Reason Magazine - Staff

Making a Meth of the PATRIOT Act

info@reason.com (John Berlau) — Thu, 23 Feb 2006 15:15:00 EST

If you thought al Qaeda or Iraqi insurgents were the major threats facing America, Rep. Charlie Dent (R-Pa.) says you're wrong. According to Dent, "The growing availability of methamphetamine is a form of terrorism unto itself." Many of Dent's colleagues apparently agree, so they've attached surveillance, "smuggling", and "money laundering" provisions to the reauthorization of the USA PATRIOT Act.

These vast new police powers, contained in a new "Combat Methamphetamine Act" (CMA) and other provisions, serve no purpose in the ongoing and serious struggle against terrorism. One proposal could place millions of Americans who purchase cold medicine on a huge government watch list; another could broaden powers that have been used to prosecute people for catching lobsters whose tails are too short. What could possibly be Congress' motivation in adding stuff like this to a mammoth piece of counterterrorism legislation (ironically, as part of an agreement negotiated with wavering Senators to put more checks on the government's PATRIOT Act powers)? The answer is, to tweak the parlance of pundits, very September 10th. The CMA pushes Congress's favorite pre-9/11 bipartisan activity: escalating the never-ending War on Drugs.

Ironically, some Democrats who objected to National Security Agency wiretaps in December actually championed provisions that step on privacy in the name of stopping meth. Sen. Dianne Feinstein, (D-Calif.), who voted for a filibuster after the revelation of the National Security Agency's domestic spying program in December, co-sponsored the CMA and helped insert it into the PATRIOT Act conference report after failed attempts to pass it through other legislation. The new provisions were stalled with the filibuster and temporary PATRIOT extensions, but now appear to be poised for passage with the compromise bill.

The CMA would move cold medicines such as Sudafed behind the counter, on the grounds that their active ingredient, pseudoephedrine, is a potential meth component. In DiFi's words, the solution to this non-problem would include "requiring purchasers to show identification and sign a log book."

Once you sign for your medicine, your name becomes part of "a functional monitoring program" that would "allow law enforcement officials to track and ultimately prevent suspicious buying behavior of ingredients for meth production," according to a Feinstein press release describing a similar stand-alone bill.

Provisions such as these have already been enacted at the state level, and they've attracted criticism from groups not normally opposed to strong measures in the war on terror or the war on drugs. The conservative groups Frontiers of Freedom and the American Legislative Exchange Council, along with Dennis Vacco, New York State's Republican former Attorney General, have criticized state bans on over-the-counter cold medicine.

But the federal CMA goes further than even many of the state laws have. In North Carolina, a state not notorious for being soft on drugs, lawmakers exempted liquid and gelcap forms of medicines with pseudoephedrine, as well as children's versions of the medicine, from behind-the-counter rules. The federal CMA makes no such exceptions.

The PATRIOT Act's new anti-meth provisions don't end there. One would classify "methamphetamine precursors" such as pseudoephedrine in the same manner as "Schedule II" drugs" like opium in order to set domestic "production quotas." And there are enhanced penalties and broadened definitions for "smuggling" and "money laundering" with no terrorism prerequisites.

The Heritage Foundation, which supports the PATRIOT Act and general drug-control measures, nevertheless charges that even the current loose definitions of money laundering and smuggling are leading to the "overcriminalization" of petty regulatory violations. A Heritage paper cites an astonishing example of how far combating meth could take the PATRIOT Act from its ostensible business of combating terrorism. Fisherman David McNab is now serving a multi-year sentence because smuggling and money laundering charges were tacked on to a minor environmental violation in bagging lobsters that were less than 5.5 inches in length. "The lobsters were 'smuggled' in plastic bags for all to see," Heritage authors Paul Rosenzweig and Ellen S. Podgor note. "The proceeds from the sale of the lobsters were 'laundered' because they were deposited in a bank." (A good description of the McNab case is also available in Gene Healy's Cato Institute book Go Directly to Jail: The Crminalization of Almost Everything, but one detail is worth noting here: McNab wasn't even guilty of attacking American lobster interests: He was fishing in Honduras, and the smuggling charge stems from his violation of the "Lacey Act," a law that prohibits importation of wildlife that was taken in violation of foreign law.)

Sadly, even with some checks on the PATRIOT Act, these new liberty-threatening items are poised to slip by as "bipartisan" and "non-controversial." But one force that might stop them is a coalition of genuine civil libertarian critics of the PATRIOT Act combined with PATRIOT supporters who think that new anti-terrorism powers should be limited to terrorism cases. For if bending the PATRIOT Act to combat meth isn't legislative mission creep, nothing is.

Sarbanes-Oxley vs. the Free Press

info@reason.com (John Berlau) — Sun, 01 Jan 2006 00:00:00 EST

Back in June, when New York Times reporter Judith Miller was about to go to jail on contempt charges for refusing to testify about her anonymous sources, she and the Times had company in legal hot water: Matthew Cooper and his bosses at Time magazine. Both journalists were subpoenaed by prosecutor Patrick Fitzgerald, and both were alternately praised as First Amendment heroes and vilified as arrogant media elitists. But on June 9, in a move that took many by surprise, Time Inc. surrendered the magazine's notes to Fitzgerald and revealed its anonymous source in the Valerie Plame/Karl Rove/Joe Wilson/Robert Novak saga.

That much is well-known. What isn't widely understood is the role that may have been played by a law that most people don't associate with free press issues, the Sarbanes-Oxley Act, passed in the wake of the Enron scandal, along with related crackdowns on corporations.

Much of the reaction to Cooper's capitulation and Miller's imprisonment contrasted the two news organizations in terms of their editorial gumption. Virtually nothing was said about the growth in prosecutorial power in recent decades, even though a bipartisan journalistic consensus from Salon to The Wall Street Journal's editorial page argued that Fitzgerald had stepped way over the line in his treatment of the news organizations. Amazingly, even as Fitzgerald let Miller languish in jail for months, Time Inc. supplanted him as the villain in many media commentaries.

In taking on Time Inc., Fitzgerald seemed to take a page from New York's anti-corporate crusader of an attorney general, Eliot Spitzer. Fitzgerald came up with novel ways to implicitly and explicitly threaten all of Time's executives and corporate directors with steep fines and/or jail time. He tapped into a populist theme in his courtroom arguments and briefs, arguing that Time's officers and board members could individually be held responsible for the corporate "crime" of withholding documents. "The theory that he cited was, 'How could a board possibly permit violation of a court order?' " says Floyd Abrams, the respected First Amendment attorney who represented Miller as well as Time and Cooper at various points in the case. "He certainly suggested there could be criminal sanctions imposed on individuals in senior management if they defied the court order."

On June 28, the day after the Supreme Court refused to hear an appeal of the circuit court decision against Time Inc. and to revisit whether the First Amendment gives reporters any privilege to shield sources, Fitzgerald filed a motion specifically asking that Time Inc. CEO Ann Moore be present at the next court hearing. This was necessary, Fitzgerald argued, "so that the CEO can explain to the Court the manner in which Time's officers and/or directors purport to have authorized Time to act contrary to law; and the Court can direct the CEO of Time to comply with this order upon pain of contempt" (emphasis added).

In his arguments, Fitzgerald suggested that Time's officers and directors should face penalties equal to, if not greater than, the penalties Cooper was facing for not surrendering the notes. "Time, as well as its controlling officers, have no legal right to defy a final court order, and an officer failing to take steps to have the corporation comply could be punished by contempt," he said in the motion. In court on June 29, Fitzgerald said to U.S. District Judge Thomas Hogan, "I don't know how under any set of circumstances a corporate board could meet and agree to break the law." He also asked Hogan to levy a fine on Time Inc. large enough "to impact on the shareholders to try to coerce them."

Fitzgerald argued for the Court to deal with Time as a company first, saying that this could persuade Cooper to fall in line. "If we deal with Time Inc. first and Time produces the documents which include Mr. Cooper's notes," he said, "I think that might be material, a fact that might aid the rest of Mr. Cooper's situation [and] a fact that may sway Mr. Cooper to follow the Court's order."

Hogan took his advice about going after the corporation first, and things worked out pretty much as Fitzgerald had predicted. Time Inc. surrendered the documents the next day, and a week later Matthew Cooper surrendered his notes fingering his source as White House Deputy Chief of Staff Karl Rove. Cooper justified his decision by saying Rove had given him a new, specific waiver.

No Document Is Private

How could a prosecutor bring one of the largest and most powerful media organizations in history so completely to heel?

In 2002, with many journalists cheering him on, President Bush signed the Sarbanes-Oxley Act, one of many new laws that have expanded the list of corporate crimes and ratcheted up criminal penalties to terms longer than some serve for murder. Critics have complained that these laws criminalize risk taking. Fitzgerald's use of anti-corporate rhetoric and new legal precedent shows that can include risk taking by media companies.

Fitzgerald wasn't making his argument against Time in a legal vacuum. In his motion, he cited a 2003 case in which the U.S. Court of Appeals for the Sixth Circuit ruled that an officer of a Michigan company could be held in contempt of court for the business's lack of compliance with a court order, even though the officer had not been subject to any legal action, such as a lawsuit or indictment, as an individual. Michigan corporate attorney Nathan D. Plantinga warned in 2003 that the case "represents a significant change in the law and new exposure of corporate officers to liability and sanctions."

This is what Time Inc. faced, and that is why comparisons to The New York Times aren't completely fair. Fitzgerald could go after Time as a corporation. But Miller, who never filed a story about Plame, "apparently kept personal possession of her notes and the Times' view is it never had them," The Wall Street Journal reports. Since it seems there were no corporate documents to be surrendered, Fitzgerald never had the opportunity to ask the court to hold officers and directors of the New York Times Co. in contempt. Time Inc. wasn't so lucky.

The Sarbanes-Oxley Act includes provisions that, even if they weren't a factor in Time Inc.'s decision, will almost surely affect the use and protection of anonymous sources in the future. The law was passed right after the Enron and WorldCom bankruptcies. Like the PATRIOT Act, it was rushed through after a crisis, and many provisions weren't scrutinized. Right now businesses are struggling with the costly Section 404, which mandates that accountants certify "internal controls" that are only tangentially related to a company's financial statements. (See "You Can Be Too Careful," page 40.)

