Created: 9/15/1996

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to Encryption Proposal

Based on che discussion ac Che Principal* meeting of September 13 you asked foe two changes Co myh proposal to further mitigate the negative Impact on law enforcement.

First, you asked that we tighten che control regime for encryption products that do not support key recovery. The Commorce Department would now take the following, tougher approach to licensing:

Issue an initial general export license valid for six months, based on one-time NSA review and submissionata recovery development plan that explains in detail the steps the applicant will take to develop, produce, distribute, and/or market encryption products with key recovery features- The specific commitments would depend on the applicant's line of business. Producers would commit to produce key recovery products. Others would commit to incorporate such products into their own products or services- Plans would be evaluated based on such criteria as what resources the firm will devoteor key recovery, the aggressiveness of the firm's product development and marketing plans, how much of the product line will be devoted to such products, etc.

Extend the license for up to three additional six month periods, subject each time to receipteport showing satisfactory prograss in implementing the data recovery development plan.

No license would extend beyond two years after che effoctivo date of the Commerce Department's regulation unless the President determines otherwise).

Second, you asked that we restructure the proposed Data Recovery infrastructure Commission to include law enforcement representation in addition to industry and other private soctor interests already envisioned. We^amend the proposal accordingly.

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