December 30, 1996

	                                	VIA FACSIMILE AND MAIL

Anthony Coppolino, Esq.
U.S. Department of Justice
Civil Division
Federal Programs Branch
P.O. Box 883
Washington, D.C. 20044

	Re:  Bernstein v. U.S. Department of State

Dear Mr. Coppolino:

	We understand that as of today, December 30, 1996, your clients have
shifted licensing jurisdiction over encryption software and related
technical data and defense services from the International Traffic in Arms
Regulations (ITAR) to the Export Administration Act and Export
Administration Regulations, which are currently kept in place by the
International Economic Emergency Powers Act (collectively referred to as the
IEEPA/EAR Scheme).  Our initial review of the new licensing scheme reveals
that it does not differ significantly from the previous ITAR Scheme, but
rather merely seeks to license the same encryption software and
encryption-related items and activities as the ITAR did under new regulatory

	Brief Summary of the New Regulations

	Under the new regulations, primary license administration shifts from
Defendant State Department to another named Defendant in this action, the
Commerce Department.  A license is required for "encryption items" which
were formerly controlled under Category XIII(b) of the ITAR, including items
which were controlled as both software and technical data.  A license is
also required prior to providing "technical assistance" under the new
regulations, just as a license was required for "defense services" under
the ITAR.

	The new regulations divide these encryption items into three
sub-categories:  1) encryption software, which is controlled as a
"commodity" unlike any other software subject to the EAR (5A002); 2)
software "specially designed or modified for the development, production or
use" of encryption software and "having the characteristics or performing or
simulating the functions of "encryption software, among others (5D002); 3)
technology, which is the "information and know how that can be used to
manufacture, utilize or reconstruct encryption software" (5E002)  The
Departments of Justice and Energy, as well as the Central Intelligence
Agency, have also been added as reviewing agencies under the new scheme.

	The New Regulations Are Also Unconstitutional

	Our review of the new regulations reveals that they contain the
same facial Constitutional violations as Judge Patel found in the ITAR,

  1.  	The IEEPA/EAR Scheme does not meet the requirements of Freedman v.
Maryland in that it fails to limit bureaucratic discretion to censor
protected expression and does not contain provisions for:

	a.      A short time limit on the licensing decision.  We
understand that the IEEPA/EAR does contain some time limits on initial
licensing decisions.  If a license request is denied, however, there
are no time limits on the appellate process outlined in 15 C.F.R.
756.2(c)(1), but only the comment that decisions must be made within a
"reasonable time."

	b.      Prompt judicial review.  The IEEPA, whose judicial
review provisions are currently in force, does not preclude judicial
review entirely as the ITAR did, but still fails to provide the
Freedman protections that any such review must be prompt, that it must
be initiated by the agency and that the agency bears the burden of
proof before the court.  Should Congress reenact the EAA and bring it
back in force as the governing statute, judicial review of licensing
decisions is precluded.  50 U.S.C. App. 2412(a), (e).  The EAR also
separately precludes judicial review.  15 C.F.R. 756.2(c)(2).

	c.      A duty on the part of the agency to bring the court
action and defend a denial of a license.  As noted above, the IEEPA/EAR
provides for no such duties.

2.	The IEEPA/EAR Scheme fundamental research provisions are the same as
those found void for vagueness in the ITAR.

	The clear effect of this shift is to undermine the Memorandum
and Order issued by Judge Patel on December 16, 1996, which found the
ITAR licensing provisions unconstitutional on their face.  As part of
this, the imposition of the new regulatory scheme means that, despite
Judge Patel's Order, Professor Bernstein is once again at risk of
prosecution for his intended activities in conjunction with his
teaching at the University of Illinois at Chicago which begins on
January 13, 1997.

	Proposed Stipulation and Order

	Given this turn of events, we seek a Stipulation and Order from
you to do two things, and enclose a form for your review and
signature.  First, we seek a stipulation that we may file a
Supplemental Complaint pursuant to F.R.C.P. 15(d) so that our Complaint
may properly reflect the new licensing scheme to be applied to
Professor Bernstein's encryption-related activities.

	Second, the Stipulation should provide that the IEEPA/EAR
regulations will not be enforced against Professor Bernstein and others
pending final review by Judge Patel.  This Stipulation will ensure that
Professor Bernstein and others will not be restrained from their
protected speech activities by the new regulations while they are under
Court review.  We believe that this Stipulation is consistent with the
spirit and findings of Judge Patel's recent Memorandum and Order,
specifically her concluding observation: "In view of the fact that the
court has ruled on the merits and has found certain provisions of the
ITAR invalid, plaintiff cannot be prosecuted under those provisions
absent reversal on appeal." (Memorandum and Order, page 37:14-17).