But it's the law's broad definition of "obstruction of justice" that has First Amendment and civil liberties experts concerned. Because of the media coverage of accounting firm Arthur Andersen's memo shredding during the Enron scandal--shredding the Supreme Court has now said was not necessarily improper--Sarbanes-Oxley increased penalties and created new offenses related to document concealment. Section 802 applies not just to corporate fraud but to "the investigation or administration of any matter within the jurisdiction of any department or agency of the United States." It punishes a person who "knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document or tangible object" with new penalties of up to 20 years in prison. The record tamperer need not have a "corrupt" motive.

Corporate Reform vs. a Free Press

Spokespeople for Fitzgerald and Time Inc. declined to say what role, if any, Sarbanes-Oxley played in the events leading to Time Inc.'s surrender of Cooper's documents. But even if Fitzgerald did not directly threaten Time with Sarbanes-Oxley, it's not a stretch to say that good lawyers would take the law and its sentencing provisions into consideration. "You have a risk that a vigorous prosecutor will think of that act as obstruction of justice, and you don't know what a jury will do," says Ronald Rotunda, a professor at the George Mason University School of Law who specializes in legal ethics.

And for the press, the "obstruction of justice" provision may cover more than just withholding notes from the government once an investigation has begun. It may also endanger the common practice of routinely destroying notes to protect anonymous sources. For decades, newsrooms have shredded or thrown away notes some time after using them both to save space and to prevent prosecutors like Fitzgerald from demanding them as part of an investigation. This "routine expungement is a longstanding practice in many news organizations," says Sandra Davidson, a professor of communications law at the University of Missouri School of Journalism. Sarbanes-Oxley, because it covers document destruction even "in contemplation" of a federal investigation, could apply to the press's "routine expungement" practices, scholars say. "If you're destroying documents to prevent them from being subpoenaed," says Rotunda, "you have a risk that a vigorous prosecutor will think of that as obstruction of justice."

Because it's hard for journalists to analyze the changing legal environment, Plamegate coverage has tended toward character-driven treacle about journalism's fall from grace. In the October Vanity Fair, the legendary Watergate reporter Carl Bernstein never mentions Fitzgerald by name. He does devote a couple sentences to arguing that Fitzgerald's prosecution is out of control, but he saves most of his venom for Time Inc. He smugly compares the actions of The Washington Post's late publisher Katharine Graham to those of Time Inc. officials.

"In 1972, Katharine Graham did the opposite of what Time editor in chief Norman Pearlstine did in 2005," Bernstein writes. "She took formal control of our notes and unequivocally declared she would go to jail rather than give them up or reveal their contents--as would we....Pearlstine's actions suggested that he had a responsibility to protect the profits and corporate interests of Time Warner first--and journalistic principle second."

Others have charged that Time made the decision only to further its bottom line. The Brussels-based International Federation of Journalists issued a statement saying it was "impossible not to conclude that commercial interests have taken priority over a principled defense of professional secrecy."

To Bernstein and others, the erosion of journalistic standards is the only significant change since 1972. But to focus on the rise of big media corporations and ignore the new prosecutorial powers the state can use against them is to miss an important part of the story. At their best, big media corporations are still an important part of the investigative journalistic landscape, because they have the resources to probe wrongdoing by government and business. (Indeed, Time Inc.'s Fortune was one of the first publications to raise questions about Enron before the scandal broke.)

To be effective at restraining prosecutorial power, any proposed shield law should specifically protect media entities, as well as "journalists" broadly defined, from subpoenas related to news gathering. Like the free market, the free press may allow behavior that some consider unethical, such as excessively cozy relationships between reporters and their sources. But criminalizing the anonymous source relationship would make society less informed and less free.

Reporters and commentators in the establishment media need to rethink their cheerleading for Sarbanes-Oxley and so-called corporate reform. From their privileged perch, journalists frequently have advocated giving prosecutors and grand juries more power over their fellow citizens, especially those who work for big corporations. But prosecutors like Fitzgerald see a media company as just another corporation. Now that the media are under the government's thumb, they may be a bit more skeptical in covering the crusade against corporate crime.�

Citizen Snoops Forever

info@reason.com (John Berlau) — Mon, 06 Dec 2004 00:00:00 EST

As the House and Senate in this week's "lame duck" session wrangle over differences on immigration and Pentagon authority in the intelligence overhaul bill, civil libertarians should be very concerned about another section of the bill that many members of both bodies seem to agree on. The intelligence bill seeks to end the "sunset" clause of what experts say is one of the most privacy-harming sections of the USA PATRIOT Act, allowing it to be extended permanently without congressional review. This is the section of the bill supposedly designed to fight money laundering by forcing businesses to conduct even more routine customer surveillance. And it does so even though the 9/11 Commission report casts heavy doubt on the effectiveness of know-your-customer type programs at fighting terrorism.

Title III of the PATRIOT Act required a broad category of businesses defined as "financial institutions" to set up anti-money laundering programs similar to those already in existence for banks. From the definitions of the PATRIOT Act and other statutes, These "financial institutions" specifically include auto dealers, jewelry stores, travel agencies, and financial service providers, as well as any other type of business the Treasury Department regulators deem to have a connection to money laundering (This speech given by a deputy assistant Treasury secretary to a jewelers' trade association offers a useful synopsis of the change in the law) . Like the banks, these new businesses are being forced to report transactions that meet an arbitrary and secretive definition of "suspicious activity," which regulators have sometimes defined to mean anything that deviates from a customer's normal transactions.

To assuage privacy concerns, the writers of the PATRIOT Act's Title III put in a clause called section 303 that put the provisions up for congressional review "on and after" Jan. 1, 2005. While not as strong as the sunset clauses contained in other parts of the law up for review next year, it does create a procedure to repeal Title III if just one House or Senate member introduces a joint resolution. If introduced, the repeal legislation receives "expedited consideration," ensuring it will receive a vote and not be bottled up in committee.

But even this mild privacy safeguard will be killed if the intelligence bill in its current form passes. In the sections of the House intelligence bill added by the House Financial Services Committee, a clause states "Title III of Public Law 107-56 [the PATRIOT Act] is amended by striking section 303." The clause's title makes its intentions clear. It is called "Repeal of Review," referring to the congressional review provisions of the money-laundering section of the PATRIOT Act.

A version of the Senate "compromise" on the table before Congress adjourned for Thanksgiving contained the House's repeal of Congressional review (see attached version obtained by this writer.). While negotiators were hung up over other things, "differences over a number of financial provisions in the bill have been settled," reported Dow Jones Newswires. But they have not settled well with privacy advocates, who are fuming at the bill's repeal of one of the few checks on the PATRIOT Act.

"These money laundering provisions are of concern to consumers who buy gold or jewelry or boats or even cars," notes James Plummer, director of the Privacy Group of the free-market National Consumer Coalition. "Now there's going to be no chance to come back and revisit this next year, because if this passes next week, that chance will be gone."

Former Rep. Bob Barr (R-GA), who voted for the PATRIOT Act but was instrumental in getting many of the sunset clauses added, says he is angry that this sunset is being removed without the debate that should occur next year. "We were hoping that these would be looked at in 2005 and that hearing would be had so that we could very methodically go through and see how the administration had been using these provisions, whether or not they truly were as instrumental as the administration would have us believe in fighting terrorism, and whether or not adjustments needed to be made at the time," Barr says. "Now, if this provision goes through, we won't have the opportunity to do that.

Barr, who is now a consultant on privacy to the American Conservative Union and the American Civil Liberties Union, adds: "When we provided for the sunset provisions in 2001, it was certainly my hope that they would be addressed openly and specifically rather than piecemeal in other legislation. Doing that defeats the intent of having the sunset provision in the first place."

Eroding privacy in the name of fighting money laundering, unfortunately, has bipartisan support. As Reason has previously pointed out, Title III was added to the PATRIOT Act by the then Democratic-controlled Senate and was championed by Massachusetts Sen. John Kerry. Despite the ACLU's criticism of Title III, most recently in its report "The Surveillance-Industrial Complex," many Democrats seem all too willing to throw civil liberties out the window in supporting money-laundering laws that promise to go after customers of so-called "tax havens." Title III isn't even addressed in the SAFE Act, the most prominent bipartisan bill designed to rein in the PATRIOT Act.

But there is a small but growing backlash among jewelers, gold dealers, and car dealers, and other owners of the loosely defined "financial institutions" who object to a law that forces them to be government snoops on their longtime customers. Trade groups such as the Jewelers Vigilance Committee and the American Council of Life Insurers are complaining publicly about the burdensome new rules. For traditional financial services alone, compliance with the PATRIOT anti-money laundering provisions is projected to cost $10.9 billion by the end of 2005, according to the research firm Celent Communications. No wonder that the champions of forced business spying didn't want to present even this watered down procedure for congressional review, says banking industry consultant Bert Ely. "If I was on the other side, I'd want that damn thing out of there!" he says.

In a press release, Rep. Mike Oxley (R-OH), chairman of the House Financial Services Committee (which has not responded to requests for comment), cited the 9/11 Commission report as justification for the sunset repeal and other measures. But that report actually casts a skeptical eye on whether a broad-brush approach such as that contained in the PATRIOT Act would ever be able to find the terrorist money trail. For the 9/11 attacks, "Al Qaeda had many avenues of funding. If a particular funding source dried up, al Qaeda could have easily tapped a different of diverted funds from another project to fund an operation that cost $400,000 to $500,000 over nearly two years," the report notes in Chapter 5. And in a stunning statement in footnote 90 of Chapter 6, the Commission stated with regard to the reporting rules for wire transfer businesses that went into effect shortly after 9/11 and other anti-money laundering regulations, "It is an open question whether such legislative or regulatory initiatives would have significantly harmed al Qaeda, which generally made little use of the U.S. financial system to move or store its money."

This further adds to the case made by national security and privacy experts last year in Reason for a more targeted approach with human intelligence and targeted surveillance of the specific entities believed to be funding terrorism, rather than the current PATRIOT Act requirements that every U.S. bank, jewelry store, and car dealer profile their customers for "suspicious activity." But in the rush to "do something," the House and Senate have pushed through provisions that will further erode privacy and likely make it harder to fight terrorism. In addition to gutting Title III's sunset, the bill gives the Treasury further authority to make banks report random "cross-border transactions." It also contains a slew of "technical corrections" to the PATRIOT Act that seem merely to replace words and correct grammar, but could result in some nasty surprises. All the better to wait until next year to weigh these provisions in full and open debate. The victims of 9/11 deserve no less.

