To sum up, I would say that we feel that the activity that, again,

has led up to this is wrong, is morally wrong, it's ethically wrong.

We feel that it's also very dangerous. It's dangerous to the people

who record it, and it's also dangerous to the people doing the recording, it can tend to corrupt them.

We think it damages us as a Nation and reflects poorly on us as

an open and free society. And lastly, we believe that the committee

should act and this should not be seen as a breach of trust, but as a

violation of law.

Thank you.

[The full statement of Dennis Hays follows:]

STATEMENT OF DENNIS HAYS, PRESIDENT, AMERICAN FOREIGN SERVICE ASSOCIATION

Mr. Chairman, on behalf of the American Foreign Service Association, the professional representative of the career foreign service for 60 years, I am grateful for the

opportunity to appear before you today and present testimony in support of H.R.

4620, a bill to prohibit the recording of conversations made on the Federal Telecommunications System.

The public has every right to expect ethical and lawful behavior on the part of its

elected and appointed officials, and to be assured that violations will be punished by

appropriate means. We have recently witnessed an episode, however, that threatens

the credibility of not just the individuals involved, but the entire nation. We have

learned that Mr. Charles Z. Wick, Director of the United States Information

Agency, regularly recorded telephone conversations over a period of years, in many

cases without informing the taped party. Mr. Wick explains his actions as taken in

the interest of bureaucratic efficiency and historical necessity, but these cannot justify violations of individual privacy.

Mr. Wick took these actions notwithstanding existing General Services Administration regulations prohibiting recording of phone conversations where all of the

parties to the conversation do not give prior consent. According to a GSA report,

Mr. Wick was advised by his staff that his actions were inconsistent with these regulations. Nonetheless, he continued to tape or have secretaries listen in and take

notes on phone conversations. The fact that an individual can knowingly violate regulations and suffer no adverse consequences points to the need for the bill under

consideration.

The reason that Mr. Wick could continue to blatantly violate GSA regulations despite warnings from his staff is that, as Mr. Wick recognized, the regulations have

"no teeth." Unless Congress enacts legislation to make violation of these regulations

punishable, government officials will be able to ignore these prohibitions.

As representatives of the United States Foreign Service, we are particularly sensitive to the effect of Mr. Wick's actions on the way America is perceived overseas.

The men and women of USIA have striven for three decades to create and manage

an information agency that would have international credibility. Mr. Wick presides

over the instrument with which the United States government communicates its

policies to the rest of the world. The image of the United States will of necessity

suffer if we cannot be assured that the highest standards of professionalism and ethical conduct are expected of our elected and appointed officials, and enforced by

laws and regulations•with teeth.

There are circumstances under which recording of telephone conversations by

government employees is legitimate. This bill recognizes these exceptions and provides for recording for law enforcement, counterintelligence, public safety, and other

purposes. In addition, it provides that all parties may agree to tape a conversation.

This might be done in the interest of recordkeeping or historical purposes. Apart

from these legitimate uses of tape recording, there can be no justification for surreptitious or nonconsensual taping.
49

The bill before you provides some deterrent to this unethical and unlawful behavior. Unless the bill is amended to impose criminal sanctions for wilful violation of

its provisions, however, we question the effectiveness of that deterrent.

We would also urge the Committee to examine legislative provisions to compensate individuals whose privacy rights are violated by federal employees acting in

violation of law. A federal employee who is wrongfully taped might well suffer

injury to his personnel record as a result of information gained from taped conversations. That individual should have the express right to exercise administrative recourse such as filing a charge with the Merit Systems Protection Board. He should

be able to have his file cleansed and be made whole for any injury to his employment status arising from the meterial wrongfully placed in his record. Similarly, an

individual should be able to seek civil relief from the United States government

under the Federal Tort Claims Act. Under this procedure, he could obtain monetary

damages to compensate for the violation of his right to privacy. Of course, the individual would bear the burden of proving the extent of damages.

The enactment of H.R. 4620 will assure the public that their elected and appointed officials will be held to the high standards appropriate to their offices. The very

mission of the United States government depends on this assurance, and we urge

this Committee to take favorable action on the bill before it.

