Wiretap cases worry phone industry

WASHINGTON — For months, the Bush administration has waged a high-profile campaign, including personal lobbying by President Bush and closed-door briefings by top officials, to persuade Congress to pass legislation protecting companies from lawsuits for aiding the National Security Agency's (NSA) warrantless-eavesdropping program.

But the battle is really about something much bigger. At stake is the government's extensive partnership with industry to conduct a wide range of secret surveillance operations in fighting terrorism and crime.

To detect narcotics trafficking, for example, the government has been collecting phone records of thousands of Americans and others inside the United States who call people in Latin America, according to several government officials who spoke on the condition of anonymity.

But in 2004, one major phone carrier balked at turning over customers' records. Worried about possible privacy violations or public-relations problems, company executives declined to help the operation. The company was not identified.

In a separate NSA project, executives at a Denver phone carrier, Qwest, refused in early 2001 to give the agency access to its most localized communications switches, which primarily carry domestic calls, according to people aware of the request, which has not been reported previously. They said the arrangement could have permitted neighborhood-by-neighborhood surveillance of phone traffic without a court order.

Government needs help

The government's reliance on private industry has been driven by changes in technology. Two decades ago, telephone calls and other communications traveled mostly through the air, relayed along microwave towers or bounced off satellites. The NSA could vacuum up phone, fax and data traffic by erecting satellite dishes. But the fiber-optics revolution has sent more and more international communications by land and undersea cable, forcing the agency to seek company cooperation to gain access.

After the disclosure two years ago that the NSA was eavesdropping on the international communications of terrorism suspects inside the United States without warrants, more than 40 lawsuits were filed against the government and phone carriers. As a result, companies and their lawyers have been demanding stricter safeguards before they provide access to the government and, in some cases, are refusing to cooperate, officials said.

"It's a very frayed and strained relationship right now, and that's not a good thing for the country in terms of keeping all of us safe," said an industry official who thinks that immunity is critical for phone carriers.

With a Senate vote on the issue expected as early as Monday, the Bush administration has intensified efforts to win retroactive immunity for companies cooperating with counterterrorism operations.

Privacy vs. bad publicity

While the NSA operates under restrictions on domestic spying, the companies have broader concerns: customers' demands for privacy and shareholders' worries about bad publicity.

In the drug-trafficking operation, the NSA has been helping the Drug Enforcement Administration (DEA) in collecting the phone records showing patterns of calls between the United States, Latin America and other drug-producing regions. The program dates to the 1990s, according to several government officials, but it appears to have expanded in recent years.

The DEA declined to comment on the call-tracing program, except to say it "exercises its legal authority" to issue administrative subpoenas. The NSA also declined to comment.

In a separate program, NSA officials met with the Qwest executives in February 2001 and asked for more access to their phone system for surveillance operations, according to people familiar with the episode. The company declined, expressing concerns that the request was illegal without a court order.

While Qwest's refusal was disclosed two months ago in court papers, details of the NSA request were not. The agency, sources said, wanted to install monitoring equipment on Qwest's "Class 5" switching facilities, which transmit the most localized calls. Limited international traffic also passes through the switches.

A government official said the NSA intended to single out only foreigners on Qwest's network, and added that the agency believed Joseph Nacchio, then chief executive of Qwest, and other company officials misunderstood the agency's proposal. Bob Toevs, a Qwest spokesman, said the company did not comment on matters of national security.

Other NSA initiatives have stirred concerns among phone-company workers. A lawsuit was filed in federal court in New Jersey challenging the agency's wiretapping operations. It claims that in February 2001, days before agency officials met with Qwest officials, the NSA met with AT&T officials to discuss replicating a network center in Bedminster, N.J., to give the agency access to all global phone and e-mail traffic that ran through it.

Michael Coe, a company spokesman, said: "AT&T is fully committed to protecting our customers' privacy."

The facts behind a class-action lawsuit in San Francisco also are shrouded in government secrecy. The case relies on disclosures by a former AT&T employee, Mark Klein, who said he stumbled upon a secret room at a company facility in San Francisco that was reserved for the NSA. Company documents he obtained and other former AT&T employees have lent some support to his claim that the facility gave the agency access to a range of domestic and international Internet traffic.

The telecommunications companies that gave the government access are pushing hard for legal protection from Congress. As part of a broader plan to restructure the NSA's wiretapping authority, the Senate Intelligence Committee agreed to give immunity to telecommunications companies, but the Judiciary Committee refused to do so. The White House has threatened to veto any plan that leaves out immunity, as the House bill does.