John Kerry's Dark Record on Civil Liberties

info@reason.com (John Berlau) — Fri, 01 Oct 2004 00:00:00 EDT

For John Kerry, the specter of Attorney General John Ashcroft trashing Americans' civil liberties has been a useful campaign prop. In campaign stops, Kerry has promised to "end the era of John Ashcroft and renew our faith in the Constitution." In a Kerry administration, he promised the liberal group MoveOn last year, "there will be no John Ashcroft trampling on the Bill of Rights." In his 2004 campaign book, A Call to Service, Kerry accuses Ashcroft and the Bush administration of "relying far too much on extraordinary police powers."

In contrast, Kerry positions himself as a civil libertarian -- or at least as a proponent of a reasonable balance between liberty and security. "If we are to stand as the world's role model for freedom, we need to remain vigilant about our own civil liberties," Kerry writes in A Call to Service. He calls for "rededicating ourselves to protecting civil liberties."

Kerry, like every other senator in the chamber except Russell Feingold (D-Wis.), voted for the USA PATRIOT Act in the wake of 9/11. Now he is co-sponsoring the SAFE Act, a bipartisan measure that restricts some of the powers that the PATRIOT Act granted the government. Furthermore, he is critical of the package of proposals from Ashcroft's Department of Justice (DOJ) that has been dubbed Patriot II. Citing his experience as a prosecutor -- he was an assistant district attorney in suburban Boston in the '70s -- Kerry writes, "I know there's a big difference between giving the government the resources and commonsense leeway it needs to track a tough and devious foe and giving in to the temptation of taking shortcuts that will sacrifice liberties cheaply without significantly enhancing the effectiveness of law enforcement. Patriot II threatens to cross that line -- and to a serious degree."

Sacrificing Personal Privacy

This isn't the first time Kerry and Ashcroft have been at odds over civil liberties. In the 1990s, government proposals to restrict encryption inspired a national debate. Then as now, the American Civil Liberties Union (ACLU) and electronic privacy groups locked horns with the DOJ and law enforcement agencies. Then as now, Kerry and Ashcroft were on opposite sides.

But there was a noteworthy difference in those days. Then it was Sen. John Ashcroft (R-Mo.) who argued alongside the ACLU in favor of the individual's right to encrypt messages and export encryption software. Ashcroft "was kind of the go-to guy for all of us on the Republican side of the Senate," recalls David Sobel, general counsel of the Electronic Privacy Information Center.

And in what now seems like a bizarre parallel universe, it was John Kerry who was on the side of the FBI, the National Security Agency (NSA), and the DOJ. Ashcroft's predecessor at the Justice Department, Janet Reno, wanted to force companies to create a "clipper chip" for the government -- a chip that could "unlock" the encryption codes individuals use to keep their messages private. When that wouldn't fly in Congress, the DOJ pushed for a "key escrow" system in which a third-party agency would have a "backdoor" key to read encrypted messages.

In the meantime, the Clinton administration classified virtually all encryption devices as "munitions" that were banned from export, putting American business at a disadvantage. In 1997 Senate Commerce Committee Chairman John McCain (R-Ariz.) pushed the Secure Public Networks Act through his committee. This bill would have codified the administration's export ban and started a key escrow system. One of his original co-sponsors was his fellow Vietnam vet and good friend from across the aisle, John Kerry.

Proponents such as McCain and Kerry claimed that law enforcement could not get the key from any third-party agency without a court order. Critics responded that there were loopholes in the law, that it opened the door to abuses, and that it punished a technology rather than wrongdoers who used that technology. Some opponents argued that the idea was equivalent to giving the government an electronic key to everyone's home. "To date, we have heard a great deal about the needs of law enforcement and not enough about the privacy needs of the rest of us," said then-Sen. Ashcroft in a 1997 speech to the Computer and Communications Industry Association. "While we need to revise our laws to reflect the digital age, one thing that does not need revision is the Fourth Amendment....Now, more than ever, we must protect citizens' privacy from the excesses of an arrogant, overly powerful government."

But John Kerry would have none of this. He had just written The New War: The Web of Crime That Threatens America's Security, a book about the threat of transnational criminal organizations, and he was singing a different tune on civil liberties. Responding directly to a column in Wired on encryption that said "trusting the government with your privacy is like having a Peeping Tom install your window blinds," Kerry invoked the Americans killed in the 1993 bombing of the World Trade Center and the 1995 bombing of the Alfred P. Murrah Building in Oklahoma City. "[O]ne would be hard-pressed," he wrote, "to find a single grieving relative of those killed in the bombings of the World Trade Center in New York or the federal building in Oklahoma City who would not have gladly sacrificed a measure of personal privacy if it could have saved a loved one."

Change a few words, and the passage could easily fit into Attorney General Ashcroft's infamous speech to the Senate Judiciary Committee in late 2001 -- the one where he declared, "To those who scare peace-loving people with phantoms of lost liberties, my message is this: Your tactics only aid terrorists -- for they erode our national unity and diminish our resolve."

If Ashcroft was encryption advocates' go-to guy on the GOP side in the encryption debate, Kerry played that role for law enforcement among the Democrats. "John Kerry was always a pretty strong proponent of law enforcement and the military, and the NSA was not terribly crypto-friendly, and the FBI was extremely uncrypto-friendly," says Will Rodger, who covered the encryption debate for USA Today and is now public policy director at the Computer and Communications Industry Association. "John Kerry's support for limiting encryption wasn't a real shock to most people who had followed his voting record."

Eventually, the strength of the business and civil liberties opposition -- plus the sheer impossibility of keeping up with encryption technology -- led the Clinton administration and Kerry to accept relaxed encryption controls. Today it seems laughable that software would ever have been labeled as "munitions"; even Ashcroft's DOJ did not try to include a key escrow system in the PATRIOT Act.

"Get Their Ass and Get Their Assets"

The Bush administration is not likely to point out Kerry's position in favor of encryption control, because it is trying to paint him as soft on crime and terrorism. Kerry does hold many traditionally liberal views on crime, including a consistent opposition to the death penalty. But encryption was just one of many issues in Kerry's Senate career where he and civil libertarians were on opposite sides. And while Kerry is in some respects singing a different tune today on civil liberties, he has never walked away from his statements in The New War. In fact, he displays the book in an ad that began running in late June as evidence that he authored an antiterrorism strategy way back in the late '90s.

Although the encryption fight appears to be over, similar battles are being fought today. For instance, as with encryption, the FBI now wants preemptive design mandates so it can have an automatic mechanism to tap into Voice over Internet Protocol, the fledgling technology that allows people to make phone calls online. Once again, law enforcement wants tech firms to build a "back door" for the police. Wayne Crews, director of technology studies at the pro-market Competitive Enterprise Institute, notes that Kerry has been silent on the FBI's efforts. "The only thing I've heard from Kerry on technology regulation is continued investment from the federal government," Crews says.

This isn't the only issue that could be worrisome for civil libertarians, given Kerry's record in the '90s. In general, whenever the ACLU was aligned with business interests, Kerry took the side of law enforcement against what he called "big money."

An example is the fight over asset forfeiture. In the 1980s war on drugs, the laws were stretched so that property that had been used for criminal purposes could be seized by law enforcement even if the owner of that property was innocent. If a drug dealer rode in your car or your airplane, for example, it was subject to seizure, and you would have to sue to get it back by proving you had no knowledge that a dealer had used it for illicit purposes. This was the case even if you had never been charged with any crime. The resale of impounded property became a source of revenue -- and corruption -- for local police departments. Even in cases where there were actual criminal convictions, governments would often seize assets that were not related to the crime or to compensating victims.

In the mid-1990s, a bipartisan movement arose to reform the forfeiture laws, with conservative Republican Reps. Henry Hyde of Illinois and Bob Barr of Georgia joining with such liberal Democrats as Reps. John Conyers of Michigan and Barney Frank of Massachusetts. They wanted to increase the burden of proof on the government when it seized property. As with encryption, there was stiff opposition to reform from Janet Reno's Justice Department.

What was Kerry's position? He thought U.S. asset forfeiture laws were working so well that he wanted to export them. "We absolutely must push for asset forfeiture laws all over the planet," Kerry wrote in The New War. "In the words of one plainspoken lawman, 'Get their ass and get their assets.'" There was, tellingly, no discussion at all of civil liberties issues.

Kerry added that we can't reasonably expect another country "to assist us in our struggle with crime if it does not see direct benefit for itself, especially if it is among the countries with highly limited funds for law enforcement." It didn't seem to occur to Kerry that, without safeguards, countries "with highly limited funds" might go after the assets of innocent people or third parties with only a tangential relationship to the criminal. Indeed, the only "dark and dangerous underside" of international forfeiture he identified was the possibility that criminals would give up assets in exchange for avoiding jail sentences. "We must ensure that asset forfeitures do not become a substitute for serving time," he wrote. (In 2000, after being watered down by the Reno Justice Department, the Civil Asset Forfeiture Reform Act passed the Senate by a voice vote and was signed into law by Clinton. Kerry did not object on the Senate floor; neither did Sen. Ashcroft.)

Know Your Candidate

Even a semi-sympathetic review in the liberal Washington Monthly called The New War "a kind of international edition of Reefer Madness," referring to the notoriously overwrought anti-drug movie of the 1930s. Kerry is an avid drug warrior, and after having discovered some genuine instances of bad guys' stashing their money at the $23 billion Bank of Credit and Commerce International, an international financial institution that was shut down in 1991 by various countries' bank regulators, he became a crusader against banks holding "dirty money." (BCCI had dealings with drug lords, Saddam Hussein, the PLO, and the KGB.) While it may be too much to ask a major-party presidential candidate to ponder drug prohibition's contribution to dirty money, Kerry's solution to money laundering was -- and is -- to deputize banks and force them to spy on all their customers.

Many on the left and right worried about overreach from the federal "Know Your Customer" regulations of 1997-98, which would have required banks to monitor every customer's "normal and expected transactions." Those proposed rules were eventually withdrawn after the ACLU, the Libertarian Party, and other groups generated more than 100,000 comments in opposition. But from his writings and statements, John Kerry seemed worried that the regulations did not go far enough. "If the standards by which banks accept money were lived up to with the same diligence as that by which most banks lend money, the 'know your customer' maxim would have teeth," he wrote in The New War. "But too many bankers pretend they are doing all they can to know what money crosses their threshold and pretend they are not as key as they are to law-enforcement efforts."

