greater civil liberties or greater respect for privacy in asking a close family member to cooperate in sending another close family member to jail.

Mr. KASTENMEIER. To conclude, the Department, I take it, is endorsing the approach taken by the Banking and Currency Committee with these two exceptions, notwithstanding reservations about the two areas of disagreement with the bill; are you, on balance, supporting that bill rather than opposing it in its present form?

Mr. HEYMANN. Mr. Chairman, I think we are talking about events that have taken place within the last 48 hours. I am not sure we have an answer to that and I think we would like to return to you on that. Certainly we were very satisfied with the bill right up to the last two amendments. I think it would be better if we returned to you with our views in light of the two amendments.

Mr. KASTENMEIER. The gentleman from California does not have any questions, so let me thank you for your testimony. It was very helpful. We may need to get back to you again, I suspect, before this is finally disposed of.

Mr. HEYMANN. Thank you, Mr. Chairman.

Mr. KASTENMEIER. Mr. Pauley and Mr. Heymann, we are very pleased to have you in your initial appearance before our subcommittee.

Mr. HEYMANN. It has been a pleasure to be here. Mr. KASTENMEIER. That concludes this morning's hearing and, accordingly, the subcommittee stands adjourned.

[Whereupon, at 11:30 a.m., the Subcommittee on Courts, Civil Liberties, and the Administration of Justice adjourned.]

BILL OF RIGHTS PROCEDURES ACT

THURSDAY, JULY 20, 1978

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES,

AND THE ADMINISTRATION OF JUSTICE

OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C.

The subcommittee met, pursuant to recess, at 9:50 a.m., in room 2237, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Ertel, and Railsback.

Also present: Bruce A. Lehman, counsel; Timothy A. Boggs, professional staff member; Thomas E. Mooney, associate counsel; and Audrey Marcus, clerk.

Mr. KASTENMEIER. This morning we will continue hearings on H.R. 214, the Bill of Rights Procedures Act.

The Committee on Banking, Finance and Urban Affairs has reported favorably legislation which is similar to title I of H.R. 214, and we are pleased to greet as our first witness this morning, Mr. Richard Davis, who is Assistant Secretary of the Treasury. Mr. Davis is chiefly responsible for the law enforcement functions of the Department.

We are very pleased to have you here, Mr. Davis. You may proceed as you wish.

TESTIMONY OF RICHARD DAVIS, ASSISTANT SECRETARY FOR ENFORCEMENT AND OPERATIONS, U.S. DEPARTMENT OF THE TREASURY

Mr. Davis. Thank you, Mr. Chairman. I have submitted a statement to the committee and, with the Chair's permission, what I would like to do is summarize that statement.

Mr. KASTENMEIER. Yes; and your prepared statement in full will be accepted for the record and you may proceed as you wish. [The prepared statement of Mr. Davis follows:]

STATEMENT BY HON. RICHARD J. DAVIS, ASSISTANT SECRETARY OF THE

TREASURY

Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before you today in order to present the views of the Department of the Treasury concerning H.R. 214, the Bill of Rights Procedures Act. While I will refer to the other Titles, the focus of my testimony will be on Title I of this bill. This Title would substantially affect the manner in which government agencies may obtain access to bank, credit, and telephone toll records. It would create legally recognized right of individuals, corporations and other associations in any such records which pertain to them, but are in the possession of third parties.

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The general approach taken by this Title would be to bar government access to these records until the individual or association has an opportunity to object to their production and whenever such an objection is interposed, until the government prevails in a judicial proceeding.

The issues of government access and privacy raised by this Title have been matters of controversy for some time. This is largely due to the fact that they appear to bring into confrontation two highly desirable goals-the need for a system of government which enables its citizens to be and feel free from unnecessary official scrutiny, and the need for a system of justice which protects our citizens against violence, assassination, corruption, fraud and other criminal activities in as effective and efficient a manner as possible.

Because of legitimate and deep concerns over achieving this latter goal the Executive Branch has in earlier Administrations simply opposed virtually all proposals such as those contained in Title I. We no longer do so. The Treasury Department has spent much time in recent months discussing this issue and, along with the Department of Justice, we are prepared to support legislation incorporating the principles of Title I, although we believe that certain amendments are essential in order to place the law enforcement-privacy goals in proper balance. We have not, however, come to this position because we believe that adoption of our proposal will be cost free for our enforcement type activities-we recognize, as you should, that it has the potential for a certain amount of investigative delay and loss and will put some added burdens on our courts and prosecutors. We are prepared to support this course of action instead because we believe it responds to a genuine need to provide added safeguards against the erosion of the privacy of our citizens, while meeting the essential needs of our law enforcement and regulatory agencies.

