Senate Panel Presses N.S.A. on Phone Logs

At a Senate Judiciary Committee hearing, the chairman, Patrick J. Leahy, Democrat of Vermont, accused Obama administration officials of overstating the success of the domestic call log program. He said he had been shown a classified list of “terrorist events” detected through surveillance, and it did not show that “dozens or even several terrorist plots” had been thwarted by the domestic program.

“If this program is not effective it has to end. So far, I’m not convinced by what I’ve seen,” Mr. Leahy said, citing the “massive privacy implications” of keeping records of every American’s domestic calls.

At the start of the hearing, the Obama administration released previously classified documents outlining the rules for how the domestic phone records may be accessed and used by intelligence analysts. And as senators debated the program, The Guardian published on its Web site a still-classified 32-page presentation, apparently downloaded by Edward J. Snowden, the former N.S.A. contractor, that describes a separate surveillance activity by the agency.

Called the XKeyscore program, it apparently gives N.S.A. analysts access to virtually any Internet browsing activity around the world, data that is being vacuumed up from 150 foreign sites.

Together, the new disclosures provided additional details on the scope of the United States government’s secret surveillance programs, which have been dragged into public view and public debate by leaks from Mr. Snowden, who remains stranded in a Moscow airport.

The hearing came a week after the House voted narrowly to defeat an amendment to shut down the N.S.A.’s domestic phone record tracking program. The 217-to-205 vote was far closer than expected, and it — along with shifting poll numbers — suggested that momentum against the domestic program was building. In recent days even some of the most outspoken supporters of the program have said they are open to adjusting it.

The Obama administration has been trying to build public support for its surveillance programs, which trace back to the Bush administration, by arguing that they are subject to strict safeguards and court oversight and that they have helped thwart as many as 54 terrorist events. That figure, Mr. Leahy emphasized, relies upon conflating another program that allows surveillance targeted at noncitizens abroad, which has apparently been quite valuable, with the domestic one.

Still, Senator Dianne Feinstein, the California Democrat who is chairwoman of the Senate Intelligence Committee, said she supported overhauling the program but keeping it in place because it generates information that might prevent attacks.

John C. Inglis, the deputy director of the N.S.A., said there had been 13 investigations in which the domestic call tracking program made a “contribution.” He cited two discoveries: that several men in San Diego were sending money to a terrorist group in Somalia, and that a suspect who was already under scrutiny in a subway bomb plot was using a different phone.

Robert S. Litt, the top lawyer in the Office of the Director of National Intelligence, testified that the Obama administration was also “open to re-evaluating this program” to create greater public confidence that it protects privacy while “preserving the essence of the program.” Administration officials have emphasized that the program collects only so-called metadata, and not the contents of phone calls.

Still, the top Republican on the committee, Senator Charles E. Grassley of Iowa, asked skeptical questions about the legal basis for the program while criticizing the director of national intelligence, James Clapper, for making inaccurate statements to Congress about it in March. Mr. Clapper has since apologized.

“Nothing can excuse this kind of behavior from a senior administration official of any administration, especially on matters of such grave importance,” Mr. Grassley said.

A series of slides describing XKeyscore, dated 2008, make it clear that the security agency system is collecting a huge amount of data on Internet activity around the globe, from chats on social networks to browsing of Web sites and searches on Google Maps. The volume of data is so vast that most of it is stored for only three days, although metadata — information showing logins and server activity, but not content — is stored for a month. Several of the pages were redacted by The Guardian.

Some of the servers the agency uses are run by foreign intelligence services of friendly nations, including Britain, Australia, Canada and New Zealand, but other servers may be on the soil of countries unaware the agency is mining Internet “pipes” on their soil. Some of the harvesting of data takes place on the coasts of the United States, and along the Mexican border. Most sites are in Europe, the Middle East, and along the borders of India, Pakistan, and China.

Bits Blog: Senate Panel Questions Apple on Corporate Taxes

Jason Reed/Reuters Timothy D. Cook being questioned at Tuesday’s congressional hearing.

In his statement to the Senate panel, Mr. Cook made several questionable assertions. Here are some examples:

1) “We don’t rely on tax gimmicks.” The precise definition of the word “gimmick” may be debatable, but Apple’s use of two Irish entities, which it claims are stateless (and help it sidestep $10 billion per year in taxes, according to the Congressional report) would seem to qualify.

