We recommend, in effect, formalizing informal access by requiring that a formal written request be used by agencies which have no administrative summons power to obtain access to financial records. Such a written request (which would have to conform to regulations promulgated by the head of each agency and department) would be subject to the notice and challenge provisions of the legislation just like any summons or subpoena. Unlike a summons or subpoena, however, in the event of an unsuccessful challenge (or none being filed), the record keeper would be free to disclose the records but would not be compelled to do so.

Our support for such a procedure is based on our belief that record keepers, which would now have rules to govern the release of records and which would not be held liable for their good faith reliance on government representations, should and will cooperate with our legitimate investigations.

NOTICE

With regard to the notice provisions of this legislation, there are two exceptions to the pre-notification scheme that we believe are crucial.

First, some provision must be made to deal with emergency situations in which immediate access to an individual's records is needed to avoid imminent danger of physical injury, serious property damage, or flight from prosecution. In a kidnapping case, for example, obviously every second counts. It might turn out that a key clue can be found in third-party-held records. In this situation, the delay that would occur from having to give notice or even from having to find a judge to sanction dispensing with notice could seriously threaten a victim's life. We suggest, therefore, that in emergency cases, the government be able to obtain the needed records upon a written representation to the record keeper that one or more of the above conditions is present. Subsequently, within a short time, the government would have to submit to a court a sworn statement justifying resort to the emergency access procedure. Thereafter, the customer would receive notice, the right to challenge and other remedies as provided for in the other provisions of the legislation.

Second, there are non-emergency situations where the harm that is feared will not result from the delay caused by having to give notice, but from the notice itself. In these cases, an opportunity must be afforded the government to secure a court order dispensing with the pre-notice requirements of the legislation and forbidding the record keeper from alerting an individual that the government has sought or received records.

Unlike the provision in H.R. 214, which allows such a delay of notice only for requests made through judicial subpoenas and only when the government has "affirmatively demonstrated" that notice "would seriously jeopardize a continuing investigation" of certain enumerated offenses, the delay provision should be applicable to all offenses and to all avenues of access to records where the court finds there is reason to believe that giving notice would (1) endanger life or physical safety, (2) cause flight from prosecution, (3) cause the destruction of evidence, (4) result in witness intimidation or (5) otherwise jeopardize an investigation or official proceeding or unduly delay a trial or ongoing official proceeding.

CUSTOMER CHALLENGE

Another set of our proposals seeks to modify the customer challenge provisions of the legislation.

Because there is a need for speedy access to third-party-held records in many investigations, the period for a customer to bring a challenge should be kept relatively short. The 18 days provided for by H.R. 214 should be substantially reduced to insure that delays are kept to a minimum.

Furthermore, challenges should be heard not only by district court judges, but also by federal magistrates. Giving magistrates such expanded jurisdiction can divert these disputes from overburdened district judges.

Another procedure we recommend to minimize delays in this process is to require a court, to which a challenge has been made, to decide the case within a prescribed period of time. Since the issues to be decided in these challenge suits should be relatively simple, this should not be too burdensome to implement.

One further major change we are suggesting in this legislation is to give the customer more of the burden of going forward to stop the government from obtaining his or her financial records. Except in the case of a judicial subpoena, H.R. 214, following the model of other statutes like the Tax Reform Act of 1976,

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permits a customer to halt government attempts to gain access to records merely by sending a written objection to the government agency or financial institution. Experience to date under the Tax Reform Act suggests that this makes objections too easy and encourages frivolous interference with wholly legitimate investigations. Consequently, instead of allowing the customer to block a request by merely filing an objection with the record-keeper, we propose a provision requiring the customer to file a motion in court. With such a requirement, frivolous challenges can better be avoided. It is important to note, however, that once the customer makes an initial showing that access may be improper, the government bears the burden of proving to the court that the records are sought for a legitimate law enforcement purpose.

Similarly, we believe it essential that this legislation include a provision which prohibits a customer from taking an immediate appeal from an unsuccessful challenge to the government's request for records. Such appeals should be joined with claims arising from any proceedings initiated by the government or wait a period of time for the government to state that no such proceedings are contemplated. By this means, delays in carrying out legitimate investigations will be minimized.

We also want to make certain that the standard of relevance the government must meet in order to prevail in a customer challenge suit is not unreasonable. If too high a standard is imposed, many legitimate investigations will founder. Consequently, the test for allowing the government to obtain records should be whether or not those records may be relevant to a legitimate law enforcement purpose. While not worded exactly this way, H.R. 214 seems to incorporate such a realistic standard.

We have included in our proposal a requirement that record keepers, which receive requests for records, process such requests during the notice period and be prepared to deliver the records requested to the government at the end of the period for filing challenges or after an unsuccessful challenge has been made. This provision can help diminish the adverse impact this legislation would have on law enforcement activities without requiring any sacrifice in the way of privacy protection.

