On June 27, Sen. Charles Grassley (R-Iowa) introduced the "Anti-Electronic Racketeering Act of 1995." The legislation addresses a broad array of Internet-related issues, including encryption. Under the heading of "Racketeering-related crimes involving computers," the bill would, in effect, criminalize the distribution of all encryption software over the Internet or other computer networks unless "the software at issue used a universal decoding device or program that was provided to the Department of Justice prior to the distribution." Section 2(h)(1) of S.974 would amend Title 18 of the United States Code to make it unlawful to: distribute computer software that encodes or encrypts electronic or digital communications to computer networks that the person distributing the software knows or reasonably should know, is accessible to foreign nationals and foreign governments, regardless of whether such software has been designated as nonexportable. The legislation further provides that: [i]t shall be an affirmative defense to prosecution under this section that the software at issue used a universal decoding device or program that was provided to the Department of Justice prior to the distribution. The legislation is plainly an attempt to mandate the result the Administration sought to achieve with the failed Clipper Chip initiative -- ensuring law enforcement access to *all* encrypted communications through government-escrowed keys. Requiring "knowledge" of accessibility to foreign nationals or governments provides no meaningful protection in a global communications environment. Such knowledge can easily be imputed to any person making encryption software available on the Internet. Criminalizing such distribution "regardless of whether such software has been designated as nonexportable," would effectively outlaw the dissemination of any encryption software that does not provide the government with escrowed keys or some other backdoor. As drafted, the legislation would appear to prohibit the distribution of any program that contains security features, including Netscape Navigator, various digital cash applications and even PKZIP. The Grassley bill was drafted with input from the Department of Justice, suggesting that the Administration may be moving from the initial "voluntary" Clipper approach toward mandatory restrictions on the distribution and use of non-escrowed encryption. Indeed, FBI Director Louis Freeh has indicated on several occasions that domestic uses of encryption will eventually be curtailed. For instance, Freeh said in Congressional testimony on May 11, 1995, ... we're in favor of strong encryption, robust encryption. The country needs it, industry needs it. We just want to make sure we have a trap door and key under some judge's authority where we can get there if somebody is planning a crime. The text of the "Anti-Electronic Racketeering Act" can be obtained at http://www.epic.org/privacy/crypto/s974.txt EPIC will continue to monitor the progress of this legislation and will be posting analyses of its other draconian provisions, including those dealing with computer crime, distribution of copyrighted material and searches and seizures of computer systems.