The National Security Agency, the top-secret spy shop that has been secretly eavesdropping on Americans under a plan authorized by President Bush seven years ago, destroyed the names of thousands of Americans and US companies it collected after 9/11 because the agency feared it would come under fire by lawmakers for conducting unlawful surveillance on United States citizens without authorization from a court, according to a little known report published in October 2001.

NSA lawyers advised the agency to immediately destroy the names of thousands of American citizens and businesses it collected shortly after 9/11 in its quest to target alleged terrorists in this country. NSA lawyers told the agency that the surveillance was illegal and that it could not share the data it collected with the CIA or other intelligence agencies.

The lawyers said the surveillance could result in numerous lawsuits from people identified in the surveillance reports, two former US officials told the Houston Chronicle in an October 27, 2001, report, and was illegal despite any terrorist threat that existed in the days following 9/11.

By law, the NSA cannot spy on a US citizen, an immigrant lawfully admitted to this country for permanent residence, or a US corporation. But, with the permission of a special court, it can target foreigners inside the United States, including diplomats.

The revelation raises new questions about the legality of the NSA’s domestic spying efforts just as Congress prepares to debate legislation that would expand Bush’s surveillance powers.

In 2002, Newsweek revealed earlier this year that the NSA disclosed to senior White House officials and other policymakers at federal agencies the names of as many as 10,000 American citizens the agency obtained while eavesdropping on foreigners. The Americans weren’t involved in any sort of terrorist activity, nor did they pose any sort of threat to national security, but had simply been named while the NSA was conducting wiretaps.

The “NSA received – and fulfilled – between 3,000 and 3,500 requests from other agencies to supply the names of U.S. citizens and officials (and citizens of other countries that help NSA eavesdrop around the world, including Britain, Canada and Australia) that initially were deleted from raw intercept reports,” Newsweek said in its May 2, 2006, issue. “Sources say the number of names disclosed by NSA to other agencies during this period is more than 10,000. About one third of such disclosures were made to officials at the policymaking level; most of the rest were disclosed to other intel agencies and, perhaps surprisingly, only a small proportion to law-enforcement agencies.”

James Bamford, the author of the bestselling books The Puzzle Palace and Body of Secrets, which blew the door wide open by first revealing the NSA’s covert activities, said he doesn’t believe terrorism was a priority for the administration before 9/11 and he doesn’t think the agency targeted specific Americans as it is doing now.

“I looked into that theory,” Bamford said in an interview. “And I was assured that domestic surveillance was a black area the NSA stayed away from before 9/11. The NSA was sort of a side agency before 9/11. At that point they were looking for a mission. Terrorism was not a big priority. (American) names may have been picked up but I was told they dropped them immediately after. That’s the procedure.”

But Bamford said it’s possible the NSA may have conducted the type of spying prior to 9/11 that the former NSA officials described. “It’s hard to tell” if that happened, Bamford said. “It’s a very secret agency.”

In the summer of 2001, the NSA spent millions of dollars on a publicity campaign to repair its public image by taking the unprecedented step of opening up its headquarters in Fort Meade, Maryland to reporters, to dispel the myth that the NSA was spying on Americans.

In a July 10, 2001, segment on “Nightline,” host Chris Bury reported that “privacy advocates in the United States and Europe are raising new questions about whether innocent civilians get caught up in the NSA’s electronic web.”

Then-NSA Director Lt. Gen. Michael Hayden, who was interviewed by “Nightline,” said it was absolutely untrue that the agency was monitoring Americans who are suspected of being agents of a foreign power without first seeking a special warrant from the Foreign Intelligence Surveillance Court.

“We don’t do anything willy-nilly,” Hayden said. “We’re a foreign intelligence agency. We try to collect information that is of value to American decision-makers, to protect American values, America – and American lives. To suggest that we’re out there, on our own, renegade, pulling in random communications, is – is simply wrong. So everything we do is for a targeted foreign intelligence purpose. With regard to the – the question of industrial espionage, no. Period. Dot. We don’t do that.”

But, when asked “How do we know that the fox isn’t guarding the chicken coop?” Hayden responded by saying that Americans should trust the employees of the NSA.

