Since June, 1939, when President Franklin D. Roosevelt directed the FBI to investigate "all espionage, counterespionage and sabotage matters," until recent years, the FBI has worked under a general mandate in the foreign counterintelligence and foreign counterterrorism field. In 1976, President Ford issued Executive Order 11905, which was an attempt to produce a unified intelligence effort by the Government while at the same time placing limitations on our activities and leading to the creation of the Attorney General Foreign Counterintelligence Guidelines, under which we now work. President Carter further developed these concepts in Executive Order 12036. In addition, the Foreign Intelligence Surveillance Act was passed to address the narrow yet crucial problem of employing electronic surveillance in intelligence work.

The proposed National Intelligence Act of 1980 follows years of preparation and discussion between the Congress, the Administration and the intelligence agencies. It evidences our shared recognition of the need for an intelligence charter. The President stated in a letter to the Chairman of this committee “only a comprehensive charter will give the American intelligence community the kind of endorsement it needs and deserves from the American people."

The drafting of a charter is difficult. It must strike an acceptable balance between the need to protect individual rights and the need to have an effective intelligence capability. We believe too that it must insure that the dedicated men and women who serve our country in intelligence positions know with certainty the range of permissible intelligence activities available to them.

As you know, a charter for the FBI that would define our duties and responsiblities in the field of criminal investigation is presently before the Congress. A legislative charter for the FBI's counterintelligence activities would be a logical supplement to it.

Counterintelligence and counterterrorism are activities that are not always fully understood by the American public. It is relatively easy for most to understand the necessity for foreign intelligence activities and their relationship to the national defense and foreign policy of the United States. The protective function of counterintelligence, however, and its demands on the counterintelligence elements of the Government are not so readily apparent.

Because of the FBI's counterintelligence mission in the United States, American citizens are sometimes of necessity the objects of inquiry, either as a result of their clandestine relationship with a foreign power, or because of a foreign power's interest in them. Contacts between Americans and foreign intelligence officers must also concern us, even though contacts may turn out to be innocent. But given the need for such inquiries, there should be legislative recognition for our actions.

Now, I would like to comment briefly on some of the proposed statute's provisions that directly affect the FBI.

Title VIII amends the Foreign Intelligence Surveillance Act to subject physical searches to the same review and certification procedures, plus the same criminal standard for U.S. persons, as was carefully designed for wiretaps by this Congress in late 1978. The same compelling reasons of security that led to the foreign intelligence wiretap process, apply to physical searches of foreign powers and their agents. Judicial review exists except in that limited number of searches that do not affect U.S. persons, property or premises. I am confident that with the Foreign Intelligence Surveillance Court having the expanded role regarding physical search, plus Congressional oversight, the American public can be assured of the lawfulness of the process, while affording necessary security to the activity. Standards affecting the counterintelligence and counterterrorism mission of the FBI that appear in section 214 of the Act are the result of considerable work on the part of this Committee and the intelligence agencies. They strike an acceptable balance between the legitimate needs of the Government to undertake measures to protect itself and the rights of the individual.

The standard in the proposed statute is that the FBI cannot undertake counterintelligence or counterterrorism activities against a U.S. person unless it has facts or circumstances to indicate not only clandestine intelligence activity on the part of the individual, but also that this activity is on behalf of a foreign power or is an international terrorist activity. The bill recognizes that since we are not ordinarily engaged in traditional criminal investigation in these matters, it is inappropriate to tie the threshold investigative standard to a criminal act. In my view this approach permits sufficient authority for the FBI to act where necessary yet imposes restrictions and oversight on our judgment to do so.

Because of the concern that an investigation might be undertaken on a person who is otherwise a legitimate agent of a foreign power, such as a lobbyist, section 214(d) requires notification to the Department of Justice in any investigation that may significantly intrude into a person's political or religious activity.

We should look closely at the case of past completed intelligence activities which continue to be of legitimate investigative concern. In certain cases, an agent may have ceased intelligence activities, as for example when the agent has been convicted and incarcerated, but the investigation of the agent's activities is continuing. The current statutory language which is limited to facts or circumstances indicating the person is or may be currently engaged in intelligence activities must be clearly examined in this context.

Another part of the proposed bill that recognizes the realities of intelligence work is section 215. It provides for a controlled process of intelligence activity that could be directed against unsuspecting targets of clandestine intelligence gathering by foreign powers. Such activity, however, could be undertaken only after a finding is made that the person is indeed the target of a foreign intelligence service and the Attorney General is notified. Additionally, techniques of collection are limited.

I would also like to express to this Committee my continuing concern about the impact of the Freedom of Information Act on sensitive records of the FBI, including those relating to its foreign counterintelligence and counterterrorism activities. As you know, Mr. Chairman, foreign counterintelligence is one of the top priorities of the Department of Justice. The importance of an effective program to combat hostile intelligence activities cannot be overemphasized. I, therefore, endorse the concept of providing relief to the FBI and other intelligence agencies from the excessive disclosure requirements of the Freedom of Information Act.