Kerry then expressed his belief that bank customers are entitled to essentially zero privacy. "The technology is already available to monitor all electronic money transfers," he wrote (emphasis added). "We need the will to make sure it is put in place."

Has a politician who seven years ago proposed all electronic transfers be monitored changed his views on civil liberties? That's the question I asked officials at Kerry's Senate office and presidential campaign. He promised to have someone answer questions about his civil liberties positions, but as of press time no one has responded to my calls. A close look at Kerry's statements on the PATRIOT Act, however, reveals that there is less to his opposition than meets the eye.

The Real Problem Is the Law

As noted above, Kerry is co-sponsoring the SAFE Act, which would limit the circumstances under which "sneak- and-peek" warrants can be issued under the PATRIOT Act. (PATRIOT broadened the government's power to conduct such searches, in which the person whose property is examined is not notified.) It also puts some brakes on PATRIOT provisions that give the FBI the power to search records on individuals held by third parties -- such as libraries, bookstores, and Internet service providers -- and the power to require the third parties to keep silent about the search.

But Kerry signed onto the SAFE Act only after his right flank was protected; the bill's original co-sponsors included conservative Sens. Larry Craig (R-Idaho) and Lisa Murkowski (R-Alaska) as well as Feingold. More tellingly, Kerry's support is premised on what he calls Ashcroft's abuses of the PATRIOT Act, not on PATRIOT itself. "John Kerry stands by his vote for the Patriot Act," says a March 11 campaign statement. "You can sum up the problems with the Patriot Act in two words: John Ashcroft....The real problem with the Patriot Act is not the law, but the abuse of the law."

In fact, the "real problem" is the law's provisions, which would be troubling in any administration. Responding to Kerry's statement, Gregory T. Nojeim, associate director of the ACLU's Washington National Office, says, "People from the left to the right agree that John Ashcroft is no civil liberties angel, but the problems of sneak-and-peek warrants and an overbroad notion of what constitutes terrorism are dangerous in the hands of any attorney general." Nojeim observes that the definition of terrorism is so broad that it could cover groups practicing civil disobedience, such as the anti-abortion Operation Rescue.

Meanwhile, Kerry continues to support intrusive efforts to stamp out money laundering. His campaign statement points out that Kerry "authored most of the money laun-dering provisions" in PATRIOT. Those provisions were largely based on an old money laundering bill that Kerry had introduced and which was opposed by economic conservatives and the ACLU. Kerry and other Democrats insisted that the money laundering provisions be attached to the PATRIOT Act. An October 2001 Associated Press article quoted Kerry as accusing Republicans of trying to remove the provisions "by fiat." The article noted that Kerry "underlined the political influence of Texas bankers."

The money laundering provisions, which became Title III of the PATRIOT Act, are some of the most privacy-threatening aspects of the bill. (See "Show Us Your Money," November 2003.) They go beyond the "Know Your Customer" rules of the late 1990s, bringing real estate brokers, travel agents, auto dealers, and various other businesses under the rubric of "financial institutions" that must monitor their customers and file "suspicious activity reports" on deviations from customers' normal patterns.

It was the Title III money laundering provisions that the FBI used in the much-criticized Operation G-String, an investigation of a strip club owner in Las Vegas accused of bribing local officials. The case had nothing to do with terrorism. Kerry -- whose provisions allowed it to happen -- has not cited this operation as one of Ashcroft's abuses, even though other Democrats have.

We have been told repeatedly that the world has changed since 9/11. Indeed, that is the explanation many have offered for Ashcroft's change of heart on civil liberties. But what about a candidate who, well before 9/11, consistently advocated measures that would have eroded those liberties? Would he be more or less constrained in the middle of a war on terror? To raise the issue is to take Kerry's own advice from his new book -- that we "remain vigilant about our own civil liberties."

John Kerry's Monstrous Record on Civil Liberties

info@reason.com (John Berlau) — Mon, 26 Jul 2004 00:00:00 EDT

For John Kerry, the specter of Attorney General John Ashcroft trashing Americans' civil liberties has been a useful campaign prop. In campaign stops, Kerry has promised to "end the era of John Ashcroft and renew our faith in the Constitution." In a Kerry administration, he promised the liberal group MoveOn in June 2003, "there will be no John Ashcroft trampling on the Bill of Rights." In his 2004 campaign book, A Call to Service, Kerry accuses Ashcroft and the Bush administration of "relying far too much on extraordinary police powers."

In contrast, Kerry positions himself as a civil libertarian—or at least as a proponent of a reasonable balance between liberty and security. "If we are to stand as the world's role model for freedom, we need to remain vigilant about our own civil liberties," Kerry writes in A Call to Service. He calls for "rededicating ourselves to protecting civil liberties."

Kerry, like every other senator in the chamber except Russell Feingold (D-Wis.), voted for the USA PATRIOT Act in the wake of 9/11. Now he is now co-sponsoring the SAFE Act, a bipartisan measure that restricts some of the powers that the PATRIOT Act granted the government. Furthermore, he is critical of the package of proposals from Ashcroft's Department of Justice (DOJ) that has been dubbed Patriot II. Citing his experience as a prosecutor—he was an assistant district attorney in suburban Boston in the '70s—Kerry writes, "I know there's a big difference between giving the government the resources and commonsense leeway it needs to track a tough and devious foe and giving in to the temptation of taking shortcuts that will sacrifice liberties cheaply without significantly enhancing the effectiveness of law enforcement. Patriot II threatens to cross that line—and to a serious degree."

But there was noteworthy difference in those days. Then it was Sen. John Ashcroft (R-Mo.) who argued alongside the ACLU in favor of the individual's right to encrypt messages and export encryption software. Ashcroft "was kind of the go-to guy for all of us on the Republican side of the Senate," recalls David Sobel, general counsel of the Electronic Privacy Information Center.

And in what now seems like a bizarre parallel universe, it was John Kerry who was on the side of the FBI, the National Security Agency, and the DOJ. Ashcroft's predecessor at the Justice Department, Janet Reno, wanted to force companies to create a "clipper chip" for the government—a chip that could "unlock" the encryption codes individuals use to keep their messages private. When that wouldn't fly in Congress, the DOJ pushed for a "key escrow" system in which a third-party agency would have a "backdoor" key to read encrypted messages.

In the meantime, the Clinton administration classified virtually all encryption devices as "munitions" that were banned from export, putting American business at a disadvantage. In 1997 Senate Commerce Committee Chairman John McCain pushed the Secure Public Networks Act through his committee. This bill would have codified the administration's export ban and started a key escrow system. One of his original co-sponsors was his fellow Vietnam vet and good friend from across the aisle, John Kerry.

Proponents such as McCain and Kerry claimed that law enforcement could not get the key from any third-party agency without a court order. Critics responded that there were loopholes in the law, that it opened the door to abuses, and that it punished a technology rather than wrongdoers who used that technology. Some opponents argued that the idea was equivalent to giving the government an electronic key to everyone's home. "To date, we have heard a great deal about the needs of law enforcement and not enough about the privacy needs of the rest of us," said then-Sen. Ashcroft in a 1997 speech to the Computer and Communications Industry Association. "While we need to revise our laws to reflect the digital age, one thing that does not need revision is the Fourth Amendment... Now, more than ever, we must protect citizens' privacy from the excesses of an arrogant, overly powerful government."

But John Kerry would have none of this. He had just written The New War, a book about the threat of transnational criminal organizations, and he was singing a different tune on civil liberties. Responding directly to a column in Wired on encryption that said "trusting the government with your privacy is like having a Peeping Tom install your window blinds," Kerry invoked the Americans killed in 1993 bombing of the World Trade Center and the 1995 bombing of the Alfred P. Murrah Building in Oklahoma City. "[O]ne would be hard-pressed," he wrote, "to find a single grieving relative of those killed in the bombings of the World Trade Center in New York or the federal building in Oklahoma City who would not have gladly sacrificed a measure of personal privacy if it could have saved a loved one." Change a few words, and the passage could easily fit into Attorney General Ashcroft's infamous speech to the Senate Judiciary Committee in late 2001—the one where he declared, "To those who scare peace-loving people with phantoms of lost liberties, my message is this: Your tactics only aid terrorists—for they erode our national unity and diminish our resolve."

Eventually, the strength of the business and civil liberties opposition—plus the sheer impossibility of keeping up with encryption technology—led the Clinton administration and Kerry to accept relaxed encryption controls. Today it seems laughable that software would ever have been labeled as "munitions"; even Ashcroft's DOJ did not try to include a key escrow system in the PATRIOT Act.

"Get Their Ass and Get Their Assets"

An example is the fight over asset forfeiture. In the 1980s war on drugs, the laws were stretched so that property that had been used for criminal purposes could be seized by law enforcement even if the owner of that property was innocent. If a drug dealer rode in your car or your airplane, for example, it was subject to seizure, and you would have to sue to get it back by proving you had no knowledge that a dealer had used it for illicit purposes. This was the case even if you had never been charged with any crime. The resale of impounded property became a source of revenue—and corruption—for local police departments. Even in cases where there were actual criminal convictions, governments would often seize assets that were not related to the crime or to compensating victims.

Even a semi-sympathetic review in the liberal Washington Monthly called The New War "a kind of international edition of Reefer Madness," referring to the notoriously overwrought anti-drug movie of the 1930s. Kerry is a drug warrior, and after having discovered some genuine instances of bad guys' stashing their money at the $23 billion Bank of Credit and Commerce International, an international financial institution that was shut down in 1991 by various countries' bank regulators, he became a crusader against banks holding "dirty money." (BCCI had dealings with drug lords, Saddam Hussein, the PLO, and the KGB.) While it may be too much to ask a major-party presidential candidate to ponder drug prohibition's contribution to dirty money, Kerry's solution to money laundering was—and is—to deputize banks and force them to spy on all their customers.

Has a politician who seven years ago proposed all electronic transfers be monitored changed his views on civil liberties? Officials from Kerry's Senate office and presidential campaign promised to have someone answer questions about his civil liberties positions, but no one ever had. A close look at his campaign's statements on the PATRIOT Act, however, reveals that there is less to his opposition than meets the eye.