“They deserve your trust, but you don’t have to trust them,” Hayden said. “We aren’t off the leash, so to speak, guarding ourselves. We have a body of oversight within the executive branch, in the Department of Defense, in the president’s Foreign Intelligence Advisory Board, which is comprised of both government and nongovernmental officials. You’ve got both houses of Congress with – with very active – in some cases, aggressive – intelligence oversight committees with staff members who have an access badge to NSA just like mine.”

The NSA, based in Fort Meade, Maryland, operates under the Department of Defense. It distributes analysis summaries of its intelligence-gathering to a certain number of senior US officials, but it doesn’t share its raw data – transcripts from wiretaps – with anyone. The raw data is prized by intelligence analysts because it provides additional context and more leads than the watered-down summaries.

Those guidelines changed after 9/11.

The NSA gave its raw data to then Under Secretary of State for Arms Control John Bolton on at least 10 different occasions. Bolton, who had been nominated by President Bush to be US ambassador to the United Nations, let slip during his confirmation hearings in 2006 that he asked the NSA to unmask the identities of the Americans blacked out in the agency’s raw reports, to better understand the context of the intelligence.

During one routine wiretap, the NSA obtained the name of a state department official whose name had been blacked out when the agency submitted its report to various federal agencies. The wiretap indicated the official had was planning a celebration of some sort.

Bolton’s chief of staff, Frederick Fleitz, a former CIA official, revealed during the confirmation hearings that Bolton had requested that the NSA unmask the unidentified official. Fleitz said that when Bolton found out his identity, he congratulated the official, and by doing so he had violated the NSA’s rules by discussing classified information contained in the wiretap.

It turned out that Bolton was just one of many government officials who learned the identities of Americans caught up in the NSA intercepts. The State Department had also asked the NSA to unmask the identities of American citizens 500 times since May 2001.

In a letter to Gen. Michael Hayden, then the NSA’s outgoing director, Sen. Jay Rockefeller, the Intelligence Committee’s vice chairman said, “the NSA memorandum forwarding the requested identity to State (Intelligence and Research) included the following restriction: ‘Request no further action be taken on this information without prior approval of NSA.’ I have confirmed with the NSA that the phrase ‘no further action’ includes sharing the requested identity of U.S. persons with any individual not authorized by the NSA to receive the identity.”

“In addition to being troubled that Mr. Bolton may have shared U.S. person identity information without required NSA approval,” Rockefeller wrote, “I am concerned that the reason for sharing the information was not in keeping with Mr. Bolton’s requested justification for the identity in the first place. The identity information was provided to Mr. Bolton based on the stated reason that he needed to know the identity in order to better under the foreign intelligence contained in the NSA report.”

Patrick Radden Keefe, author of Chatter: Dispatches From the Secret World of Global Eavesdropping, said at the time that he was troubled that, other than the questions raised by Rockefeller, Congress and the Senate showed little concern over the NSA’s practices “beyond the specifics involving Bolton.”

“If the National Security Agency provides officials with the identities of Americans on its tapes, what is the use of making secret those names in the first place?” Keefe wrote in an August 11 op-ed in the New York Times. “We now know that this hasn’t been the case – the agency has been listening to Americans’ phone calls, just not reporting any names. And Bolton’s experience makes clear that keeping those names confidential was a formality that high-ranking officials could overcome by picking up the phone.”

At the time of the NSA purge in October 2001, US Rep. Charles F. Bass, R-NH, who served for four years on the House Permanent Select Committee on Intelligence, suggested that the NSA routinely skirted the law by eavesdropping on Americans.

“I think it could be the biggest information problem that we face,” Bass told the Chronicle. “If somebody is abroad and they even mention the name of an American citizen, bang, off goes the tap, and no more information is collected.”

But what seemed to be a blatant violation of the law shortly after 9/11 was beginning to get a second look a year later, when Bush first authorized the NSA to spy on Americans, and lawmakers suggested that domestic spying was all but guaranteed to avoid terrorist attacks.

Porter Goss, the former Republican chairman of the House Intelligence Committee, said as much in a wide ranging interview with the Miami Herald on June 11, 2002.

“The most critical question of all – how much spying on Americans do we want,” said Goss, now the Director of the Central Intelligence Agency. “What this comes down to is domestic surveillance [on individuals and groups], and I don’t know how you do that without spying on Americans. I can’t emphasize enough that that’s the hardest part.”