Tech Law Journal Daily E-Mail Alert
June 18, 2004, 9:00 AM ET, Alert No. 921.
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House Passes Bill to Repeal ETI

6/17. The House passed HR 4520, the "American Jobs Creation Act of 2004", by a vote of 251-178. See, Roll Call No. 259.

The primary and original purpose of this bill is to repeal the extraterritorial income (ETI) tax regime. It accomplishes this, and to compensate for this, reduces the top corporate tax rate from 35% to 32%, over several years, for domestic manufacturers, producers, farmers, and small corporations.

The impetus for repealing ETI is that the World Trade Organization (WTO) ruled that the Foreign Sales Corporation (FSC) tax regime, and its replacement, the ETI tax regime, constitute illegal export subsidies, and authorized the EU to impose up to $4 Billion in retaliatory tariffs. See also, story titled "EU Imposes FSC/ETI Sanctions" in TLJ Daily E-Mail Alert No. 847, March 2, 2004.

While the bill addresses international tax concerns, it also has become a vehicle for numerous other unrelated changes to tax law. Several of these are technology related.

First, the bill contains a provision limiting the deduction for contributions of intellectual property (IP). This provision is of concern to both technology companies that donate IP, and universities and other entities that receive these donations. See, story titled "Ways and Means Committee Approves Bill to Limit Deductions for IP Contributions" in TLJ Daily E-Mail Alert No. 918, June 15, 2004.

Second, the bill extends the research and development (R&D) tax credit, which is scheduled to expire on June 30, 2004, through December 31, 2005. The R&D tax credit is found at 26 U.S.C. 41. The sunset provision is found at Section 41(h)(1). The R&D tax credit is a perennial issue in Congress. The credit was first enacted in 1981 as a temporary measure, and has been extended every few years since then. See, story titled "Ways and Means Committee Votes to Extend Research and Development Tax Credit", in TLJ Daily E-Mail Alert No. 918, June 15, 2004.

Third, the bill provides for collection of taxes by private sector entities. To the extent that the Internal Revenue Service (IRS) would transfer data about taxpayers to these private collectors, such as names, addresses, phone numbers, and taxpayer identification numbers (which are usually Social Security Numbers for individuals), this would augment the personally identifying information held in private sector databases, and thus, implicate issues related to the misuse of data, and data privacy. See, story titled "Ways and Means Committee Debates Private Tax Collectors and Information Privacy" in TLJ Daily E-Mail Alert No. 918, June 15, 2004.

Fourth, the bill excludes incentive stock options and employee stock purchase plan stock options from wages.

Fifth, the bill includes a provision regarding the limitation on the depreciation period for software leased to tax exempt entities.

The vote broke down mostly along party lines, with 203 Republicans voting for the bill, and 154 Democrats opposing it. However, 48 Democrats voted for the bill, and 23 Republicans against it.

The Senate has already passed a bill that addresses the rulings of the WTO. On May 11, 2004, the Senate passed S 1637, the "Jumpstart Our Business Strength (JOBS) Act", by a vote of 92-5.

Rep. Bill Thomas (R-CA), the Chairman of the House Ways and Means Committee, and sponsor of the bill, stated in a release that "I look forward to quickly resolving differences between the House and Senate versions and sending a bill to the President's desk for his signature -- so American businesses can continue to do what they do best -- create jobs."

More Capitol Hill News

6/16. Sen. Ted Kennedy (D-MA), Sen. Patrick Leahy (D-VT), Sen. Richard Durbin (D-IL), Sen. Russ Feingold (D-WI), and Sen. Jon Corzine (D-NJ) introduced  S 2528, the "Civil Liberties Restoration Act of 2004". This is a huge bill. Much of its pertains to immigration law and procedure. However, it also contains numerous technology related provisions. These pertain to (1) government data mining, (2) the National Crime Information Center database, and (3) disclosure of surveillance and searches performed pursuant to the Foreign Intelligence Surveillance Act (FISA), including electronic surveillance and use of pen registers and trap and trace devices (PR&TTDs), in criminal proceedings. PR&TTDs is a term that now encompasses internet routing and addressing information. There will be further coverage of this bill in the next issue of the TLJ Daily E-Mail Alert.

