[Senate Hearing 110-27]
[From the U.S. Government Printing Office]



                                                         S. Hrg. 110-27
 
   MISUSE OF PATRIOT ACT POWERS: THE INSPECTOR GENERAL'S FINDINGS OF 
        IMPROPER USE OF THE NATIONAL SECURITY LETTERS BY THE FBI

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 21, 2007

                               __________

                          Serial No. J-110-19

                               __________

         Printed for the use of the Committee on the Judiciary


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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
EDWARD M. KENNEDY, Massachusetts     ARLEN SPECTER, Pennsylvania
JOSEPH R. BIDEN, Jr., Delaware       ORRIN G. HATCH, Utah
HERB KOHL, Wisconsin                 CHARLES E. GRASSLEY, Iowa
DIANNE FEINSTEIN, California         JON KYL, Arizona
RUSSELL D. FEINGOLD, Wisconsin       JEFF SESSIONS, Alabama
CHARLES E. SCHUMER, New York         LINDSEY O. GRAHAM, South Carolina
RICHARD J. DURBIN, Illinois          JOHN CORNYN, Texas
BENJAMIN L. CARDIN, Maryland         SAM BROWNBACK, Kansas
SHELDON WHITEHOUSE, Rhode Island     TOM COBURN, Oklahoma
            Bruce A. Cohen, Chief Counsel and Staff Director
      Michael O'Neill, Republican Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Cornyn, Hon. John, a U.S. Senator from the State of Texas........     7
Feingold, Hon. Russell D., a U.S. Senator from the State of 
  Wisconsin,.....................................................     9
    prepared statement...........................................    66
Feinstein, Hon. Dianne, a U.S. Senator from the State of 
  California.....................................................     6
Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa, 
  statement and letters..........................................    81
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     1
    prepared statement...........................................    92
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................     3

                                WITNESS

Fine, Glenn A., Inspector General, Department of Justice, 
  Washington, D.C................................................     8

                         QUESTIONS AND ANSWERS

Responses of Glenn Fine to questions submitted by Senators Leahy, 
  Grassley and Feingold..........................................    36

                       SUBMISSIONS FOR THE RECORD

American Civil Liberties Union, Caroline Fredrickson, Director, 
  Washington Legislative Office, Washinton, D.C., statement......    56
Fine, Glenn A., Inspector General, Department of Justice, 
  Washington, D.C., statement....................................    67


   MISUSE OF PATRIOT ACT POWERS: THE INSPECTOR GENERAL'S FINDINGS OF 
        IMPROPER USE OF THE NATIONAL SECURITY LETTERS BY THE FBI

                              ----------                              


                       WEDNESDAY, MARCH 21, 2007

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:07 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy, Feinstein, Feingold, Schumer, 
Durbin, Cardin, Whitehouse, Specter, Hatch, Grassley, Kyl, and 
Cornyn.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. Good morning. I want to welcome Inspector 
General Fine to the Committee's hearing today.
    The Inspector General has been here many times, and he has 
earned the respect of people on both sides of the aisle for the 
important work his office has done in shining a light in a 
number of areas, but especially one that has concerned me--the 
abuses of the broad powers that we in Congress gave the FBI to 
obtain information through National Security Letters. We all 
know how important National Security Letters can be. We also 
know how easy it is and how great the temptation can be to 
abuse them.
    Six years ago, in the wake of the September 11th attacks, 
when I was Chairman of this Committee, I worked very hard with 
members on both sides of the aisle to ensure that the 
Government had the powers it needed to protect us from 
terrorism. I knew that we had to balance our rights so that the 
Government did not abuse its powers or needlessly invade the 
privacy of Americans.
    In the years since, the Government's powers have increased 
steadily. One safeguard I fought hard to keep in the 2005 
PATRIOT Act reauthorization was a mandate for this review by 
the Department of Justice Inspector General of the FBI's use of 
National Security Letters. Some of us wanted more safeguards, 
but this was the best we could get to at least have a review so 
we would know how they were used. So keeping the PATRIOT Act's 
sunset provisions and adding new sunshine provisions to improve 
oversight and accountability were among my highest priorities 
during that reauthorization process. Fortunately, the then-
Chairman of the Committee, Senator Specter, felt the same way, 
and we insisted together on this Inspector General review.
    I am glad we insisted on the review. It is good news and 
bad news, though. The good news is I am glad we insisted on it. 
The bad news is what came out in the review. We actually would 
not know of the errors and violations that have been 
documented--extending back years--if not for the sunshine 
requirements we put in.
    So now we have to get to use our oversight to find out what 
went wrong, what needs to be done to prevent them from 
recurring. We have scheduled an oversight hearing with the FBI 
Director for March 27th. We are planning a hearing with the 
Attorney General in April. And, of course, we will hold 
whatever hearings are necessary.
    I am troubled by the scope of the National Security Letters 
and the lack of accountability for their use, and these 
concerns appear to be well founded. The NSLs, the National 
Security Letters, allow the FBI--for those who are not familiar 
with what they are, they allow the FBI to request sensitive 
personal information--phone toll records, e-mail transaction 
records, bank records, credit records, and other related 
records--without a judge or a grand jury or even a prosecutor 
evaluating the requests. And Congress expanded the scope of the 
information the FBI could request and reduced the procedural 
and substantive requirements for the FBI to use them. So we 
have to ask: Did the Congress go too far?
    Now, the Inspector General's report found that of the more 
than 143,000 National Security Letter requests the FBI issued 
from 2003 to 2005, the FBI field divisions in their self-
reporting said there were only 26 possible violations of the 
law and policy. The Inspector General found almost as many 
violations in his review of just 77 of them. None of the errors 
the Inspector General found had been self-reported by the FBI, 
and the FBI has massively failed to find or report its own 
mistakes. Documentation was missing or inadequate in 60 percent 
of the files the Inspector General looked at.
    I was particularly distressed by the Inspector General's 
findings about the FBI's use of so-called exigent letters. The 
FBI sent these letters, which are not authorized anywhere in 
any statute, in at least 739 instances to telephone companies 
in place of NSLs or grand jury subpoenas. Basically, they told 
the telephone companies: This is an emergency, so give us these 
records voluntarily, without the regular process. And they went 
on to say, ``Subpoenas requesting this information have been 
submitted to the U.S. Attorney's Office who will process and 
serve them formally.'' The point is that was not honest. No 
subpoenas had been submitted. Sometimes the letters were 
followed up with an NSL, sometimes they were not, and sometimes 
the FBI did not know one way or the other. The letters were 
often sent by FBI personnel who were not even authorized to 
sign NSLs.
    These abuses are unacceptable. We cannot have the FBI 
requesting information under false pretenses and proceeding 
with total disregard for the law. Nobody is above the law, 
especially those in charge of law enforcement, sworn law 
enforcement officers. They, of all people, have to follow the 
law. And that continued into 2006 despite the FBI's Office of 
General Counsel becoming aware of it in 2004. That is 
unacceptable.
    So I want to make clear that it is not a matter of 
technical violations. These were private and personal 
information about Americans and others, including phone 
numbers, bank records, and credit information. We may not be 
able to get the genie back in the bottle, but we are going to 
see what we can do.
    When I voted against the PATRIOT Act reauthorization, I 
explained, ``Confronted with this administration's claims of 
inherent and unchecked powers, I do not believe that the 
restraints we have been able to include in this reauthorization 
of the PATRIOT Act are sufficient.'' I wish I could say I was 
wrong. I do not think I was.
    I will put the rest of my statement in the record, and I am 
sorry I did not notice the clock.
    [The prepared statement of Chairman Leahy appears as a 
submission for the record.]
    Chairman Leahy. I will yield to Senator Specter.

STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM THE STATE 
                        OF PENNSYLVANIA

