The Role of the Government in Encryption Policy
                                
                       Remarks before the
                    House Science Committee
                   Subcommittee on Technology
                                
                       Dorothy E. Denning
                     Georgetown University
                                
                       November 26, 1996


Thank you for the opportunity to be here today to share with you my
views on the role of the federal government in encryption policy.  It
is vital to the country that the government carefully consider, with
the private sector, encryption policy, and to that end, I applaud the
work of this subcommittee in sponsoring this briefing, the efforts of
the Administration's interagency working group on encryption policy,
the extensive and thoughtful study performed by the National Research
Council, and the efforts of other Congressional committees.  I will
focus on the use of encryption for confidentiality protection as there
does not seem to be much controversy over its use for authentication
and digital signatures.  I will discuss seven areas where I believe the
government should take action.

First, the government should buy and use encryption products to protect
sensitive information.  These products must provide strong
confidentiality protection.  In addition, they must provide a key
recovery mechanism for recovering lost or damaged encryption keys and
for facilitating internal investigations of corrupt employees.  The
government, like any other business, cannot afford to leave sensitive
data vulnerable either to unauthorized access or to loss of authorized
access, or to allow its employees to engage in activity with total
secrecy and no accountability.  Royal Dutch Shell, which uses
encryption around the world, uses key recovery methods for all their
stored data and communications.  IBM has stated that "a number of
information technology users have begun to view key recovery techniques
as a possible solution to their concerns about the loss, destruction,
or compromise of keys that they hold today and the associated costs
they absorb in managing those keys."

Second, the government should use commercial off-the-shelf encryption
products to the extent possible.  Such products will be considerably
less expensive than custom products developed just for the federal
government.  They will enable the government to adopt new technologies
as they become available in the commercial sector.  To ensure the
availability of COTS products, the government must work closely with
industry and participate in industry-led standards groups to ensure
that industry standards are responsive to government requirements.
Standards adopted by the government for internal use should be based on
industry standards to the maximum extent possible.  In addition, the
government's funded research program should be directed towards meeting
requirements for both confidentiality and data recovery.

Third, because encryption can undermine law enforcement, public safety,
and national security interests by giving terrorists and criminals a
tool for making their communications and stored records immune from
lawful government access, and because key recovery systems offer an
antidote to that while also providing important security and
accountability benefits, the government should take reasonable steps to
encourage the development of products with key recovery capabilities
over those without.  The government's approach has been to do this by
adopting key recovery for its own use and by liberalizing export
controls for products with key recovery.  This is preferable to
domestic regulations, which could be overly burdensome, objectionable
to many, and not cost effective.  Because many customers will want key
recovery to protect their own assets, manufacturers could elect to
incorporate the key recovery features needed for export into a single
product line for both domestic and international sales.  Thus, the
majority of U.S. products, whether sold in the domestic or foreign
market, could accommodate government access in investigations of
criminal activity.

Fourth, the government's actions should ensure the economic strength of
the nation and the economic competitiveness of U.S. business.  To that
end, regulations on encryption must not be so onerous that they
prohibit U.S. business from competing here or internationally with
foreign companies.  Export reviews must be expeditious, and transfer of
jurisdiction to the Commerce Department should facilitate the licensing
process.  Recent announcements by Hewlett-Packard, Microsoft, Intel,
Trusted Information Systems, and other companies suggest that industry
will be able to develop and export competitive products.  The U.S. is
not the only country with export controls; indeed, many have import
controls as well.  HP's International Cryptography Framework is one way
of addressing these various regulations while also providing the
cryptography needed by business for secure international commerce.
Because U.S. companies are aggressively pursuing international
approaches and approaches based on key recovery, and because key
recovery is recognized by many governments and businesses as the best
approach to date, U.S. companies are likely to be major players in the
international market.  The bills introduced in the House and Senate
last year to lift export controls, of course, would also have helped
industry compete internationally.  However, they likely would have
unnecessarily harmed law enforcement interests here and abroad.
Although the Administration's approach does not give industry as much
flexibility, it provides enough for U.S. business to be a strong player
in a market which is increasingly moving toward key recovery methods.

Fifth, given that the government is using key recovery services and
promoting their use by others, the government should do what it can to
make sure that the services do not compromise legitimate security and
privacy interests.  This can be accomplished by developing, with
industry, standards for operating key recovery services, which would
include requirements for security and for auditing.  The government
should adopt legislation penalizing the unauthorized use or release of
keys.  Legislation should also be adopted to protect key holders from
liability claims when keys are properly released.  The conditions and
procedures under which keys can be released to the U.S. government or
to any foreign government should be made public.

Sixth, the government should encourage and participate in international
organizations and conventions aimed at adoption of encryption policies
and standards that support global electronic commerce while also
accommodating legitimate law enforcement interests.  The OECD
guidelines on cryptography policy, which the Administration has been
actively involved with, are a good first step.

Seventh, the government should establish mutual law enforcement
assistance agreements with other governments so that foreign purchasers
of U.S. products can use key recovery services in their home country
and vice-versa.  These agreements must protect U.S. citizens and
businesses from espionage by foreign governments, for example, by
permitting or requiring the U.S.  government to review keys or
plaintext released to a foreign government in support of an
investigation into U.S. persons or businesses.  In this regard, I am
encouraged by the appointment of Ambassador David Aaron as Special
Envoy for Cryptography.

What I have outlined is for the most part the policy of the Clinton
Administration.  I believe the Administration has been moving forward
with encryption policy in a way that can accommodate our interests as a
nation in information security, national security, privacy, economic
competitiveness, public safety, and law enforcement.  At the same time,
the market has been moving in the direction of key recovery to protect
business interests.  These factors together are leading to a workable
arrangement that will give users the security they need and industry
competitive products.