This is beginning to strike me as ridiculous. DOD can collect information on Mr. or Ms. Terrorist, but when they come into contact with one "U.S. person", DOD has to shut it down. Am I misreading this?
If Mr. terrorist comes in contact with a US Person, there are 13 exceptions which can be made to keep the information. But even then, I think they have 90 days to decide some legal issues and if the issues aren't decided (as it seems was the case in this matter) or if the issues don't fall within the parameters of the 13 exceptions, then the information has to be destroyed.
Congress wants/needs to make this more difficult because otherwise some of the blame turns right around and points a big fat finger right in their direction.
They make these ridiculous laws and make it nearly impossible for covert agents to do their jobs.
No, I don't think you are misreading the situation - unfortunately.
Search for posts by An.American.Expatriate. He has experience of MI and has explained the issues (and the Alice in Wonderland world of the legal rules limiting intelligence gathering) in some previous posts.