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August 5, 2003, 9:00 AM ET, Alert No. 711.
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Sen. Hollings Will Not Run in 2004

8/4. Sen. Ernest Hollings (D-SC) announced that he will not run for re-election to the Senate in 2004. He is the ranking Democrat on the Senate Commerce Committee, and the ranking Democrat on the Senate Appropriations Committee's Subcommittee on Commerce, Justice, State and the Judiciary, which also funds the Federal Communications Commission (FCC). See, transcript of retirement announcement.

The Democrat with the next most seniority on the Commerce Committee is Sen. Daniel Inouye (D-HI). He is up for re-election in 2004. He is now 78 years old, and will be 80 at the time of the election. Next in seniority is Sen. Jay Rockefeller (D-WV).

Sen. Hollings' speech was not gracious. He said that "we've got the weakest president and weakest government in the history of my 50 years of public service. I say weak president in that the poor boy campaigns all the time and pays no attention to what's going on in the Congress. Karl Rove tells him to do this or do that or whatever it is".

Sen. Ernest HollingsSen. Hollings (at right) also criticized free trade in his speech. He stated that "at the end of World War II we had 40 percent of our workforce in manufacturing. And now we're down to 10 percent. We've got 10 percent of the country working and producing, and we've got the other 90 percent talking and eating. That's all they're doing." He added, "we're eliminating jobs -- hard manufacture, service, high-tech -- all except the press and the politicians. They don't import us. If they'd imported us, they'd get rid of us, too."

On July 31, Sen. Hollings voted against  HR 2738, the "United States-Chile Free Trade Agreement Implementation Act". See, Roll Call No. 319. He also voted against HR 2739, the "United States-Singapore Free Trade Agreement Implementation Act". See, Roll Call No. 318. Both bills passed overwhelmingly in both the House and Senate.

Sen. Hollings has a record of supporting the interests of competitive local exchange carriers (CLECs) in the Senate. Russell Frisby, President of CompTel, stated in a release that "Sen. Hollings leaves behind many legacies after serving seven terms in the Senate, including his long-time advocacy of the principles of an open, competitive telecommunications marketplace. Sen. Hollings' heroic efforts to open the local telephone market to competition resulted in the Telecommunications Act of 1996. As a result, his constituents in South Carolina and consumers across the nation, now have the opportunity to select innovative, low-cost services from a variety of carriers."

Walter McCormick, P/CEO of the U.S. Telecom Association (USTA), a group that represents the interests of the incumbent local exchange carriers (ILECs), stated in a release that "Senator Hollings has had a distinguished career, has been a leading voice on telecommunications issues and has played a significant role in shaping today's communications marketplace."

In 2002 Sen. Hollings was responsible for derailing the DOJ FTC merger review agreement. Charles James, the previous Assistant Attorney General in charge of the Department of Justice's (DOJ) Antitrust Division reached an agreement Federal Trade Commission (FTC) Chairman Timothy Muris to divide responsibility for merger reviews. The two issued a Memorandum of Agreement in January 2002 concerning clearance procedures for merger reviews and other antitrust matters. The agreement attempted to define, by industry, which transactions would be reviewed by which agency.

However, this agreement was dropped following opposition from, and threats of appropriations cuts by, Sen. Hollings. See, story titled "DOJ & FTC Abandon Merger Review Agreement Under Threat from Sen. Hollings" in TLJ Daily E-Mail Alert No. 436, May 22, 2002.

Sen. Hollings cosponsored, along with Sen. John McCain (R-AZ), the Children's Internet Protection Act (CIPA), which requires that schools and libraries receiving e-rate subsidies to use filtering software on computers to block access to material that is harmful to minors.

More recently, Sen. Hollings has been one of the leading advocates in the Senate for rolling back the FCC's revisions to its media ownership rules.

Senate Judiciary Committee Approves Bill to Regulate Internet Cigarette Sales

7/31. The Senate Judiciary Committee amended and approved S 1177, the "Prevent All Cigarette Trafficking (PACT) Act of 2003". The bill would amend the Jenkins Act of 1949, 15 U.S.C. Ё 375-378, to, among other things, expand the reporting requirements of the Act to cover internet sales of cigarettes.

