New Restrictions on Covert Action Passed by Congress : Legislation: The measure expands current oversight laws to apply to any government agency and not just the CIA.

Congress on Wednesday overwhelmingly approved the first reform of the nation’s intelligence laws in more than a decade, placing new restrictions on covert actions in the aftermath of the Iran-Contra affair.

The legislation, which is a compromise version of a bill that President Bush vetoed last year, expands the reach of current oversight laws beyond the CIA to encompass covert actions by any agency of the U.S. government. That would include the National Security Council, which was responsible for the secret sale of arms to Iran and the diversion of the arms-sales profits to the Contras in Nicaragua.

The House overwhelmingly endorsed the compromise, worked out over months of closed negotiations with the Bush Administration, on a 419-4 vote. Hours later, the Senate followed suit, adopting the legislation on a voice vote and sending it to the White House, where Bush is expected to sign it.

The covert action reforms were included in an authorization bill retroactively providing approval to finance activities by the CIA and other intelligence agencies for the fiscal year ending Sept. 30. Passage was a year late because the White House and the House and Senate Intelligence committees took nearly that long to negotiate a compromise over new covert action rules.

Although the exact amount of the authorization remains classified, the bill is understood to provide about $30 billion for the CIA, the Defense Intelligence Agency, the National Security Agency, the National Reconnaissance Office and other clandestine operations.

Objections over the size and the secretiveness of the intelligence budget were cited by the four House lawmakers who voted against the authorization measure--Reps. Maxine Waters (D-Los Angeles), Mervyn M. Dymally (D-Compton), Gus Savage (D-Ill.) and Bernard Sanders (I-Vt.).

But the real significance of the bill appears to be in its attempt to close loopholes in the nation’s intelligence oversight laws exposed by the Iran-Contra affair.

Existing law, written in 1974, provides for oversight only of the CIA. But the bill passed Wednesday would apply oversight requirements to any agency of the government engaged in covert actions. In so doing, the bill puts into law many of the recommendations made by House and Senate committees that investigated the Iran-Contra scandal in 1987.

Under the new rules, no funds could be spent on any covert action by any agency of the executive branch without a written, signed “finding” by the President.

The bill would also require the President to inform Congress when third countries or private citizens are used “in any significant way” for covert activities on behalf of the United States.

The restrictions applying to covert actions by third parties were among several provisions the Bush Administration opposed last year and which were subsequently weakened in eight months of secretive negotiations between the congressional intelligence committees and the White House.

In vetoing the original bill, Bush argued that disclosing identities of all third countries or individuals involved in U.S.-sponsored covert operations would hamstring “the ability of our diplomats to conduct highly sensitive discussions.”

Under the compromise, Congress would still have to be informed of third party involvement, but the identities of those parties will not have to be disclosed.

Another compromise was made over the question of how quickly the President would have to notify Congress after signing a “finding” that authorizes a covert activity.

Existing law says only that notification must be made “in a timely fashion.” But Bush objected to language in the report accompanying last year’s bill that defined “timely fashion” as meaning that Congress should be informed of a covert action “within a few days” after it had begun.

The new language is fuzzier on that point. It says a majority still believes that notification must be made within a few days. But it notes that the President may argue that he has the constitutional authority to delay notification in certain cases.