Bid to Limit North Use of Secrets Fails : Justice Department May Appeal Security Issue to High Court

The U.S. Court of Appeals Thursday rejected a Justice Department attempt to impose stricter rules on the introduction of national security material at the trial of Oliver L. North in the Iran Contra scandal, but the government said that it might appeal the action to the Supreme Court.

The government, arguing that sensitive information must not be allowed to surface at the trial, wants U.S. District Judge Gerhard A. Gesell, who is presiding over the case, to impose tighter restrictions on using such material in court. However, if enough information that Gesell considers essential to North is withheld by the government, some of the charges could be dismissed.

The legal maneuvering halted the trial just as prosecutors and defense attorneys were finally preparing to give their opening statements to a newly chosen jury. Those statements were postponed until Monday but may have to be delayed further.

Refused to Alter Guidelines

After Gesell refused this week to establish more precise guidelines for the classified material, the Justice Department took the matter to the appellate court here--and lost.

The appellate judges, in a brief order, unanimously sided with independent counsel Lawrence E. Walsh, who opposed the Justice Department’s position on classified information and contended that the department had no legal standing to intervene in the case at the 11th hour.

Edward S. G. Dennis Jr., chief of the Justice Department’s criminal division, responded that he and his colleagues are determined to pursue the issue.

“We cannot go into this trial knowing we will not have a right to be heard” on the subject of possible sensitive disclosures, Dennis said Thursday.

He said the department has the option of asking the three-judge panel to reconsider its decision or of appealing the issue to the full 11-member Court of Appeals for the District of Columbia. The department could also appeal directly to the Supreme Court, he said, describing the present situation as “a crap shoot.”

Walsh said in papers filed with the appellate judges that he--and not Atty. Gen. Dick Thornburgh--is the court-appointed independent prosecutor and that he is satisfied with procedures established by Gesell for handling documents and testimony that bear on national security.

Walsh suggested that it is Thornburgh’s duty to withhold certain sensitive information altogether from the trial if he believes state secrets are in jeopardy.

Main Charges Dropped

Thornburgh did just that a month ago, with Walsh’s concurrence, in a decision that forced dismissal of the primary charges of conspiracy and theft against North. Thornburgh agreed with government security analysts that documents necessary to try North on those charges are too sensitive to be disclosed at trial.

Thornburgh, as head of the Justice Department, now is contending that Gesell’s guidelines for the use of classified information are so loose that North might force disclosure of top-secret matters during his trial on 12 lesser charges, which allege that North destroyed documents and made false statements to Congress and a presidential board of inquiry.

The department, in its brief, said that Gesell should be forced to make “explicit rulings concerning the relevance and admissibility of each item of classified information that the defense intends to introduce.”

In expressing dissatisfaction with the broad guidelines that Gesell established to govern the use of such data, department lawyers said that they might be powerless to stop North from disclosing secrets.

Jury Selected

After the Justice Department had filed its papers Thursday, Gesell proceeded to select a jury of three men and nine women. Then the appellate judges ordered an “administrative stay,” a ruling that halted the trial while they studied the national security dispute.

Gesell promptly told the jurors to go home and return on Monday, when he hoped the question would be settled.

“What we are going to do is shut down, catch up on our sleep,” he said.

Two hours later, the appellate judges rejected the Justice Department’s arguments and lifted the stay. But the jurors already had gone home.

U.S. Still Wants Stay

“We are committed to pursuing a stay” in the North trial until the issue can be decided on its merits, Dennis said. He suggested that the department might decide which appeal route it would take by today.

Dennis was asked repeatedly if Thornburgh were prepared to withhold additional sensitive material as a last resort, a move that might abort North’s trial altogether. He replied that such a decision was “premature.”

“We have not thought that far ahead,” he said, “but we’re not leaving any options out of consideration.”