|News from July 11-15,
Senate Passes Accounting Reform Bill
7/15. The Senate approved S 2673, the
Public Company Accounting Reform and Investor Protection Act of 2002, by a vote
of 97-0. The bill creates an independent board to oversee auditors of public
companies, restricts auditors from providing many consulting services, requires
CEOs and CFOs to be personally responsible for the accuracy of their companys'
financial reports, and gives the Securities and
Exchange Commission (SEC) more resources.
However, the bill contains no provision requiring companies to treat stock
options as expenses. Sen. George Allen
(R-VA), and others, had opposed such language, in part because it would
discourage technology companies from offering their employees stock option
The House passed a different accounting reform bill, HR 3763, the
Corporate and Auditing Accountability, Responsibility, and Transparency Act of
2002, on April 24, 2002. Differences will have to be resolved in a conference
Sen. Paul Sarbanes (D-MD), the sponsor
of the Senate bill, stated that "For nearly seventy years, our framework of
securities laws has proved remarkably effective at protecting investors. Recent
events, though, have shown how urgently this framework needs reform. We must
ensure that investors can once again trust corporate executives and their
financial reports, and have confidence in the independence of accountants and
analysts. We also must assure that the SEC has adequate funds to carry out its
SEC Chairman Harvey
Pitt said in a release
that "the Senate moved one step closer towards meaningful and effective
oversight of accounting regulation in America." He added that "There
is much to commend in the legislation that has passed in the House and Senate,
and the SEC looks forward now to working with Congressional leaders in
reconciling their proposals and passing a final bill that will help restore
investor confidence and integrity in America's capital markets."
House Passes Cyber Security Enhancement Act
7/15. The House passed HR 3482, the
Cyber Security Enhancement Act, by a vote of 385-3. See, Roll
Call No. 296. The bill, which is sponsored by Rep. Lamar Smith (R-TX), contains
provisions relating to sentencing guidelines for computer hacking crimes,
authority of Internet service providers (ISPs) and others to voluntarily
disclosure the content of communications to law enforcement and other government
entities, appropriations for the National
Infrastructure Protection Center (NIPC), and other topics. The bill further
amends several sections of the criminal code that were amended by the USA
PATRIOT Act late last year.
Industry groups, such as the Business Software
Alliance (BSA), support the bill. Robert Holleyman, P/CEO of BSA, stated in
a release that "The House today took a much needed step toward protecting
this nation's networks and information infrastructure ... This bill makes it
clear that cyber criminals will be punished."
The Center for Democracy and Technology (CDT)
and the Free Congress
Foundation (FCF) opposed Section 102 of the bill. Brad Jansen of the FCF
stated that "H.R. 3842 is unnecessary and duplicative. It reduces the
accountability of the government in implementing provisions of the USA PATRIOT
Act, leaving the door open even wider to allowing abuses of civil liberties and
privacy rights of law abiding Americans."
Section 101 of the bill requires the U.S.
Sentencing Commission to amend the federal sentencing guidelines with
respect to violations of 18 U.S.C. § 1030,
which pertains to crimes involving intentionally accessing a computer without
authorization, or in excess of authorized access.
Section 102 of the bill, which is the most controversial item, amends 18 U.S.C. § 2702(b),
regarding voluntary disclosure of the contents of communications.
Currently, the statute provides that "A person or entity may divulge the
contents of a communication ... (6) to a law enforcement agency ... (C) if the
provider reasonably believes that an emergency involving immediate danger of
death or serious physical injury to any person requires disclosure of the
information without delay." The bill would allow the disclosure "to a
Federal, State, or local governmental entity, if the provider, in good faith,
believes that an emergency involving danger of death or serious physical injury
to any person requires disclosure without delay of communications relating to
Hence, the bill lowers the standard that ISPs and others must meet before they
voluntarily release information -- from "reasonably believes" to
"good faith". It also removes the immediacy requirement. It also
expands the set of entities to which information can be released -- from
"law enforcement agency" to "to a Federal, State, or local
Section 103 provides, in full, that "Section 2520(d)(3) of title 18,
United States Code, is amended by inserting ‘‘or 2511(2)(i)’’ after
‘‘2511(3)’’." This amends the computer tresspasser provision
of the recently enacted USA PATRIOT Act to allow providers to rely on the good
Section 104 of the bill authorizes the appropriation of
$125,000,000 for the FBI's National
Infrastructure Protection Center (NIPC) for fiscal year 2003.
