As I read it, it was to access encrypted information on a suspect after a warrant or court order has been issued. If you have something in a locked room and the police have a warrant to search it, they can cut the lock off and search it, that's perfectly legal. The trick with encryption is to find a way to do that without rendering every other lock in existence worthless, and I think that's what they're looking for.

Maybe some three-key encryption, with the third key escrowed for judicial purposes.

Good luck forcing people to use deliberately broken encryption. https://en.wikipedia.org/wiki/Clipper_chip

A 3rd key would have to be kept secret forever but still available easily. How long before this gets leaked? One thing everyone can learn from the Snowden leaks is that governments are rubbish at keeping secrets for long periods of time. Bear in mind that the 3rd key would have a serious financial value and could be sold semi-anonymously.

I assumed it would be a unique 3rd key per user/transaction. It increases the burden of the escrow-holder (by vastly increasing the number of keys to manage), but has the benefit of allowing granular access to data, rather than compromising all of one service if a warrant is served for a single user's information.

So which governments get access to the 3rd keys?

The escrow there would make me very nervous, as it becomes a very juicy target.

Give it to the Office of Personnel Management, they are charged with holding some of the most sensitive information the US Government has.