2) “We don’t move its intellectual property into offshore tax havens.” Apple’s intellectual property is held by its Irish subsidiary, Apple Operations International, which has no employees or physical presence in Ireland, has received $30 billion in income since 2009 and paid no income tax to any government for the past five years, according to Congressional investigators. Ireland is not on the official list of tax havens compiled by the Organization for Economic Cooperation and Development, but it is offshore and Apple’s special deal with the country allowed the company to enjoy rates lower than some companies that shelter income in the Caribbean. What’s more, Apple’s unique agreement hinges on its ability to take advantage of a wrinkle in Irish tax law that allows it to avoid Irish taxes by holding a fraction of its ownership in a shell company called Baldwin Holdings Ltd. in the British Virgin Islands.

3) “We don’t stash money on some Caribbean island.” While perhaps true, this is not necessarily a strong defense. The tens of billions of dollars that Apple does not pay taxes on because they are classified as “permanently invested offshore” are actually held in New York banks. They are managed by Braeburn Capital, a subsidiary Apple opened in Reno, Nev., to avoid some state taxes in California and other states.

4) “These foreign earnings are taxed in the jurisdiction where they are earned.” Apple booked more than $74 billion in sales from dozens of countries around the world to its subsidiary Apple Sales International over the last four years. Although the subsidiary is based in Ireland, Apple accountants and corporate executives contend that, for tax purposes, it is not a resident of any country.

– David Kocieniewski

— David Kocieniewski

Senate Votes to Extend Electronic Surveillance Authority

The Senate passed the bill by a vote of 73 to 23, clearing it for approval by President Obama, who strongly supports it. Intelligence agencies said the bill was their highest legislative priority.

Critics of the bill, including Senators Ron Wyden of Oregon, a Democrat, and Rand Paul of Kentucky, a Republican, expressed concern that electronic surveillance, though directed at noncitizens, inevitably swept up communications of Americans as well.

“The Fourth Amendment was written in a different time and a different age, but its necessity and its truth are timeless,” Mr. Paul said, referring to the constitutional ban on unreasonable searches and seizures. “Over the past few decades, our right to privacy has been eroded. We have become lazy and haphazard in our vigilance. Digital records seem to get less protection than paper records.”

The bill, which extends the government’s surveillance authority for five years, was approved in the House by a vote of 301 to 118 in September. Mr. Obama is expected to sign the bill in the next few days.

Congressional critics of the bill said that they suspected that intelligence agencies were picking up the communications of many Americans, but that they could not be sure because the agencies would not provide even rough estimates of how many people inside the United States had had communications collected under authority of the surveillance law, known as the Foreign Intelligence Surveillance Act.

The inspector general of the National Security Agency told Congress that preparing such an estimate was beyond the capacity of his office.

The chief Senate supporter of the bill, Dianne Feinstein, Democrat of California and chairwoman of the Senate intelligence committee, said the proposed amendments were unnecessary. Moreover, she said, any changes would be subject to approval by the House, and the resulting delay could hamper the government’s use of important intelligence-gathering tools, for which authority is set to expire next week.

The Foreign Intelligence Surveillance Act was adopted in 1978 and amended in 2008, with the addition of new surveillance authority and procedures, which are continued by the bill approved on Friday. The 2008 law was passed after the disclosure that President George W. Bush had authorized eavesdropping inside the United States, to search for evidence of terrorist activity, without the court-approved warrants ordinarily required for domestic spying.

Senator Mark Udall, Democrat of Colorado, said that he and Mr. Wyden were concerned that “a loophole” in the 2008 law “could allow the government to effectively conduct warrantless searches for Americans’ communications.”

James R. Clapper Jr., the director of national intelligence, told Congress, “There is no loophole in the law.”

By a vote of 52 to 43, the Senate on Friday rejected a proposal by Mr. Wyden to require the national intelligence director to tell Congress if the government had collected any domestic e-mail or telephone conversations under the surveillance law.

The Senate also rejected, 54 to 37, an amendment that would have required disclosure of information about significant decisions by a special federal court that reviews applications for electronic surveillance in foreign intelligence cases.