Along the same lines, we suggest a provision which tolls any applicable statute of limitations for the period in which customer challenges are taken. Without such a requirement, a customer might seek to avoid prosecution by trying to circumvent applicable statutes of limitations.

Finally, we would like to see a provision added to the challenge procedures which would allow the government to request an in camera inspection of any showing it is required to make. Without this procedure, there would be a temptation to bring challenges not to protect privacy but to conduct criminal discovery.

USE OF INFORMATION

We suggest that the bill recognize that information which the government lawfully possesses may have legitimate uses apart from the purposes for which it was originally obtained.

H.R. 214, on the other hand, prohibits use of records "for any purpose other than the specific statutory purpose for which the information was originally obtained." This conflicts with the well-established constitutional and legal principle that evidence legally obtained for one purpose may be used for other legitimate law enforcement purposes. E.g., Coolidge v. New Hampshire, 403 U.S. 443, 464-473 (1971); Rule 6(e). F. R. Crim. P. The principle is of particular importance at the incipient stages of a criminal investigation, where all participants and offenses may not be known. For example, the S.E.C. could subpoena bank records for the purpose of investigating violations of the federal securities laws and upon analysis discover that the records do not reveal securities violations but do reveal blatant violations of the tax laws. It would be unreasonable and excessively burdensome for another government agency to have to resupoena the records for tax law purposes and notify the subjects that it now seeks to use the records to investigate tax violations.

This provision would, in effect, amend the Privacy Act of 1974 in a piece-meal fashion. Different rules might apply to financial records than to medical, educational or other personal information.

Such different rules would pose an extraordinary administrative burden, buteven more important this sort of piecemeal policy making is inadvisable for a complicated, important subject like the transferring of records among government agencies. This subject should be considered as a whole, with an eye toward

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ares cannot purisert to rest on any はちす oses footing than a claim of on ofufional search and swaren es v. Miller, 425 U.S. if would be anomalous and weld lead to neonsistent resuits if federal were subject to the requirements of any new law.

In addition to the unique legal and constitutional position which the federal grand jury occupies, it is protected by rules seeking to insure the secrecy of its proceedings. Expanded notice and challenge rights in the grand jury context could seriously jeopardize its traditional secrecy and, in so doing, pose an unintended threat to the privacy rights of individuals being investigated. Furthermore, federal grand jury subpoenas are not issued randomly and are already subject to the supervisory authority of district courts which can wield their contempt and remedial powers to deter or punish any abuse.

Finally, the legislation in this area represents an experimental procedure with uncertain impact on legitimate law enforcement activities. It is appropriate to confine the initial application of these provisions to those avenues of legal process utilized in law enforcement which are not as integral to criminal procedure or as constitutionally rooted as the grand jury. After an initial period in which the provisions of this legislation can be studied, modifications, if needed, can be made. We note that, presumably for the foregoing reasons, grand juries are exempted from a similar Senate bill, S. 2096.

A second exemption we advocate is when access to records is sought for the purpose of conducting foreign counter-or foreign positive-intelligence activities or when access is sought by the Secret Service for the purpose of carrying out its protective functions.

In such cases even notice after the fact could gravely impair those functions. In the relatively infrequent occasions when records are requested for these purposes, the government agency, allowed to conduct such activities, should be able to gain access to records by presenting to the recordkeeper a certification that the exempt purposes are present. The recordkeeper should then be prohibited from notifying the customer of the request for or disclosure of records.

Third, since the purpose of the proposed legislation is to protect individual privacy, the provisions of any bill should not apply when records are sought by the government in connection with an investigation or proceeding, such as a civil rights "redlining" investigation, directed at the recordkeeper institution itself. In these cases, whatever privacy right an individual might have is far outweighed by the enormous costs and other burdens of having to give hundreds of thousands of individuals notice and standing. Where the recordkeeper is the subject of an investigation, abuses may be avoided by requiring the government to submit a sworn statement that records are being inspected for that purpose and by prohibiting the government from using such records against any individual customer without following the notice and challenge provisions of this legislation.

While there are other modifications and provisions which we suggest, I have briefly reviewed the most important parts of our proposal. Although I realize that the provisions I have referred to are numerous and complex, this is an area which lends itself to complexity. There are, as this Subcommittee is sell aware, simply no easy answers here, no shortcuts to finding the appropriate accommodation of two concepts as important as privacy protection and effective law enforcement. Mr. Chairman, the proposals that we are making are the result of a great deal of study and careful balancing of the interests involved. While we realize there may be other ways to accomplish the ends we propose, it is of paramount concern to this Department that any modification does not disrupt this balance in such a manner that effective law enforcement will be impaired.

We appreciate the hard work your Subcommittee has devoted to this subject and we hope to assist you in any way we can to avoid such a result and to assure the passage of a good privacy bill.

