By Tabassum Zakaria and Susan Cornwell
WASHINGTON, May 14 (Reuters) - U.S. Attorney General Eric Holder was likely to face a storm of questions on Tuesday over the Justice Department's controversial decision to seize telephone records of the Associated Press, a move denounced by critics as a gross intrusion into freedom of the press.
The episode has created an uproar in Washington and led to questions over how the Obama administration is balancing the need for national security with privacy rights.
Holder, a frequent target of conservatives, was scheduled to appear at 1 p.m. (1700 GMT) with Health and Human Services Secretary Kathleen Sebelius to discuss Medicare fraud but he was likely to face questions from reporters about his decision on the AP records.
In a decision made public on Friday, Holder ordered federal agents to secretly seize telephone records of AP offices and reporters for a two-month period last year.
The AP on Monday described the seizures as a "massive and unprecedented intrusion" into news-gathering operations.
AP Chief Executive Gary Pruitt, in a letter posted on the agency's website, said the AP was informed last Friday that the Justice Department gathered records for more than 20 phone lines assigned to the news agency and its reporters.
"There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters," Pruitt said in the letter addressed to Holder.
An AP story on the records seizure said the government would not say why it sought them.
But it noted that U.S. officials have previously said the U.S. Attorney's Office in the District of Columbia was conducting a criminal investigation into information contained in a May 7, 2012, AP story about a CIA operation in Yemen that stopped an al Qaeda plot to detonate a bomb on an airplane headed for the United States.
Five reporters and an editor involved in that story were among those whose phone records were obtained by the government, the AP said.
The disclosure threatened to set off a confrontation between free press advocates and the Obama administration, which has aggressively pursued national security leaks.
"It's alarming given the scale of it," said David Schulz, an attorney with Levine Sullivan Koch & Schulz who is representing the AP. "This is a massive intrusion into the news gathering operation of one of the largest news organizations in the U.S. People should be concerned."
The U.S. Attorney's Office in the District of Columbia, which notified the AP of the seizure, issued a statement on Monday saying it was "careful and deliberative" when dealing with issues around freedom of the press.
"We take seriously our obligations to follow all applicable laws, federal regulations, and Department of Justice policies when issuing subpoenas for phone records of media organizations," the office said.
A Justice Department spokesman referred inquiries to the U.S. Attorney's Office.
The White House was not involved in the decision to seize the AP records, Press Secretary Jay Carney said.
"Other than press reports, we have no knowledge of any attempt by the Justice Department to seek phone records of the AP," Carney said. "We are not involved in decisions made in connection with criminal investigations, as those matters are handled independently by the Justice Department."
The seized phone records were for April and May of 2012, and AP bureaus in New York, Hartford and Washington were among those affected, as well as an AP phone at the U.S. House of Representatives press gallery, the AP said.
AP journalists' home and cell phone records were seized by the Justice Department, Pruitt said in his letter to Holder.
The reporters who were targeted included Matt Apuzzo, Adam Goldman and Eileen Sullivan, who were also members of a team that won the Pulitzer Prize for revealing secret New York Police Department intelligence operations targeting Muslim communities.
The AP said it had delayed reporting the Yemen plot story at the request of government officials and disclosed it after officials said it no longer endangered national security.
CIA Director John Brennan, in testimony in February, said the FBI had questioned him but denied being the AP's source.
Reuters reported that on May 7, 2012, Brennan, then Obama's top White House counterterrorism adviser, held a small, private teleconference to brief former counterterrorism advisers who are frequent commentators on television news shows and told them that the plot was never a threat to U.S. public safety because Washington had "inside control" over it.
The original AP story made no mention of an undercover informant or "control" over the operation by the United States or its allies. 'POINTED QUESTIONS'
The AP is assessing options for legal action in response to the government's actions, said Schulz, the attorney.
The Justice Department has issued rules that apply to subpoenas seeking phone records for news organizations. The subpoenas must be approved by the attorney general, drawn as narrowly as possible and used only when other attempts to get the information have failed.
The department is also required to notify the organization and seek to negotiate an agreement before issuing those subpoenas, as long as "such negotiations would not pose a substantial threat to the investigation at issue. Pruitt said that the AP was not notified in advance.
The AP may have little recourse to fight the subpoenas in court, since they were served not on the news organization but, presumably, on phone companies, legal experts said.
David Anderson, a law professor at the University of Texas at Austin and an expert in media law, said there is no prohibition against seeking phone records to pursue potential leaks.
"There's nothing unusual about that, except that it's a news organization," said Anderson, who noted that the subpoenas could have a "terrible effect" by discouraging sources from talking to reporters.
Laura Murphy, director of the Washington legislative office of the American Civil Liberties Union, said the incident was part of a pattern by the Obama administration in going after whistleblowers and leaked information.
"The Obama administration has been one of the most aggressive administrations in history when it comes to going after whistleblowers, and we find their conduct highly disturbing, and this is part of a pattern," she said in a phone interview.
Among at least a half-dozen prosecutions by the Obama White House - more than all other previous presidents combined, according to tallies by multiple news organizations - the Justice Department charged former National Security Agency official Thomas Drake under the Espionage Act with mishandling classified information.
On the eve of his trial, the government dropped the charges in exchange for Drake's guilty plea on a misdemeanor charge.
Republican Representative Robert Goodlatte, chairman of the House Judiciary Committee, said in a statement that the panel intends to ask Holder "pointed questions" about the issue when he testifies on Wednesday at a previously scheduled general oversight hearing.
House Oversight and Government Reform Committee Chairman Darrell Issa, a Republican who has been criticizing the Obama administration on several fronts, including over last year's attacks on the U.S. mission in Benghazi, Libya, faulted the administration for the Justice Department action.
"Coming within a week of revelations that the White House lied to the American people about the Benghazi attacks and the IRS targeted conservative Americans for their political beliefs, Americans should take notice that top Obama administration officials increasingly see themselves as above the law and emboldened by the belief that they don't have to answer to anyone," Issa said in a statement.
Senate Judiciary Committee Chairman Patrick Leahy, a Democrat from Vermont, said he was "very troubled" by the allegations and wants to hear the government's explanation.
"The burden is always on the government when they go after private information - especially information regarding the press or its confidential sources. I want to know more about this case, but on the face of it, I am concerned that the government may not have met that burden," he said in a statement. (Additional reporting By David Ingram, Jennifer Saba, Joseph Ax, Ben Berkowitz and Mark Felsenthal; Editing by Warren Strobel and Jim Loney)
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