As Assistant Attorney General Heymann has previously told this Subcommittee, the Justice and Treasury Departments recently have had occasion to offer draft legislation incorporating our position to another Committee considering legislation similar to Title I. A copy of that draft has been submitted to this Subcommittee for its consideration. Before discussing the principal provisions of this proposal, however, I would like briefly to articulate with more specificity some of the underlying, and in part competing, principles and concerns which Treasury sought to balance in developing its position on this matter.

First, First, as I mentioned previously, we accept the validity of the need to provide protection for financial records. It is necessary to develop more clearly stated rules governing access to financial records. In the mere adoption of rules greater discipline is introduced into the record acquisition system, reducing intrusions into private records which are only of marginal value to investigators. Also, we recognize that whatever rules are established some instances of abuse are possible. It is thus desirable that any proposal provide an opportunity for those instances to be identified and remedied.

Second, and certainly central to consideration of this issue, is a desire in selecting the appropriate rules to minimize any genuine risk to the performance of the missions of Treasury's various agencies. Treasury currently has agencies with diverse responsibilities-protecting the President and Vice President of the United States, as well as visiting heads of State; guarding against smuggling and customs fraud; enforcing our tax laws; regulating national banks; administering laws concerning blocked assets and economic sanctions; regulating the liquor industry; and enforcing laws involving dumping, currency transactions, counterfeiting, forgery and the illegal use of firearms and explosives are just some examples. Many of these responsibilities have special needs. As an example, in protecting the President speed without notice to those involved is often critical. For all, however, it is important that any proposals recognize that undue delay may mean lost leads and diminished momentum. Similarly, in all cases, care must be taken that procedures to regulate access do not mean that in actual practice there is no access to information which is legitimately needed. Also, it is necessary to consider the reality of many criminal investigations-the risks of flight and illegal obstruction of inquiries and the danger to individuals in particular situations.

Third, we believe it appropriate ate to minimize the impact of these proposals on the criminal justice system as a whole. The trial and pretrial stage when a case is actually pending-has generally been the time when questions about the investigative phase were litigated. Therefore, the extent to which there is more routine judicial intervention in this earlier stage adds to the burdens being placed on an already congested judicial system. Opportunities to litigate and generate delay in the investigative phase also may lengthen further a process which many believe

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already takes too long for all involved. Additionally, at a time when we are striving to enhance interagency cooperation and avoid duplicative efforts it seems desirable that an approach be avoided that routinely mandates repetitive investigations or otherwise unnecessarily complicates our criminal justice system. We are not unmindful of the fact that adding too much to the burden on the various aspects of the criminal justice system runs the risk of lessening the speed and quality of justice felt by the many who get caught up in that system.

These then, briefly, were some of the underlying concerns which we considered, and which we urge this Subcommittee to consider. I would now like to highlight some aspects of the proposal which we support. Assistant Attorney General Heymann has already articulated many of the key issues and we join in the statement he submitted to you last week.

CHALLENGE PROCEDURES

Among the most important aspects of the Justice-Treasury proposal is a modification of the challenge procedures from those contained in H.R. 214. We strongly believe that generally investigations require speedy access to records. This is necessary, among other reasons, so that leads can be pursued in a timely fashion before evidentiary trails become more difficult to follow or disappear; so that investigative momentum can be maintained; and so that the large volume of matters involved can be handled in an efficient fashion. In order to accommodate this need we have offered several suggestions.

Initially we believe that the time period in which a customer may act to prevent access should be relatively short and that a time limit should be established by which the Judge must decide the matter. Also, it is important that appeals by customers from adverse rulings should not be allowed during the investigative phase. To do so would generate an opportunity for delay which could stymie particular investigations. Instead, we believe it sufficient to allow appellate remedies to be pursued after the completion of the investigation. Our proposals contain provisions implementing these proposals.

An additional major change in this aspect of our proposal would be to place on the customer the initial requirement of going forward to prevent the government from gaining access to the customer's record. H.R. 214, in the case of administrative subpoenas and summonses, would enable someone to prevent access simply by objecting to the government agency. This is the same general approach taken in the Tax Reform Act of 1976. While experience under that statute is still insufficiently complete to provide much guidance, it does appear so far that this approach invites the interposition of frivolous or casual objections which accomplishes no more than the generating of delay and adding to the government's workload. We would require more of a customer who wishes to object to government access. In essence we suggest that a customer be required to file with the appropriate court a simple affidavit and motion to quash setting forth the basis for the objection to the access. Of course, once the customer makes a showing that access may be improper, the government should have the burden of proving that access to the records is being sought for a legitimate law enforcement purpose. Other provisions in our proposal would toll relevant statutes of limitations while challenges are being processed; require recordkeepers to process requests during the notice period; and authorize in camera showings by the government. These suggestions are designed to avoid provisions designed to enhance privacy from being misused simply to generate delay or obtain otherwise unauthorized criminal discovery.