Mr. ALBOSTA. If it's of any reassurance to you, Chairman Brooks

of the Government Operations Committee has entered a statement

into the record for this committee and has recommended that we

go forward with this legislation as fast as possible and he supports

it wholeheartedly.

Mr. HAYS. Thank you.

Mr. ALBOSTA. We have no questions.

We thank the witnesses for being here this morning very much.

The committee is adjourned.

[Whereupon, at 11:30 a.m., the committee adjourned.]

[The following statement was received for the record:]

STATEMENT or DAVID S. BURCKMAN, PRESIDENT, SENIOR EXECUTIVES ASSOCIATION

Mr. Chairman, we are pleaded to appear before you today to testify concerning

the proposals set out in H.R. 4620, the Federal Telecommunications Privacy Act of

1984".

We have examined in some depth the provisions of H.R. 4620, and also the positions of the various federal agencies on this bill, including those of the Department

of the Treasury, Central Intelligence Agency, and the Department of Justice.

Many of the objections voiced by the agencies raise very real issues about their

ability to operate under the provisions of the bill. For example, the Internal Revenue Service often uses telephone monitoring of taxpayer assistance calls in order to

ensure that proper information is provided to the public who seek answers to their

tax questions. Each year service is "graded" by many newpapers around the country. Wrong answers are pointedly criticized. It is in the best interest of the government and the public that taxpayers be given correct answers. This kind of monitoring would seem to promote the interest of all parties. Monitoring is also utilized in

the collection function of IRS with the automatic call distribution system. Occasional monitoring of this function helps to ensure that the taxpayer is treated properly.

As written, this bill would prohibit such action.

The purpose of the bill should be to establish civil and criminal penalties against

those who violate current law. We think that such a purpose is laudable. It would

have many effects. If civil and criminal penalties were imposed for improper monitoring and recording by the government, then agencies would clarify exactly what is

proper and improper monitoring or taping of telephone conversations, without consent of all parties. We do not believe that current law is necessarily defic!

ent, but

we do know that many federal employee do not know what that law is.

However, we emphatically believe that individual employees should not be subjected to criminal or civil penalties so long as they are acting within the "scope of

their employment". That term is well known and utilized by the agencies and the

courts in determining, under the Federal Tort Claims Act, when an employee can be

held personally liable.

Monitoring and taping of telephone conversations by the government can be an

invasion of privacy by which citizens and government employees can be substantial-
50

ly harmed. However, there are instances when it is necessary, in order to provide

proper governmental services, or for law enforcement. Those who willfully abuse

the current restrictions in law and regulation should be subjected to some kind of

penalty. However, if a government employee is an inadvertent violator, and he or

she is acting within the scope of their employment, obviously no civil or criminal

penalty should be sought against that employee. If a citizen is harmed by the government employee's mistaken If a citizen is harmed by the government employee's

mistaken action, then a suit could be brought against the government for any damages incurred. If, however, the employee's actions were knowing and willful violations of law, then they would stand in the same situation as any other citizen for

violating the law. Their actions would not be within "the scope of their employment".

The Department of justice makes scope of employment determinations on a daily

basis in civil suits filed against individual federal employees. If it finds that the employee was acting within the scope of employment, then the Department of Justice

defends the case, and seeks to substitute the United States as the defendant. If not,

then the Department of Justice will not represent the employees. It seems logical

that an agency which has so much experience in making these determinations continue to make them in cases involving unauthorized telephone taping or monitoring.

Therefore, we believe any sanctions should be preceded by a "scope of employment"

determination by the Department of Justice if the proposed sanction involves a federal employee.

In sum, we support what we understand the purpose of the legislation to be, i.e.,

to enact penalties which can be utilized to enforce current law and regulation. We

agree with many agency concerns that the bill, as currently written, could inhibit

some agencies' to operate. Finally, we believe that government employees who are

acting within the scope of their employment should be protected from any personal

liability. Any liability which incurs should be that of the federal government in

those situations.

Thank you for this opportunity to appear and testify before you. I will be happy

to answer any questions you might have.

o