Outside Probe in Passport File Case May Be Step Closer : Campaign: At issue is whether Privacy Act was violated by highly placed officials during a search of Clinton’s travel records.

The Justice Department has taken the first step toward possibly appointing an independent counsel to investigate the Bush Administration’s presidential campaign search of State Department files for material damaging to then-candidate Bill Clinton, government officials said Thursday.

The sources, who declined to be identified, said the department’s public integrity section is conducting an initial inquiry to determine whether the source of the information and the evidence are sufficiently credible to merit a full-scale preliminary inquiry that could result in the naming of an outside prosecutor.

At issue is whether the search by State Department political appointees of Clinton’s passport files for any evidence that he had considered renouncing his citizenship to avoid military service in Vietnam violated the Privacy Act, one official said.

No evidence was found that Clinton attempted to renounce his citizenship.

Although the Privacy Act is a misdemeanor statute that carries a $5,000 fine and no prison sentence for violators, the independent counsel provisions could be triggered because so-called “covered” individuals may be involved, according to the officials.

If anyone covered by the Ethics in Government Act were involved, Atty. Gen. William P. Barr would be required to seek court appointment of an outside prosecutor.

The sources declined to name the covered individuals, but they could include Elizabeth M. Tamposi, who was fired as assistant secretary of state for consular affairs over her role in the search; White House Chief of Staff James A. Baker III; White House Political Director Janet G. Mullins and Steven K. Berry, then acting assistant secretary of state for legislative affairs.

An investigation by Sherman Funk, the State Department’s inspector general, concluded last week that Baker, the former secretary of state, and Mullins knew about the search almost as soon as it began. It also found that White House political operatives had encouraged State Department officials to hunt for anything that could substantiate the citizenship renunciation rumors about Clinton.

Funk found that Berry and Tamposi had directed the two-day search on Sept. 30 and Oct. 1. The inspector general’s investigation quoted Tamposi as telling investigators that Berry had told her that Mullins wanted the Clinton files searched. Berry denied invoking the authority of the White House.

Funk also said there was no evidence the White House had “orchestrated” the search, which was conducted in a way that could have violated the Privacy Act. It also drew the traditionally nonpartisan State Department into the Nov. 3 election campaign.

However, a State Department official said Wednesday that Funk is still pursuing leads in the probe with “the strong implication that they are new leads.”

The government sources would not say Thursday whether new leads had led to the public integrity section’s initial inquiry.

Although the appointment of an independent counsel would keep the issue alive for months, it is uncertain that there would be time to name one before the law providing for such investigations expires on Dec. 15.

A full-scale preliminary inquiry by Barr could stretch until the Bush Administration leaves office on Jan. 20.

Despite the tight timetable, “there was no choice” because of the possible involvement of individuals covered by the ethics law, an official said.

Funk’s original investigation drew criticism from congressional Democrats, who contended that he should have tried harder to tie in the White House.

“He said he found no evidence of White House involvement . . . but it certainly appears that there was White House knowledge,” said Rep. Howard L. Berman (D-Panorama City), chairman of the House Foreign Affairs subcommittee on international operations.

Prodded by Berman’s subcommittee, the General Accounting Office has initiated its own investigation of the incident, with a report expected in January.