As noted above, Kerry is cosponsoring the SAFE Act, which would limit the circumstances under which "sneak- and-peek" warrants can be issued under the PATRIOT Act. (PATRIOT broadened the government's power to conduct such searches, in which the person whose property is examined is not notified.) It also put more brakes on PATRIOT provisions that give the FBI the power to search records on individuals held by third parties—such as libraries, bookstores, and Internet service providers—and the power to require the third parties to keep silent about the search. But Kerry signed onto the SAFE Act only after his right flank was protected; the bill's original co-sponsors included conservative Sens. Larry Craig (R-Idaho) and Lisa Murkowski (R-Alaska) as well as Feingold. More tellingly, Kerry's support is premised on what he calls Ashcroft's abuses of the PATRIOT Act, not on PATRIOT itself. "John Kerry stands by his vote for the Patriot Act," says a March 11 campaign statement. "You can sum up the problems with the Patriot Act in two words: John Ashcroft... The real problem with the Patriot Act is not the law, but the abuse of the law."

Meanwhile, Kerry continues to support intrusive efforts to stamp out money laundering. His campaign statement points out that Kerry "authored most of the money laundering provisions" in PATRIOT. Those provisions were largely based on an old money laundering bill that Kerry had introduced and which was opposed by economic conservatives and the ACLU. Kerry and other Democrats insisted that the money laundering provisions be attached to the PATRIOT Act. An October 2001 Associated Press article quoted Kerry as accusing Republicans of trying to remove the provisions "by fiat." The article noted that Kerry "underlined the political influence of Texas bankers."

It was the Title III money laundering provisions that the FBI used in the much-criticized Operation G-String, an investigation of a strip club owner in Las Vegas accused of bribing local officials. The case had nothing to do with terrorism. Tellingly, Kerry—whose provisions allowed it to happen—has not cited this operation as one of Ashcroft's abuses, even though other Democrats have.

We have been told repeatedly that the world has changed since 9/11. Indeed, that is the explanation many have offered for Ashcroft's change of heart on civil liberties. But what about a candidate who, well before 9/11, consistently advocated measures that would have eroded those liberties? Would he be more or less constrained in the middle of a war on terror? To raise the issue is to take Kerry's own advice from his new book—that we "remain vigilant about our own civil liberties."

Dangerous Deputies

info@reason.com (John Berlau) — Fri, 05 Dec 2003 00:00:00 EST

One night a few weeks ago, I was half-watching a black-and-white, early '60s episode of The Andy Griffith Show on TV LAND (Episode 60, "The Bookie Barber"), when, all of a sudden, the homespun wisdom of Griffith as Sheriff Andy Taylor touched on today's heated debate over how to balance individual privacy with security. Andy responded to a suggestion by his deputy Barney Fife by saying: "You can't ask a private citizen to become a police spy. It's too dangerous. Something could go wrong." The statement jolted me, and I thought, if only Sheriff Taylor had been there to offer this profound piece of advice to the Republicans and Democrats writing the USA PATRIOT Act.

Title III of the act, which contains provisions to counter money-laundering, requires a host of private businesses to become "police spies" on their customers. These little-known provisions of the much-talked about law draft a substantial number of private-sector employees as citizen soldiers in the war on terrorism as well as on the broadly-defined crime of "money laundering."

Do you think I'm exaggerating when I say "citizen soldiers"? Well, I'm only using the very terminology of one of the chief defenders of these provisions, former Treasury Department general counsel David Aufhauser. While at Treasury in 2002, Aufhauser gave this candid statement to The Washington Post: "The Patriot Act is imposing a citizen-soldier burden on the gatekeepers of financial institutions." He justified what he admitted was an enormous burden on businesses by saying "they are in the best position to police attempts by people who would do ill to us in the U.S. to penetrate the financial system."

Just as importantly, the PATRIOT Act also redefines the term "financial institution" to include a broad swath of businesses. The law gives the Feds the authority to apply "know your customer" requirements to securities firms, insurance companies, real estate brokers, auto dealers, jewelry stores, as well as any other business the government finds has "a high degree of usefulness in criminal, tax, or regulatory matters." New intelligence bills that have recently passed both the House and the Senate also include these businesses as "financial institutions" for the purpose of "national security letters," broad ranging administrative subpoenas for records that the FBI can send to the businesses without judicial oversight.

But as Aufhauser admitted, what Title III requires of these businesses is more than just complying with search warrants or subpoenas. They must actively monitor their customers, report transactions over a certain amount and also file what Treasury's Financial Crimes Enforcement Network, or FinCEN, calls "suspicious activity reports" on certain transactions that deviate from customers' normal patterns. Failure to report "suspicious activity" can result in civil or criminal penalties set by the Patriot Act. Since Sept. 11, FinCEN applied the financial monitoring requirements to brokerage houses, casinos, and so-called "money service businesses," a category that includes small convenience stores that process money orders or sell smart cards. It has also drafted rules for real estate agents, travel agents, and auto dealers. And that imposes great burdens on small entrepreneurs, who face increased costs and must file reports on their legitimate customers.

Small business people aren't the only ones being hurt. For banks, insurance companies, and securities companies alone, the financial-services research firm Celent Communications LLC estimates compliance with the anti-money laundering provisions will cost $10.9 billion by the end of 2005. Yet law enforcement and counterterrorism experts I spoke to maintain these regs will do little to stop terrorism. Even before the PATRIOT Act banks sent more than 12 million reports to FinCEN in 2000, and economist and former Bush administration official Lawrence Lindsey had estimated that banks file 100,000 reports on innocent customers for every one money laundering conviction. Adding the "know your customer" requirements to other businesses likely will only make the needle harder to find in an even bigger haystack.

Andy Taylor didn't say what exactly it was that could go wrong when private citizens are deputized as police spies, but I think his common-sense reasoning would cast doubt on the PATRIOT Act provisions. If businesses face criminal penalties for not reporting what the government determines to be "suspicious activity," employees will have an incentive to overreport, flooding the system with reports on legitimate transactions that they may find the slightest bit suspicious. And knowing how human nature can make even the good citizens of Mayberry act foolishly on impulse, Andy also could probably imagine another scenario. There are penalties for misuse of "suspicious activity" reporting, but knowing that a customer will likely never find out a report was filed on him, (since businesses are forbidden to tell their customers when they have filed reports), it's not a weak possibility that somewhere, someplace an employee will file a report on a customer who has made him mad. "You were rude to me" or "You knocked up my sister, so I'm going to report you to the Feds," an employee might say to himself.

In terms of impacting privacy rights as well as costs to the economy, Title III is one of most dramatic provisions of the Patriot Act. Businesses file reports to the government with sensitive data, such as Social Security numbers, of many customers who are perfectly innocent, and this information is shared upon request with domestic and foreign law enforcement agencies, often without any evidence at all. And there are few, if any, barriers to including this information in a Total Information Awareness-style database. After all, it would technically satisfy conditions that TIA defenders say they agree to: The government would only be using data it already had, even though the only reason the government had the information was that it forced businesses to give it to them.

Yet as intrusive to privacy as Title III is, it's also one of the provisions that has been the least talked about by critics of the PATRIOT Act. It's only recently received attention in the mainstream media when it was revealed that the FBI used the money laundering provisions for an extensive search of a Las Vegas strip club owner who was suspected of political corruption, not terrorism. Newsweek's Michael Isikoff then revealed that two-thirds of these money-laundering searches had no apparent connection to terrorism. Politicians expressed outrage, but none of the bills introduced in Congress to roll back parts of the PATRIOT Act, including the bipartisan SAFE Act in the Senate, even touch Title III. The reason could be that Title III was largely the handiwork of Senate Democrats.

Although to their credit, some liberal groups, such as the American Civil Liberties Union, have been critical of money-laundering laws, many liberal Democrats in Congress let their anti-business ideology trump privacy concerns. At a November 2001 Senate hearing, then-Senate Banking Committee Chairman Paul Sarbanes, D-Maryland, asked FinCEN director James Sloan why it was taking so long to require money service businesses such as convenience stores to monitor their customers and never asked one question about privacy concerns. It was a money-laundering bill sponsored by Sarbanes that became Title III of the PATRIOT Act at Democrats' insistence. House Republicans and the Bush administration had wanted to take up money laundering as a separate bill, but Democrats threatened to hold up the entire package if Sarbanes' amendment was not included.

An Oct. 2001 article in the newspaper The Hill quotes then-Senate Majority Leader Tom Daschle, D-S.D., as saying that a bill without Sarbanes's money-laundering provisions was "just something we cannot accept." Similarly, Sen. John Kerry, D-Mass., who now is attacking the PATRIOT Act in his presidential campaign, "criticized the House Republican leadership for separating the anti-money laundering bill from the counterterrorism package 'by fiat'" and "underlined the political influence of Texas bankers," according to the Associated Press. And former Clinton administration National Security Council official William Wechsler proudly told me that, especially in regard to the money-laundering section, "there are a lot of provisions of the PATRIOT Act that the Clinton administration had asked for."

Yet this initial Democratic support doesn't let Republicans and conservative defenders of the PATRIOT Act off the hook for the anti-business and anti-privacy Title III. Not only did the Bush administration and the GOP congressmen fold to the Democrats, but in defending the PATRIOT Act, the Ashcroft Justice Department has actually praised the provisions. The DOJ's tax-supported pro-PATRIOT Act website, LifeandLiberty.gov, quotes Democrats who back Title III, such as Kerry and Sen. Carl Levin of Michigan. And there seems to be an eerie silence at the pro-PATRIOT Act National Review, which had opposed Title III in its initial stages. An October 2001 "Washington Bulletin" on National Review Online by John J. Miller and Ramesh Ponnuru referred to the money laundering provisions that Senate Democrats were pushing as "bad" and "illustrations of the dangers of lawmaking during a crisis." But NR doesn't seem to have said a word about these provisions in its current effort to defend the PATRIOT Act from the growing number of critics on the right. Instead, comments like editor Rich Lowry's sarcastic suggestion that Patriot Act critics "bundle their proposals together and call them 'The Zacarias Moussaoui Protection Act'" mock the conservative values NR should be defending.

My fellow conservatives who campaign against burdensome regulations on the free market must speak out about the burdens of Title III. Especially because nearly every conservative knows that regulations that costs billions of dollars are passed on to consumers.

I, for one, am with the sound advice Sheriff Andy Taylor on this. All American citizens, including businessmen, should be vigilant. And it goes without saying that authorities should swiftly punish those who knowingly help finance terrorism. But in a free society, business owners and employees should not be compelled by the force of law to become deputized police investigators who have to scrutinize their customers for the slightest "suspicious activity." It's time to end the tour of duty of the "citizen soldiers" and let them go back to being private citizens running their businesses.