Section 105 of the bill amends 18 U.S.C. § 2512,
which pertains to the advertising of certain illegal devices. The statute
prohibits the advertising of "any electronic, mechanical, or other device,
knowing or having reason to know that the design of such device renders it
primarily useful for the purpose of the surreptitious interception of wire,
oral, or electronic communications." Section 105 of the bill specifically
includes advertising on the Internet.
Section 106 of the bill amends 18 U.S.C. §
1030(c), which pertains to punishment of crimes involving intentionally
accessing a computer without authorization or in excess of authorized
access. For example, the bill would increase the maximum penalty to life
imprisonment for crimes where the "offender knowingly or recklessly causes
or attempts to cause death".
Section 107 of the bill ensures that providers of communications remain
covered under 18 U.S.C. § 2703(e), a "no cause of action provision,"
which protects providers from law suits when they legally assist law enforcement
with an investigation under the new emergency disclosure exception created in
the USA PATRIOT Act.
Section 108 of the bill amends 18 U.S.C. § 3125, regarding emergency
use of pen registers and trap and trace (PRTT) devices. Currently, under 18
U.S.C. § 3125, law enforcement authorities may use PRTT devices for 48 hours in
certain emergency situations, while court authority is being sought. Section 108
would expand the list of situations to include "an immediate threat to a
national security interest" and "an ongoing attack on a protected
computer (as defined in section 1030) that constitutes a crime punishable by a
term of imprisonment greater than one year".
Section 109 of the bill raises penalties for illegally intercepting cell
phone conversations, and increases penalties for unlawful access to stored
Ridge Testifies on Information Security and FOIA
7/15. The House Select Committee on Homeland
Security held another hearing on HR 5005,
the Homeland Security Act of 2002. Tom Ridge, head of the President's Office of
Homeland Security, testified. Ridge addressed information security and the
proposed Freedom of Information Act exemption in his prepared testimony.
Ridge stated that "The President's proposal would transfer to the new
Department the National Infrastructure Protection Center of the FBI, the
National Communications System of the Department of Defense, the Critical
Infrastructure Assurance Office of the Department of Commerce, the Computer
Security Division of the National Institute of Standards and Technology, the
National Infrastructure Simulation and Analysis Center of the Department of
Energy, and the Federal Computer Incident Response Center of the General
Ridge also addressed the proposed Freedom of Information Act exemption of
information regarding critical infrastructures voluntarily shared with the
federal government. This is contained in Section 204 of the HR 5005 as
Ridge stated in his prepared testimony that "In order to build a system
capable of protecting the Nation's critical infrastructure, the federal
government must be able to gather information related to operational capacities
and vulnerabilities and share resulting assessments or analysis with not only
the private sector but also state and local officials. This problem is not new.
Congressman Davis, along with many of his peers, has been focused on this issue
for some time. Last week the Government Reform and Oversight Committee approved
an amendment that the Congressman submitted providing a limited exemption for
information voluntarily submitted to the government related to critical
infrastructure. This amendment recognizes the need for an exemption while
ensuring that the federal government's regulatory and enforcement efforts are in
no way undermined. The Administration supports the intent and purpose of this
The House Select Committee on Homeland Security is scheduled to hold its third
hearing on Tuesday, July 16, at 10:00 AM.
GAO Reports Weaknesses in Information Systems at FDIC
7/15. The General Accounting Office (GAO)
released a report [PDF]
titled "FDIC Information Security: Improvements Made but Weaknesses
Remain". This report on the Federal Deposit
Insurance Corporation (FDIC) identifies "weaknesses in its information
systems controls that affect the corporation's ability to safeguard electronic
access to critical financial and other sensitive information. These weaknesses
place critical FDIC financial and sensitive personnel and bank examination
information at risk of unauthorized disclosure, critical financial operations at
risk of disruption, and assets at risk of loss."
For example, the GAO report finds that the "FDIC did not adequately limit
access to data and programs by controlling mainframe access authority, providing
sufficient network security, or establishing a comprehensive program to monitor
People and Appointments
7/15. The Senate confirmed Lavenski Smith to be a Judge of the U.S. Court of Appeals (8thCir).
7/15. The Securities and Exchange Commission's
(SEC) Division of Corporation Finance published Staff Legal Bulletin No.
14A, which announces that the SEC has changed its position regarding the
application of Exchange Act Rule 14a-8, the shareholder proposal rule, to equity
compensation plans. This will increase the opportunity of shareholders to
approve or reject equity compensation plans. See, SEC release.