    Senator Specter. Thank you, Mr. Chairman.
    Before taking up the issue at hand, I think it important to 
make a few comments about the pending investigation by this 
Committee on the issue of United States Attorneys.
    First, I thank the Chairman for calling me yesterday to 
bring me up to date on his conversation with the Attorney 
General yesterday, and the issues came into different focus 
with the President's statement on television yesterday 
afternoon at 5:45. And I would urge my colleagues to rethink 
the issue as to how we are going to proceed with this 
investigation as to the request for resignations of the eight 
United States Attorneys.
    It is obviously indispensable to find the facts to see if 
the Department of Justice acted properly or improperly. That 
raises the issue as to what is the best way to find those 
facts.
    We have had an offer from the President to submit the three 
key White House officials under a less formal process than 
having them before the Committee sworn in regular order. I 
think it is important to note the letter that Senator Leahy and 
I sent to the three individuals on March 13th, where we said we 
would like to work out a process for interviews, depositions, 
or hearing testimony on a voluntary basis. The President has 
responded, taking us on the suggestion, by way of interviews on 
a voluntary basis.
    The Chairman has responded that he believes it necessary to 
have the witnesses before the Committee in regular order and 
under oath. And that is the prerogative of the Judiciary 
Committee, as any Congressional Committee can vote subpoenas 
out on a majority vote.
    The question is: What will that do for us on our effort to 
find the facts and deal with a very, very serious problem in 
the Department of Justice as to how they handle U.S. Attorneys? 
There has been an obviously major impact on the morale of the 
U.S. Attorneys across the country. There is obviously a 
question as to their authority and how they are going to 
function with respect to the risk of being asked to resign. So 
that is a matter which involves the administration of justice 
in this country on a daily basis and is of the utmost 
importance.
    Now, if we have a confrontation between the President and 
the Congress and we go to court, which is the way these matters 
have been resolved if there cannot be an accommodation, we face 
very, very long delays. The most recent landmark decision on 
the scope of Executive privilege and what Congress may do by 
way of compelling testimony is the circuit court opinion In Re 
Sealed Case, D.C. Circuit of 1997. And without going into any 
detailed analysis of that case, the Office of Independent 
Counsel filed a motion to compel documents on June 7th of 1995, 
and it was not until June 17, 1997, 2 years later, that the 
District of Columbia Circuit ruled on the matter. And that did 
not even take into account the petition for cert.
    So, in the normal course of litigation process, if we go to 
court, have the confrontation, very serious constitutional 
confrontation, we will be looking at the year 2009, in the 
midst of the next Presidential term, before we will have 
judicial resolution. And the judicial resolution is uncertain.
    Our preliminary research on the scope of Executive 
privilege deals with two items: the deliberative process and 
the Presidential communication privilege. And the courts have 
said that it depends upon the facts. So it is unpredictable 
whether the President will prevail or the Congress will 
prevail.
    Now, it had been my hope--and, frankly, it still is--that 
we will not have a constitutional confrontation. And I have 
made the point, both publicly and privately, that there are 
precedents for people similarly situated to come forward and 
testify on a voluntary basis. In somewhat different 
circumstances, National Security Counselor Condoleezza Rice 
appeared before the National Commission on Terrorist Attacks, 
and National Security Counselors Berger and Brzezinski did it 
on a couple of occasions, and there are many, many precedents 
for not challenging on the basis of Executive privilege.
    At the same time, I think it is important to note that if 
these individuals come forward voluntarily, they do not do so 
without risk if they do not tell the truth. The criminal 
statutes under 18 U.S. Code 1001 provide a tough penalty--I 
think it is equivalent really to the perjury statute--for 
making a false statement.
    Now, it would be preferable to have the matter transcribed, 
but the FBI has brought many cases for false official 
statements just with note taking. And on the President's 
suggestion, there is nothing to stop the Congress from having a 
stenographer present, although not the traditional court 
reporter, to make a record.
    My own preference is that it be public because I think the 
public has a very deep-seated interest and a right to know what 
is going on. Also, if it is done behind closed doors and then 
Senators emerge and are interviewed, you are likely to get 
conflicting accounts as to what was said.
    Well, those are all matters that I think ought to be 
considered and ought to be the subject of discussion and 
accommodation if we can find it.
    I am going to await judgment on my own vote in Committee--
we will be taking this up tomorrow--until I have a chance to 
reflect on it further and talk to my Committee colleagues on 
both sides of the aisle.
    But I come back to the essential question of finding the 
facts, and I would not like to see a 2-year delay or more 
before we find these facts because the efficiency and the 
viability of our United States Attorneys hangs in the balance 
until we clear this up.
    Well, it seems we go from one crisis to another. Last week, 
the crisis was the National Security Letters, and that was 
superseded by the U.S. Attorneys, and I do not know what will 
supersede it the balance of this week. But this issue is one of 
enormous importance.
    Yesterday in the House of Representatives, both Republicans 
and Democrats chastised the FBI, the sternest warnings coming 
perhaps from Republicans, that the FBI was in danger of losing 
the National Security Letters. The Chairman is exactly right 
that it was only the foresight of this Committee which 
authorized the Inspector General's reports so we know what is 
going on. It is very hard to understand why the FBI has not 
acted. It is a little hard to understand why the FBI is only 
now moving for internal audits on these National Security 
Letters. And I would suggest that the FBI faces a greater risk 
on its investigative authority in intelligence matters than 
losing National Security Letters. I think the FBI is at risk of 
losing its jurisdiction on the entire field.
    There has been a lot of debate as to whether the FBI is 
competent to handle these matters in terms of training all the 
agents that start off on law enforcement. And the scholars and 
members are taking another look at the issue of going to the 
British model of MI5, so that when we have Director Mueller 
next week, we will be looking for some firm answers if we are 
to leave National Security Letters available to the FBI and if 
we are to leave the FBI in charge of a facet of U.S. 
intelligence.
    Mr. Chairman, I regret going over time.
    Chairman Leahy. No, no, no. Senator Specter, you are one of 
the longest-serving members of this Committee, like me, and we 
have worked very closely together over the years to try to get 
the answers to these issues, whether it has been Republican or 
Democratic administrations. You speak of possibly it taking 
until the year 2009, but you and I will still be here.
    Senator Specter. But who will be the Chairman, Mr. 
Chairman?
    [Laughter.]
    Chairman Leahy. One of us will.
    [Laughter.]
    Senator Specter. I think either way the Committee will be 
in good hands.
    Chairman Leahy. Well, thank you. I appreciate that.
    But, you know, the concern I had on the question you 
raised, I will just briefly -and I know Senator Feinstein 
wanted to say something. But we saw the offer. Mr. Fielding and 
I met for the first time yesterday. He seems like a very 
experienced and fine lawyer. And we talked about this, and I 
received the offer he made. But that is still an offer to talk 
to a few Members of Congress behind closed doors, with no 
record for the public to see, not under oath, on a very limited 
number of issues.
    My proposal is to have it in public with both Republicans 
and Democratic members of this Committee, and we have superb 
members on both sides of the aisle who can ask the questions, 
and the public will know what is going on. There have been too 
many closed-door hearings where we have gotten inadequate and 
many times misleading information. Let's have it in public. 
Let's find out what is going on, allow both Republicans and 
Democrats to ask the questions, have them under oath, and clear 
this matter up. It is far too important for law enforcement and 
our country to know what is going on. The Chairman and I are 
both former prosecutors. We know the importance of independence 
of the prosecutor's office.
    We want to get to Mr. Fine, but Senator Feinstein asked to 
make a short comment.

  STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Feinstein. If I may, Mr. Chairman, and I apologize 
to Mr. Fine, who is here. But this is a big issue, I think far 
bigger than we have ever seen up to this point.
    Mr. Chairman, you have negotiated with Mr. Fielding. I have 
read his letter. Frankly, it is not acceptable. You have made 
very clear statements which have been carried on nationwide 
television about where this Committee is, that any testimony 
will be done in public, under oath, and recorded. I think that 
is appropriate. And I believe very strongly that we should 
stand by that statement.
    Tomorrow we will have a chance to do so. I very much hope 
we will.
    I remember a private interview sitting at this table down 
here with Mr. McNulty when the issue was the performance of 
these U.S. Attorneys. I recall what he said. In many respects, 
I wish that could have been public because then the performance 
reports were revealed, and it turned out that the performance 
reports of the very people he was saying were being terminated 
on the basis of performance were all excellent.
    Well, the public is entitled to know that information, I 
believe. And now the issue has been joined, and the White House 
is in a bunker mentality, won't listen, won't change. I believe 
there is even more to come out, and I think it's our duty to 
bring that out.
    I happened to hear my very distinguished colleague from 
Texas on the floor speaking about the President's right to make 
appointments. And, yes, we all know the President has the right 
to make these appointments. But pattern and practice plays a 
role, and virtually every administration has fired U.S. 
Attorneys of a prior administration and put in their own. But 
once they are in, by and large they have remained. There never 
in history has been a time when the phone was picked up on 1 
day and a number were fired and no cause was given. They were 
fired and terminated, essentially. They were told to leave 
office by January the 15th, and no explanation was given. And 
then we were given one explanation, and then that explanation 
changed. Well, the performance may be good, but we do not have 
confidence. And then that explanation was changed to we can do 
better. And it has been a slippery slope of explanations. And I 
think we need to look more deeply into this.
    Six of the seven who were called on that very day--and 
there are others--were involved in public corruption cases, 
either the investigation or the carrying out of open public 
corruption cases. And I think we have an obligation to know 
what was the genesis of this move. Why was this put together in 
the way in which it was? I do not believe we will get that in a 
private interview, unrecorded, with people not under oath. I 
really do not.
    And, yes, I am angry because we have had the San Diego U.S. 
Attorney, an excellent one, terminated. Shortly during that 
time, the Los Angeles U.S. Attorney resigned. I do not know 
whether she was asked to resign or not, but the fact is she 
did. We are a big State. These are big jurisdictions with big 
cases ongoing. And I care very much that the right reasons 
prevailed here.
    So my point is that I am one that urges you to be strong. 
You have laid out the parameters. I think they are the correct 
parameters, and we should issue those subpoenas.
    Chairman Leahy. Thank you. Well, the subpoenas will be 
voted on tomorrow, and I have tried to be very clear in what I 
intend to do. And I think after 32 years here, people know that 
I do what I say I am going to do.
    Only because Senator Cornyn was mentioned in this, I will 
yield just briefly to him, in fairness to Senator Cornyn, and 
then we must get to Mr. Fine.

STATEMENT OF HON. JOHN CORNYN, A U.S. SENATOR FROM THE STATE OF 
                             TEXAS

    Senator Cornyn. Mr. Chairman, thank you very much, and I 
will try to be brief.
    You know, what seems surreal about this is that the Clinton 
administration terminated 93 U.S. Attorneys in one fell swoop, 
and no one suggested--even though they were appointees of a 
Republican administration. No one said this is dirty politics. 
But when the Bush administration terminates eight U.S. 
attorneys that are Bush appointees, then it is claimed to be 
dirty politics.
    I do not know what the facts are, and I will join the 
Chairman, as we have talked about, and the Ranking Member and 
all members of the Committee, in an inquiry into the facts. I 
think we owe that to the country and to all of our 
constituents. But I would just ask my colleagues to be careful 
that this does not take on the attributes of a political circus 
or witch hunt because, frankly, I think that undermines the 
credibility of our attempt to look into the facts.
    I would just point out that Senator Specter cited an 
authority, In Re Sealed Case. On the issue of whether we ought 
to issue subpoenas tomorrow or not, I would just point out that 
in United States v. AT&T, D.C. Circuit Court, the court said, 
``Judicial intervention in Executive privilege disputes between 
the political branches is improper unless there has been a 
good-faith but unsuccessful effort at compromise.'' What I hear 
Senator Specter saying is that is what we ought to be engaged 
in, good-faith discussions and compromise, not shoot first, ask 
questions later. So I would welcome that.
    Chairman Leahy. I should note on that to the Senator, I met 
for an hour with Mr. Fielding yesterday in that regard. I also 
found they had already issued or had the press release out 
about what was going to be their bottom line before he even 
talked to me and what would be the only thing they would accept 
before he even came in to talk to me about what they might 
accept. So it is not really what I have thought of as seeking 
an area of compromise.
    We will vote on the subpoenas tomorrow. Obviously, anybody 
can appear voluntarily, and we would not have to issue the 
subpoenas if they do.
    I would also note I have been here with six Presidential 
administrations. In all six, all the U.S. Attorneys that were 
there from the previous administration were let go, which is 
assumed will happen when a new administration came in. 
President Reagan did with President Carter's, President Clinton 
did with former President Bush's, this President Bush did with 
President Clinton's, and on and on.
    Senator Cornyn. Mr. Chairman, would you give me 5 seconds 
to say that--
    Chairman Leahy. I am counting.
    Senator Cornyn. You and I have worked together on open 
government issues. I am very sympathetic to what you said a 
moment ago about the importance of the public seeing and 
hearing what is going on. And I would like to work with you on 
that.
    Chairman Leahy. Thank you.
    All right. Mr. Fine, I hope you have enjoyed this.
    [Laughter.]
    Chairman Leahy. Please stand and raise your right hand. Do 
you solemnly swear that the testimony you will give in this 
proceeding will be the truth, the whole truth, and nothing but 
the truth, so help you God?
    Mr. Fine. I do.
    Chairman Leahy. Thank you. You have been a patient man. 
Please go ahead.

 STATEMENT OF GLENN A. FINE, INSPECTOR GENERAL, DEPARTMENT OF 
                   JUSTICE, WASHINGTON, D.C.