6/17. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection amended and approved HR 2929, the "Securely Protect Yourself Against Cyber Trespass Act" or "SPY ACT". This is Rep. Mary Bono's (R-CA) spyware bill. The Subcommittee approved an amendment in the nature of a substitute [18 pages in PDF] offered by Rep. Clifford Stearns (R-FL), the Chairman of the Subcommittee, by a unanimous voice vote. There will be further coverage of this markup in the next issue of the TLJ Daily E-Mail Alert.

6/17. The House Ways and Means Committee's Subcommittee on Health held a hearing titled "Health Care Information Technology". See, prepared testimony of witnesses: David Brailer (Department of Health and Human Services), Robert Kolodner (Department of Veterans Affairs), Charles Safran (American Medical Informatics Association), Janet Marchibroda (eHealth Initiative), Marc Overhage (Regenstreif Institute), and Andrew Wiesenthal (Kaiser Permanente).

6/17. President Bush gave a speech at a George Nethercutt for Senate reception in which he discussed judicial nominations. He said that "unfortunately, some United States senators are playing politics with my nominees, two of them right from this state. One of the reasons you ought to have George Nethercutt as United States senator is to make sure that good, honorable, decent judges are able to make it through the nominating process and the confirmation process of the United States Senate."

Cheney Addresses Technology

6/17. Vice President Dick Cheney gave a speech at NexTech Materials Ltd. in Columbus, Ohio in which he addressed nanotechnology, health care IT, and free trade.

He stated that "There's a lot of promise in fields like nanotechnology and hydrogen energy. We need to maintain American leadership in those areas by funding aggressive research development. Our administration has doubled federal funding for nanotechnology research and development. The President also recently signed the Nanotechnology Research and Development Act, which authorizes four years of additional research and development funding."

On December 12, 2003, President Bush signed S 189, the "21st Century Nanotechnology Research and Development Act". This bill authorized the appropriation of $3.7 Billion over four years for nanotechnology R&D programs at the National Science Foundation (NSF), Department of Energy (DOE), Department of Commerce's (DOC) National Institute of Standards and Technology (NIST), National Aeronautics and Space Administration (NASA), and Environmental Protection Agency (EPA). See, story titled "Bush Signs Nanotech R&D Funding Bill" in TLJ Daily E-Mail Alert No. 792, December 4, 2003.

VP Cheney also stated that "we proposed upgrades to our health care information technology, including electronic medical records for more Americans so we can avoid dangerous medical mistakes, reduce costs, and improve care."

On April 27, 2004, President Bush gave a speech in Baltimore, Maryland in which he advocated the use of electronic records in the health care industry. He also issued an executive order regarding "the development and nationwide implementation of an interoperable health information technology infrastructure". See also, story titled "President Bush Advocates Conversion to Electronic Medical Records" in TLJ Daily E-Mail Alert No. 886, April 28, 2004.

Finally, VP Cheney addressed trade. "Here at NexTech, you know the importance of our efforts to break down trade barriers and open up markets around the world." He added that "And remember also, that workers employed by the more than 900 companies from outside the United States have operations right here in Ohio; add to that all the Ohio suppliers, distributors, and service companies that do business with those companies -- the surest way to endanger all of those jobs would be a policy of tariff and barriers and economic isolationism. We will not give in to that temptation. For the sake of growth and jobs, and for the good of our economic future, the United States of America will remain a confident, successful trading nation."

People and Appointments

6/17. The Senate confirmed Jane Boyle to be a Judge of the U.S. District Court for the Northern District of Texas by a vote of 99-0. See, Roll Call No. 128.

6/17. The Senate confirmed Roger Benitez to be a Judge of the U.S. District Court for the Southern District of California, by a vote of 98-1. See, Roll Call No. 127.

6/17. The Senate confirmed James Robart to be a Judge of the U.S. District Court for the Western District of Washington, by a vote of 99-0. See, Roll Call No. 126.

6/16. The Senate confirmed Paul Diamond to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania, by a vote of 97-0. See, Roll Call No. 123.

6/16. The Senate confirmed Lawrence Stengel to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania, by a vote of 97-0. See, Roll Call No. 122.