7/15. President Bush gave a campaign speech
in Birmingham, Alabama at a Bob Riley for Governor event. He also gave a speech
at the University of Alabama at Birmingham. He addressed trade promotion
authority at both events. He said in the university speech that "We're good
at a lot things in America, and we ought to be selling our products all around
the world. It's time for Congress to quit talking and start acting, and giving
me trade promotion authority so we can open up more markets and more people can
find work right here in America."
State Department to Provide Internet Access to Afghan
7/13. The State Department announced that
"U.S. Ambassador Robert P. Finn and Afghanistan’s Minister of Commerce,
Sayed Mustafa Kazemi, signed an agreement in Kabul July 13 to provide the
ministry with Internet connectivity and 10 computer terminals. The Center is
expected to be functioning within one month. The grant for the equipment and
Internet service, valued at $50,000, is provided through the U.S. Agency for
International Development ..." See, release.
Senate Appoints Conferees on Trade Promotion Authority
7/12. The Senate appointed conferees to negotiate with the House conferees on
trade legislation, including trade promotion authority. The Senate conferees are
Sen. Max Baucus (D-MT), Sen. Jay Rockefeller (D-WV), Sen. John Breaux (D-LA), Sen. Charles Grassley (R-IA), and Sen. Orrin Hatch (R-UT). See, Cong. Rec.,
July 12, 2002, at Page S6728.
The House passed its bill HR 3005,
the Bipartisan Trade Promotion Authority Act, by a vote of 215 to 214, on
December 6, 2001. The Senate passed its bill, HR 3009,
the Trade Act of 2002, on May 23, 2002. It includes trade promotion authority,
renewal and expansion of the Andean Trade Preference Act, renewal of the
Generalized System of Preferences, re-authorization and expansion of Trade
Adjustment Assistance, and re-authorization of the U.S. Customs Service.
Sen. Grassley, the ranking Republican on the Senate Finance Committee, stated in a
release that "This is a good development ... A conference on this historic
legislation has lagged for too long. We need to get started. Our trading
partners are moving on without us. Our workers and our economy need trade
promotion authority to succeed. Now we have to get it done. With enough
political will, I'm confident we can complete this conference by the August
recess. I want the bill on the President's desk this year."
Trade promotion authority, as passed by the House, would give the President
authority to negotiate trade agreements that the Congress could approve or
reject, but not amend.
House Judiciary Committee Schedules Mark Up of TEACH Act
7/12. The House Judiciary Committee
has scheduled a mark up of S 487, the
Technology, Education and Copyright Harmonization Act, or TEACH Act, for
Wednesday, July 17.
This bill would amend copyright law to extend the exemption for distance
learning to cover the Internet and other digital delivery media. The bill would
benefit rural schools where students are dispersed, colleges that are offering
online courses to distant students, and busy adults who cannot attend their
brick and mortar classroom sessions.
Title 17, Section 106,
contains the basic protection for copyrighted works. It provides that "the
owner of copyright under this title has the exclusive rights to do and to
authorize any of the following: (1) to reproduce the copyrighted work in copies
..." However, Section
110 provides exemptions relevant to education. First, there is the exemption
for face to face instruction. Second, there is the distance learning exemption,
which was first enacted in 1976 with closed circuit TV based classroom type
education in mind. S 487 expands this exemption to encompass Internet based
classroom type education.
The Senate passed this bill by unanimous consent on June 7, 2001. The House
Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual
Property promptly held a hearing, and then, on July 11, 2001, approved the bill
by a vote of 12 to 0.
The delay in consideration by the full committee may be associated with an
effort by library groups and Rep. Rick
Boucher (D-VA) to expand the scope of the exemption to include nonprofit
PFF Hosts Panel Discussion on Spectrum Issues
7/12. The Progress and Freedom Foundation (PFF)
hosted a panel discussion on spectrum issues on Capitol Hill. The speakers were
Ed Thomas (head of the FCC's Office of
Engineering and Technology), Mike Gallagher (Deputy Director of the NTIA), Kevin Krufky (office of Sen. Sam Brownback), Rudy Baca
(Precursor Group), and Steven Berry (SVP for Governmental Affairs at the CTIA). The
event was titled "When Wireless Grows Up: Mandates vs. Markets for a
Ed Thomas reviewed the work of the FCC's Spectrum
Policy Task Force. Gallagher recited several broad principles that guide the
NTIA (such as cooperation among federal agencies, efficiency, stronger receiver
standards, and innovative use of spectrum) that he has addressed elsewhere. See,
for example, speech
of July 11.