The amendment was proposed by one of the most liberal senators, Jeff Merkley, Democrat of Oregon, and one of the most conservative, Mike Lee, Republican of Utah.

The No. 2 Senate Democrat, Richard J. Durbin of Illinois, said the surveillance law “does not have adequate checks and balances to protect the constitutional rights of innocent American citizens.”

“It is supposed to focus on foreign intelligence,” Mr. Durbin said, “but the reality is that this legislation permits targeting an innocent American in the United States as long as an additional purpose of the surveillance is targeting a person outside the United States.”

However, 30 Democrats joined 42 Republicans and one independent in voting for the bill. Three Republicans — Mr. Lee, Mr. Paul and Senator Lisa Murkowski of Alaska — voted against the bill, as did 19 Democrats and one independent.

Mr. Merkley said the administration should provide at least unclassified summaries of major decisions by the Foreign Intelligence Surveillance Court.

“An open and democratic society such as ours should not be governed by secret laws,” Mr. Merkley said, “and judicial interpretations are as much a part of the law as the words that make up our statute.”

Mrs. Feinstein said the law allowed intelligence agencies to go to the court and get warrants for surveillance of “a category of foreign persons,” without showing probable cause to believe that each person was working for a foreign power or a terrorist group.

Mr. Wyden said these writs reminded him of the “general warrants that so upset the colonists” more than 200 years ago.

“The founding fathers could never have envisioned tweeting and Twitter and the Internet,” Mr. Wyden said. “Advances in technology gave government officials the power to invade individual privacy in a host of new ways.”

Senate Judiciary Committee Approves Overhaul of Electronic Communications Privacy Act

The bill is not expected to make it through Congress this year and will be the subject of negotiations next year with the Republican-led House. But the Senate panel’s approval was a first step toward an overhaul of a 1986 law that governs e-mail access and that is widely seen as outdated.

Senator Patrick Leahy, the Vermont Democrat who is chairman of the committee, was an architect of the 1986 law and is leading the effort to remake it. He said at the meeting on Thursday that e-mails stored by third parties should receive the same protection as papers stored in a filing cabinet in an individual’s house.

“Like many Americans, I am concerned about the growing and unwelcome intrusions into our private lives in cyberspace,” Mr. Leahy said. “I also understand that we must update our digital privacy laws to keep pace with the rapid advances in technology.”

Mr. Leahy held a hearing about two years ago on whether and how to update the 1986 law, called the Electronic Communications Privacy Act. But the effort has moved slowly, in part because some law enforcement officials have opposed restricting an investigative tool now used increasingly.

Under the law, authorities need to obtain a search warrant from a judge — requiring them to meet the high standard of showing that there is probable cause to believe that a subject is engaged in wrongdoing — only when they want to read e-mails that have not yet been opened by their recipient and that are fewer than 180 days old.

But the law gives less protection to messages that a recipient has read and left in his or her account. In some cases, officials may obtain a court order for such material merely by presenting a judge with facts suggesting the messages are relevant to an investigation; in other cases, prosecutors can issue a subpoena demanding the materials without any court involvement.

Senator Leahy’s bill would generally require prosecutors to obtain a search warrant from a judge, under the stricter probable-cause standard, to compel a provider to turn over all categories of e-mails and other private documents.

The Center for Democracy and Technology, a nonprofit organization that advocates for electronic privacy rights, hailed the committee vote as “historic.”

In a statement, Gregory T. Nojeim, director of the center’s program on security and technology, said it “sets the stage for updating the law to reflect the reality of how people use technology in their daily lives. It keeps the government from turning cloud providers into a one-stop convenience store for government investigators and requires government investigators to do for online communications what they already do in the offline world: get a warrant before reading postal letters or searching our homes.“

Still, the ranking Republican on the committee, Senator Charles Grassley of Iowa, argued that the bill does not strike the proper balance between privacy and public safety. He expressed concerns that changing the standard of proof for obtaining e-mails would inhibit certain investigations, such as child pornography or child abduction cases.

Mr. Leahy argued that the bill does not alter criminal and antiterrorism laws related to search warrants, including exceptions in emergencies where time is of the essence. But he also said the bill was a starting point and he was open to further negotiations. The panel approved it by a voice vote.