The bill is intended, in part, to facilitate state collection of taxes on cigarette sales over the internet. See, story titled "Senators Introduce Bill to Regulate Internet Cigarette Sales" in TLJ Daily E-Mail Alert No. 675, June 6, 2003.

The Jenkins Act requires that any person who sells and ships cigarettes across a state line to a buyer, other than a licensed distributor, to report the sale to the buyer's state tobacco tax administrator. Some states impose vastly higher taxes on the sales of cigarettes than others. The Jenkins Act helps these states enforce their cigarette tax laws. Currently, many internet based cigarette sellers are not reporting sales to state tax administrators.

Internet Cigarette Sales Bill Introduced in House

7/23. Rep. Mark Green (WI), Rep. Marty Meehan (D-MA) and others introduced HR 2824, the "Internet Tobacco Sales Enforcement Act", a bill to amend the Jenkins Act to aide states in collecting taxes on internet tobacco sales.

Rep. Marty MeehanRep. Meehan (at right) stated that "This bill will help to reduce youth smoking and crack down on cigarette sellers who evade state taxes. Smokers of all ages have increasingly turned to the Internet to buy cheaper cigarettes. Over 200 smoke shops have come online in the past few years offering cheap cigarettes. The reason these cigarettes are so cheap is that Internet sellers typically don't collect sales or excise taxes." See, Meehan statement.

Meehan continued that "In a study of 147 Internet tobacco retailers, the GAO found none of the sites posted information that indicated the vendors complied with the Jenkins Act. In addition, the GAO found that because Internet tobacco retailers are not collecting state cigarette excise taxes, the sales are creating a huge revenue loss for states, including Massachusetts. The states already lose millions in tax revenue as a result of Internet tobacco sales, and Internet sales are expected to constitute about 20 percent of the U.S. cigarette market by 2006, so the problem is only going to get worse."

See, August 13, 2002, General Accounting Office (GAO) report [60 pages in PDF] titled "Internet Cigarette Sales: Giving ATF Investigative Authority May Improve Reporting and Enforcement". See also, story titled "GAO Reports on Internet Cigarette Sales" in TLJ Daily E-Mail Alert No. 491, August 14, 2002.

Meehan added that the problem is that "the Jenkins Act is toothless." He explained that HR 2824 "will fix the problem by placing new restrictions on Internet sales and giving state attorneys general the tools they need to bring effective enforcement actions against Internet tobacco sellers who break the law.  The Green-Meehan bill will make Internet tobacco sellers follow the same kinds of laws and requirements that in-state bricks-and-mortar sellers of tobacco products must comply with relating to the collection of state taxes."

GAO Reports on Information Security Control Weaknesses at

7/31. The General Accounting Office (GAO) released a report [PDF] titled "Information Security: Computer Controls Controls over Key Treasury Internet Payment System". The report finds information security control weaknesses in the Department of the Treasury's Financial Management Service's (FMS) website, which allows the public to make certain payments to the federal government (not including income tax payments) via the internet.

The report notes that "The federal government is moving toward implementing Web-based electronic government to provide public services. At the same time, the computer systems that support these services face increasing security risks from viruses, hackers, and others who seek to interrupt federal operations or to obtain sensitive information that is stored in federal computers."

This report focuses on just one of the federal government's electronic government initiatives, the website, which the report states is "estimated to eventually handle up to 80 million transactions valued at $125 billion annually".

The report finds that "Although FMS and the Federal Reserve have documented and implemented many security controls to protect, security controls and practices have not always been effectively implemented to ensure the confidentiality, integrity, and availability of the computing environment and data."

The report elaborates that "numerous information security control weaknesses increased the risk that external and internal users could have gained unauthorized access to, which could have led to the inappropriate disclosure or modification of its data or to the disruption of service. For example, FMS and the Federal Reserve had not consistently implemented access controls to prevent, limit, and detect electronic access to the application and computing environment. In addition, weaknesses in other information system controls (segregation of duties, software change controls, and service continuity) and application security controls reduced FMS抯 effectiveness in mitigating the risk of errors or fraud, preventing unauthorized changes to software, and ensuring the continuity of data processing operations when unexpected interruptions occur." (Parentheses in original.)

This report was prepared for Rep. Tom Davis (R-VA), the Chairman of the House Government Reform Committee, and Rep. Adam Putnam (R-FL), the Chairman of the Subcommittee on Technology, Information Policy, Intergovernmental Relations, and the Census.

