On the face of it, the NSA's dragnet of domestic phone call records violates the Communications Act, which prohibits phone companies from giving out such information without the customer's permission or a legal requirement. As the Congressional Research Service put it in a recent report, "telecommunications carriers are subject to clear and unambiguous obligations to guard the confidentiality of CPNI [customer proprietary network information] and to ensure that it is not disclosed to third parties without customer approval or as required by law."
Violating this law seems to have been the main concern of Qwest, the one company that refused to participate in the secret program. USA Today reports that Qwest officials asked the NSA to clear its data collection with the Foreign Intelligence Surveillance Court, or at least get an opinion from the Justice Department certifying that the program was legal. The NSA refused, saying the court and the attorney general might not agree the program was legal.
The administration could argue (if it decided to acknowledge the program's existence) that the information collected and analyzed by the NSA does not qualify as "customer proprietary network information" (defined, per CRS, as "personally identifiable information derived from a customer's relationship with a telephone company") because it does not include names and addresses. But as USA Today notes, "the phone numbers the NSA collects can easily be cross-checked with other databases to obtain that information."
Hence the need for argument #2: Congress unwittingly amended the Communications Act when it authorized the use of military force against Al Qaeda and the Taliban in Afghanistan. And if you don't buy that, there's always the president's fallback position: because I said so. If Bush has inherent constitutional authority to override the Foreign Intelligence Surveillance Act, I guess he has inherent constitutional authority to override the Communications Act.