	While it is most appropriate for you to stipulate to refrain from
prosecution of any person relating to encryption software under the
IEEPA/EAR Scheme, and while we are confident that Judge Patel would grant us
such relief should we be forced to bring a Motion for a Temporary
Restraining Order, we would be willing to stipulate to less than a full
general stipulation in order to avoid the need for expedited relief pending
full judicial review.  Your representations to Judge Patel concerning the
ITAR, indicate that your clients might be willing to stipulate to
temporarily refrain from prosecuting Professor Bernstein and others under
the IEEPA/EAR regulations at least as to certain activities.  Consistent
with Judge Patel's suggestion in her Order, therefore, we would consider
entering into a Stipulation as to those certain activities for which you do
not intend to prosecute.  We believe that such a Stipulation will narrow the
issues for the Court to consider should we need to seek an Temporary
Restraining Order and could even eliminate the need for such an Order

	To that end, we list below the key activities by Professor
Bernstein and others which we believe might be amenable to such a
partial stipulation by you.  Our review of the new regulations
indicates that these various activities are controlled as "exports" of
encryption items under 15 C.F.R. 734.2(b)(2), (3) and (9) and/or as
the provision of "technical assistance" under 15 C.F.R. 744.9.
Accordingly, without stipulation by you, Professor Bernstein and others
face prosecution if they engage in these activities without a license
from your clients:

  1.	Publication of Snuffle 5.0 software and the related technology and
software (formerly called "technical data") on the sci.crypt Usenet newsgroup.

  2.	Engaging in classroom lecture and discussion with both U.S. and
foreign students about encryption items, including instruction about theory
and use.

	a.       Although under section 744.9 the new regulations state
that teaching "information about cryptography" in an academic
institution does not require a license, the term "information about
cryptography" is not defined.  It is therefore not clear whether this
includes teaching of encryption software itself, related software and
technology, or some combination thereof.

	b.	Our concern on this point is supported by the elimination of the
following licensing exceptions for encryption software and technology:

		1.  "educational information" under 734.9,
		2.  "publicly available information" under 734.3(b)(3),
		3.  software which is the result of "fundamental research"
		    under 734.8.

  3.	Release of encryption software, related software and technology to
foreign students in the classroom.

  4.	Communications with academic and scientific peers and other researchers
abroad over the telephone, facsimile, U.S. mail and Internet concerning
cryptographic software and related technical data, which communications
could include the sharing of encryption items.

  5.	Publication of cryptographic source code, related software and
technology other than Snuffle 5.0 to the sci.crypt Usenet newsgroup and
electronic publications.  This includes but is not limited to the
publication by Professor Bernstein of encryption software called dh227 which
is discussed in Plaintiff's Motion for Preliminary Injunction.

  6.	Creation by Professor Bernstein and others of class Internet sites on
the World Wide Web which will serve to distribute the encryption items to be
taught and discussed during academic courses, again as detailed in
Plaintiff's Motion for Preliminary Injunction.  These sites contain no more
restrictions as to access than any other University World Wide Web sites.

	Please note that in order to ensure that Professor Bernstein
and others may teach cryptography freely, the Stipulation will have to
specify that your clients will not prosecute Plaintiff, other
professors teaching cryptography, cryptography students or any others
who may receive technical data, cryptographic software or defense
services from cryptographic courses.  Specifically, it must specify
that foreign cryptography students will not be prosecuted for taking
their course materials, including encryption software, home with them
when they have finished their studies in the United States.

	If your clients will stipulate to refrain from prosecuting for
any or all of the acts mentioned above, please provide us with an
appropriately specific stipulation for our review.  We note that in the
past you have responded to our requests for stipulations with a letter
from one of your clients.  Given the nonbinding nature of such
correspondence and the lack of clarity in those previous letters, we
must insist that any agreements between the parties as to these issues
be make by specific Stipulation with a corresponding Order from Judge

	Unfortunately, since your clients drafted the regulations so
that they became effective immediately upon publication, and since the
start of Professor Bernstein's course is fast approaching, we will need
to seek immediate relief for Professor Bernstein and others should you
decline to stipulate to refrain from prosecution under the IEEPA/EAR
regulations.  As a result, we will seek such an order and injunction
unless we receive a sufficient stipulation from you by noon, Pacific
time, on Thursday, January 2, 1996.


						Professional Corporation


cc:  Daniel Bernstein