Senate Subcommittee Holds Hearing on ICANN

7/31. The Senate Commerce Committee's Communications Subcommittee held a hearing on the Internet Corporation for Assigned Names and Numbers (ICANN).

The ICANN manages the domain name system (DNS) pursuant to a Memorandum of Understanding (MOU) with the Department of Commerce (DOC). The current MOU expires at the end of September.

Nancy Victory, head of the DOC's National Telecommunications and Information Administration, stated in her prepared testimony that "ICANN has made significant strides this year in developing into a more stable, transparent and responsive organization. ICANN has completed a comprehensive reform effort that has resulted in major structural adjustments and refinements to its decision-making processes that allow for greater transparency and responsiveness to all critical Internet stakeholders".

Victory continued that the DOC "is currently in the process of reviewing ICANN's accomplishments and assessing what actions remain under the MOU. This review will underlie any decision to extend the MOU and, if so, how best to modify the agreement to focus ICANN's and the Department's efforts going forward."

Paul Twomey,  P/CEO of ICANN, reported on its activities. See, prepared testimony.

Ari Balough, SVP of VeriSign, stated in his prepared testimony that "As the ONLY institution serving in a multi-national capacity in the Internet space -- other than the professional technical standards bodies -- ICANN has ``acquired创 some roles, and ``assumed创 others that have little to do with ``coordinating the administration of the naming and numbering system.创 And this functional ``ambiguity创 for ICANN has led to significant debate around the nature of and proper scope of responsibility for any entity taking on responsibilities of Internet ``coordination.创"

Balough argued that "any entity charged with ensuring the stability, availability and growth of the Internet requires the legitimacy, capacity and authority necessary to accomplish those tasks. Today's ICANN cannot effectively do this. ICANN's legitimacy is hampered by the non-inclusion/non-participation of regional numbering authorities, the collective community of root server operators or over 200 country code Top Level Domain registries. ICANN抯 capacity is questioned by those who see security and stability as essential to the Internet, but find ICANN preoccupied with regulation of registrar business practices and the minutiae of delegation of new generic registries. ICANN's authority is clouded by its ambiguous status as a contractor with the U.S. Department of Commerce, but a PR message espousing its ``international创 character."

He also stated that ICANN should be involved in promoting security and stability of the 13 root servers that serve as the nerve center of the Internet's addressing system.

Alan Davidson, of the Center for Democracy and Technology (CDT), stated in his prepared testimony that "serious questions persist about ICANN's public accountability and its ability to fulfill its role as a steward of an important public trust. While CDT remains a believer in the ideal behind ICANN, close oversight by Congress and the Department of Commerce are essential to provide accountability for ICANN."

Paul Stahura, CEO of eNom, a domain name registrar, stated in his prepared testimony, that "while ICANN is the correct model, there should be changes to increase ICANN's accountability to, and foster trust from, those they regulate."

Sen. Conrad Burns (R-MT) presided. See, Burns release.

People and Appointments

8/1. The Senate confirmed Josette Shiner to be a Deputy U.S. Trade Representative.

8/1. The Senate confirmed James Jochum to be an Assistant Secretary of Commerce.

8/1. The Senate confirmed Rene Acosta to be an Assistant Attorney General in charge of the Civil Rights Division.

8/1. The Senate has not confirmed Daniel Bryant to be an Assistant Attorney General in charge of the Office of Legal Policy (OLP), because Sen. Charles Grassley (R-IA) placed a hold on his nomination on August 1. The Senate Judiciary Committee approved his nomination on July 31. If confirmed, Bryant would replace Viet Dinh, who has returned to his teaching position at Georgetown University Law Center. The OLP is tasked with making recommendations to the Congress regarding anti-terrorism legislation, such as amendments to the PATRIOT Act. Sen. Grassley stated that "I have placed a hold on this individual because I have numerous outstanding issues that have yet to be resolved by the Department of Justice. More specifically, I have several outstanding written requests before the Department of Justice. Some of these requests are more that 6 months overdue. In addition, I am presently working with the Department of Justice to overcome a number of procedural issues directly affecting my ability, as a member of the Judiciary Committee to, among other things, conduct oversight of the Department of Justice, and the Federal Bureau of Investigations." See, Congressional Record, August 1, 2003, at S10898.