6/16. The Senate confirmed William Duffey to be a Judge of the U.S. District Court for the Northern District of Georgia, by a vote of 97-0. See, Roll Call No. 121.

6/15. The Senate confirmed Gene Pratter to be a Judge of the U.S. District Court for the Eastern District of Pennsylvania, by a vote of 98-0. See, Roll Call No. 117.

6/15. The Senate confirmed Ricardo Martinez to be a Judge of the U.S. District Court for the Western District of Washington, by a vote of 98-0. See, Roll Call No. 116.

6/15. The Senate confirmed Virginia Hopkins to be a Judge of the U.S. District Court for the Northern District of Alabama, by a vote of 98-0. See, Roll Call No. 115.

Washington Tech Calendar
New items are highlighted in red.
Friday, June 18

The House will meet at 9:00 AM. It will resume consideration of HR 4567, the Department of Homeland Security (DHS) appropriations bill.

The Senate will meet at 9:30 AM for morning business. It will then resume consideration of S 2400, the Department of Defense authorization bill for FY 2005.

8:30 AM - 5:30 PM. There will be a one day conference titled "Washington Digital Media Conference". See, conference web site. Location: Hilton McLean, McLean, VA.

9:00 AM - 4:00 PM. The Federal Communications Commission (FCC) Consumer Advisory Committee (CAC) will meet. See, notice and agenda [4 pages in PDF] and notice in the Federal Register, May 27, 2004, Vol. 69, No. 103, at Pages 30293 - 30294. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th Street, SW.

The Defense Science Board Task Force on Global Positioning System will hold a closed meeting to discuss Galileo and other future radio navigation satellite systems. See, notice in the Federal Register, May 18, 2004, Vol. 69, No. 96, at Pages 28125 - 28126. Location: Strategic Analysis Inc., 3601 Wilson Boulevard, Arlington, VA.

Day two of a three day event titled "China-U.S. Telecommunications Summit". See, NTIA notice and TIA notice. Location: Chicago, Illinois.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of propose rulemaking (NPRM) regarding imposing mandatory minimum Customer Account Record Exchange (CARE) obligations on all local and interexchange carriers. This item is FCC 04-50 in CG Docket No. 02-386. See, notice in the Federal Register, April 19, 2004, Vol. 69, No. 75, at Pages 20845 - 20851.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its draft [91 pages in PDF] of Special Publication 800-58, titled "Security Consideration for Voice Over IP Systems". Submit comments to Rick Kuhn at sp800-58@nist.gov.

Monday, June 21

The Supreme Court will return from the recess that it began on June 14.

8:30 AM - 5:30 PM. The Federal Trade Commission (FTC) will hold a workshop on the uses, efficiencies, and implications for consumers associated with radio frequency identification (RFID) technology. See, FTC web page for this workshop, and notice in the Federal Register, April 15, 2004, Vol. 69, No. 73, at Pages 20523 - 20525.

1:00 PM. The Center for Democracy and Technology (CDT) will host a telephone press conference to discuss the Supreme Court's opinion in Ashcroft v. ACLU, a challenge to the constitutionality of the Child Online Protection Act (COPA). If the Supreme Court does not issue the opinion on this date, then the CDT will reschedule this conference for the next likely date for the issuance of the opinion -- June 28. To participate, call 334 260-2557 and provide security code 36991.

Tuesday, June 22

5:45 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host a continuing legal education (CLE) program titled "Migration Trends in Spectrum Use and Regulation" The speakers are all Federal Communications Commission (FCC) officials: Julius Knapp (FCC Office of Engineering and Technology), Kenneth Carter (FCC Office of Strategic Plans and Policy Analysis), and Peter Tenhula (FCC Wireless Telecommunications Bureau). To register, contact Wendy Parish at wendy@fcba.org. The FCBA states that "After 6:00 p.m. the doors will be locked." Location: FCC, Commission Meeting Room, 445 12th Street, SW.

CANCELLED. The Federal Communications Commission's (FCC) Network Reliability and Interoperability Council VII will meet. See, notice of cancellation [PDF].

