Immunity in Early Days
The use of grants of immunity to compel testimony is older than the US federal Constitution. It dates to English practice, and to US colonial practice derived from the English practice. The Statute of Elizabeth, 5 Eliz. 1, c. 9, § 12 (1562) was an early example of a statute granting such immunity. As footnote 13 in Kastigar v. United States, 406 U.S. 441 (1972) points out:
Soon after the privilege against compulsory self-incrimination became firmly established in law, it was recognized that the privilege did not apply when immunity, or "indemnity," in the English usage, had been granted. See L. Levy, Origins of the Fifth Amendment 328, 495 (1968). Parliament enacted an immunity statute in 1710 directed against illegal gambling, 9 Anne, c. 14, §§ 3-4, which became the model for an identical immunity statute enacted in 1774 by the Colonial Legislature of New York. Law of Mar. 9, 1774.
Such immunity has been regarded from the first as irrevocable. No doubt this is in part because if it could be revoked at will, it would be seen as of no value or meaning.
Counselman 1863 -- Absolute Immunity
In the US the Supreme Court in Counselman v. Hitchcock, 142 U.S. 547 (1892) held that:
It is an ancient principle of the law of evidence that a witness shall not be compelled, in any proceeding, to make disclosures or to give testimony which will tend to criminate him or subject him to fines, penalties, or forfeitures. Rex v. Slaney, 5 Car. & P. 213; Cates v. Hardacre, 3 Taunt. 424: Maloney v. Bartley, 3 Camp. 210; 1 Starkie on Evidence 71, 191; Case of Sir John Friend, 13 How.St.Tr. 16; (additional citations omitted)
It is quite clear that legislation cannot abridge a constitutional privilege, and that it cannot replace or supply one, at least unless it is so broad as to have the same extent in scope and effect. It is to be noted of § 860 of the Revised Statutes that it does not undertake to compel self-criminating evidence from a party or a witness. ...
We are clearly of opinion that no statute which leaves the party or witness subject to prosecution after he answers the criminating question put to him can have the effect of supplanting the privilege conferred by the Constitution of the United States. Section 860 of the Revised Statutes does not supply a complete protection from all the perils against which the constitutional prohibition was designed to guard, and is not a full substitute for that prohibition. In view of the constitutional provision, a statutory enactment, to be valid, must afford absolute immunity against future prosecution for the offense to which the question relates. In this respect, we give our assent rather to the doctrine of Emery's Case, in Massachusetts, than to that of People v. Kelly, in New York; and we consider that the ruling of this court in Boyd v. United States, supra, supports the view we take. Section 860, moreover, affords no protection against that use of compelled testimony which consists in gaining therefrom a knowledge of the details of a crime, and of sources of information which may supply other means of convicting the witness or party.
In Counselman v. Hitchcock a law, Section 860, had been passed, providing bare use immunity and it was sought to compel testimony in exchange for such immunity. That is, the immunity prohibited direct future use of the compelled testimony, but did not prevent the government from using information learned through the compelled testimony to obtain further evidence. The Court held that this was not sufficient, because such bare use immunity did not offer protection as extensive as the Fifth Amendment privilege, so it was not sufficient to compel testimony. Only absolute immunity later known as transactional immunity was sufficient, according to the Counselman court. Such absolute immunity was permanent, or irrevocable. The Counselman decision includes an extensive review o0f previous laws and court decisions on the subject of immunity.
Murphy 1964 -- Federal vs State Immunity
In 1964 immunity was considered again by the US Supreme Court in the case of Murphy v. Waterfront Comm'n, 378 U.S. 52. That case dealt with the "dual sovereignty" issue, with the petitioners claiming that a state grant of immunity would not protect against Federal prosecution, and thus was not enough to compel testimony.
The decision said:
We hold that the constitutional privilege against self-incrimination protects a state witness against incrimination under federal as well as state law and a federal witness against incrimination under state as well as federal law.
[W]e hold the constitutional rule to be that a state witness may not be compelled to give testimony which may be incriminating under federal law unless the compelled testimony and its fruits cannot be used in any manner by federal officials in connection with a criminal prosecution against him. We conclude, moreover, that, in order to implement this constitutional rule and accommodate the interests of the State and Federal Governments in investigating and prosecuting crime, the Federal Government must be prohibited from making any such use of compelled testimony and its fruits. This exclusionary rule, while permitting the States to secure information necessary for effective law enforcement, leaves the witness and the Federal Government in substantially the same position as if the witness had claimed his privilege in the absence of a state grant of immunity.
Murphy meant that state grants of immunity barred Federal use (direct or indirect) of the information obtainment via a grant of immunity. A similar bar of state use of testimony obtained via a Federal grant of immunity was implied, and soon became established. Murphy cites with approval Counselman and Ullmann v. United States, 350 U. S. 422, 350 U. S. 426, which is worth reviewing on these issues.
Kastigar 1970 -- Transactional vs Derived Use Immunity
In Kastigar v. United States, 406 U.S. 441 (1972) The US Supreme court faced the issue of whether transactional immunity is essential to compelling testimony over a Fifth Amendment claim. It held that while bare use immunity had been ruled insufficient in Counselman, the more extensive grant of use and derived use immunity, which prevents not only use of the testimony, but also use of any information or evidence first revealed by the immunized testimony, is sufficient. 18 U.S.C. § 6002, provides for grants of such immunity, saying:
... but no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case, except a prosecution for perjury, giving a false statement, or otherwise failing to comply with the order.
Note that 18 U.S.C. § 6002 does not provide any method to revoke such immunity.
The Court in Kastigar said:
The constitutional inquiry, rooted in logic and history as well as in the decisions of this Court, is whether the immunity granted under this statute is coextensive with the scope of the privilege. If so, petitioners' refusals to answer based on the privilege were unjustified, and the judgments of contempt were proper, for the grant of immunity has removed the dangers against which the privilege protects. Brown v. Walker, supra. If, on the other hand, the immunity granted is not as comprehensive as the protection afforded by the privilege, petitioners were justified in refusing to answer, and the judgments of contempt must be vacated. McCarthy v. Arndstein, 266 U. S. 34, 266 U. S. 42 (1924).
The statute's explicit proscription of the use in any criminal case of
"testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information)"
is consonant with Fifth Amendment standards. We hold that such immunity from use and derivative use is coextensive with the scope of the privilege against self-incrimination, and therefore is sufficient to compel testimony over a claim of the privilege. While a grant of immunity must afford protection commensurate with that afforded by the privilege, it need not be broader. Transactional immunity, which accords full immunity from prosecution for the offense to which the compelled testimony relates, affords the witness considerably broader protection than does the Fifth Amendment privilege.
Thus since 1970 *transactional immunity has been largely replaced by use and derived use immunity, but both have been treated as permanent and irrevocable at all times. Thus under this standard is is not the case that:
a known criminal (who has given a credible testimony against self-interest) is allowed to participate in society as if they have not committed the crime which they have in fact committed
Rather the government is just as free to prosecute the criminal as if the testimony has never been given, but may not use the testimony, discreetly or indirectly, to provide evidence in that prosecution.
Moreover, as mentioned in the Wikipedia article on Kastigar:
In a subsequent criminal prosecution, the prosecution has the burden of proving affirmatively that evidence proposed to be used is derived from a legitimate source, wholly independent of the compelled testimony.