As this charter process continues, consideration should also be given to the inclusion of FBI and other intelligence agency personnel and assets in the identities protection provisions of Title VII. Even though the personnel of the CIA have been the main target of those who would cripple our intelligence efforts by disclosing affiliations with that organization, the same compelling reasons for protection exist in our other intelligence agencies.

There are several language changes, mostly technical in nature that we would like to suggest as this charter process proceeds which are unnecessary to discuss at this time.

Now, I would be pleased to respond to any questions you may have.

TESTIMONY OF JUDGE WILLIAM H. WEBSTER, DIRECTOR, FEDERAL BUREAU OF INVESTIGATION, ACCOMPANIED BY BILL CREGAR, ASSISTANT DIRECTOR, INTELLIGENCE DIVISION

Judge WEBSTER. Mr. Chairman, I first would like to thank you for taking time to recognize the distinguished service to his country offered by Bill Cregar. We are very proud of what he has done and we are glad that you have taken the opportunity to recognize this.

Since June 1939, when President Franklin D. Roosevelt directed the FBI to investigate "all espionage, counterespionage, and sabotage matters," until recent years, the FBI has worked under a general mandate in the foreign counterintelligence and foreign counterterrorism field.

In 1976, President Ford issued Executive Order 11905, which was an attempt to produce a unified intelligence effort by the Government while at the same time placing limitations on our activities and leading to the creation of the Attorney General Foreign Counterintelligence Guidelines, under which we now work.

President Carter further developed these concepts in Executive Order 12036. In addition, the Foreign Intelligence Surveillance Act

was passed to address the narrow yet crucial problem of employing electronic surveillance in intelligence work.

The proposed National Intelligence Act of 1980 follows years of preparation and discussion between the Congress, the administration, and the intelligence agencies. It evidences our shared recognition of the need for an intelligence charter. The President stated in a letter to the chairman of this committee "that only a comprehensive charter will give the American intelligence community the kind of endorsement it needs and deserves from the American people."

The drafting of a charter is difficult. It must strike an acceptable balance between the need to protect individual rights and the need to have an effective intelligence capability. We believe, too, that it must insure that the dedicated men and women who serve our country in intelligence positions know with certainty the range of permissible intelligence activities available to them.

As you know, a charter for the FBI that would define our duties and responsibilities in the field of criminal investigation is presently before the Congress. A legislative charter for the FBI's counterintelligence activities would be a logical supplement to it for us.

Counterintelligence and counterterrorism are activities that are not always fully understood by the American public. It is relatively easy for most to understand the necessity to the national defense and foreign policy of the United States. The protective function of counterintelligence, however, and its demands on the counterintelligence elements of the Government are not so readily apparent.

Because of the FBI's counterintelligence mission in the United States, American citizens are sometimes of necessity the objects of inquiry, either as a result of their clandestine relationship with a foreign power, or because of a foreign power's interest in them. Contacts between Americans and foreign intelligence officers must also concern us, even though contacts may turn out to be innocent. But given the need for such inquiries, there should be legislative recognition for our actions.

Now, I would like to comment briefly on some of the proposed statute's provisions that directly affect the FBI.

Title VIII amends the Foreign Intelligence Surveillance Act to subject physical searches to the same review and certification procedures, plus the same criminal standard for U.S. persons, as was carefully designed for wiretaps by this Congress in late 1978. The same compelling reasons of security that led to the foreign intelligence wiretap process apply to physical searches of foreign powers and their agents.

Judicial review exists except in that limited number of searches that do not affect U.S. persons, property or premises. I am confident that with the Foreign Intelligence Surveillance Court having the expanded role regarding physical search, plus congressional oversight, the American public can be assured of the lawfulness of the process, while affording necessary security to the activity.

Standards affecting the counterintelligence and counterterrorism mission of the FBI that appear in section 214 of the Act are the result of considerable work on the part of this committee and the intelligence agencies. They strike an acceptable balance between the legitimate

needs of the Government to undertake measures to protect itself and the rights of the individual.

The standard in the proposed statute is that the FBI cannot undertake counterintelligence or counterterrorism activities against a U.S. person unless it has facts or circumstances to indicate not only clandestine intelligence activity on the part of the individual, but also that this activity is on behalf of a foreign power or is an international terrorist activity.

The bill recognizes that since we are not ordinarily engaged in traditional criminal investigation in these matters, it is inappropriate to tie the threshold investigative standard to a criminal act. In my view this approach permits sufficient authority for the FBI to act where necessary yet imposes restrictions and oversight on our judgment to do so.

Because of the concern that an investigation might be undertaken on a person who is otherwise a legitimate agent of a foreign power, such as a lobbyist, section 214 (d) requires notification to the Department of Justice in any investigation that may significantly intrude into a person's political or religious activity.