    Mr. Fine. Thank you. Mr. Chairman, Senator Specter, and 
members of the Committee, thank you for inviting me to testify 
about our report about the FBI's use of National Security 
Letters. The PATRIOT Reauthorization Act required the Office of 
the Inspector General to examine the FBI's use of these 
authorities, and on March 9th, in accord with the statute, we 
issued a report detailing our findings.
    Our review examined the FBI's use of National Security 
Letters, NSLs, from 2003 through 2005. As required by the Act, 
the OIG will conduct another review on the FBI's use of NSLs in 
2006, which we must issue by the end of this year.
    Before highlighting the main findings of our report, I 
would first like to recognize the hard work of the OIG team 
that conducted this review, particularly the leaders of the 
effort: Roslyn Mazer, Patty Sumner, Michael Gulledge, and Carol 
Ochoa. They and their colleagues worked tremendously hard to 
report on this important subject on a tight deadline. I want to 
thank them and the other team members for their outstanding 
work on this report.
    Our report describes widespread and serious misuse of the 
FBI's National Security Letter authorities. In many instances, 
the FBI's misuse violated NSL statutes, Attorney General 
guidelines, or the FBI's own internal policies. We also found 
that the FBI did not provide adequate guidance, adequate 
controls, or adequate training on the use of these sensitive 
authorities. However, I believe it is also important to provide 
context for these findings.
    First, we recognize the significant challenges the FBI 
faced during this period covered by our review. After the 
September 11th terrorist attacks, the FBI implemented major 
organizational changes while responding to continuing terrorist 
threats and conducting many counterterrorism investigations, 
both internationally and domestically.
    Second, it is also important to recognize that in most, but 
not all, of the cases we examined, the FBI was seeking 
information that it could have obtained properly through the 
National Security Letters if it had followed applicable 
statutes, guidelines, and internal policies.
    Third, although we could not rule it out, we did not find 
that FBI employees sought to intentionally misuse NSLs or 
sought information that they knew they were not entitled to 
obtain. Instead, I believe the misuses and the problems we 
found generally were the product of mistakes, confusion, 
sloppiness, lack of training, lack of adequate guidance, and a 
lack of adequate oversight. But I do not believe that any of my 
observations excuse the FBI's misuse of National Security 
Letters. When the PATRIOT Act enabled the FBI to obtain 
sensitive information through the NSLs on a much larger scale, 
the FBI should have established sufficient controls and 
oversight to ensure the proper use of these authorities. The 
FBI did not do so. The FBI's failures, in my view, were serious 
and unacceptable.
    I would now like to highlight our review's main findings. 
Our review found that after enactment of the PATRIOT Act, the 
FBI's use of National Security Letters increased dramatically. 
In 2000, the last full year prior to passage of the Act, the 
FBI issued approximately 8,500 NSL requests. After the PATRIOT 
Act, the number of NSLs requests increased to approximately 
39,000 in 2003, approximately 56,000 in 2004, and approximately 
47,000 in 2005. In total, during the 3-year period the FBI 
issued more than 143,000 NSL requests. However, we believe that 
these numbers, which are based on information from the FBI's 
database, significantly understate the total number of NSL 
requests. During our file reviews in four FBI field offices, we 
found additional NSL requests in the files that were not 
contained in the FBI database. In addition, many NSL requests 
were not included in the Department's reports to Congress.
    Our review also attempted to assess the effectiveness of 
National Security Letters. NSLs have important uses, including 
to develop links between subjects of FBI investigations and 
other individuals, and to provide leads and evidence to allow 
FBI agents to initiate or close investigations.
    Many FBI headquarters and field personnel, from agents in 
the field to senior officials, told the OIG that NSLs are 
indispensable investigative tools in counterterrorism and 
counterintelligence investigations, and they provided us with 
examples and evidence of their importance to these 
investigations.
    The OIG review also examined whether there were any 
improper or illegal uses of NSL authorities. From 2003 through 
2005, the FBI identified, as the Chairman stated, 26 possible 
intelligence violations involving the use of NSLs. We visited 
four field offices and reviewed a sample of 77 investigative 
case files and 293 NSLs. We found 22 possible violations that 
had not been identified or reported by the FBI. We have no 
reason to believe that the number of violations we identified 
in the field offices was skewed or disproportionate to the 
number of violations in other files. This suggests that a large 
number of NSL-related violations throughout the FBI have not 
been identified or reported by FBI personnel.
    And in one of the most troubling findings, we determined 
that the FBI improperly obtained telephone toll billing records 
and subscriber information from three telephone companies 
pursuant to over 700 so-called exigent letters. These letters 
generally were signed by personnel in the Communications 
Analysis Unit and FBI headquarters.
    The exigent letters were based on a form letter used by the 
FBI's New York Field Division in the criminal investigations 
related to the September 11th attacks. Our review found that 
the FBI sometimes used these exigent letters in non-emergency 
circumstances. In addition, the FBI failed to ensure that there 
were authorized investigations to which these requests could be 
tied. The exigent letters also inaccurately represented that 
the FBI had already requested subpoenas for the information 
when it had not.
    In response to our report, we believe the Department and 
the FBI are taking our findings seriously. The FBI concurred 
with all our recommendations, and the Department's National 
Security Division now will be actively engaged in oversight of 
the FBI's use of NSLs. In addition, the FBI's Inspection 
Division has initiated audits of a sample of NSLs issued by 
each of its 56 field offices. The FBI also is conducting a 
special investigation of the use of exigent letters to 
determine how and why the problems occurred there.
    The OIG will continue to review the FBI's use of National 
Security Letters, and we intend to monitor the actions that the 
FBI and the Department are taking to address the problems we 
found in our review.
    Finally, I want to note that the FBI and the Department 
cooperated fully with our reviews, agreed to declassify 
information in the report, and appear committed to addressing 
the problems we identified. We believe that significant efforts 
are necessary to ensure that the FBI's use of National Security 
Letters is conducted in full accord with the statutes, Attorney 
General guidelines, and FBI policy.
    That concludes my testimony. I would be pleased to answer 
any questions.
    [The prepared statement of Mr. Fine appears as a submission 
for the record.]
    Chairman Leahy. Thank you very much, Mr. Fine. I could not 
help but think, when I was reading over your testimony earlier, 
I wish the findings were not as they are, because I feel the 
FBI is very important to this country, but it also is very 
important to have a lot tighter control.
    I was disturbed by your finding that the FBI sent out more 
than 700 so-called exigent letters asking telephone companies 
to immediately provide records without a subpoena or a National 
Security Letter saying it was an emergency. They said that 
subpoenas would follow, but apparently there was no real 
emergency. And the FBI had not actually requested subpoenas.
    How can the FBI send out hundreds of such letters over the 
years with basically false statements in them?
    Mr. Fine. Well, Mr. Chairman, we believe it was an 
incredibly sloppy practice, and that what they had done was 
they took a form that applied in another context, and when they 
created this unit, they applied that form, unthinkingly and 
without adequate review or oversight of this. These forms were 
signed by many in this unit. From the time they started through 
the time they ended in 2006, over 29 individuals signed them, 
and it became the accepted practice. And it was really 
incorrect and inappropriate, in my view.
    Chairman Leahy. But I am just wondering if there are any 
grownups around here, because, you know, somebody signed them. 
They actually read the letter and they signed. They saw the 
claims of emergency. They saw the claims there was going to be 
a backup subpoena. They knew there was no emergency. They knew 
there was no subpoena. They sent the letter anyway. Isn't that 
kind of a willful violation?
    Mr. Fine. Well, in some cases there was an emergency, and 
there were--they couldn't tell us, though, when there was and 
when there wasn't. They couldn't tell us when they had followed 
up with NSLs and when they didn't. The telephone companies 
tracked it to some extent, but the FBI didn't. They had 
incredibly inappropriate and sloppy practices. They didn't even 
keep signed copies of NSLs, which we were astonished at.
    So we don't believe that they were intended to deceive the 
telephone companies because the telephone companies knew what 
was happening here and were cooperating with the FBI. But it is 
extremely troubling, I totally agree.
    Chairman Leahy. If you are a manager of a branch of the 
telephone company and you get one of these letters, you say, 
``Oh, I am not going to cause any trouble. I am going to do 
what is being asked of me.''
    Mr. Fine. Well, it wasn't to branch officials. There was a 
designated official.
    Chairman Leahy. They have an office for them.
    Mr. Fine. They had a certain person and individuals who 
worked with the FBI on this under contract. But it is an 
inexcusable practice.
    Chairman Leahy. Did any of these letters result in 
obtaining information to which they were otherwise not 
entitled?
    Mr. Fine. Well, it is impossible to tell that because we 
have asked the FBI to tie them to authorized investigations. 
They have since gone back and are trying to do that as we 
speak. In the testimony yesterday, the General Counsel said 
that they are able to tie most of them to authorized 
investigations, but they are still working on it. So there is a 
possibility that there was not an authorized investigation for 
some of these letters.
    Chairman Leahy. Well, let's go to just the issue--aside 
from any criminal or other type intent, let's set that aside 
for the moment and let's just talk about sloppy management. You 
found, if I am reading this correctly, that attorneys in the 
National Security Law Branch of the FBI's Office of General 
Counsel learned of these existent letters as early as 2004 and 
counseled that they modify them. But why didn't they just tell 
them to stop doing it or at least alert senior FBI officials to 
the practice? I mean, if you see something being done wrong, is 
there nobody in charge that says--having found that it is being 
done wrong, is there nobody in charge to say you ought to stop 
doing what is wrong?
    Mr. Fine. We think they should have said stop doing it or 
raised it higher. They made efforts to work with the 
Communication Analysis Unit to modify the practice, to ensure 
that they were tied to an authorized investigation, to do other 
things to ensure that these letters were appropriate, and over 
time the CAU did not change the practices.
    But, unfortunately, the OGC attorneys did not raise it to a 
higher level, did not raise it to the highest levels of the FBI 
and say we have got to stop this practice. They were trying to 
work with the CAU, and they did not have authority to tell the 
CAU to stop. On the other hand, they should have raised it 
higher, as you suggest.
    Chairman Leahy. Well, I look at it just from a statistical 
aspect of the 77 files your office looked at, and you found 22 
violations. The FBI said they reported 26 violations, but that 
is out of the whole pile of these NSL letters.
    Am I safe in concluding from that that they did not have a 
good tracking way and they were not reporting the violations?
    Mr. Fine. Yes, I think there were--our reviews indicate 
that there are violations out there that were not identified by 
the FBI and they are not reported from the field offices to the 
FBI.
    Now, we did not do a statistical sample. We did a small 
sample of 77, and you cannot statistically extrapolate from 
that small sample how many there would be in the entire 
universe. On the other hand, we found 22 in a review of 77 
files, almost as many as the FBI found over the entire 3-year 
period. So we believe that there are certainly more out there.
    Chairman Leahy. But this information they picked up had to 
go somewhere, either into data banks or into unrelated case 
files. Have you done anything to get information that they were 
not supposed to get back out of that? I mean, I think with all 
the cross-fertilization of our Government data banks, if you 
are in there by mistake, it can hurt. I think of Senator 
Kennedy on this Committee not being allowed to go on an 
airplane ten times in a row because he is mistaken for some 
Irish terrorist or--
    [Laughter.]
    Mr. Fine. Well, yes, they have told us, they reported to us 
that when they obtained information improperly, illegally 
through the NSLs, they have destroyed the information--they 
have either sequestered the information or destroyed the 