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding broadband over powerline systems. The FCC adopted this NPRM on February 12, 2004. See, story titled "FCC Adopts Broadband Over Powerline NPRM" in TLJ Daily E-Mail Alert No. 836, February 13, 2004. The FCC released the text of this NPRM on February 23, 2004. This NPRM is FCC 04-29 in ET Docket Nos. 03-104 and 04-37. See, notice in the Federal Register, March 17, 2004, Vol. 69, No. 52, at Pages 12612-12618. See also, Order Granting Extension of Time [3 pages in PDF].

Wednesday, June 23

10:00 AM. The Senate Judiciary Committee will hold a hearing on pending judicial nominees. Press contact: Margarita Tapia (Hatch) at 202 224-5225 or David Carle (Leahy) at 202 224-4242. Location: Room 226, Dirksen Building.

1:30 PM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will hold a hearing titled "Protecting Homeland Security: A Status Report on Interoperability Between Public Safety Communications Systems". The hearing will be webcast by the Committee. See, notice. Press contacts: Jon Tripp (Barton) at 202 225-5735 or Sean Bonyun (Upton) at 202 225-3761. Location: Room 2322, Rayburn Building.

2:30 PM. The Senate Commerce Committee's Subcommittee on Competition, Foreign Commerce, and Infrastructure will hold a hearing on peer to peer networks. Location: Room 253, Russell Building.

Thursday, June 24

9:00 AM. The Senate Governmental Affairs Committee will hold the second part of its hearing titled "Buyer Beware: The Danger of Purchasing Pharmaceuticals Over The Internet". See, notice. Location: Room 342, Dirksen Building.

12:15 - 2:00 PM. The DC Bar Association's Arts, Entertainment and Sports Law Section will host a lunch titled "Indecent Exposure: Broadcast Standards and the First Amendment". The speakers will be Lee Carosi (Majority Counsel, Senate Commerce Committee) Thomas Carpenter (American Federation of Television and Radio Artists), Robert Corn-Revere (Davis Wright & Tremaine), Kelly Zerzan (Majority Counsel, House Commerce Committee), and John Davis Malloy. Prices vary. See, notice. For more information, call 202-626-3463. Location: Jenner & Block, 601 13th Street, NW, Concourse Level.

12:30 PM. The Federal Communications Bar Association (FCBA) will hold its Annual Meeting and Luncheon. The speaker will be Federal Communications Commission (FCC) Commissioner Kathleen Abernathy. Location: J.W. Marriott, 1331 Pennsylvania Ave., NW.

Deadline to submit comments to the Federal Trade Commission (FTC) to assist it in preparing its report (which is required by the Fairness to Contact Lens Consumers Act, 15 U.S.C. 7601 et seq.) on the strength of competition in the sale of prescription contact lenses. See, notice in the Federal Register, April 22, 2004, Vol. 69, No. 78, at Pages 21833 - 21836.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rule making (NPRM) regarding expanding the disruption reporting requirements beyond wireline carriers. See, notice in the March 26, 2004, Vol. 69, No. 59, at Pages 15761 - 15774.

Friday, June 25

5:45 - 8:00 PM. The Federal Communications Bar Association (FCBA) Cable Committee and Legislation Committee will hold a joint brown bag lunch. The speakers will be majority and minority counsel for the House Commerce Committee. RSVP to Wendy Parish at wendy@fcba.org. Location: Willkie Farr & Gallagher, 1875 K Street, NW.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding presubscribed interexchange carrier (PIC) change charge policies. This NPRM is FCC 04-96 in CC Docket No. 02-53. See, notice in the Federal Register, May 26, 2004, Vol. 69, No. 102, at Pages 29913 - 29917.

More News

6/17. The Federal Communications Commission (FCC) released its Notice of Inquiry (NOI) [30 pages in PDF] regarding its annual report to the Congress on the status of competition in the market for the delivery of video programming. The FCC adopted, but did not release, this NOI at its June 10 meeting. This NOI sets deadlines for comments. Initial comments are due by July 23, 2004. Reply comments are due by August 25, 2004. See, story titled "FCC Adopts NOI For Annual Report to Congress on Video Programming" in TLJ Daily E-Mail Alert No. 916, June 11, 2004. This NOI is FCC 04-136 in MB Docket No. 04-227.

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