Telecommunications companies will watch anxiously as Senator Leahy’s Judiciary Committee marks up revisions to the Foreign Intelligence Security Act. If you notice the word “indemnification” during the hearing, scheduled for tomorrow, do not be surprised to hear a collective groan from investors.

FISA is a law designed to enable our federal government to track down foreign wrongdoers who would harm Americans and destroy our government. But FISA in court proceedings today is being turned on its head to intimidate companies whose only crime was helping our government.

Our courts are fair and just and the best in the world, but they are ill suited to handle cases in which evidence and even theories are shrouded in highly classified materials. Merely to discuss publicly the specific actions taken under FISA may be unlawful.

Moreover, their accusers seek to punish the telecommunications companies not for wrongs they directly committed for corporate gain but for the wrongs committed by the government — supposedly improperly collecting and handling customer information. Assigning private parties the responsibility for the behavior of the government violates every tenet of civil liberty. Wrongdoers are exculpated; the innocent punished.

Surely, in a rational world, civil liberties groups would rally to the defense of telecommunications companies. But in our world, it is civil liberties groups, such as the American Civil Liberties Union and the Electronic Frontier Foundation, that are among the accusers. Some of the lawsuits target just the federal government for allegedly mishandling FISA. But other lawsuits include the telecommunications companies, perhaps as hostages to gain leverage on the federal government to change FISA practices. Tomorrow’s hostages could be banks, airlines, or anyone else.

Our national intelligence suffers as FISA is mired in court proceedings. Our government relies on cooperation from private companies under FISA. If those companies today are held liable for cooperating with the federal government under FISA, companies will not cooperate with the federal government tomorrow. That would blind our government’s intelligence gathering activities.

Congress is reviewing FISA and has an opportunity to clean up the mess. Understanding that neither FISA nor our national security structure can operate without the full cooperation of private companies, Senator Rockefeller and the Intelligence Committee are offering immunity.

Why should any company need immunity from being sued? Only a narrow set of companies — those that cooperated with the federal government after being assured of the lawfulness under FISA by the federal government — need protection. Indeed, it would be easy to imagine a situation in which the federal government, after it assures a private party of the lawfulness of an action, assumes all legal responsibility for such action. Under this scenario, aggrieved parties under FISA could continue to sue the federal government, as they do today.

But Mr. Leahy and several of the Democratic presidential candidates believe that any form of immunity is wrong. Senator Dodd has even threatened to filibuster any FISA bill offering immunity. Is there a compromise position? “Indemnification” for telecommunications companies, first mentioned in recent weeks by Senators Specter and Reid, is a supposed middle ground. But federal indemnification may be the worst of all possible outcomes.

Even under FISA indemnification, telecommunications companies would defend themselves in court against findings of liability because such liability may have far-reaching effects on related litigation not subject to federal indemnification. Such indemnification would likely not cover subsequent litigation addressing the management and judgment of the company. These companies could suffer a long series of court battles even under indemnification.

Indemnification would create perverse incentives if a telecommunications company were found liable. The company would have no incentive to object to large damages and penalties. Further, knowing that taxpayers would pay any damages and penalties, some courts and juries might inadvertently be more inclined to find liability in the first instance. Plaintiffs, most of whom claim little interest in financial rewards, might receive kingly ransoms, all at the taxpayer’s expense.

Indemnification would not stop the FISA trials against private companies; indeed, they might expand. Indemnification would not reassure private parties to cooperate with the federal government under FISA in the future; it would do just the opposite. To add insult to injury, the American taxpayer would be asked to foot the bill.

Some investors will watch the Judiciary Committee tomorrow. If the committee adopts indemnification, investors will conclude that there must be a better industry — and perhaps country — for investments.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He is organizing a seminar series at the Hudson Institute. He can be reached at hfr@furchtgott-roth.com.