Krufky stated that "it is time for Congress to step in and create a new
framework" for spectrum. He said that "in the last fifty years we have
done nothing." He also said that the wireless services sector needs more
spectrum, and that "giving more ownership rights is more important".
He also stated that the U.S. should be more aggressive in international
proceedings pertaining to spectrum management.
Steve Berry stated that the U.S. wireless service providers need more spectrum
to be able to provide Third Generation (3G) wireless services. He outlined the
status of various spectrum bands under consideration for reallocation for 3G
services. He then expressed his views about the incumbent user of some of the
bands -- the Department of Defense (DOD).
Berry stated that "the DOD is in a time warp." He said that it
"has not done particularly well in their past management" and that
"DOD has to upgrade to new technologies". He also stated that the DOD
"needs to use sound spectrum management" and that, to date, it has
been "fairly pathetic".
Berry also advocated repealing the excise tax on phones, and lifting ownership
Baca predicted that "probably we are going to see increasing regulatory
forays and mandates" for the wireless sector. He also predicted that
consolidation is not likely in the wireless industry.
The panel also discussed 802.11. WiFi, or 802.11b, is an IEEE standard for wireless
Ethernet networks. It operates on unlicensed spectrum in the 2.4 GHz band at
speeds of up to 11 mbps. See, FCC Rules, at Sec. 15.247, "Operation within
the bands 902-928 MHz, 2400-2483.5 MHz, and 5725-5850".
Baca stated that "I think that it is a tenuous economic model." He
cited, for example, that 802.11 networks "are so incredibly leaky."
In contrast, Gallagher stated that "there is tremendous promise because it
relies upon the ingenuity of the American people." He stated, for example,
that "you can turn a Pringles can into an 802.11 antenna that can reach for
miles", and alerted the audience that there is a website that
802.11b operates at .5 watts, and has a range of up to about 300 feet under
ideal conditions. Also, the data transfer rate declines with distance. However,
using a pair of Pringles cans as directional antennas can boost the range to
over 10 miles at an 11 mbps transfer rate. The Pringles can antennas can also be
used to locate and access other peoples' wireless networks. See, however, 18 U.S.C. § 1030.
Sen. Hollings Writes Michael Powell Re Telecom Bankruptcies
and Continuity of Service
7/12. Sen. Ernest Hollings (D-SC), the
Chairman of the Senate Commerce
Committee, wrote a letter to Federal
Communications Commission (FCC) Chairman Michael Powell regarding
bankruptcies and potential bankruptcies in the "telecom sector".
He wrote that "millions of consumers risk significant disruption of their
basic telephone and data services", and asked what the FCC is doing to
assure that there is no interruption in service.
He wrote that "The Communications Act provides explicit authority to the
Federal Communications Commission to prevent service disruption. Section 214(a),
in part, provides: ``No carrier shall discontinue, reduce, or impair service to
a community, or part of a community, unless and until there shall first have
been obtained from the Commission a certificate that neither the present nor
future public convenience and necessity will be adversely affected thereby ...´´"
He also wrote that "To assure that all possible steps are being taken to
prevent such debilitating disruptions, please provide any contingent plans that
exist or steps the FCC has taken to ensure uninterrupted service. In addition,
please discuss what, if any, coordination has occurred between the Commission
and the state Public Utility Commissions. Moreover, should you believe that the
FCC needs additional statutory authority to appropriately address this issue,
please include that in your response."
In addition, Andy Davis, Communications Director for the Commerce Committee,
announced that "the Committee is putting together a hearing on the issues
facing the telecom industry in the wake of the WorldCom, Global Crossing and
Qwest financial problems. The Committee's examination will extend beyond the
accounting failures and address the impact on service and the telecom industry
as a whole." He added that the hearing will be held during the week of July
Qwest Files Section 271 Applications for Four Western States
7/12. Qwest Communications filed a Section
271 application with the Federal Communications
Commission (FCC) for authorization to provide in region interLATA service in
the states of Montana, Utah, Washington and Wyoming. See, Qwest
The FCC issued a public
notice [PDF] setting August 1 as the deadline for public comments. This is
WC Docket No. 02-189.
Court Grants Preliminary Injunction in Washington Post v.
7/12. The U.S.
District Court (EDVa) heard oral argument on plaintiff's motion for
preliminary injunction in Washington Post v. Gator. The Court announced from
then bench that it will issue a preliminary injunction order against the Gator Corporation on Monday, July 15.