information. And so that is what efforts they have taken. Or in 
some cases, when an NSL could have been issued properly, they 
have gone back and issued a proper NSL.
    Chairman Leahy. So, on the one hand, they were not quite 
sure how many mistakes they had made, but they claimed that the 
material they got that they have now taken back out of the 
databases. Is that it?
    Mr. Fine. The ones they know about they have taken out, but 
they are in the process now of doing a full-scale audit 
throughout all 56 FBI field offices, a sample of 10 percent, 
and I am quite confident they are going to find more.
    Chairman Leahy. All right. Thank you very much, Mr. Fine.
    Senator Specter?
    Senator Specter. Thank you, Mr. Chairman.
    Mr. Fine, I have two questions for you. One question is: 
Should we replace the FBI Director? And the second question I 
have for you is: Should we replace the FBI?
    Going to the first question first, you have found 
``widespread and serious misuse'' of the FBI's National 
Security Letters. ``The FBI's oversight of the use of NSLs was 
inconsistent and insufficient.''
    On February 12th of this year, you filed a report regarding 
weapons and laptops, and you found that the FBI ``had not taken 
sufficient corrective action.''
    ``The FBI cannot determine in many cases whether the lost 
or stolen laptop computers contained sensitive or classified 
information because the FBI did not maintain records indicating 
which of its laptop computers actually contained sensitive or 
classified information.''
    Then your report on February 20th of this year relating to 
the FBI's internal controls over terrorism said, ``The 
collection and reporting of terrorism-related statistics within 
the Department is decentralized and haphazard. The number of 
terrorism-related cases was overstated because the FBI 
initially coded the investigative cases as terrorist-related 
when the cases were open, but did not re-code cases when there 
was no link to terrorism established.''
    Now, could you do a better job managing the FBI?
    Mr. Fine. Could I personally?
    Senator Specter. That is the question.
    Mr. Fine. I am not sure I could. I believe--
    Senator Specter. Is the job too big for anybody to do 
right?
    Mr. Fine. I don't think so. I think it is a tremendously 
difficult job.
    Senator Specter. Well, if you are not the right man, you 
are suggesting that somebody else might be the right man or 
woman?
    Mr. Fine. I believe Director Mueller is a strong leader and 
is doing his best to try and reform and change the FBI.
    Senator Specter. We acknowledge that he is doing his best. 
Is he doing an adequate job based on what you have said?
    Mr. Fine. I believe there are serious problems that he 
needs to address. I think he has taken responsibility for that.
    Senator Specter. We know there are serious problems, and we 
know that he has taken the responsibility. This is the last 
time I am going to ask you the question. Is he up to the job?
    Mr. Fine. I think he is.
    Senator Specter. Well, you better rewrite your report then, 
Mr. Fine.
    Let me move to the second question. One of the outstanding 
scholars in America is a man named Richard Posner, who is a 
judge on the Seventh Circuit, and he wrote an extensive article 
which appeared in the Wall Street Journal earlier this week, 
and this is what he says about the FBI: ``The FBI training 
emphasizes firearm skills, arrest techniques and self-defense, 
and legal rules governing criminal investigations. None of 
these proficiencies are germane to national security 
intelligence. What could be more perverse than to train new 
employees for one kind of work and assign them to another for 
which they have not been trained?''
    Then he goes on to analyze quite a number of cases where 
the FBI conducts an investigation and makes an arrest, which is 
what they are good at, but does so, as he analyzes the facts, 
prematurely, without conducting the investigation far enough to 
find out if there are others involved. Doing a great job on law 
enforcement but not on intelligence gathering because they are 
not trained for it and not experienced in it.
    And then he writes this, referring to the FBI, that they 
have the ``wrong attitude.'' Finding somebody who has the means 
to carry out a terrorist attack is more important than 
prosecuting plotters who pose no immediate threat to the 
Nation's security. The undiscovered somebody is the real 
threat.'' And I have only got 40 seconds left, so I cannot go 
into greater detail, but I commend this to you.
    Judge Posner comes to the categorical, emphatic conclusion 
that the FBI is not suited to carry out intelligence work, and 
that when he compares it to MI5 in Great Britain, they have a 
much better system.
    Can you be a little more forthcoming on your answer to 
question No. 2: Should we replace the FBI?
    Mr. Fine. I don't think we should replace the FBI. I think 
we need to reform the FBI. I think it needs dramatic reform. I 
think it needs to make changes, and it is making changes--
clearly not fast enough and good enough. There is no question 
about that.
    Senator Specter. Not fast enough or good enough on handling 
the terrorist threat on intelligence.
    Mr. Fine. It needs to do better.
    Senator Specter. That is a hearty recommendation.
    Mr. Fine. It needs to do better.
    Senator Specter. My time is up, but I have a third question 
for you, Mr. Fine. Should we replace the Inspector General?
    Mr. Fine. I don't think so. We have tried to do our best.
    Senator Specter. That is you. Should we replace you?
    Mr. Fine. I don't think so. We have tried to do our job 
and--
    Senator Specter. I asked you three questions and I got 
three noes. Thank you very much.
    Chairman Leahy. I would hope we would not replace you.
    I would hope that--I have found your reports to be very 
good, without fear of favor, as the expression goes, and you 
certainly have my confidence.
    Senator Specter. How about my other two questions, Mr. 
Chairman? I am not suggesting replacing you. I will revert back 
to just my first two questions, Mr. Fine.
    Chairman Leahy. Shall we go on to Senator Feinstein.
    Senator Feinstein. Thank you very much, Mr. Chairman.
    Mr. Fine, in the 15-some years I have watched you, I want 
to thank you. I think you have done excellent work. You have 
been straight as an arrow. You have told us as you see them, 
and this Senator very much respects you, and I want you to know 
that.
    Mr. Fine. Thank you.
    Senator Feinstein. Let me ask some specific questions. What 
is your impression of the FBI's continuing position that agents 
can continue to issue verbal emergency requests for 
information?
    Mr. Fine. I think there may be some circumstances when 
there is a true emergency that they need to get the information 
in a truly expeditious fashion, and if they do ask for it 
verbally, I believe they need to immediately, as soon as they 
can, follow it up with documentation for that. So I think there 
are some circumstances where that would be appropriate.
    Senator Feinstein. Which raises the question then: Do you 
believe that their assurance of the audit trail to follow in 
this context is sufficient?
    Mr. Fine. Well, they clearly didn't have an audit trail and 
they clearly didn't do it, but I think they need to ensure that 
if there ever is that need and they use it, there is a clear 
record and documentation of it and an audit trail of that.
    Senator Feinstein. Now, if they are going to use these 
emergency verbal requests, does it make sense to limit them to 
a few people?
    Mr. Fine. Yes, it does. I think it does make sense--limit 
them to a few people who can authorize that?
    Senator Feinstein. That is correct.
    Mr. Fine. Yes. It clearly should be a limited authority on 
an emergency basis, and it should be authorized by only a few 
people at the highest levels.
    Senator Feinstein. Thank you. Can you provide this 
Committee with a copy of the FBI's new emergency letter 
template?
    Mr. Fine. I can certainly go back to the FBI and request 
that.
    Senator Feinstein. I appreciate it.
    Do you know how many people have had their private 
telephone, Internet, or financial records turned over in 
response to NSLs since 2001?
    Mr. Fine. We have in our classified appendix a breakdown of 
the uses of NSL authorities based upon the particular statute. 
We break that down, and so we do have that in there. In terms 
of the exact number of people under each one, I am not sure, 
but we can try and get back to you on that.
    Senator Feinstein. If you would, and I have not seen the 
classified section, so I will take a look at it. Thank you for 
that.
    How do you reconcile your findings of no deliberate or 
intentional violations of NSL statutes, the Attorney General 
guidelines, or FBI policy with the fact that the exigency 
letters, signed by various FBI officials, were sent in non-
emergency situations and even inaccurately represented that the 
FBI had already requested grand jury subpoenas when, in fact, 
it had not?
    Mr. Fine. Well, we did not do a top-to-bottom review of why 
everyone signed those letters, but our review indicated that it 
was an unthinking form that they used inappropriately, it 
became the accepted practice, and they signed it and sent it.
    With regard to the emergency situations, they did say there 
were times when they could not tie this to an emergency, and 
they used them, nevertheless, and it was clearly inappropriate.
    Now, the FBI is doing a review of talking to the 
individuals involved, a performance review, and to determine 
what they did, why they did it, what was in their mind, and we 
will follow that carefully.
    Senator Feinstein. Thank you.
    A lawyer to Bassem Youssef, who was in charge of the FBI's 
Counterterrorism Analysis Unit, recently told the New York 
Times that his client raised concerns about the FBI's failure 
to document the basis for its exigent letters soon after being 
assigned to the Communications Analysis Unit in early 2005 and 
that his concerns were met with apathy and resistance by 
superiors who tried to minimize the scope of the problem.
    Did your office investigate these allegations?
    Mr. Fine. Well, we interviewed Mr. Youssef. As you stated, 
he became the head of the unit in early 2005. We interviewed 
him, and he did not tell us at that time that he had raised 
concerns to his supervisors and that he was ignored.
    In addition, he was not the one who brought these 
allegations about the exigent letters to us. We saw that from 
lawyers in the Office of General Counsel as well as e-mails 
from the Office of General Counsel to his unit when he was the 
head of it to try and reform the practice. And, in fact, when 
he was the head of that unit, he signed one of these letters, 
and also under his name approximately 190 of those letters were 
issued. So the problems with the letters continued under his 
leadership.
    Now, he has said publicly, we have heard, that he raised 
the concerns to his supervisors and it was met with apathy. He 
didn't tell us that, and so we did not investigate that. And I 
know the FBI is looking at exactly what happened here.
    Senator Feinstein. Did you find any evidence that his 
superiors tried to minimize the problem?
    Mr. Fine. No. We found that the Office of General Counsel 
was trying to get the Communications Analysis Unit to change 
this, and it was not changed. And what went up the chain is not 
clear, but it does not look like it went high up the chain 
there.
    Senator Feinstein. To your knowledge, has anyone in or out 
of the FBI's Office of General Counsel been held accountable in 
any way for these serious and unacceptable failures to 
establish controls and oversight?
    Mr. Fine. As the result of our report, the Attorney General 
has asked the Department to look at the conduct of attorneys, 
as well as the FBI is looking at the conduct and the 
performance of its employees to determine accountability.
    Senator Feinstein. Thank you.
    Thank you, Mr. Chairman.
    Chairman Leahy. Thank you, and I have a list from Senator 
Specter on the Republican side of who will go first: Senator 
Cornyn, and then, in sequence, normal sequence, rotating to 
Senator Grassley, and then the normal sequence, Senator Hatch.
    Senator Specter. Mr. Chairman, that is the order of arrival 
under our early bird rule.
    Chairman Leahy. OK.
    Senator Cornyn. Thank you, Mr. Chairman.
    Thank you, Mr. Fine, for your important work that you are 
doing. I would like for you to distinguish between the fault 
you found with the way in which the NSL letters are being 
accounted for and being issued and the usefulness of this tool, 
because I do not want us to make any mistakes in what the 
corrective action needs to be. Could you please clarify that 
for me or expand on your testimony?
    Mr. Fine. Certainly. The FBI told us and provided us 
examples of the importance of this tool. It is an indispensable 
tool in the conduct of counterterrorism and 
counterintelligence.
    Senator Cornyn. I am sorry. You called it an 
``indispensable tool''?
    Mr. Fine. Indispensable tool. It can connect terrorists or 
terrorist groups with other individuals, it can look at the 
financing of terrorist groups, and it can initiate leads or 
close investigations. It can be used in an attempt to connect 
the dots. That is very important.
    On the other hand, it has to be used, because it is an 
intrusive tool, in accord, in strict accord, with the statutes, 
the guidelines, and the FBI's own policies. There needs to be 
internal oversight over it. There needs to be internal 
controls. There needs to be clear guidance to the field and the 
supervisors who are using it on when it can be used and when it 
