If no automatic moderation was applied, the front page would be filled with surveillance stories--many of which contain no real new information. So there's an automatic penalty. And it appears there's not a moderator who's following the surveillance story closely, so it can be difficult for them to determine what's newsworthy.
The system is clearly somewhat broken, but I don't think it's due to bad intent. You can help by flagging stories that add no value, and you can email hn@ycombinator.com if you see a major story that is being penalized unfairly [1].
I think the mods are trying, but the system here wasn't really built to gracefully handle a topic that the community is so passionate about like this. Or even to communicate what's going on with moderation. I know a lot of us here naturally speculate about systems and like to get into them and improve them, but I'm fairly convinced that the best approach, at least at the moment and outside of new moderation tools, is an email to the moderators when stories shouldn't be penalized.
We normally take this penalty off of clearly major stories, but we missed this one. Someone has reposted it, though, and we'll make sure that the penalty doesn't kick in on the repost (https://news.ycombinator.com/item?id=8224529).