8/4. Anastasia Kelly was named EVP, General Counsel and Corporate Secretary of MCI WorldCom, effective immediately. She will report to Ch/CEO Michael Capellas. She will oversee legal, regulatory and public policy initiatives. She was previously General Counsel of Sears Roebuck. Before that, she worked for Fannie Mae. And before that, she worked for the law firm of Wilmer Cutler & Pickering. See, MCI WorldCom release.

Atlanta Lawyers at DOJ

8/1. George Bush has nominated numerous Georgia attorneys to top positions at the Department of Justice (DOJ). There have been several recent developments regarding the Georgia contingent at the DOJ.

The Attorney General, John Ashcroft, is not from Georgia. However, the Deputy Attorney General, which is the second highest position at the DOJ, is Larry Thompson. He was previously as partner in the law firm of King & Spalding in Atlanta, Georgia.

On June 27, the Senate confirmed Robert McCallum to be the Associate Attorney General, the third highest position at the DOJ. He was previously Acting Associate Attorney General, and before that, Assistant Attorney General in charge of the DOJ's Civil Division. And before that, he was a partner in the law firm of Alston & Bird, which is based in Atlanta, Georgia.

On July 31, the Senate confirmed Joe Whitley to be General Counsel of the Department of Homeland Security (DHS). He too was a partner in the law firm of Alston & Bird. He was previously U.S. Attorney for both the Northern and Middle Districts of Georgia. He has also held positions at the DOJ.

Meanwhile, Ralph Boyd, the outgoing Assistant Attorney General (AAG) in Charge of the Department of Justice's (DOJ) Civil Rights Division (CRD), and Robert Driscoll, the outgoing Chief of Staff and Deputy AAG in the CRD, will join the law firm of Alston & Bird. On July 31, the Senate confirmed Rene Acosta to replace Boyd.

On July 30, Sen. Charles Grassley (R-IA), a senior member of the Senate Judiciary Committee, stated that he has placed a hold on the nomination of Christopher Wray to be an AAG in charge of the DOJ's Criminal Division. He is currently Acting AAG. Wray previously worked for the law firm of King & Spaulding, which is based in Atlanta.

Sen. Grassley stated that "I have several outstanding written requests before the Department of Justice. Some of these requests are more than 6 months overdue. In addition, I am presently working with the Department of Justice to overcome a number of procedural issues directly affecting my ability, as a member of the Judiciary Committee to, among other things, conduct oversight of the Department of Justice, and the Federal Bureau of Investigations." See, Congressional Record, July 30, 2003, at S10258.

The DOJ's Computer Crimes and Intellectual Property Section (CCIPS) is a part of the Criminal Division. And, it should be noted, the head of the CCIPS, John Malcolm, is a Georgian.

And finally, on August 1, David Nahmias was named one of the Deputy Assistant Attorneys General in the Criminal Division. He replaces Alice Fisher, who left the DOJ on July 31. He will oversee the Counterterrorism, Fraud and Criminal Appellate sections of the Criminal Division, and the Capital Case Unit. See, DOJ release. Nahmias is a Georgian.

Nahmias has been Counsel to the Assistant Attorney General for the Criminal Division since October of 2001. He has coordinated investigations and prosecutions of Al Qaeda and other terrorist activity, assisted in policy making, and acted as Criminal Division liaison to other federal agencies on terrorism related issues. Before that he was an Assistant U.S. Attorney in Atlanta, Georgia.

Tuesday, August 5

The House is in recess until September 3. Senate is in recess until September 2. The Supreme Court is in recess.

10:00 AM - 12:00 NOON. The Department of State's (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for the meeting of the International Telecommunications Union's ITU-D, Study Groups 1 and 2, in Geneva, Switzerland on September 2-11, 2003. See, notice in Federal Register, July 22, 2003, Vol. 68, No. 140, at Page 43413. Location: DOS, Room 2533-A.