(Special thanks to the Mayberry.com web site for filling in details about this episode of The Andy Griffith Show.)

Show Us Your Money

info@reason.com (John Berlau) — Sat, 01 Nov 2003 00:00:00 EST

"This is really a bill which, if enacted into law, will be [a longer] step in the direction of stopping terrorism than any other we have had before this Congress in a long time," one of the bill's sponsors declared. The legislation authorized broad surveillance of financial transactions, bypassing the Fourth Amendment's normal protections against "unreasonable searches and seizures" by requiring businesses to collect and share information with the government. After the measure passed and was signed into law, the debate was far from over. The American Civil Liberties Union and other critics continued to rail against the law as an unnecessary breach of privacy.

"Under the act and regulations the reports go forward to the investigative or prosecuting agency...without notice to the customer," one civil libertarian wrote. "Delivery of the records without the requisite hearing of probable cause breaches the Fourth Amendment....I am not yet ready to agree that America is so possessed with evil that we must level all constitutional barriers to give our civil authorities the tools to catch terrorists."

But times have changed, one of the law's defenders countered. "While an act conferring such broad authority over transactions such as these might well surprise or even shock those who lived in an earlier era," he wrote, "the latter did not...live to see the heavy utilization of our domestic banking system by the minions of organized terrorism as well as by millions of legitimate businessmen." The author did not "think it was strange or irrational that Congress, having its attention called to what appeared to be serious and organized efforts to avoid detection of terrorist activity, should have legislated to rectify the situation."

These may sound like the arguments for and against the USA PATRIOT Act, passed immediately after the attacks of September 11, 2001. But they concern another piece of legislation, the Bank Secrecy Act (BSA) of 1970. The only change I made to these decades-old quotes was to substitute the word terrorist for criminal and terrorism for crime.

The congressman was Wright Patman, the populist Texas Democrat who pushed through the bill on the premise that it would help fight drug trafficking, tax evasion, and other crimes, including the then-prohibited ownership of gold as a commodity. The civil libertarian was Supreme Court Justice William O. Douglas. In the 1974 case California Bankers Association v. Shultz, Douglas wrote a dissent, joined by Justices William Brennan and Thurgood Marshall, concluding that the Bank Secrecy Act violated the Fourth Amendment. The final quote is from William Rehnquist, now the Court's chief justice, who wrote the majority opinion upholding the law.

Needle in a Haystack

The reason the arguments sound familiar is that the BSA set the precedent for much of the PATRIOT Act, not to mention government fishing expeditions such as the Pentagon's aborted Total Information Awareness program. The law authorized the government to require bank reports of all transactions over a dollar value set by the Treasury Department, even if there is no reason to suspect a criminal connection. For the first time, in the words of the U.S. District Court for the Northern District of California, "the government claim[ed] the legal right to maintain routine surveillance, without summons, subpoena, or warrant, over the details of citizens' financial transactions."

The district court struck down the BSA's reporting requirement, but its decision was reversed by the Supreme Court. In a complicated majority opinion, Rehnquist said that banks, as businesses, don't have the same Fourth Amendment rights as individuals. The opinion relied on the many post-New Deal cases that minimized economic liberties, including one that said "corporations can claim no equality with individuals in the enjoyment of a right to privacy." In this and in a subsequent BSA case, U.S. v. Miller (1976), the Court ruled that a bank's customers generally lack standing to challenge the law.

Law enforcement agencies thus found a convenient end run around the Fourth Amendment. They can access the details of a bank customer's transactions from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) without showing probable cause -- or any evidence at all. That is why the PATRIOT Act's defenders argue that the law is not a radical departure from what the government already had the power to do. Writing in the Summer 2003 issue of City Journal, the Manhattan Institute's Heather Mac Donald accuses the PATRIOT Act's opponents of trying to "invent new rights," because it has long been the case that "there is no Fourth Amendment privacy right in records or other items disclosed to third parties."

While Mac Donald may be partly right about the case law, she overlooks two important questions. One is whether surveillance programs like FinCEN are consistent with the principles of a free society. The other is how effective they've been: Have we gotten more security during the last 30 years in exchange for the privacy we've sacrificed? Looking specifically at the BSA and other bank surveillance measures, prominent experts in law enforcement, national security, and technology say the answer is no. The record of FinCEN, the agency that was charged with tracking terrorist financing prior to 9/11, seems to vindicate their arguments. The lack of success with the financial information that the government has long been collecting does not bode well for more-ambitious data dredging plans. Indeed, experience suggests that piling up more data could make it harder to zero in on terrorists.

"I consider all these measures to be highly counterproductive," says John Yoder, director of the Justice Department's Asset Forfeiture Office in the Reagan administration. "It costs more to enforce and regulate them than the benefits that are received. You're getting so much data on people who are absolutely legitimate and who are doing nothing wrong. There's just so much paperwork out there that it's really not a targeted effort. You have investigators running around chasing innocent people, trying to find something that they're doing wrong, rather than targeting real criminals."

The paperwork is indeed massive. Even before the PATRIOT Act, banks sent more than 12 million transaction reports to the government in 2000 alone. In a 2000 report for the Competitive Enterprise Institute, economist Lawrence Lindsey, who later became head of the Bush administration's National Economic Council, calculated that banks file more than 100,000 reports on innocent customers for every money laundering conviction. Oliver "Buck" Revell, a highly decorated 30-year veteran of the FBI who supervised the bureau's counterterrorism division in the 1980s and '90s, agrees that the sheer volume of data generated by these measures can overwhelm law enforcement efforts. "You can be buried in an avalanche of information," Revell says. "The total volume of activity makes it very difficult to track and trace any type of specific information....It's virtually impossible to look at millions and millions of CTRs [currency transaction reports] and make any sense out of them if you don't have some prior intelligence as to what might be occurring."

Yoder argues that the information overload from bank surveillance contributed to the intelligence failure before the September 11 attacks. "We already had so much information that we weren't really focusing on the right stuff," he says. "What good does it do to gather more paperwork when you're already so awash in paperwork that you're not paying attention to your own currently existing intelligence gathering system?"

While it did not cite the BSA directly, the recently published Joint Congressional Inquiry report on intelligence lapses before 9/11 did find that law enforcement and intelligence agencies faced a "huge volume of intelligence reporting," within which were "various threads and pieces of information that, at least in retrospect, are relevant and significant." The report concluded that "although relevant information...was available to the Intelligence Community prior to September 11, 2001, the Community too often failed to focus on that information and consider and appreciate its collective significance in terms of a probable terrorist attack." This was partly because analysts were trying to find a needle in a very large haystack of data created by laws like the BSA.

Banker or Spy?

Fears that the BSA would swamp law enforcement with data were expressed from the beginning. The federal court decision striking down the law's reporting requirement (issued, coincidentally, on September 11, 1972) called the BSA a "far-fetched" way to catch criminals and warned that it could be counterproductive. The court quoted an IRS commissioner as saying that "the creation of a mass of paper beyond our capacity to utilize could have the effect of submerging and making unobtainable information of special interest to us."

Despite such concerns, financial surveillance has been massively expanded during the last 30 years, while other intelligence-gathering techniques, such as the use of informants, have been sharply restricted. The Treasury Department's BSA regulations required banks, subject to some exemptions, to file a currency transaction report on every cash transfer of $10,000 or more. In the 1990s, the department established FinCEN, which expanded the regulations to require that banks file "suspicious activity reports" on all transactions of $5,000 or more if they have "no apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage." Banks are forbidden to notify customers about the reports. "In effect, bankers have been drafted as spies and snitches," wrote banking industry consultant Bert Ely in a 2002 paper for the conservative Free Congress Foundation.

"Know Your Customer" rules, proposed by FinCEN and the Federal Reserve in 1998, would have required banks to profile every customer's "normal and expected transactions" and report the slightest deviation to the feds. The rules were withdrawn after the Libertarian Party, the ACLU, and other groups helped generate 300,000 public comments in opposition.

But according to Wired magazine, as of 1999 more than 88 percent of U.S. banks already had "Know Your Customer" policies in place to satisfy regulators who looked at their suspicious activity reports. And after the September 11 attacks, regulators began openly using the phrase again. At an American Bankers Association conference in October 2001, Federal Reserve Bank of Atlanta Vice President Suzanna Costello told the audience her agency was "looking for...effective Know Your Customer" programs at the banks it regulates. "A year ago, I wouldn't have even said 'Know Your Customer,'" she said. "But I see that it's back."

The Citizen-Soldier Burden

Customer surveillance is not just at banks anymore. In his dissent in the California Bankers Association case, Justice Douglas made a sarcastic suggestion that turned out to be prophetic:

"It would be highly useful to government espionage to have reports from all our bookstores, all our hardware and retail stores, all our drugstores....What one buys at the hardware and retail stores may furnish clues to potential uses of wires, soap powders, and the like used by criminals."

Even before 9/11, FinCEN had put out a rule applying the "suspicious activity" reporting requirement to any establishment that processed money orders or sold smart cards, including convenience stores. The PATRIOT Act extended the requirement to many more businesses. FinCEN, pursuant to the act, recently put the "suspicious activity" reporting rules into effect for brokerage houses, and real estate transactions are next on the list. The law also specifically covers casinos, credit card agencies, and life insurers. In the next few months, the Broward Daily Business Review reports, "the Treasury Department will decide whether the act covers travel agents, automobile dealers, mutual funds and dealers in precious metals and stones." And under the law, virtually all businesses, including the "hardware and retail stores" mentioned by Douglas, now have to report to the government any cash purchases over $10,000.

Treasury Department General Counsel David Aufhauser explained the new reporting requirements this way in a 2002 interview with The Washington Post: "The Patriot Act is imposing a citizen-soldier burden on the gatekeepers of financial institutions." He justified this burden by arguing that "they are in the best position to police attempts by people who would do ill to us in the U.S. to penetrate the financial system."

Few politicians, even among those who have criticized other parts of the PATRIOT Act, are willing to challenge the proposition that businesses should be deputized to spy on their customers. The late Justices Douglas, Brennan, and Marshall might be shocked that liberal Democrats in Congress such as Sens. Carl Levin of Michigan and Paul Sarbanes of Maryland have been the biggest proponents of expanding the Bank Secrecy Act. They see it as a way of targeting wealthy people who pay less than their "fair share" in taxes by moving some of their investments overseas. The only member of Congress who has gone on record in support of repealing the BSA entirely is Rep. Ron Paul (R-Texas).