can't be used and what needs to be done. And we found real 
problems with that.
    So, on the one hand, it is an important tool. On the other 
hand, it is an intrusive tool that needs greater controls.
    Senator Cornyn. Thank you. I think that is very important 
to differentiate. And I know Senator Durbin has spent a lot of 
time looking into this issue and working on this issue. I think 
we tried to work together, all of us, in a bipartisan way to 
deal with some of the problems with National Security Letters, 
the so-called gag rule that prohibited a recipient from 
actually even telling their own lawyer, and the issue of 
allowing them to go to court to challenge the National Security 
Letter, providing some level of judicial review.
    Did you find any problems with regard to those particular 
features of the amended PATRIOT Act?
    Mr. Fine. Well, we didn't really look at that issue that 
you just raised right there.
    Senator Cornyn. OK. Thank you.
    Those are the two things I wanted to ask about. Thank you 
very much.
    Chairman Leahy. Thank you, Senator Cornyn. Thank you very 
much.
    Senator Feingold?
    Senator Feingold. Thank you, Mr. Chairman.
    Mr. Fine--
    Chairman Leahy. And I should note, at one point I may have 
to go for a few minutes to the Appropriations Committee. If I 
do, Senator Whitehouse has offered to stay and chair.
    Senator Feingold?
    Senator Feingold. Thank you, Mr. Chairman.
    Mr. Fine, let me start by thanking you for these very 
thorough and thoughtful reports. I remember the very strong, 
courageous IG report about the treatment of detainees right 
after 9/11 in New Jersey and New York. I know that conducting 
this type of detailed audit takes a great deal of resources, 
and I want you to know that we appreciate the work that your 
office did. This independent product is invaluable to our 
Congressional oversight responsibilities, and I want to 
especially compliment you, Mr. Fine, on how you handled the 
questioning by the Ranking Member concerning the FBI Director.
    It is not your job to speak on whether or not Mr. Mueller 
is up to his job. You have a specific role in the Department, 
and in my view, you have discharged your duties with tremendous 
integrity and professionalism. I think it is inappropriate to 
browbeat you for an answer to a question that is outside of 
your professional responsibilities.
    I do not know why we would want to intimidate somebody like 
this, but the fact is this is one guy that I do not think can 
be intimidated. So I thank you for your service to our country.
    Mr. Fine, the Attorney General guidelines state generally 
that agents are supposed to use the least intrusive 
investigative tools available. Your report recommends that more 
guidance be provided to agents about how to implement that 
standard, particularly with respect to the use of NSLs, and I 
want to get your view on the level of intrusiveness involved in 
obtaining different types of information available through an 
NSL.
    First of all, with respect to the three main categories of 
NSLs, how would you rank them in terms of their level of 
intrusiveness?
    Mr. Fine. Well, if you had to rank them, I think that the 
least intrusive, although I do think it is intrusive, is the 
telephone records, the transactional records of telephone calls 
made and the subscriber. I think it then goes to more 
intrusive, much more intrusive, when you are talking about 
financial records and when you are talking about credit 
reports. I think those are much more private and more intrusive 
than initial telephone call records.
    Senator Feingold. That is consistent with the FBI General 
Counsel's statements to my staff as well. But the same loose 
legal standard applies with respect to all of these different 
types of records. Isn't that right?
    Mr. Fine. It is the same general standard. Some of them are 
called ``relevant to an authorized investigation.'' In terms of 
others, ``sought for an authorized investigation'' is the same 
principle. It is the same standard.
    Senator Feingold. Do you think it is a good idea that the 
same standard applies to all these records?
    Mr. Fine. Well, I don't know if a different standard needs 
to be applied. I will have to think about that. But what does 
need to happen, something we recommended, is that the FBI 
consider this and look at what guidelines there should be on 
using the least intrusive method while at the same time 
effectively pursuing terrorism leads. And I don't think there 
has been guidance. It has been left to the field. There are 56 
field supervisors who make their own calls, and they have 
counsel in their office who probably have different ideas of 
what is intrusive and when it should be used in the conduct of 
an investigation, whether it is the subject or whether it is 
someone who is connected to the subject. So I do think there 
has to be thought put into when these methods are used and at 
what stage of the investigation.
    Senator Feingold. With respect to the NSL for credit 
reports, would you agree that obtaining a full credit report is 
more intrusive than obtaining what is commonly known as a 
``credit header,'' data such as name, address, employer, and 
the name of a bank where an individual has an account?
    Mr. Fine. Yes.
    Senator Feingold. With respect to the NSL for financial 
records, would you agree that obtaining the details of 
someone's financial transaction is more intrusive than finding 
out their bank account number?
    Mr. Fine. Yes.
    Senator Feingold. And with respect to the NSL for phone or 
Internet records, would you agree that obtaining the details 
about who someone is communicating with and when is more 
sensitive than finding out what their phone number or e-mail 
address is and how they pay for their phone and Internet usage?
    Mr. Fine. Yes.
    Senator Feingold. According to your report, the share of 
NSL requests directed at U.S. persons--that is, citizens and 
permanent residents--increased from 39 percent in 2003 to 53 
percent in 2005. First of all, you have warned that many of the 
numbers in your report are likely somewhat inaccurate because 
of poor FBI recordkeeping. Do you have a sense of how accurate 
the breakdown is that I just mentioned, and to the extent that 
it is inaccurate, whether it is more likely to overstate or 
understate the percentage of U.S. persons? Which direction is 
it likely to go?
    Mr. Fine. I don't think we can make an estimation of 
whether it is more inaccurate for U.S. persons or non-U.S. 
persons. But it is clearly inaccurate for a whole variety of 
reasons. We looked at the files and couldn't find about 70 
percent of the NSLs that we found in the files in the database. 
We also know that the FBI has delays in putting information in 
the database, so the reports that come to Congress, those NSLs 
are not included.
    We also found computer malfunctions and glitches in the 
system, structural problems, so that they didn't capture NSLs. 
And I think it is a widespread problem throughout the database, 
and I couldn't really tell you whether it was more for U.S. 
persons or less for U.S. persons.
    Senator Feingold. Do you have any idea why a larger 
percentage of targets are U.S. persons now than several years 
ago, to the point where a majority of NSL requests in 2005 
actually involved citizens or permanent residents?
    Mr. Fine. I think the FBI would say that because of 
international terrorism cases, they are looking to see any 
potential contact with the United States. So if there is a 
person hypothetically in the London bombing, if there is a 
bomber who has information that seems to indicate there was 
some contact with the United States, they will more assiduously 
and aggressively look to see if there has been that contact.
    Senator Feingold. Thank you, Mr. Fine.
    Thank you, Mr. Chairman.
    Senator Specter. Mr. Chairman, if I may exercise a point of 
personal privilege.
    Mr. Fine, did I browbeat you?
    Senator Feingold. Say ``No.''
    [Laughter.]
    Chairman Leahy. I don't think anybody could do that to Mr. 
Fine, but go ahead.
    Mr. Fine. I answered the questions. I didn't feel 
browbeaten.
    Senator Specter. Did I intimidate you?
    Mr. Fine. No, you did not intimidate me, Senator Specter.
    Senator Specter. Do you think I need a lesson from Senator 
Feingold as to how to question a witness?
    Mr. Fine. Well, on that one, I will, I think, exercise my 
discretion and--
    [Laughter.]
    Chairman Leahy. I think we may move on to Senator Grassley, 
who has questions to ask. Senator Grassley?
    Senator Grassley. Well, I don't want to be guilty of 
pandering, so I might as well say I think you do a job that 
other inspectors general ought to follow, and I think I am some 
judge of that because I think I have had a hand in getting 
either the resignation or firing of at least five or six 
inspectors general since I have been in office. And I am not 
looking for a replacement for you. I want other people to 
follow your direction.
    I am going to follow along the lines eventually of what 
Senator Feinstein was asking you, but before I get there, I 
want to ask a couple other questions.
    You have said that some of your most disturbing findings 
deal with the 739 so-called exigent letters issued from one 
particular unit. Your report states that these letters 
``contain factual misstatements, claiming that the subpoenas 
had been submitted to the U.S. Attorney's Office and that there 
was an emergency need for the phone records before the subpoena 
could be processed. We need to find out if the officials 
signing these letters knew that they were untrue. If so, it 
would be extremely serious misconduct, if not a criminal 
violation.''
    I understand that your review did not focus on that issue 
because you had a much broader mission to look at the National 
Security Letters generally. I also understand that in response 
to your findings of the exigent letters, the Director ordered a 
special inspection of the headquarters unit that issued them. 
However, I am not confident that the FBI can be trusted to 
investigate itself and hold the right people accountable.
    If the public is going to be reassured that these abuses 
are taken seriously, there needs to be a separate independent 
inquiry to find out whether any misrepresentations in the 739 
letters were knowingly or intentional.
    Question: Are you aware of any independent investigation by 
your office or any other office looking into exactly who knew 
what and when?
    Mr. Fine. Senator Grassley, no, we are not looking into who 
knew what when. We will monitor what the FBI does, and I am 
sure the FBI will report to this Committee about its findings 
as well.
    We are, as required by the reauthorization act, looking at 
the use of NSLs in 2006. We have a mandate to do that very 
broad review again in 2006 for the 2006 NSLs, which we are 
intending to do.
    Senator Grassley. Do you think that there needs to be an 
independent review?
    Mr. Fine. I think the FBI should look at what happened, and 
we ought to see what the results are and then see whether it 
was aggressive and thorough or not.
    Senator Grassley. Well, I think that there ought to be an 
independent review. I am skeptical of the FBI's ability to 
objectively investigate itself, and especially since one of the 
people at the center of the issue is Bassem Youssef, who has 
already been referred to by Senator Feinstein. He is a 
decorated Arab American agent who has a discrimination lawsuit 
pending against the FBI. Last year, Senator Specter, Senator 
Leahy, and I wrote to you forwarding evidence that Mr. Youssef 
appeared to be a victim of whistleblower retaliation. So from 
my judgment, trusting the FBI to investigate this matter is a 
little bit like trusting a fox to guard a chicken house.
    Mr. Youssef is the current head of the unit that issued the 
letters, but most of the letters were issued under his 
predecessor before 2005. According to a letter provided by his 
attorney, Mr. Youssef's efforts to report and correct the 
problems were dismissed or ignored by his superiors, forcing 
him to report the issue to the General Counsel's office, not 
directly to you, as you stated correctly.
    Mr. Chairman, I want a copy of that letter from Mr. 
Youssef's attorney put in the record.
    Chairman Leahy. Without objection, so ordered.
    Senator Grassley. Inspector Fine, yesterday the Washington 
Post reported that in light of these developments surrounding 
the release of your report on National Security Letters, the 
FBI issued new guidance to field agents in seeking phone 
records. This new guidance includes a new template for 
emergency letters and instructions telling agents there is no 
need to follow these letters with NSLs or subpoenas. Further, 
this guidance states that the letters are a preferred method in 
emergencies, but that agents may make these emergency record 
requests orally. FBI Assistant Director John Miller stated that 
these new procedures will include ``an audit trail to ensure 
we''--the FBI--''are doing it the right way.''
    My question is: How do you see these new procedures 
working?
    Mr. Fine. We will have to take a look at those procedures. 
We heard about that as well and read about it. There is a 
provision in the law, the current law, the ECPA law, Electronic 
Communications Privacy Act, which allows voluntary disclosure 
of customer communications in specified circumstances when 
there is an emergency involving danger of death or serious 
physical injury to any person.
    Now, what we said was you have got to follow that law. You 
cannot combine it with an NSL because that is not a voluntary 
disclosure. You have got to separate it. And that was the 
