The federal government moved to classify more than 15 million pieces of information in 2004 — the largest number since the peak of the Cold War.

The unprecedented secrecy, say some members of Congress and government watchdogs, is hindering the War on Terror (search) and putting Americans at risk.

"Somewhere in the vast cache of data that never should have been classified, and may never be declassified, is that tiny nugget of information that, if shared, could be used to detect and prevent the next deadly terrorist attack," said Rep. Christopher Shays, R-Conn., chairman of the National Security, Emerging Threats and International Relations Subcommittee of the House Government Reform Committee.

Lawmakers and witnesses attending a March 2 hearing on what one expert termed the "pseudo-classification" of documents say that in the government's zeal to protect information, thousands of documents that would not normally be considered top secret are being kept from congressional oversight, public view and other agencies relying on the data.

"Some of the examples we reviewed involve absurd overreactions to vague security concerns," said Rep. Henry Waxman, D-Calif., in a letter to Shays before the hearing.

In one example, Waxman said the Department of Homeland Security had concealed the identity and contact information of its new Transportation Security Administration (search)ombudsman, whose chief responsibility is to interact with the public over airport security measures.

In another example, Thomas S. Blanton, a fellow at the National Security Archive (search) at George Washington University, said that his group is trying to track down primary sources cited and quoted in the publicly released final report of the National Commission on Terrorist Attacks Upon the United States (search).

In the course of requesting five warnings distributed by the Federal Aviation Administration (search) to airlines about terrorism in the months before the Sept. 11, 2001, terror attacks, the archive was told the content of the memos was classified under the designation of "Sensitive Security Information." Dates, times and titles of the memos were blacked-out before being sent to the archive.

Blanton, whose group has filed more than 30,000 Freedom of Information Act (search) requests in the last 20 years, said that when his team pointed out that the details were quoted in the best-selling Sept. 11 Commission report, TSA returned the documents with the redacted dates, times and titles restored, but everything else still blacked out.

The irony, say Blanton and others, is that the commission's report states bluntly that the lack of information-sharing among agencies and with the public contributed to the inability for Americans to disrupt the terrorist plot against them.

"The risk is by keeping information secret, we make ourselves vulnerable," Blanton testified before the subcommittee.

The Sept. 11 Commission "found this culture of secrecy was a barrier to communication that was necessary to information-sharing," said Lawrence Halloran, staff director for Shay's subcommittee. That culture hadn’t changed since Sept. 11, but instead has became more intense, he added.

Not All Secret All the Time

Despite the concern, some officials say the system is not broken. Rear Adm. Christopher McMahon, director of the Office of Intelligence, Security and Emergency Response at the U.S. Department of Transportation, said that after Sept. 11, Transportation Secretary Norm Mineta (search) installed comprehensive guidelines for classifying information under the Sensitive Security Information authority and streamlined the process by which officials at the DOT could classify information.

"I have emphasized to the heads of our operating administrations that they keep in mind that our actions must always conform to the law and, with the secretary’s admonition, that we should not use this authority to restrict unreasonably the public’s right to know how we are carrying out our duties," McMahon testified during Shay’s committee hearing earlier this month.

McMahon said Mineta ordered that only the heads of each of the DOT’s constituent agencies would have authority to classify documents and they would have to consult with McMahon’s office first. He said the decisions about whether to classify information were to be reviewed by Mineta.

McMahon acknowledged that his agency does use the administrative designation "For Official Use Only." Information stamped with this label cannot be shown to anyone outside the federal government before FOIA staff determines whether it deserves stronger classification. But documents with that designation are not automatically protected by the staff and cannot be abused that way, he said.

"My staff is learning day-in and day-out how truly challenging that charge from the secretary – to find the right balance between protecting what needs to be protected and revealing what should be revealed – can be," McMahon said.

Culture of Secrecy Prevails

J. William Leonard is the director of the Information Security Oversight Office (search) at the National Archives and Records Administration (search). His office has the primary responsibility for designating national security information as "classified," the most secret information in government and exempt from FOIA requests.

Leonard told the House panel that "the government classifies too much information."

"Classification often becomes an automatic decision rather than an informed deliberate decision," he said of the practice that occurs too frequently in his office.

Leonard said if information doesn’t fit the criteria for a national security classification or a Sensitive Security Information label, both of which are rooted in federal statute, agencies have opted for so-called "pseudo-classifications" like "For Official Use Only" or "Sensitive but Unclassified," which are not exempt from FOIA requests but can protect documents from oversight or public consumption if no one fights for them.

"The government has been running around trying to figure out how they can protect information," said Harry Hammitt, editor and publisher of Access Reports (search), a bi-weekly newsletter on Freedom of Information issues. "My bottom line is that these classifications almost always do more harm than good."

One FBI (search) spokesperson who did not want to be named told FOXNews.com that the agency has been working hard to be more open, at least among other U.S. security branches, its own field offices and local and state law enforcement sources.

"Information-sharing with other agencies is at an all-time high," the spokesperson said. Since Sept. 11, "our goal now is to generate information and share it with the proper people so they can act."

But critics say that designating the "proper" or "relevant" people to receive information keeps the culture elitist.

"Who exactly decides the relevant players?" Blanton asked. "The No. 1 lesson of 9/11 is that the 'relevant players' include the public, front and center."

A CIA spokesman told FOXNews.com that a lot has been done to change the culture and learn lessons. He pointed to a recent example in which government officials made public a transmission between Al Qaeda founder Usama bin Laden (search) and his top agent in Iraq, Abu Musab al-Zarqawi (search).

"I think tremendous efforts have been made to declassify," he said, acknowledging that public awareness is part of the anti-terrorism effort. "These are critically important decisions that we grapple with every day."