Yet given the BSA's track record, experts say there's no reason to believe the new financial surveillance measures will stop the next attack. They could simply swamp law enforcement with even more useless data. The critics say reporting mandates have flooded the government with massive volumes of irrelevant information, such as reports on the "suspicious activities" of law-abiding customers withdrawing large amounts of money for medical treatment or depositing thousands of dollars in casino winnings, and have not been effective in either attacking the drug trade or preventing terrorist attacks.

J. Michael Waller, vice president of the Center for Security Policy, a hawkish D.C. think tank, is usually not in sync with the ACLU. He fully supports Attorney General John Ashcroft's detention of Arab visitors and advocates targeted ethnic profiling. But he calls the BSA's routine mass surveillance measures "really, really dumb."

"To me, it's just a well-intentioned thing with no cojones behind it," says Waller, who is also a professor of international communications at the Institute of World Politics in Washington. "It's a huge burden on the banks. It could mean that every time somebody trades in some stock and just buys other stock with the same money, it's got to be reported to FinCEN. [FinCEN bureaucrats] are giving themselves millions of times more information than they can possibly handle or analyze....What if you get a $25,000 or $50,000 book advance? 'Oh, that's an anomaly; let's look at this guy.' Think of the probably millions of anomalies occurring every day. It's really stupid."

Hawala Bungle

Although it was not one of the agencies covered in the 9/11 report, FinCEN had its own intelligence failures, and they cast light on how effective the expanded financial reporting mandates might be. In the months prior to 9/11, FinCEN appeared to be choking on the flood of bank reports it received. In the March 25, 2002, issue of Insight, Jamie Dettmer reported that "Treasury sources say there is a two-year backlog of SARs [suspicious activity reports] still waiting to be entered into the agency's computers." In addition, several banking compliance officers told him "they were unaware of any SARs they'd filed being followed up by federal investigators."

FinCEN apparently was so busy processing paperwork that it ignored the valuable advice of one of its experts -- advice that many say could have led to the Al Qaeda money trail. Patrick Jost, who came to FinCEN in the '90s with an atypical background as a jazz musician, linguistics instructor, and video game programmer, was an expert on hawala, the shadowy, informal system of money trading in South Asian and Middle Eastern countries that leaves a very faint paper trail. In a hawala transaction, someone from Pakistan living in America could send money back home by paying a U.S. vendor, who in turn would contact a trusted partner in Pakistan, who would give the money in local currency to its intended recipient. The money technically never leaves the U.S. It is a money transfer without money movement. Although hawala is often used for innocent purposes such as sending money to relatives, in the late '90s there was already evidence that it was being used by terrorists. As Jost documented in a 1998 paper he co-wrote for Interpol, terrorists used hawala to finance a series of bomb blasts in Bombay, India, in 1993.

William Wechsler, head of a White House working group on terrorist financing, met with Jost in 1999. Wechsler recalls that after hearing Jost's explanation of hawala, he spread the word to counterterrorism experts in the government, many of whom contacted Jost for help. Jost was also doing research on other aspects of terrorist financing, such as the countries terrorist money flows through. But FinCEN, even though it was charged with helping law enforcement track criminal money laundering, instructed him to decline Jost's offer of assistance and discouraged him from pursuing further research on terrorism financing. Jost told The Washington Post in 2001 that FinCEN Director James Sloan and Chief of Operations Connie Fenchel "didn't want FinCEN to pursue this line of work." According to the Post, after being "made to feel unwelcome, Jost left government in June 2000." (Jost and FinCEN officials declined to comment for this article.)

Wechsler recalls that the issue of terrorism did not seem to be a high priority for FinCEN, which appeared much more interested in processing data for the drug war. "FinCEN, along with the rest of the federal law enforcement community, for too long assigned far too low a priority to understanding the nature of and the threat from underground remittance systems, like the hawala network," he says.

Now that supposedly has changed. FinCEN has set up a toll-free number for banks to report transactions they truly think are suspicious, and the Treasury Department has a targeted "watch list" of suspected terrorists for banks to report on. But FinCEN and other agencies will still be inundated with an even bigger flood of reports about mostly legal financial transactions, thanks to the mandates of the BSA and the PATRIOT Act.

Wechsler, along with other Clinton administration officials such as Treasury Undersecretary Stuart Eizenstat, supported the expansion of "suspicious activity" reporting. (He proudly claims that "there are a lot of provisions of the PATRIOT Act that the Clinton administration had asked for.") He argues that new technology will be able to sift through the data. "We should spend the money that it takes to make sure we are able to use the information as effectively as possible, and that we are able to give back to the banking community the after-action reports, how it was used," he says. "But all of those are marginal questions compared to the overall statement that this is way too burdensome and useless. It's nonsense; it's very useful."

Yet for 30 years agencies have said technology eventually would be able to pinpoint the needle in this enormous haystack, and the elusive technology has yet to appear. The Pentagon's Total Information Awareness (TIA) project was aimed at developing methods to sift through huge volumes of data from public and private sources, looking for patterns that could indicate terrorist activity. After a loud public outcry about the privacy implications, Congress voted earlier this year to deny the project funding. Now the Pentagon is trying to revive it under a new name, Terrorism Information Awareness.

Missing Human Intelligence

Professional criminals often know the banking laws and how to get around them. And terrorist money, without prior intelligence, appears to be even harder to track than drug money. While large cash transfers can occasionally tip off authorities to drug activity, terrorists leave few telltale financial signs. As Jost pointed out in Senate testimony in late 2001, money used for terrorism often comes from legal businesses and charities. "With a certain amount of simplification, money laundering and terrorist financing are opposites," he said. "In money laundering, dirty money becomes clean; in terrorist financing, clean money become dirty."

Take the September 11 hijackers. The only way we know of that any of them broke the law prior to the attacks was by overstaying their visas. They gave no signs to the financial institutions they dealt with that they were plotting something sinister. "The terrorists didn't spend a whole lot," observes Richard Rahn, a senior fellow at the Seattle-based Discovery Institute and the author of The End of Money and the Struggle for Financial Privacy. "They stayed in cheap hotels, ate in cheap restaurants and rode in cheap rental cars....And so these measures that are promulgated to try to just collect financial information willy-nilly are not really very useful." Bert Ely, the banking consultant, noted in his Free Congress Foundation paper that "the FBI has estimated that the Sept. 11th hijackers spent just $500,000 over more than a year carrying out their diabolical acts. Payments moving through the U.S. financial system average $1.7 trillion per business day."

A SunTrust bank in Florida did file an internal report, as required for wire transfers of $3,000 or more, on money received by 9/11 ringleader Mohammad Atta, which came from the United Arab Emirates in 2000 and totaled more than $100,000. But "there was nothing unusual in the way those accounts and transactions were opened or maintained," says SunTrust spokesman Barry Koling. The only possible tipoff was that the money came from the UAE, which Jost had identified in his 1998 Interpol report as a hotbed of hawala and terrorism financing. But FinCEN apparently had not issued any warnings about the UAE, as it had about Colombia and other hot drug spots.

That oversight illustrates the importance of what's called "human intelligence." Both privacy and national security advocates say that since the advent of massive data- bases and laws like the BSA, the government too often has relied on technology as a savior and disregarded the importance of human sources, both experts in the field and snitches among the bad guys. FBI veteran Revell says that in his major cases, it was the informant who led to the financial data, not the other way around. "When we were investigating the skimming of the casinos by the mob in Las Vegas [in the late 1970s and early '80s], we had to have intelligence on how it was being done before we could really determine evidence of how it was being done," he recalls. "The development of informants within the mob's control structure of Las Vegas led us to be able to discover the money laundering and to bring charges and wipe the mafia out in Las Vegas."

Even data mining experts say the most advanced technology is useless without human intelligence. "The data won't do anything unless you ask the right questions," says Marc Epstein, CEO of Data Mining International, a Los Gatos, California, firm that makes software for the U.S. Customs Service and other law enforcement agencies. Epstein says that before the government starts collecting massive data for a TIA-style program, it should make better use of the data it has. He says there is much that can be gleaned simply from the customs data of goods going into and out of the country. "From a pure law enforcement point of view, putting aside privacy concerns, more information is better," Epstein says. "But we're not using the information that we have well."

30 Years of Failure

There are plenty in the tech world who would take issue with Epstein's assertion that more information is always better. Software engineer Bruce Schneier, for example, has written about the inevitable problem of "false positives" in a large database. Passengers at airports are already seeing the effect of false positives that mistakenly put them on "no fly" lists, presumably because their names are similar to those of terrorists or criminals. Recent press reports have chronicled the travails of several men named David Nelson, including the actor who played himself on the popular '50s TV show The Adventure of Ozzie and Harriet, who have been delayed or prevented from catching their flights because the name mysteriously set off an alarm in an airport computer.

"When you are scanning a population that is composed of hundreds of millions of people, and the class of criminal you're looking for is a couple hundred or a couple thousand, there are no tools available, and there are almost certainly never going to be tools available, with the sophistication to focus almost exclusively on the bad guys," says Bob Gellman, who in the '90s acted as chief counsel of a House subcommittee on privacy and technology. Gellman says data mining's success in the private sector will never translate to law enforcement because a different level of precision is required. "If direct marketing companies, with all the research they do, get a 3 percent response rate, they're ecstatic," Gellman says. "And these are smart people with lots of data and lots of motivation because they're making money, and they can't do much better than that."

In the debate over the PATRIOT Act and other broad surveillance measures, the Bank Secrecy Act should be thought of as a 30-year experiment in subverting the Fourth Amendment. The experiment has imposed tremendous costs on individual privacy and the economy (even before 9/11, the banking industry was estimating compliance costs of $10 billion a year), with few tangible results in stopping crime and even fewer in preventing terrorism. Getting back to the standards of the Fourth Amendment is a good idea, not just for securing privacy but for making law enforcement and intelligence agencies more focused and effective at stopping criminals and catching terrorists.

"Most police officers, I find, have very high regard for and deference to the Fourth Amendment," says Bob Barr, the former CIA agent and U.S. attorney who served as a Republican congressman from Georgia for eight years and is now a consultant on privacy issues for the ACLU and the American Conservative Union. "I think they understand, perhaps better than a lot of bigwigs, that it is there to protect them and to help keep them focused as well as to protect the individuals."