problem we found with the exigent letters. This does appear to 
be trying to separate that, but we are going to have to take a 
look at exactly what it is and how it is in operation. But, 
clearly, they had to put a stop and they should have put a stop 
to the exigent letters as they existed and as they were used.
    Senator Grassley. Do you think the FBI documents can 
provide adequate justification for emergency requests when they 
allow agents to make these requests orally?
    Mr. Fine. Well, it has to be documented. Sometimes there is 
an emergency and you can orally make that request, but it has 
to be followed up with documentation and immediately thereafter 
explain why there was an emergency and why there was the need 
for the oral notification.
    Senator Grassley. Could you provide copies of any and all 
unclassified e-mails related to the exigent letters provided by 
the CAU?
    Mr. Fine. Can we do that?
    Senator Grassley. Yes.
    Mr. Fine. We will certainly work with this Committee and 
you for that. They are FBI documents, and we will follow the 
protocol as we normally do.
    Senator Grassley. I think I am going to have to submit the 
rest of my questions for answers in writing.
    Chairman Leahy. Thank you. And normally, Senator Whitehouse 
would be next, but he has agreed to let Senator Durbin, the 
Deputy Leader, go first. Senator Durbin, you are recognized.
    Senator Durbin. Thank you, Mr. Chairman.
    Chairman Leahy. I have been advised that I had the order 
wrong. Senator Specter says that it will be Senator Kyl next in 
the normal rotation and then Senator Hatch.
    Senator Grassley. Could I have this letter put in the 
record?
    Chairman Leahy. Without objection.
    Senator Grassley. And I would like to also see if we could 
get this stuff before next Tuesday's hearing that we have 
schedule.
    Chairman Leahy. Let's see if we can.
    Senator Durbin?
    Senator Durbin. Mr. Chairman, thank you, and, Senator 
Whitehouse, thank you very much for this chance to ask 
questions.
    I think it is worth a minute to reflect on why we are here 
today. We are here because a bipartisan group of Senators 
thought that the PATRIOT Act went too far. We came together and 
suggested changes to tighten up the PATRIOT Act to avoid abuses 
similar to the ones that are the subject of this Inspector 
General's report. Unfortunately, our request to amend the 
PATRIOT Act was denied in this Committee and on the floor, and 
the best that we could get out of our effort was an Inspector 
General's report to at least alert us as to what was happening.
    And so the reason we are here today is because Mr. Fine 
followed on the recommendation and requirement of our 
legislation to at least tell us how this law is being used, and 
I thank you for that. But I also want to say that if the FBI 
and Department of Justice were derelict in the way that they 
used and applied the PATRIOT Act, I happen to believe that 
Congress could have done a much better job in making this law 
more responsive to our basic values when it comes to checks and 
balances. And I think that comes through very clearly.
    I want to try to ask you four fairly specific questions 
that relate to your findings. Let us move to the exigent letter 
situation. In this situation, the FBI would go to a telephone 
company and say to them: We are involved in a national security 
investigation. It is of an emergency nature. We have requested 
a subpoena from the court, but because of the emergency we need 
you to produce this record or this information immediately.
    And what you have found, as I understand it, is that in 
many cases there was no emergency, there was no application for 
a subpoena, and there was no evidence that it really had 
anything to do with an ongoing investigation.
    If the FBI misrepresented those three material facts to a 
telephone company to secure the private records of innocent 
Americans, was a crime committed?
    Mr. Fine. One would have to look at the intent of the 
individuals involved. I don't believe that they had the intent 
to commit that crime. One has to also recognize that these were 
three telephone companies with which they had a pre-existing 
relationship and they had lots of information going back and 
forth, and they set up this arrangement to obtain these 
records. The telephone companies were providing this 
information, lots of this information, on an ongoing basis. The 
FBI used this form. It was the inappropriate form.
    The telephone companies knew what was happening here, and 
the form kept being used. That was inaccurate and 
inappropriate. If somebody knew that and intended to do that, 
nonetheless, that would be a potential crime. We did not see 
that.
    Senator Durbin. You question whether it was intentional, 
but yet you found it was repeated over and over again.
    Mr. Fine. The same form was used over 700 times. They just 
kept sending it. It was signed by many people, and it was an 
unthinking use of an improper form.
    Senator Durbin. And the FBI General Counsel, Valerie 
Caproni, has said when it came to the NSLs, in her words, there 
was ``a colossal failure on our part to have adequate internal 
controls and compliance programs in place.''
    Next question: How high up the chain did this information 
go? At what point, at any point, did the Attorney General of 
the United States know of the serious abuses and misuses 
identified in your report?
    Mr. Fine. Of the entire report? He knew about it when we 
provided a draft report to the Office of the Attorney General.
    Senator Durbin. I am talking about when they were actually 
using the exigent letters and NSLs.
    Mr. Fine. What he said, I think he has said this publicly, 
is that he was surprised about the misuses that we identified, 
as did the Director of the FBI.
    Senator Durbin. The Director of the FBI, again, was not 
informed of these colossal failures?
    Mr. Fine. I don't think they knew about these misuses that 
we found until we put it all together in this comprehensive 
report.
    Senator Durbin. Would you say the same of the General 
Counsel of the FBI?
    Mr. Fine. I think the General Counsel also probably didn't 
know of the extent of the problems here.
    Senator Durbin. I say to my colleagues on the Committee, 
when we start asking questions about whether we need checks and 
balances when it comes to the PATRIOT Act, isn't this a perfect 
illustration when neither the Attorney General, the Director of 
the FBI, nor even the General Counsel of the FBI knew of these 
serious abuses that may have invaded the privacy of hundreds of 
innocent Americans.
    The next question I have relates to this Office of 
Professional Responsibility investigation of warrantless 
wiretaps. It is my understanding--well, first, let me say that 
when the Office of Professional Responsibility in the 
Department of Justice initiated this investigation, they were 
stopped. The White House refused to give security clearances to 
the Office of Professional Responsibility to investigate any 
wrongdoing on the part of the Department of Justice in the 
warrantless wiretap program.
    It is my understanding that your office is now 
investigating the NSA warrantless surveillance program. Is that 
correct?
    Mr. Fine. That is correct.
    Senator Durbin. And have you received security clearances 
for that?
    Mr. Fine. Yes.
    Senator Durbin. Are you aware of any rationale for granting 
security clearances to your office but not to the Office of 
Professional Responsibility?
    Mr. Fine. I am not aware of any. I wasn't--no, I am not 
aware of any.
    Senator Durbin. Last question. There is a Privacy and Civil 
Liberties Oversight Board we created to try to keep an eye on 
the type of abuses which you have reported in this Inspector 
General's report to Congress. Is there any evidence that this 
group was either informed or involved in any decisionmaking 
related to these incidents?
    Mr. Fine. Before the incidents occurred?
    Senator Durbin. Yes.
    Mr. Fine. Not that I know of. We are briefing the Privacy 
Board tomorrow.
    Senator Durbin. This is a board that is supposed to clear 
these things in advance. It is supposed to decide whether they 
have gone too far. Now they are learning years later what 
actually happened. Clearly, under current law they are 
irrelevant.
    Thank you.
    Senator Whitehouse. [Presiding.] Senator Kyl?
    Senator Kyl. Thank you, Mr. Chairman. And, Mr. Fine, I want 
to thank you for your testimony and for the report which you 
issued.
    You state in your testimony that the violations that your 
report identified were serious and widespread. You also state, 
and I am going to quote here, that you ``did not find that the 
FBI agents sought to intentionally misuse the National Security 
Letters or sought information that they knew they were not 
entitled to obtain through the letters. Instead, we,'' you say, 
``believe the misuses and the problems we found were the 
product of mistakes, carelessness, confusion, sloppiness, lack 
of training, lack of adequate guidance, and lack of adequate 
oversight.''
    Later in the recommendations section of your report, you 
state the following, and I again quote: ``To help the FBI 
address these significant findings, the OIG made a series of 
recommendations, including that the FBI improve its database to 
ensure the office that it captures timely, complete, and 
accurate data on NSLs, that the FBI takes steps to ensure that 
it uses NSLs in full accord with the requirements of National 
Security Letter authorities, and that the FBI issue additional 
guidance to field offices that will assist in identifying 
possible violations arising from use of NSLs. The FBI concurred 
with all of the recommendations and agreed to implement 
corrective action.''
    The report goes on to state, ``We believe,'' again quoting, 
``that the Department and the FBI are taking the findings of 
the report seriously. In addition to concurring with all of our 
recommendations, the FBI and the Department have informed us 
that they are taking additional steps to address the problems 
detailed in the report. For example, the FBI's Inspection 
Division has initiated audits of a sample of NSLs issued by 
each of its 56 field offices. It is also conducting a special 
inspection of the exigent letter send by the Counterterrorism 
Division to three telephone companies to determine how and why 
that occurred. The FBI's Office of General Counsel is also 
consolidating its guidance on NSLs, providing additional 
guidance and training to its field-based chief division counsel 
on their role in approving NSLs and working to develop a new 
web-based NSL tracking database. In addition to the FBI's 
efforts, we have been told that the Department's National 
Security Division will be actively engaged in oversight of the 
FBI's use of NSL authorities.''
    So, Mr. Fine, to summarize, your report found that although 
the violations you identified were serious, they were the 
result of inadvertence and inattention rather than intentional 
malfeasance. And in addition to concurring in and agreeing to 
implement all of your recommendations for correcting these 
problems, the FBI has additionally initiated its own audits 
through its Inspection Division, the FBI General Counsel's 
office has consolidated its guidance on the use of NSLs, and in 
addition, the Justice Department's National Security Division 
will begin overseeing the use of NSLs.
    Now, I have two questions, and part of this is in response 
to the Senator from Illinois, who stated certainly a truism 
that we need checks and balances. But from my observation, the 
strength of your report--and, frankly, the strength of your 
office and your reputation--is one element of the check and 
balance; second is the Congressional oversight that we are 
exercising by virtue of having hearings like this; and, third, 
the report requirements that are part of the statute. All of 
those are part of the fabric of checks and balances that are 
either built into this particular program or that exist as a 
general proposition.
    So here are my two questions. Do you believe that FBI's 
implementation of the recommendations that you made and the 
additional corrective measures that FBI and DOJ have agreed to 
undertake are reasonably likely to prevent in the future the 
bulk of the types of deficiencies that you identified? And, 
second, do you believe that in order to correct the problems 
that your report has identified, it would be necessary to 
increase the statutory standard for issuing an NSL, that the 
standard for issuance needs to be increased to require more 
than relevance to an ongoing and legitimate investigation, in 
order to address the problems that you identified in your 
report?
    Mr. Fine. With regard to the first question, are they 
reasonably likely to correct the problems: if the FBI takes 
this seriously, actually implements the controls, does not make 
this a short-term proposition but has virtually a complete 
turnaround to ensure that there are the internal controls on 
it, and not simply relying on others, such as us or the 
Congress, to point out deficiencies, but as it is ongoing, 
making sure that it doesn't happen, it can help to ensure that 
they follow the statutes and the guidelines.
    Can I say that it is going to happen? I can't say that.
    Senator Kyl. So this type of oversight and your work and 
reports will still be necessary to verify the progress that 
they make.
    Mr. Fine. Well, it certainly will be necessary, and whether 
it will completely correct the problems, I can't say. And the 
second question having to do with the statutory standard, that 
is a question for Congress and the administration, and my job 
here is to provide the facts and to show what happened and show 
the problems and to let the process work itself out.
