The U.S. National Security Agency is illegally collecting phone call records from millions of Americans and the program should be stopped, a federal privacy board said in a report issued today.

The five-member Privacy and Civil Liberties Oversight Board, created by Congress to protect privacy under post-Sept. 11 anti-terrorism laws, said in a 238-page report that the program has provided only “minimal” help to the U.S. in thwarting other terrorist attacks.

The panel has no authority to change the programs and President Barack Obama last week presented his own plan without waiting for its report. Obama said in a speech he would continue to allow government use of bulk phone records yet would prevent NSA from storing the data and require the agency get court approval to use it.

The board’s conclusions present a public relations challenge for a White House under pressure from phone and Internet companies, foreign governments and civil libertarians after disclosures by former government contractor Edward Snowden of electronic spying by the NSA.

By questioning the program’s legality, the panel may give ammunition to critics in Congress and fuel legal challenges. At the same time, the board’s 3-2 split on the question of lawfulness of collecting phone data from such carriers as Verizon Communications Inc. and AT&T Inc. may diminish the impact of the report and highlights the complexities of balancing security and democratic freedoms.

‘Fundamental Flaws’

“This is significant,” said Ed Black, president and chief executive officer of the Computer and Communications Industry Association, a Washington-based trade group that represents phone and Internet companies. “There are very deep fundamental flaws for the way the program has been operated.”

Black said in an interview today the new report will help generate support for limits on the government’s ability to collect bulk phone records and for more transparency for government spy programs.

“It’s clear that momentum is building and more and more people are coming to appreciate how truly threatening and intrusive some of these bulk collection programs can be,” Black said.

Administration Reaction

Three of the five privacy board members agreed with the legal analysis that the NSA’s phone records collection is illegal, while two other panelists said the board should limit its review to whether the program violates privacy and civil liberties.

The board said the U.S. justification for the phone records collection under Section 215 of the Patriot Act “implicates constitutional concerns under the First and Fourth Amendments, raises serious threats to privacy and civil liberties as a policy matter, and has shown only limited value.”

“As a result, the board recommends that the government end the program,” the report said.

Obama and his advisers met with board members “multiple times” and their recommendations were taken into account in the administration’s review, Caitlin Hayden, spokeswoman for the White House National Security Council, said in an e-mail.

“We disagree with the board’s analysis on the legality” of the telephone metadata program, she said. Based on federal court rulings, “the administration believes that the program is lawful.”

Preventing Terrorism

The bombshell of the report’s central conclusion may explain why Obama decided to announce his proposals on Jan. 17, before the panel’s report was made public. Obama defended U.S. electronic spying as a bulwark against terrorism.

He proposed changing aspects of the phone metadata program, which may require a divided Congress to sort out details such as whether the government, the phone companies or an unidentified third party should retain the data.

Democratic Senator Patrick Leahy of Vermont, the chairman of the Judiciary Committee and a critic of the NSA programs, said in a statement the report “reaffirms” the conclusion of critics that the program “has not been critical to our national security, is not worth the intrusion on Americans’ privacy, and should be shut down immediately.”

Senator Dianne Feinstein, a California Democrat and chairman of the intelligence committee, has defended the collection of bulk phone records as necessary to stop terrorism and vowed to fight efforts to end it.

Board Dissent

The privacy panel, created by Congress in 2007 but only operational last year, is led by David Medine, a former Federal Trade Commission official in former President Bill Clinton’s administration. Medine agreed with the findings along with retired appeals court Judge Patricia M. Wald, and James X. Dempsey, a civil liberties advocate who specializes in technology issues.

The two members who disagreed with the legal analysis are Washington attorneys Rachel Brand and Elisebeth Collins Cook, who served in President George W. Bush’s administration. All the members were appointed by Obama and confirmed by the Democratic- controlled Senate.

Internet Data

Representative Mike Rogers, a Michigan Republican and chairman of the House intelligence committee, who has been supportive of the surveillance tools, seized on that disagreement in an e-mailed statement today.

“In 38 times over the past seven years, 17 federal judges have examined this issue and found the telephone metadata program to be legal, concluding this program complies with both the statutory text and with the U.S. Constitution,” Rogers said. “I don’t believe the Board should go outside its expertise to opine on the effectiveness of counterterrorism programs.”

The panel’s findings were reported earlier by the New York Times and the Washington Post.

Internet companies such as Google Inc., Yahoo! Inc., and Facebook Inc., which have pushed for more transparency about government court requests for e-mail and other content from their customers, should be able to “voluntarily disclose certain statistical information,” the panel’s report said. “In addition, the government should publicly disclose more detailed statistics to provide a more complete picture of government surveillance operations.”

Phone Records

The recommendations from the bipartisan, independent board housed in the executive branch follows a December report by a separate review panel appointed by Obama.

The most concrete and immediate changes announced by Obama is that NSA analysts must get judicial approval for queries of the metadata records. In addition, the government can no longer access records that go beyond two persons removed from the query the government makes.

Obama ordered Attorney General Eric Holder and intelligence officials to develop a plan within 60 days for storing bulk telephone records outside of government custody, one of the most contentious issues arising from Snowden’s disclosures.

He left other steps to limit surveillance up to Congress, meaning that other changes may be months away if they are adopted at all.

Phone companies, such as Verizon and AT&T, have resisted being required to retain telephone metadata for the government because of the potential cost and legal exposure. The privacy board recommend against creating a data-retention mandate on the companies. Another entity capable of retaining the records doesn’t yet exist.

Obama also called for the creation of an outside panel of advocates to weigh in on new and major privacy issues before the secret court that oversees NSA spying under the Foreign Intelligence Surveillance Act.