Judge Hilton stated at the conclusion of the oral argument that "I find
that there is a sufficient showing that there is a violation of the mark
..." He added that "irreparable harm is presumed". He concluded
that "plaintiffs are entitled to a preliminary injunction" and that he
would issue a written injunction order on Monday, July 15. Judge Hilton did not
rule from the bench on other legal theories, such as copyright infringement and
The Washington Post, and other
major news publishers with web sites, alleged web based trademark infringement,
copyright infringement, and related claims in their complaint [99 pages
in PDF] and motion for preliminary injunction. See also, Memorandum in Support of
Plaintiffs' Motion for Preliminary Injunction [35 pages in PDF].
The plaintiffs, which include the Washington Post Newsweek Interactive Company,
Washington Post Company, New York Times Company, Gannett Satellite (USA Today),
Globe Newspaper Company (Boston Globe), Dow Jones & Company (Wall Street
Journal), Smart Money, Tribune Interactive (LA Times and Chicago Tribune), and
Knight Ridder Digital (Miami Herald and Philadelphia Inquirer), publish news
stories and other original content. Defendant Gator displays content from
plaintiffs' web sites. It also sells advertising to run on top of the
plaintiffs' web pages.
The complaint states that Gator is "a parasite on the Web that free rides
on the hard work and investments of Plaintiffs and other website owners. Gator
makes money by placing advertisements for third parties on the Plaintiffs'
websites without Plaintiffs' authorization."
The complaint continues that "Gator Corp. free rides on the valuable
intellectual property rights of the Plaintiffs and the substantial investment
Plaintiffs have made, and continue to make, to draw millions of visitors to
Plaintiffs plead trademark infringement, unfair competition, trademark dilution,
copyright infringement, contributory copyright infringement, misappropriation,
interference with prospective economic advantage, unjust enrichment, and
violation of the Virginia Business Conspiracy Act.
Collum, of the law firm of Cooley Godward,
argued the case for Gator. She is resident in the firm's Palo Alto office, and
chair of the litigation group. Mike
Klisch, of the firm's Reston office, and others, were also present. Terence
Ross, of the law firm of Gibson Dunn and
Crutcher, argued the case for the publishers. He is a partner in the firm's
Washington DC office, and a member of both its litigation and intellectual
property sections. Hill
Wellford sat second chair.
Ross came to court with two gigantic exhibits -- one showing a news story web
page as displayed in one of his client's web sites, and the other showing the
same web page as displayed by Gator, with a pop up ad.
Judge Claude Hilton, Chief Judge for the Eastern District of Virginia, presided.
He was familiar with the arguments made in the briefs, and was active in
For example, when counsel for Gator argued that alleged irreparable harm
suffered by the publishers was a "legal fiction", Judge Hilton asked,
"you think they are not entitled to the presumption that there is harm
When Collum argued that Gator had not infringed the publishers' marks, Judge
Hilton asked "doesn't the charts that they just showed me show that you are
using their marks ...?"
When Collum argued that there was no trademark infringement because "our
ads don't care what is in the background", Judge Hilton stated, "maybe
your ads have to come up when there is nobody's trademark in the background ...
so you won't have your message on somebody else's mark".
Tech Law Journal spoke with Ross after the hearing. He stated that he is
"satisfied, but not surprised" with the Court's ruling. He also stated
that trial would likely occur in November of this year, and "certainly by
the end of the year." However, he added that it could be expedited.
Ross also issued a release in which he stated that "Today's decision is an
important first step for the plaintiffs. The judge has found that through its
continuing practices, Gator is violating the intellectual property rights
of these Web sites. This is only a first step in the legal process, but it sends
a clear signal that the plaintiffs are likely to succeed on the merits of their
claims against Gator."
Counsel for Gator declined to speak with TLJ, and did not respond to e-mail
Powell and Consumer Electronics Association Continue Debate on
7/12. The Consumer Electronics
Association issued a release
in which it stated that it wrote a letter to Federal
Communications Commission (FCC) Chairman Michael Powell responding to
[PDF] of June 11 regarding transitioning to DTV.
Powell wrote on June 11 that "The missing piece of the DTV puzzle is the
consumer electronics industry. We have not yet received a final response from
the manufacturers on the phased-in inclusion of DTV tuners in new sets. I hope
they will join their industry colleagues and come forward with real and tangible
commitments to advance the transition."
