7 September 1997

See also two subsequent House reports on H.R. 695:
http://jya.com/hr105-108.txt
http://jya.com/hr105-108-pt2.txt


105th CONGRESS
  1st Session
                                H. R. 695

 To amend title 18, United States Code, to affirm the rights of United
States persons to use and sell encryption and to relax export controls
                             on encryption.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 12, 1997

 Mr. Goodlatte (for himself, Ms. Lofgren, Mr. DeLay, Mr. Boehner, Mr.
Coble, Mr. Sensenbrenner, Mr. Bono, Mr. Pease, Mr. Cannon, Mr. Conyers,
    Mr. Boucher, Mr. Gekas, Mr. Smith of Texas, Mr. Inglis of South
Carolina, Mr. Bryant, Mr. Chabot, Mr. Barr of Georgia, Ms. Jackson-Lee
    of Texas, Ms. Waters, Mr. Ackerman, Mr. Baker, Mr. Bartlett of
  Maryland, Mr. Campbell, Mr. Chambliss, Mr. Cunningham, Mr. Davis of
Virginia, Mr. Dickey, Mr. Doolittle, Mr. Ehlers, Mr. Engel, Ms. Eshoo,
  Mr. Everett, Mr. Ewing, Mr. Farr of California, Mr. Gejdenson, Mr.
Gillmor, Mr. Goode, Ms. Norton, Mr. Horn, Ms. Eddie Bernice Johnson of
 Texas, Mr. Sam Johnson of Texas, Mr. Kolbe, Mr. McIntosh, Mr. McKeon,
    Mr. Manzullo, Mr. Matsui, Mr. Mica, Mr. Minge, Mr. Moakley, Mr.
 Nethercutt, Mr. Packard, Mr. Sessions, Mr. Upton, Mr. White, and Ms.
   Woolsey) introduced the following bill; which was referred to the
    Committee on the Judiciary, and in addition to the Committee on
 Internaional Relations, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 To amend title 18, United States Code, to affirm the rights of United
States persons to use and sell encryption and to relax export controls
                             on encryption.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Security and Freedom Through
Encryption (SAFE) Act''.

SEC. 2. SALE AND USE OF ENCRYPTION.

    (a) In General.--Part I of title 18, United States Code, is amended
by inserting after chapter 121 the following new chapter:

        ``CHAPTER 122--ENCRYPTED WIRE AND ELECTRONIC INFORMATION

``2801. Definitions.
``2802. Freedom to use encryption.
``2803. Freedom to sell encryption.
``2804. Prohibition on mandatory key escrow.
``2805. Unlawful use of encryption in furtherance of a criminal act.
``Sec. 2801. Definitions
    ``As used in this chapter--
            ``(1) the terms `person', `State', `wire communication',
        `electronic communication', `investigative or law enforcement
        officer', `judge of competent jurisdiction', and `electronic
        storage' have the meanings given those terms in section 2510 of
        this title;
            ``(2) the terms `encrypt' and `encryption' refer to the
        scrambling of wire or electronic information using mathematical
        formulas or algorithms in order to preserve the
        confidentiality, integrity, or authenticity of, and prevent
        unauthorized recipients from accessing or altering, such
        information;
            ``(3) the term `key' means the variable information used in
        a mathematical formula, code, or algorithm, or any component
        thereof, used to decrypt wire or electronic information that
        has been encrypted; and
            ``(4) the term `United States person' means--
                    ``(A) any United States citizen;
                    ``(B) any other person organized under the laws of
                any State, the District of Columbia, or any
                commonwealth, territory, or possession of the United
                States; and
                    ``(C) any person organized under the laws of any
                foreign country who is owned or controlled by
                individuals or persons described in subparagraphs (A)
                and (B).
``Sec. 2802. Freedom to use encryption
    ``Subject to section 2805, it shall be lawful for any person within
any State, and for any United States person in a foreign country, to
use any encryption, regardless of the encryption algorithm selected,
encryption key length chosen, or implementation technique or medium
used.
``Sec. 2803. Freedom to sell encryption
    ``Subject to section 2805, it shall be lawful for any person within
any State to sell in interstate commerce any encryption, regardless of
the encryption algorithm selected, encryption key length chosen, or
implementation technique or medium used.
``Sec. 2804. Prohibition on mandatory key escrow
    ``(a) Prohibition.--No person in lawful possession of a key to
encrypted information may be required by Federal or State law to
relinquish to another person control of that key.
    ``(b) Exception for Access for Law Enforcement Purposes.--
Subsection (a) shall not affect the authority of any investigative or
law enforcement officer, acting under any law in effect on the
effective date of this chapter, to gain access to encrypted
information.
``Sec. 2805. Unlawful use of encryption in furtherance of a criminal
              act
    ``Any person who willfully uses encryption in furtherance of the
commission of a criminal offense for which the person may be prosecuted
in a court of competent jurisdiction--
            ``(1) in the case of a first offense under this section,
        shall be imprisoned for not more than 5 years, or fined in the
        amount set forth in this title, or both; and
            ``(2) in the case of a second or subsequent offense under
        this section, shall be imprisoned for not more than 10 years,
        or fined in the amount set forth in this title, or both.''.
    (b) Conforming Amendment.--The table of chapters for part I of
title 18, United States Code, is amended by inserting after the item
relating to chapter 33 the following new item:

``122. Encrypted wire and electronic information............    2801''.