    Senator Kyl. Good. Again, I said this in another forum, but 
when we give serious authorities to responsible agencies, we 
expect the authorities to be carried out properly. I commend 
you and the folks in your office for helping us to ensure that 
that occurs. And thank you for your testimony here today.
    Senator Whitehouse. I think at this stage I have the floor, 
or would you like to proceed, Senator Hatch? Are you under time 
pressure?
    Senator Hatch. I am a little bit, if you--
    Senator Whitehouse. Why don't you proceed.
    Senator Hatch. I have to say, you are very gracious, 
Senator, and I appreciate it very much.
    I also agree that you do an excellent job and that your 
position is very, very necessary. When you look at the PATRIOT 
Act, is it because of defects in the PATRIOT Act that these 
errors have occurred, or were they errors that were primarily 
violations demonstrated by FBI agents' confusion and 
unfamiliarity with the constraints on National Security Letter 
authorities?
    Mr. Fine. We looked at the problems, and we found that the 
execution of the FBI's use of these authorities was very flawed 
and that there were--
    Senator Hatch. In other words, the PATRIOT Act does provide 
that they have to abide by certain constraints.
    Mr. Fine. Well, the PATRIOT Act does require them to abide 
by certain constraints, and they didn't.
    Senator Hatch. And that is the problem here. Primary 
problem.
    Mr. Fine. Well, the problem that we saw was the execution 
of their authorities here.
    Senator Hatch. Well, that is my point. The primary problem 
is that they ignored--they did not follow what the law really 
said they should have followed. Is that correct?
    Mr. Fine. They did not follow what the law provided.
    Senator Hatch. And it was in large measure because of agent 
confusion over what the law really says and it may be a lack of 
total supervision with regard to these problems.
    Mr. Fine. It was a lack of guidance, a lack of training, a 
lack of oversight, inadequate internal controls, and there was 
confusion and mistakes out in the field.
    Senator Hatch. Do you expect them to be perfect, the FBI 
agents, as they implement all of these laws?
    Mr. Fine. I don't think anyone is perfect. On the other 
hand, what we saw--
    Senator Hatch. But you do expect them to follow the law.
    Mr. Fine. On the other hand, we found widespread problems 
and clearly not approaching perfection, or even satisfactory 
execution of it.
    Senator Hatch. I agree with that, and I think that my point 
is that when you work with individuals, you are going to have 
some mistakes and some confusion and some problems, even though 
they are not justified in this instance.
    Mr. Fine. Well, there certainly will be mistakes and 
problems, but that is why there needs to be that oversight and 
those internal controls, and the FBI to be finding this out and 
ensuring that it doesn't occur, not after the fact for--
    Senator Hatch. That is why we need you and us. Right?
    Mr. Fine. I think we need all of the entities.
    Senator Hatch. With regard to Section 215, did you find any 
utilization of the 215 authorities to go to libraries?
    Mr. Fine. No. We found that they did not seek a 215 order 
for library records. There were a few where there was a request 
for it within the FBI, but in the process prior to application 
to the FISA Court, they were withdrawn.
    Senator Hatch. In fact, regarding the Section 215 portion 
of the report, it appears that even though 215 orders were not 
utilized often--and that is a fair characterization, isn't it?
    Mr. Fine. They were not utilized often. In fact, in the 3-
year period that we reviewed, they were utilized, pure 215 
orders, approximately 21 times.
    Senator Hatch. But they were valued by FBI agents as a tool 
to try and interdict and work against terrorism.
    Mr. Fine. The FBI agents did tell us they thought it was a 
specialized tool that could get important information in 
certain cases that others could not.
    Senator Hatch. You mentioned that FBI personnel stated 
during interviews that the kind of intelligence gathered from 
Section 215 orders is essential to national security 
investigations and that the importance of the information is 
sometimes not known until much later in the investigation. That 
is a fair characterization?
    Mr. Fine. That is what some of them told us, yes.
    Senator Hatch. Right. Given that you did not find 
widespread misuse of this 215 authority, do you feel like the 
FBI was careful in its application and that agents exhibited 
proper restraint in its use if they did not fully understand 
the process and requirements of obtaining these orders?
    Mr. Fine. Well, in the 215 process, we did find that there 
were controls over it, that there were levels of review that 
prevented the misuse of the 215 authority. In some sense, it 
was very--there were delays in the process.
    Senator Hatch. Right.
    Mr. Fine. And there was a significant amount of time for 
them to get a 215 order, which is why some of them thought it 
was not terribly effective. On the other hand, the multiple 
levels of review and the internal controls prevented the misuse 
of these authorities.
    Senator Hatch. Well, and, frankly, the 215 authorities have 
been utilized by law enforcement for anti-crime law enforcement 
for many years before the PATRIOT Act.
    Mr. Fine. The PATRIOT Act expanded the use of the predicate 
for 215s, but it was in existence, that kind of authority.
    Senator Hatch. And we have always been able to go to 
libraries on a quest to find evidence against crime. Is that 
correct?
    Mr. Fine. In certain cases.
    Senator Hatch. Certainly, it seems to me, in terrorism 
cases or major criminal cases.
    Mr. Fine. Criminal cases, they have that authority to go to 
libraries.
    Senator Hatch. Well, I also agree that--well, you said in 
your report, in your statement here today, ``It is important to 
recognize that in most, but not all, of the cases we examined 
in this review, the FBI was seeking information that it could 
have obtained properly through National Security Letters if it 
had followed applicable statutes, guidelines, and internal 
policies.'' That is the point I was making.
    Mr. Fine. In most cases. We found some cases where they 
couldn't have obtained it, and they used it in a way that was 
seeking information that was not obtainable through an NSL.
    Senator Hatch. All right. Mr. Chairman, could I just have 
another 30 seconds?
    Senator Whitehouse. Please.
    Senator Hatch. You also said, ``We did not find that the 
FBI agents sought to intentionally misuse the National Security 
Letters or sought information that they knew they were not 
entitled to obtain through the letters. Instead, we believe the 
misuses and the problems we found were products of mistakes, 
carelessness, confusion, sloppiness, lack of training, lack of 
adequate guidance, and lack of adequate oversight.''
    Now, you also say that all of that being true, you do not 
excuse the FBI for these mistakes, and I think that is a fair 
summary of basically some of your findings.
    Mr. Fine. I think so.
    Senator Hatch. Well, I just want to tell you that I think 
we are well served by you and your office, and it is easy to 
find lots of fault. The point is that we have got some work to 
do to make sure that these problems are resolved, and because 
of your work, I think there will be more of an intense effort 
to try and resolve these problems. But basically the PATRIOT 
Act itself, it seems to me, stands as a ready, willing, and 
able statute to help us to at least do our best against 
terrorism. Would you agree with that?
    Mr. Fine. Well, Senator, it is really not my job to come to 
you and say whether the PATRIOT Act--
    Senator Hatch. But you are an expert in these areas, and--
    Mr. Fine. What I try and do is to provide the facts and 
what happened and the circumstances to allow this Committee and 
others to make judgments on--
    Senator Hatch. As a person who examines this, would you 
want to face terrorism without the tools that are given in the 
PATRIOT Act?
    Mr. Fine. I think there are important tools in the PATRIOT 
Act, and those are, as we stated, indispensable tools. On the 
other hand, there needs to be adequate and effective controls 
on them as well.
    Senator Hatch. I agree with you in every regard there. 
Thanks so much.
    Thanks, Mr. Chairman.
    Senator Whitehouse. My pleasure.
    I would like to join the other Senators who have 
complimented your work today, Mr. Fine. It is quite impressive.
    I would like to focus on the process side here a little 
bit, if I may. As I see it, there have really been two failures 
that are documented by your report. One is the failure in 
compliance with respect to the various mechanisms regarding the 
National Security Letters. The other is an oversight 
responsibility that also appears to have been failed at.
    Let me ask you first when and whether this all would have 
come to light if it had not been for your report and your 
inquiry.
    Mr. Fine. I doubt it would have. I don't know that anyone 
was doing this kind of review to uncover problems with the use 
of National Security Letters. I do know that the Director of 
the FBI said that it was a surprise to him when he learned this 
through our report.
    Senator Whitehouse. There have been previous efforts to 
report in the past, and I am informed that between 2003 and 
2005 the FBI reported 26 possible violations among the 145,000 
NSL requests that were made in that period. So, clearly, there 
was a process of some kind that produced those 26 possible 
violations.
    What was that process, and why did it fail so badly? I 
mean, the comparison is astounding, 26 out of 145,000, and yet 
when you really drilled into this, you found that 17, as I 
count them, 17 out of 77 files had at least one violation of 
reporting requirements and 46 out of 77, more than half, lacked 
some of the documentation required for approval. So the 
comparison between 26 out of 145,000--I cannot even do the 
percentage, it is so small--and 17 or 46 out of 77 is colossal.
    What was the failure in the reporting process that produced 
that original 26 number?
    Mr. Fine. There was a big discrepancy. The number actually 
should probably be about 44,000 National Security Letters, 
making 143,000 requests, but there is a huge discrepancy as you 
point out. And the problem was the FBI provided guidance to the 
field: If you have a problem, if you find a problem, if there 
has been a potential intelligence violation, report it to us; 
we will review it and we will determine whether it needs to be 
reported to the President's Intelligence Oversight Board. It 
relied upon the field to go and report problems.
    Senator Whitehouse. Voluntary self-reporting.
    Mr. Fine. Voluntary self-reporting. There was no audit 
function. There was no inspection going out there just saying, 
OK, we are going to check, too. And so when we go out there and 
check the files, we find problems in a pretty significant 
number of files that were not identified by the FBI, the FBI's 
sort of self-reporting mechanism. And as the Director has 
stated, which I agree, they should have been doing audits of 
this. They should have been having some oversight function to 
do something similar to what we were doing, that is, reviewing 
the files and making sure that their violations, if they are 
occurring, are identified and reported.
    Senator Whitehouse. What was the administrative travel that 
led you to commencing this report?
    Mr. Fine. We were required to do this by the PATRIOT 
Reauthorization Act.
    Senator Whitehouse. It is in the statute that on a certain 
date
    Mr. Fine. Oh, well, it was in the statute that within 1 
year from the date of the signing of the PATRIOT 
Reauthorization, we had to report on a whole series of issues, 
and the statute laid out what we had to do, and we did that 
very broad review and put it in this report. And it was a 
pretty tight deadline on a lot of subjects. We met the 
deadline, and I am very proud of our people for doing that.
    Senator Whitehouse. Presumably, the Bureau was aware of 
this through its legislative contacts?
    Mr. Fine. They were aware of the requirement, and they knew 
we were doing the audit. We contact them and seek their 
cooperation, and they provide it. So, yes, they were fully 
aware and cooperated fully with our review.
    Senator Whitehouse. Is it surprising to you that, aware as 
they were, this requirement as a matter of law had been 
established that you should conduct this investigation? There 
was not any--or maybe there was. You can tell me if there was--
administrative effort to kind of get ahead of this and double-
check. I mean, if I were leading an agency in my home State and 
the local legislature authorized a State Inspector General or 
somebody to come and have a look at a process that I was in 
charge of, one of my first questions would be to my staff: What 
is going on here? What have we been doing on this? Let me know, 
you know, a preview of coming attractions when the auditor 
comes in to have a look. Did you find any of that going on? Or 
was the FBI sort of blissfully ignorant right to the--
    Mr. Fine. Well, they did not go out in advance of what we 
were doing and say let's see what is in the files. I am not 
sure we would have been happy with that. But there was not an 
effort to try and say what are the problems out there. They had 
issued policies. They were hopeful that they were being 
followed. And they weren't. And the problem was the 
implementation over time.
    And, in addition, this is a time period, you know, we were 
reviewing 2003 to 2005, so it was a historical time period. And 