We should look closely at the case of past completed intelligence activities which continue to be of legitimate investigative concern. In certain cases, an agent may have ceased intelligence activities, as for example when the agent has been convicted and incarcerated, but the investigation of the agent's activities is continuing. The current statutory language which is limited to facts or circumstances indicating the person is or may be currently engaged in intelligence activities must be clearly examined in this context.

Another part of the proposed bill that recognizes the realities of intelligence work is section 215. It provides for a controlled process of intelligence activity that could be directed against unsuspecting targets of clandestine intelligence gathering by foreign powers. Such activity, however, could be undertaken only after a finding is made that the person is indeed the target of a foreign intelligence service and the Attorney General is notified. Additionally, techniques of collection are limited.

I would also like to express to this committee my continuing concern about the impact of the Freedom of Information Act on sensitive records of the FBI including those relating to its foreign counterintelligence and counterterrorism activities. As you know, Mr. Chairman, foreign counterintelligence is one of the top priorities of the Department of Justice.

The importance of an effective program to combat hostile intelligence activities cannot be overemphasized. I, therefore, endorse the concept of providing relief to the FBI and other intelligence agencies from the excessive disclosure requirements of the Freedom of Information Act.

As this charter process continues, consideration should also be given to the inclusion of FBI and other intelligence agency personnel and assets in the identities protection provisions of title VII. Even though the personnel of the CIA have been the main target of those who would cripple our intelligence efforts by disclosing affiliations with that organization, the same compelling reasons for protection exist in our other intelligence agencies.

There are several language changes, mostly technical in nature, that we would like to suggest as this charter process proceeds which are unnecessary to discuss at this time.

Mr. Chairman, that concludes my opening statement.

Senator BAYH. Thank you very much, Director Webster.
Mr. Carlucci?

[The prepared statement of Frank C. Carlucci follows:]

PREPARED STATEMENT OF FRANK C. CARLUCCI, DEPUTY DIRECTOR OF CENTRAL INTELLIGENCE

Mr. Chairman, as program manager of the Central Intelligence Agency, I am pleased to be here today to testify on title IV of the "National Intelligence Act of 1980."

In my opinion the best focal point for discussion of the provisions of title IV is section 401, the "Statement of Purposes," which lists the goals that the title IV provisions seek to accomplish. Title IV generally achieves those goals.

Admiral Turner, in his opening statement before this committee last week indicated that one of the reasons he has been a strong supporter of charter legislation is the fact that "the guiding legislation today is incomplete." While both of the Agency's enabling statutes, the National Security Act of 1947 and the Central Intelligence Agency Act of 1949, have been invaluable tools which enabled this country to build a strong inetelligence collection capability, they, like anything else, must be reviewed and updated in light of past history, new demands, and future contingencies. The CIA has functioned for the past 30 years under these statutes, but the time has come, as section 401(a) puts it, "to clarify the statutory authorities, functions, and responsibilities of the central intelligence agency". Mr. Chairman, the President, the Director of Central Intelligence, and I support this effort fully.

Title IV of S. 2284 would repeal provisions of the National Security Act of 1947 that relate to the CIA and the CIA Act of 1949, and would reestablish the Agency "under the direction of the National Security Council and subject to intelligence plans, objectives, and requirements established by the Director of National Intelligence." Section 412 provides that the Director of National Intelligence and the Director of the CIA shall be the same person, unless the President decides otherwise, with the advice and consent of the Senate.

In accordance with the second "purpose" of title IV (section 401 (2)), “to authorize the Central Intelligence Agency to perform intelligence activities that are necessary for the conduct of the foreign relations and the protection of the national security of the United States", title IV clearly delineates the authorities of the Agency to collect, analyze, produce, and disseminate intelligence and to conduct special activities (section 414 (b)). One of the key provisions of title IV is reiteration in section 412(e) (4) of the director of the Agency's authority "to protect intelligence sources and methods from unauthorized disclosure."

Mr. Chairman, title IV contains many other positive provisions too numerous to mention. I would like, however, to commend four provisions to the attention of the committee:

First, section 414(b) (10) authorizes the Agency to "coordinate the overt collection of foreign intelligence by entities of the intelligence community from witting and voluntary sources within the United States." A slightly modified version of this provision which has administration approval is attached in an appendix. This amendment would make clear that the coordination of these overt collection activities would be subject to policy guidance of the Director of National Intelligence. Such guidance is now provided by the Director of Central Intelligence.

Secondly, section 431 (c) would allow the Director of the Agency in specified circumstances to extend to CIA employees by regulation certain benefits and allowances for foreign service employees that are enacted subsequent to the enactment of S. 2284. This authority to provide for the extension of such benefits by regulation of the director alone does not have administration approval. The administration and the Office of Management and Budget recognize, however, that it would frequently be appropriate to extend these subsequently enacted