Wednesday, August 6

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda [PDF]. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry [21 pages in PDF] in its proceeding titled "In the Matter of Inquiry Regarding Carrier Current Systems, including Broadband over Power Line Systems". See, notice in the Federal Register, May 23, 2003, Vol. 68, No. 100, at Pages 28182 - 28186. See also, story titled "FCC Announces NOI Regarding Broadband Over Powerlines" in TLJ Daily E-Mail Alert No. 628, April 24, 2003, and story titled "FCC Releases NOI on Broadband Over Power Lines" in TLJ Daily E-Mail Alert No. 656, May 7, 2003.This is ET Docket No. 03-104. For more information, contact Anh Wride at 202 418-0577 or

POSTPONED. The Federal Communications Commission (FCC) will hold an auction of Direct Broadcast Satellite (DBS) Service Licenses. This is Auction No. 52. See, notice of postponement in Federal Register, June 20, 2003, Vol. 68, No. 119, at Page 36989.

Thursday, August 7

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Microsoft v. Multi-Tech Systems, No. 03-1138, and Multi-Tech Systems v. Net2Phone, No. 03-1139. This is an appeal from the U.S. District Court (DMinn) in a patent infringement case involving data communications technology. Location: Courtroom 201, 717 Madison Place, NW.

10:00 AM - 12:00 NOON. The Federal Communications Commission (FCC) Office of Engineering and Technology (OET) will sponsor a tutorial titled "Fiber to the Home Technology". Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room). See, notice [PDF].

Friday, August 8

Deadline to submit comments to the Federal Communications Commision (FCC) in response to its notice of proposed rulemaking (NPRM) [7 pages in PDF] regarding the draft Nationwide Agreement [28 pages in PDF] of the FCC, the Advisory Council on Historic Preservation, and the National Conference of State Historic Preservation Officers, regarding undertakings for communications facilities, including communications towers and antennas, under the National Historic Preservation Act (NHPA). This proceeding is titled "In the matter of Nationwide Programmatic Agreement Regarding the Section 106 National Historic Preservation Act Review Process". It is WT Docket No. 03-128. For more information, contact Frank Stilwell at 202 418-1892 or See, story titled "FCC Announces NPRM Regarding Communications Facilities and the National Historic Preservation Act" in TLJ Daily E-Mail Alert No. 677, June 10, 2003. See also, notice in the Federal Register, July 9, 2003, Vol. 68, No. 131, at Pages 40876 - 40887.

Monday, August 11

2:00 - 3:30 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "Trade Agreements and Capital Controls". The speakers will be John Taylor (Treasury Department) and Jagdish Bhagwati (Columbia University). See, notice. Location: AEI, 12th Floor, 1150 17th Street, NW.

Deadline to submit comments to the General Services Administration's (GSA) Office of Electronic Government and Technology regarding its draft policy titled "Draft E -- E-Authentication for Federal Agencies". See, notice in the Federal Register, July 11, 2003, Vol. 68, No. 133, at Pages 41370 - 41374.

Senate Banking Committee Approves Internet Gambling Bill

7/31. The Senate Banking Committee amended and approved S 627, the "Unlawful Internet Gambling Funding Prohibition Act", a bill to prevent the use of certain payments instruments, credit cards, and fund transfers for unlawful internet gambling. See, Banking Committee release.

The Committee held a hearing on this bill in March. See, TLJ story titled "Senate Committee Holds Hearing on Internet Gambling Bill", March 18, 2003.

On July 31, the Committee approved an amendment in the nature of a substitute that makes several changes to the bill as introduced. The amendment eliminates an exemption from the act for any lawful transaction with a business licensed or authorized by a state. The amendment also grandfathers state sanctioned and regulated parimutuel wagering on horse and dog racing that is conducted on a closed-loop subscriber system, and provides that any closed-loop subscriber system must be reasonably designed to verify the location at which a bet or wager is made.

The amendment also grandfathers gambling on a closed-loop system or private network in cases where both the sender and receiver of the bet are on Indian lands.

The amendment also provides that a person shall not be liable for restricting a transaction that is reasonably believed to be an online bet.

On June 10, 2003, the House amended and passed its version of the bill, HR 2143, which is also titled the "Unlawful Internet Gambling Funding Prohibition Act". It passed by a vote of 319-104. See, Roll Call No. 255. See also, story titled "House Passes Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 678, June 11, 2003.

More News

8/4. The Federal Communications Commission (FCC) announced that there is now public WiFi access "on the Twelfth Street, Courtyard, and Eighth Floor levels" of the FCC headquarters at 445 12th Street, SW, in Washington DC. The FCC supports 802.11a and 802.11b protocols. Visitors must use their own hardware. The FCC will provide no technical support. See, FCC release [PDF].

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