I shall comment briefly on the remaining titles of the bill.

TITLE II-MAIL COVERS

Title II of H.R. 214 is in many respects like 39 C.F.R. § 233.2, the postal regulation applicable to government mail covers. Summarized very briefly, Title II would permit mail covers to be maintained for certain periods of time when good cause exists to believe that such covers are necessary in investigating felony cases or in locating fugitives. Within no more than ninety days after the termination of any mail cover (absent special findings by a federal court), persons whose mail was subject to the covers would be notified thereof, and also of the dates involved and the purposes of the covers. The chief postal inspector would be required to make annual reports to the Congress, in detail, concerning mail covers. A Federal or State employee who initiated a mail cover contrary to law would be subject to civil suit for damages.

Under existing regulations the Postal Service exerts "rigid controls and supervision" over mail covers. 39 C.F.R. 233.2(a). Mail covers are authorized in the interest of national security, locating fugitives, and obtaining evidence of the commission or attempted commission of felonies. A request to the Postal Service by a law enforcement agency must stipulate and specify "reasonable grounds that exist which demonstrate the mail cover is necessary" to further one of the purposes for which a mail cover is authorized. 39 C.F.R. 233.2(d) (2) (ii). The regulation provides centralized control over mail covers; and, of course, the usual restrictions against breaking mail matter apply. 39 C.F.R. 233.2(f). There are a number of other provisions in the regulation that are comparable to provisions (not summarized above) of the proposed legislation.

Except for the omission in the bill of foreign intelligence and counter-intelligence investigations as a basis for mail covers-which we regard as a serious deficiencythe Department has no major objection to this title, which would essentially codify the standards set forth under the existing postal regulations. However, we point out that there are certain disadvantages which may arise as a consequence of codification of the regulation. It has been held that the exclusionary rule does not apply to bar the admission of evidence at trial when obtained through the use of a mail cover conducted in good faith but not entirely in keeping with the regulations. United States v. Schwartz, 176 F. Supp. 613 (E.D. Pa. 1959), aff'd on other grounds, 283 F. 2d 107 (3rd Cir., 1960), cert. denied, 364 U.S. 942 (1961); see also United States v. Leonard, 524 F. 2d 1976, 1088-1089 (2d Cir. 1975); United States v. Beckley, 335 F. 2d 86, 90 (6th Cir. 1964, cert. denied, 380 U.S. 922 (1965). The issue in general whether violation by an agency of its regulations should lead to suppression of evidence will apparently be decided by the Supreme Court in its next term. See United States v. Caceres, 545 F. 2d 1182 (9th Cir. 1976), cert. granted, June 5, 1978. The Postal Service may also have comments on Title II.

TITLE III-AMENDMENTS TO CHAPTER 119, TITLE 18, UNITED STATES CODE

There are four aspects to this title. First, the title would spell out the interception actions that a common carrier of communications could take in the interest of maintaining or improving service or in order to protect against theft of service. Second, the bill would amend 18 U.S.C. 2516(1) (c) to allow for applications for interception orders in cases involving possible violation of 18 U.S.Č. 1343 (wire fraud). Third, the bill would amend 18 U.S.C. 2512 and 2513 to make those sections applicable to theft devices as well as to intercepting devices. Finally, the bill would drop the limiting adjective "aural" from the definition of "intercept" in 18 U.S.C. 2510(4).

Existing law limits the service observing and random monitoring practices of communication common carriers to mechanical or service quality control checks. 18 U.S.C. 2511(2)(a)(1). This provision would be replaced under the bill. In doing so, "supervisory observing" practices would be limited, in part, by a requirement that the carrier's employees be given prior notice of the likelihood of the interception, and that such interceptions be conducted only for training purposes or for the evaluation of employee performance.

Being most knowledgeable in this area, the communication common carrier should be required to justify the practices to be endorsed in legislation. At the same time, the employees subject to possible "supervisory observing" interceptions would seem to have such an interest in the matter as to make their assessments pertinent. Thus, we believe that a mutual agreement between employees and the carriers regarding the practices would represent the most apt authority for "supervisory observing" interceptions. See Electronic Surveillance: Report of the Commission for Review of Federal and State Law Relating to Wiretapping and Electronic Surveillance, 29, 119 (1976). Accordingly, we recommend that the bill authorize "supervisory observing" interceptions (as defined therein) to the extent such practices are permitted pursuant to agreement between the carriers and employees.

With regard to the second and third aspects of this title, the Department supports the inclusion in 18 U.S.C. 2516(1)(c) of offenses under 18 U.S.C. 1343, as well as the enlargement of 18 U.S.C. 2512 and 2513 to cover theft of services devices.

The final purpose of the title is to expand the scope of the wiretap statutes from the current prohibition covering only "aural acquisition" of "wire or oral" com