ACCESS THROUGH PROCESS REQUIREMENT

A principal aspect of H.R. 214 would prohibit all access to financial records except by legal process and thereby eliminate any ability to obtain "informal" access to such records. What this proposal fails to consider, however, is that many investigative agencies which have legitimate need for access to such materials in various of their investigations have no summons authority. If such a rule was adopted, the impact on Treasury agencies would be substantial. The Secret Service totally lacks summons power; the Bureau of Alcohol, Tobacco and Firearms has it only for tax and Federal Alcohol Administration Act cases, not for firearms or explosives investigations; Customs has it for most, but not all its investigative jurisdiction as does the Office of Foreign Assets Control; and the IRS lacks it for its critical internal affairs anti-corruption efforts.

If the requirements of H.R. 214 are unchanged many necessary inquiriesranging from forgery to threats on our elected leaders to bribery of IRS employees-would be seriously impeded. An available alternative would, of course, be the earlier use of grand jury procedures where it is necessary to obtain access to financial records. We believe that to force such reliance on the grand jury is unwise. It invites abuse of the grand nd jury system; it means that minor matters which would otherwise be resolved without a grand jury inquiry will be forced into the system; it will adversely impact the ability of investigative agencies to organize their workload; and would place added and unnecessary burdens on both prosecutors and the grand jury. Additionally, the grand jury is not available where the inquiry is civil and not criminal.

If H.R. 214, or similar legislation, is adopted either necessary administrative summons power should be conferred on agencies needing it or an alternative procedure must be created. The Justice-Treasury proposal chooses the latter alternative. We urge that there be a formalization of "informal" agency access by requiring the use of written requests by agencies that lack summons power alternative. We urge that there be a formalization of "informal" agency requiring the use of written requests by agencies that lack summons power. These requests would be issued under regulations promulgated by agency heads and would be subject to the notice and challenge provisions of this legislation.

Of course, third party recordkeepers would not be required to produce records pursuant to a written request-they would instead be permitted to do so. Like the Justice Department, however, our support for this procedure is based upon belief that recordkeepers, who would not be liable for good good faith reliance on government representations, would be prepared to cooperate with legitimate inquiries.

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EXCEPTIONS

While accepting the general concept contained in H.R. 214, we believe that certain exceptions are necessary from the notice and challenge provisions. These exceptions are of two kinds-first from only the pre-notice provisions, and second, from the requirements of notice altogether.

We believe that delayed notice is required in several general situations. The first relates to emergency situations where immediate access is required if injury to person or property or flight is to be avoided. This exception is particularly important where the matter relates to an ongoing crime, such as the kidnapping situation referred to by Assistant Attorney General Heymann in his testimony. In these situations no impediment to immediate access should be allowed and notice can be provided after the fact,

We also are concerned that in certain other circumstances provision be allowed for notice to be delayed until after access is obtained. This exception should operate in those circumstances where 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, trial, or ongoing official proceeding. In these circumstances the government agency seeking the delay would be required to seek a court order authorizing it to do so. We feel strongly, however, that the opportunity for delayed notice where these showings can be made is important since in the everyday world of criminal investigations the potential for these consequences is real. While generally we agree that delays under this provision should be for specified time periods, in one circumstance we believe it important that the court have the authority to grant indefinite delays. This circumstance involves disclosures of records obtained by the Office of Foreign Assets Control in the course of its investigation. In these cases the owner of the account may be a foreign nationalof, for example, Vietnam or Cambodia and notification to the owner may also mean that the involved government may learn of its existence, subjecting the owner or those associated with the owner to risks of physical reprisal. If the Court finds such a risk exists, delay should be indefinite.

In some circumstances, we believe that it is unnecessary to require even delayed notice. One such situation is where the information being sought is only the name, address, account number, and type of account of any customer or ascertainable group of customers associated with a financial tranacation. This exception thus covers only what is on the account signature card-if information about actual transactions in the account is sought the notice provisions would fully apply.

This exception is intended to reach two kinds of situations. First, it would cover those situations where a forged check or other instrument has been processed by the financial institution. In these circumstances the fact of the criminality is