Play (Regulated) Ball!

info@reason.com (John Berlau) — Sun, 01 Dec 1996 00:00:00 EST

In early June, several reporters gathered for an unusual press conference at the Baltimore Orioles' Camden Yards stadium. The main speaker was not Cal Ripken Jr. or some other baseball great, but a bureaucrat: Ann Brown, the chairman of the Consumer Product Safety Commission. She was using the ballpark to reel out statistics on her new pet cause--injuries in children's baseball. She bashed the traditional hardball as unsafe for children's play.

At the press conference, Brown touted a new CPSC report recommending softer baseballs with spongy cores made of polyurethane, rubber, or kapok, and protective equipment such as batting helmets with face guards, and break-away bases, which loosen from their anchoring on impact, for children's baseball leagues. "We want kids outside in the sunshine, not inside in an emergency room," she declared. According to the CPSC report, emergency rooms treated 162,000 children for baseball-related injuries last year--less than 1 percent of all children playing the game.

Brown didn't mention that, according to the only peer-reviewed studies on the subject, a softer ball might be even more likely to put a child in the emergency room than a standard ball. "These softer balls might reduce the sting, but they're not going to prevent you from getting killed," says David Janda, an orthopedic surgeon who heads the Institute for Preventative Sports Medicine in Ann Arbor, Michigan. Janda is an award-winning sports medicine researcher who spoke at the Pre-Olympic Medical Conference just before the 1996 summer games and has written a chapter for an International Olympic Committee textbook on safety in sports.

The baseball report is just one part of CPSC Chairman Brown's ambitious agenda. Children's sports are one of her "highest priorities," she has said, and she wants every playground in America to follow the CPSC's rules. She wants to develop guidelines for baseball and other activities that "will be a bible for the industry and jurisdictions."

Coming on the heels of the press conference, the agency also voted 2-1 to consider a petition to require all batting helmets to have attached face guards. To act on the petition, the commission would have to declare that a batting helmet without the face shield is a "hazardous substance" simply because it could be made safer. That position struck CPSC Commissioner Mary Gall as absurd. "Carried to its logical conclusion," she wrote in her dissent, "if a helmet with a faceguard justifies a ban of helmets without faceguards, helmets made out of kevlar (such as the military services might wear) might justify a ban on plastic helmets."

The Camden Yards press conference was typical of Brown's colorful tenure as CPSC chairman. Appointed by President Clinton in 1994, the former toy safety activist at Americans for Democratic Action told reporters at one of her first news conferences, "I've never met a microphone I didn't like, and I plan to use this agency as a bully pulpit." Critics charge that Brown uses her "bully pulpit" to circumvent regulatory procedures, which have a lengthy notice-and- comment period, by pressuring companies afraid of negative publicity into "voluntarily" agreeing with her recommendations.

Former CPSC Commissioner Carol Dawson says that some of Brown's pronouncements are "worse than regulations, because they have not been subjected to the same scrutiny as a regulation has." Dawson notes that with Brown's pronouncements on soft baseballs and other issues, critics were never given a chance to air their views, as they would have in a formal notice-and-comment period.

And critics of the CPSC's soft baseball decision have quite a case. Sports medicine expert Janda charged in a letter to the agency that it was "step[ping] to the plate with a corked bat." Janda found that the softer balls the CPSC recommends frequently weigh more and can stick to the chest longer, and thus can hit the chest with greater force than standard balls do. A 1992 study by Janda and his research team, published in the Clinical Journal of Sports Medicine, reported that "all the tests and comparisons failed to demonstrate a significant advantage with respect to impact force reduction using softer core baseballs" and that softer balls sometimes "exacerbated impact effects."

In a small footnote to an appendix of its report, the CPSC acknowledged that the most recent of the 38 chest-impact deaths it has recorded since 1973 occurred last year after a child was struck with a soft baseball. Newspaper accounts report that the 6-year-old boy suffered a cardiac arrest after a ball his father gently lobbed to him bounced off his glove and hit him in the chest.

The CPSC stated that "the agency has found no convincing evidence that softer balls increase the risk of chest-impact death." It dismisses Janda's studies by charging that the pigs and crash dummies he "used to mimic chest impact deaths in children were not accurate representations of the way death occurs to children on the baseball field." Janda points out that while no models can perfectly simulate the effects on children, the crash dummies he used were of the same quality that the Department of Transportation uses in crash tests. Furthermore, he notes that CPSC officials gave his study a thumbs-up before it was published.

The agency conducted no original research to substantiate that soft baseballs were safer. Susan Kyle, the CPSC report's author, says that Janda's studies were "the only ones we could find" on the subject of chest impact. Janda found only a 4 percent to 8 percent lower risk of head injuries from soft baseballs. But he doesn't believe that compensates for the increased risk for chest injuries--especially since most of the 68 ball-impact deaths the CPSC has recorded since 1973 involve the chest.

"His study was pretty tight," says Robert Verhalen, who reviewed Janda's study as associate executive director for epidemiology at the CPSC in the early '90s. "The commission seems to have rejected his study out of hand." Verhalen, who is now retired, adds, "They run off with less data than that when it's a cause they're in favor of."

It's very frustrating for us to spend 12 years of research on a subject and then have the government come in and disseminate the wrong information," Janda says. This baseball controversy illustrates that government agencies hardly ever just disseminate information-- especially when they issue safety recommendations. The newsletter Sporting Goods Intelligence reports that the agency has "float[ed] the idea of requiring labeling on balls saying which ones are appropriate for younger players."

The CPSC report notes that at least five cities already require organized children's baseball leagues to use the softer balls, and the report will likely encourage more to follow suit, even absent regulations. Though the CPSC has no jurisdiction over organized children's baseball leagues, its recommendations will likely spur lawsuits against leagues not using the equipment it recommends.

"You just know there's going to be more lawsuits if a federal official makes a splashy presentation," says Walter Olson, a senior fellow at the Manhattan Institute and author of The Litigation Explosion. "It changes the climate, gets lawyers more interested, and raises the visibility [of an issue]." No federal regulations require soft baseballs (yet), but Olson points out that once the matter gets into a courtroom, "no one knows what's lawful or what isn't when you're dealing with liability."

If a child is injured by a hardball, a jury could be swayed by the fact that a federal agency recommended the softer ball and consider a team negligent for not using one--even though the injury might have been worse if a softer ball had been used. Bill Owens, a coach and equipment manager for the Youth Leagues in Boston, says the owner of a baseball camp confided to him that the camp used soft baseballs because of potential liability even though the owner did not know the balls were safer.

The CPSC was created in 1972 during the Nixon administration's great regulatory expansion, which also blessed us with the Environmental Protection Agency, the Occupational Safety and Health Administration, and the National Highway Traffic Safety Administration. The CPSC has broad power to regulate just about every product "for sale to a consumer for use in a household..., school, in recreation, or otherwise." In years past, the agency has effectively banned children's cotton pajamas because of their flammability (and encouraged the use of a flame- resistant material that was later found to be a potential cause of cancer) and banned lawn darts because of one death due to misuse. Until recently, however, the commission had not been nearly as active as other federal agencies because of its lengthy rule making process and relatively small budget.

Current Chairman Brown is finding creative ways to get around these restraints on CPSC power. A particularly striking example of her broad reach occurred in 1994, when she voiced alarm about the movies Lassie and Richie Rich because they portrayed children riding in all-terrain vehicles in an unsafe manner. The CPSC's general counsel said he was looking into claiming jurisdiction on the grounds that the movies are consumer products.

Frustrated at the agency's overstepping its jurisdiction and disregard for traditional rulemaking, former Commissioner Dawson now advocates that her old agency be phased out. "The CPSC may have outlived its usefulness," she says. "When regulation by press release replaces statutory procedure, it's time to consider non-government alternatives."

Without the CPSC, Dawson suggested in a paper for Consumer Alert, product safety could be handled by a combination of product liability and voluntary standard-setting organizations, nearly 270 of which already exist. The most famous is Underwriters Laboratories, which for about 100 years has certified the safety of many electrical appliances with its "UL" mark.

Sporting equipment also provides a good example of how the private sector can improve safety on its own. The National Operating Committee on Standards for Athletic Equipment was formed in 1969 as a joint effort of college and high school athletic associations to set standards for equipment in games. It is funded by private donations and fees that equipment companies pay to carry the NOCSAE label. After college and high school athletic associations adopted the NOCSAE standard for football helmets, manufacturers immediately complied and the numbers of head injury fatalities and serious head injuries dropped by more than 70 percent. NOCSAE's standard for baseball batting helmets is also widely followed.

Similarly, the ASTM (formerly American Society for Testing and Materials) has been around since 1898 and publishes over 10,000 product standards each year. It has over 35 subcommittees to set standards for sporting goods, and is funded by selling publications of its standards. More recently on the scene is Janda's Institute for Preventative Sports Medicine, which began in 1989 and did the research on soft baseballs, as well as research on soccer goals and shin guards, without a dime of government money. It is funded by individuals and corporations--but not by equipment manufacturers, whose money Janda refuses to avoid the appearance of a conflict of interest. He and other physicians receive no salaries for the research they conduct, and some former professional and Olympic athletes also volunteer their time.

"All of us at the institute feel that if you're doing worthwhile endeavors, that does not have to be supported by the government; it can be supported by individuals and corporations," Janda says. "It's not the sole responsibility of the government to support organizations that are doing high- powered work."

These private safety organizations do not always agree. Janda's group strongly disagrees with NOCSAE's standards for baseballs, which favor the softer balls. NOCSAE criticizes the ASTM's standards for face guards. But as long as no particular device is mandated by law, individual teams and leagues can look at the information and decide what types of devices are appropriate for them. The disagreements, coupled with competition in the marketplace, will probably lead to better products.

The most important parties in deciding on standards for children's sports are the coaches. Although they know that risk is inherent in sports (as it is in life), and that safety must be balanced with cost and competitiveness, they take safety very seriously. Youth Leagues coach Owens, for instance, weighs balls with a balance scale in his basement and has teams in the league experiment with new types of balls and face guards. After testing 24 soft baseballs, he found that one quarter exceeded the league's weight limits and many bounced excessively in the field.

The CPSC's recent report on soft baseballs, which he calls "off base," confirmed his belief that the government has no business interfering with the way he selects equipment for the league. "Why should the government get involved in it?" Owens asks. "Why can't people handle their own affairs? What's this idea that the government knows more than we know? When the government gets involved in things, the tendency is to screw things up rather than make them better."