SEC. 3. EXPORTS OF ENCRYPTION.

    (a) Amendment to Export Administration Act of 1979.--Section 17 of
the Export Administration Act of 1979 (50 U.S.C. App. 2416) is amended
by adding at the end thereof the following new subsection:
    ``(g) Computers and Related Equipment.--
            ``(1) General rule.--Subject to paragraphs (2), (3), and
        (4), the Secretary shall have exclusive authority to control
        exports of all computer hardware, software, and technology for
        information security (including encryption), except that which
        is specifically designed or modified for military use,
        including command, control, and intelligence applications.
            ``(2) Items not requiring licenses.--No validated license
        may be required, except pursuant to the Trading With The Enemy
        Act or the International Emergency Economic Powers Act (but
        only to the extent that the authority of such Act is not
        exercised to extend controls imposed under this Act), for the
        export or reexport of--
                    ``(A) any software, including software with
                encryption capabilities--
                            ``(i) that is generally available, as is,
                        and is designed for installation by the
                        purchaser; or
                            ``(ii) that is in the public domain for
                        which copyright or other protection is not
                        available under title 17, United States Code,
                        or that is available to the public because it
                        is generally accessible to the interested
                        public in any form; or
                    ``(B) any computing device solely because it
                incorporates or employs in any form software (including
                software with encryption capabilities) exempted from
                any requirement for a validated license under
                subparagraph (A).
            ``(3) Software with encryption capabilities.--The Secretary
        shall authorize the export or reexport of software with
        encryption capabilities for nonmilitary end uses in any country
        to which exports of software of similar capability are
        permitted for use by financial institutions not controlled in
        fact by United States persons, unless there is substantial
        evidence that such software will be--
                    ``(A) diverted to a military end use or an end use
                supporting international terrorism;
                    ``(B) modified for military or terrorist end use;
                or
                    ``(C) reexported without any authorization by the
                United States that may be required under this Act.
            ``(4) Hardware with encryption capabilities.--The Secretary
        shall authorize the export or reexport of computer hardware
        with encryption capabilities if the Secretary determines that a
        product offering comparable security is commercially available
        outside the United States from a foreign supplier, without
        effective restrictions.
            ``(5) Definitions.--As used in this subsection--
                    ``(A) the term `encryption' means the scrambling of
                wire or electronic information using mathematical
                formulas or algorithms in order to preserve the
                confidentiality, integrity, or authenticity of, and
                prevent unauthorized recipients from accessing or
                altering, such information;
                    ``(B) the term `generally available' means, in the
                case of software (including software with encryption
                capabilities), software that is offered for sale,
                license, or transfer to any person without restriction,
                whether or not for consideration, including, but not
                limited to, over-the-counter retail sales, mail order
                transactions, phone order transactions, electronic
                distribution, or sale on approval;
                    ``(C) the term `as is' means, in the case of
                software (including software with encryption
                capabilities), a software program that is not designed,
                developed, or tailored by the software publisher for
                specific purchasers, except that such purchasers may
                supply certain installation parameters needed by the
                software program to function properly with the
                purchaser's system and may customize the software
                program by choosing among options contained in the
                software program;
                    ``(D) the term `is designed for installation by the
                purchaser' means, in the case of software (including
                software with encryption capabilities) that--
                            ``(i) the software publisher intends for
                        the purchaser (including any licensee or
                        transferee), who may not be the actual program
                        user, to install the software program on a
                        computing device and has supplied the necessary
                        instructions to do so, except that the
                        publisher may also provide telephone help line
                        services for software installation, electronic
                        transmission, or basic operations; and
                            ``(ii) the software program is designed for
                        installation by the purchaser without further
                        substantial support by the supplier;
                    ``(E) the term `computing device' means a device
                which incorporates one or more microprocessor-based
                central processing units that can accept, store,
                process, or provide output of data; and
                    ``(F) the term `computer hardware', when used in
                conjunction with information security, includes, but is
                not limited to, computer systems, equipment,
                application-specific assemblies, modules, and
                integrated circuits.''.
    (b) Continuation of Export Administration Act.--For purposes of
carrying out the amendment made by subsection (a), the Export
Administration Act of 1979 shall be deemed to be in effect.
                                 <all>