I am not sure what they could have done to clean up the 
problems with regard to that. We will be looking at 2006 as a 
result of the PATRIOT Reauthorization Act now, and we will 
provide that report at the end of this year.
    But the FBI was not aware of these problems. They did not 
have a handle on the scope of the problems.
    Senator Whitehouse. They did not look for them and they did 
not find them.
    Mr. Fine. I think that is correct.
    Senator Whitehouse. At what stage--again, walk me through 
the administrative travel on all of this. At what point did the 
Director, for instance, become aware that you were going in and 
of what you had concluded as a result of your efforts?
    Mr. Fine. Well, I think he was aware of it at the beginning 
of 2006 when the Act was passed and we initiated the audit. We 
worked with their staff, and he is aware of that. And so that 
was not a surprise.
    With regard to the extent of the findings, I think he 
probably learned about it when we provided a draft report to 
the FBI pursuant to our normal processes, saying here are our 
findings, are they inaccurate, you tell us if there is 
something inaccurate in there, and we give them a chance to 
tell us if we are wrong. And it did not happen here.
    Senator Whitehouse. And with respect to the Attorney 
General?
    Mr. Fine. I think the same thing. We provided a draft 
report to the FBI and the Office of the Attorney General, I 
think probably in January of this year, and laid out in detail 
what we found.
    Senator Whitehouse. Did you find any internal traffic, 
either from the Director or from the Attorney General, along 
the lines of saying, you know, hey guys, we got some pretty 
important responsibilities here, by law we have certain 
requirements that we have to meet, there is a further 
requirement that the Inspector General come and have a look at 
all this stuff, let's pay some attention here?
    Mr. Fine. Well, we didn't look for that. We didn't go and 
ask for the internal processes between the FBI Director and the 
Attorney General. We were looking at what are the problems out 
there, and we had a mandate there to look at a broad review and 
answer very specific questions. And that is what we were 
focused on, and that is what we provided in this report, a 
description of the problems that we found.
    Senator Whitehouse. So the extent to which the oversight 
failure tracked up into the Department of Justice is not the 
focus of your report beyond the initial level that the NSLs 
themselves were in large measure noncompliant and the self-
reporting function had failed.
    Mr. Fine. Right. That is correct. We looked at the 
problems, and when this report was issued, the FBI Director 
said publicly that the FBI should have, and he should have, 
ensured that there were adequate controls and that these kinds 
of reviews had been done and not waited for the OIG to do it. 
So he said that.
    Senator Whitehouse. I think that that raises a whole 
different set of questions. I understand that your report did 
not go there. But the idea that this Congress passes 
legislation as significant as the PATRIOT Act, that lays out 
very specific responsibilities that relate to the use of an 
indispensable, according to your testimony, tool in our war on 
terror and there is not some kind of an automatic process and 
trigger whereby somebody in the Bureau goes through the statute 
and says here is the checklist of the things we need to do now 
and that floats upstream to an appropriate administrative 
official who says this is what we are going to do, and then the 
Deputy Director or somebody signs off on the oversight, I mean, 
that would seem to be an ordinary administrative consequence to 
a new set of authorities and responsibilities. And as far as 
you can tell, none of that ever happened.
    Mr. Fine. Well, the PATRIOT Act didn't provide this 
checklist of what needed to be done to oversee this. It was in 
the PATRIOT Reauthorization Act. But I agree with your point
    Senator Whitehouse. I was using that shorthand.
    Mr. Fine. I do agree with your point that when you work 
hard to get these important and sensitive authorities that are 
intrusive, that get sensitive information that is retained for 
a significant period of time, you are obligated and you should 
put in a system and internal controls to ensure that it is used 
properly and to ensure that there are not misuses of it.
    Senator Whitehouse. And I would suggest that even a step 
ahead of that, as an administrator, you should have a system in 
place to identify those moments so that you are sure that the 
process that you just described actually takes place, sort of 
the meta system, which is are we up to the task of looking at 
new legislation that Congress gives us and making sure that 
this step happens. That is sort of an overarching
    Mr. Fine. Yes, and they should do that on a systematic 
basis. I agree with you.
    Senator Whitehouse. And there is no indication that they do 
at this stage, at least that we can glean from your report.
    Mr. Fine. We didn't review that, but it didn't happen in 
this case.
    Senator Whitehouse. Yes. A final point, if you don't mind a 
moment, Senator Feingold. A fine question. There has been some 
testimony given on the House side that the FISA 215 orders are 
too cumbersome, and if you tried--that the 215 order would 
technically allow you to get all of the information that is now 
obtained through the National Security Letters, but that the 
process of using that vehicle would be so cumbersome that it 
would essentially grind a lot of what we need to do to a halt.
    In between allowing the FBI, completely unsupervised, to 
exercise oversight over themselves with, you know, demonstrated 
failure to date in that respect, and a full-blown FISA 215, are 
you prepared to recommend whether there is any intermediate 
step that this Committee and this Congress might consider to 
see that the FISA Court or somebody, at least, outside of the 
immediate administrative structure of the Bureau at least has 
some kind of sign-off on whether the approval process is being 
done right? Should that be located elsewhere, and is the FISA 
Court an appropriate place?
    Mr. Fine. I am not prepared to recommend a specific 
legislative piece. I would have to sort of address it on a 
case-by-case basis. I think that is obviously a consideration 
to be reviewed, and whether there should be review of these by 
an entity outside the FBI, whether it is in the Department of 
Justice or whether it is a local prosecutor, that is obviously 
an issue that both this Committee and the Congress need to 
review along with the input of the Department and the FBI about 
what that would mean.
    Senator Whitehouse. OK. Well, I appreciate your testimony 
very much today, and Senator Feingold has the floor.
    Senator Feingold. Thank you, Mr. Chairman, very much. And, 
Mr. Fine, thanks for your patience here.
    In your October 2006 memo to the Attorney General on the 
Justice Department's top management and performance challenges 
for fiscal year 2006, you cautioned that the PATRIOT Act 
granted the FBI broad new authorities to collect information, 
including the authority ``to review and store information about 
American citizens and others in the United States about whom 
the FBI has no individualized suspicion of illegal activity.'' 
You cautioned nearly 6 months ago that the Department and the 
FBI need to be particularly mindful about the potential for 
abuse of these types of powers.
    First, I want to establish some basic facts alluded to in 
your memo. Under the existing NSL statutes, it is possible to 
obtain information, including full credit reports, about people 
who are entirely innocent of any wrongdoing. Isn't that 
correct?
    Mr. Fine. It is possible, yes, as a result of the 
investigation, there is no finding of anything and that they 
are innocent, yes.
    Senator Feingold. And the FBI's policy is that it will 
retain all information obtained via NSLs indefinitely, often in 
databases, like the Investigative Data Warehouse, that are 
available to thousands of investigators. Is that correct?
    Mr. Fine. Yes.
    Senator Feingold. Now, with regard to your caution about 
the potential for abuse of these powers, DOJ responded in 
November 2006 that the FBI agrees and that it is ``aggressively 
vigilant in guarding against any abuse.'' Would you agree with 
that statement, that the FBI has been aggressively vigilant in 
guarding against abuses?
    Mr. Fine. I would agree that the FBI was not aggressively 
vigilant in terms of guarding against the problems we found, 
yes.
    Senator Feingold. So you would disagree that the FBI was
    Mr. Fine. Oh, I am sorry. I would disagree that they were--
    Senator Feingold. Being aggressively vigilant.
    Mr. Fine.--aggressively vigilant, yes.
    Senator Feingold. Now that your investigation is complete, 
what kinds of things do you think the FBI should be doing if it 
is going to be aggressively vigilant in guarding against abuses 
of its NSL powers?
    Mr. Fine. I think they ought to establish an audit function 
so they are going out to look for problems and misuses. I think 
they need to have clear guidance. I think they need to have 
better training. I think they ought to do a review to look at 
what happened in this case to ensure it doesn't happen in the 
future and that accountability is assessed. I think that it has 
to have a change in mind-set that we are going to make sure 
that there are not abuses of these important tools that are 
indispensable to their investigations.
    Senator Feingold. Your office identified 22 violations of 
the NSL statute that had not previously been reported by the 
FBI to the President's Intelligence Oversight Board. The report 
explains that one of the reasons that occurred was that agents 
did not review the records they received to check them against 
the original NSL requests, and this strikes me as a little odd.
    If, as the FBI has stated, these authorities were so 
critical to its investigations, why wouldn't agents immediately 
verify that they had received what they needed and review it to 
see what insight it provided? Do you think the agents were 
collecting information with NSLs and then not even reviewing 
and using that information? And why would they do that?
    Mr. Fine. Well, I think they were obtaining information, 
using them, reviewing it to some extent. I don't think there 
was a careful check to make sure all these telephone numbers 
are the correct ones that we have asked for, that there wasn't 
a typo in the thing that went out or that it wasn't a mistake 
by the provider to give us an additional telephone number that 
we hadn't requested. So I don't think it was a careful review. 
I do think that they were using this information and using it 
in link analysis and databases. So I think it would be a little 
strong to say that they weren't reviewing it or using it, but 
they surely weren't doing it carefully enough.
    Senator Feingold. One of the concerns I have repeatedly 
raised about the legal standard for NSLs is that it is so lax 
that any one NSL could arguably be used to obtain entire 
databases of information about people. And your report actually 
explains that in 2004 nine NSLs were issued in one 
investigation for a total of 11,100 separate telephone numbers.
    You may be limited in what you can say about this in an 
open setting, but can you tell us any more about the 
circumstances of that investigation that would lead to 
thousands of phone numbers being covered by just a few NSLs?
    Mr. Fine. I think I am limited in discussing an individual 
case in an open setting, but I would be glad to discuss this 
further
    Senator Feingold. Would you give that to us in a classified 
response in writing at some point?
    Mr. Fine. Certainly.
    Senator Feingold. Thank you. Do you know when precisely the 
FBI General Counsel and the FBI Director learned of the exigent 
letters practice?
    Mr. Fine. The practice of exigent letters? We believe that 
they learned of it when we brought it to their attention, and 
with regard to the General Counsel, sometime late in--by the 
practice, I should make clear, sort of the practice of the 
misuses of them, I believe it was late in 2006, and the FBI 
Director around that time or shortly thereafter.
    Senator Feingold. Do you think that these abuses of the NSL 
authority would have occurred if court orders had been 
required?
    Mr. Fine. I can't speculate on that.
    Senator Feingold. Finally, do you believe that these types 
of abuses would have occurred if the standard for issuing an 
NSL had required more individualized suspicion about the 
individual whose records were being obtained?
    Mr. Fine. I don't think I can speculate on that either. I 
think that abuses are going to occur in many settings, but 
certainly they occurred in a widespread setting here.
    Senator Feingold. Thank you very much, Mr. Fine.
    Thank you, Mr. Chairman.
    Senator Whitehouse. I don't think we have any necessity for 
closing statements, so the record will remain open for a week, 
and I thank the Inspector General for his testimony and for his 
report and for the hard work of his staff.
    I would like to take a moment, I know that you are here 
representing an office that has worked very hard to make this 
happen, and as somebody who has led offices like that before, I 
know firsthand how important the staff work is that makes 
something like this all come to pass. So I want to commend, 
through you, the hard work of your staff as well.
    The Committee will stand in recess.
    Mr. Fine. Thank you.
    [Whereupon, at 11:58 a.m., the Committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]

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