From the DNI on Prism:

PRISM is not an undisclosed collection or data mining program. It is an internal government
computer system used to facilitate the government’s statutorily authorized collection of
foreign intelligence information from electronic communication service providers under
court supervision, as authorized by Section 702 of the Foreign Intelligence Surveillance Act
(FISA) (50 U.S.C. 1881a). This authority was created by the Congress and has been widely
known and publicly discussed since its inception in 2008.
 Under Section 702 of FISA, the United States Government does not unilaterally obtain
information from the servers of U.S. electronic communication service providers. All such
information is obtained with FISA Court approval and with the knowledge of the provider
based upon a written directive from the Attorney General and the Director of National
Intelligence. In short, Section 702 facilitates the targeted acquisition of foreign intelligence
information concerning foreign targets located outside the United States under court
oversight. Service providers supply information to the Government when they are lawfully
required to do so.
 The Government cannot target anyone under the court-approved procedures for Section 702
collection unless there is an appropriate, and documented, foreign intelligence purpose for the
acquisition (such as for the prevention of terrorism, hostile cyber activities, or nuclear
proliferation) and the foreign target is reasonably believed to be outside the United States.
We cannot target even foreign persons overseas without a valid foreign intelligence purpose.
 In addition, Section 702 cannot be used to intentionally target any U.S. citizen, or any other
U.S. person, or to intentionally target any person known to be in the United States. Likewise,
Section 702 cannot be used to target a person outside the United States if the purpose is to
acquire information from a person inside the United States.
 Finally, the notion that Section 702 activities are not subject to internal and external oversight
is similarly incorrect. Collection of intelligence information under Section 702 is subject to
an extensive oversight regime, incorporating reviews by the Executive, Legislative and
Judicial branches