FCC Chairman Powell also released a statement
[PDF] on Friday, July 12. He wrote that "The CE industry's response on DTV
tuners is so limited, and loaded down with so many conditions, that I believe it
amounts to no commitment at all. Not only does the CE industry demand that
certain issues be resolved before they will act, they demand they be resolved to
their satisfaction. Other industries could have made similar demands.
Thankfully, they did not. I hope that the CE industry will reconsider its
position and join with its industry colleagues in the effort to make progress
today while we continue to work on issues that will take longer to
However, Powell also wrote, "I commend Zenith for its courage in publicly
supporting a phased-in tuner requirement and the persuasive case it makes for
why such a requirement will benefit consumers."
NTIA Director Writes Powell Re Analog Wireless Rules
7/12. Nancy Victory
wrote a letter
to Michael Powell in
which she recommended that the Federal
Communications Commission (FCC) eliminate its rules requiring that
"that each cellular carrier continue to provide an AMPS-type analog service
so long as the carrier continues to have analog customers or roamers on its
She elaborated that "Given the widespread availability of digital cellular
technologies, which are undeniably more spectrally efficient and secure than
analog transmissions, it seems contrary to the public interest for the
Commission to continue to mandate the use of this old technology. Further, not
only is the original rationale for the requirement (to ensure nationwide
roaming) no longer necessary, but the continued mandate to use this less
efficient technology constrains innovation and places cellular carriers at a
distinct disadvantage vis-à-vis their PCS competitors."
Victory is director of the National
Telecommunications and Information Administration (NTIA), a part of the
Department of Commerce. Powell is Chairman of the FCC.
FCC Grants Waiver for GPR UWB Devices
7/12. The Federal Communications Commission's
(FCC) Office of Engineering and Technology
(OET) announced that it adopted an order "establishing a waiver procedure
that will permit the continued operation of Ground Penetrating Radar (GPR)
devices and wall imaging devices. Under the new procedure, eligible users may
operate under a blanket waiver to Part 15 regulations provided that they
register their devices with the Commission. The waiver will be contingent on no
evidence of harmful interference to authorized services. The Order denies a
Motion for Interim Stay of Enforcement of the Commission's UWB rules filed by
the Ground Penetrating Radar Industry." See, FCC
Rep. Billy Tauzin (R-LA), Chairman of
the House Commerce Committee, who
had requested such a waiver, issued a release regarding the FCC's decision. He
stated that "Based on the information we have received from the FCC, we are
pleased that the Commission has decided to grant a blanket waiver for Ground
Penetrating Radar (GPR) devices. We look forward to reviewing the order, but if
it grants a blanket waiver to all GPR devices that operate at the Class B
limits, as we hope, the Commission will have corrected a serious flaw in its
original ultra-wideband order."
DOJ Official Addresses Antitrust Compliance
7/12. William Kolasky gave a speech titled
"Antitrust Compliance Programs: The Government Perspective" to the
Practicing Law Institute in San Francisco, California.
He stated that "investigating and prosecuting hard core cartels has always
been, and remains, our number one enforcement priority. Cartels -- whether in
the form of price fixing, output restrictions, bid rigging, or market division
-- raise prices and restrict supply, enriching producers at consumers' expense
and acting as a drag on the entire economy. In our view, these are crimes, pure
and simple, and those who perpetrate them are criminals who belong in
He then spoke about "how to design a compliance program to prevent and
detect antitrust crimes."
Kolasky is a Deputy Assistant Attorney General in the Antitrust Division of the Department of
People and Appointments
7/12. The U.S. Chamber of Commerce hired
Walter Shaub as science advisor to oversee science, technology and data
quality issues. see, release.
Powell Pressures Consumer Electronics Industry on DTV
7/11. Federal Communications Commission (FCC)
Chairman Michael Powell
released a statement
on DTV transition. He wrote that "In April I challenged several industries
to take specific steps to move the DTV transition forward. The plan challenged
major broadcast and cable networks to create more compelling digital content,
equipment manufacturers to produce more television sets with digital tuners, and
broadcasters, cable operators and satellite providers to make digital content
more accessible to consumers." See, Chairman Powell's April statement
He continued that "Virtually every industry -- cable, broadcast and
satellite -- has either fully embraced my plan, or made real commitments to
advance the transition. I deeply appreciate these efforts."
However, he added that "The missing piece of the DTV puzzle is the consumer
electronics industry. We have not yet received a final response from the
manufacturers on the phased-in inclusion of DTV tuners in new sets. I hope they
will join their industry colleagues and come forward with real and tangible
commitments to advance the transition."
Rep. Tauzin Writes Powell Re Waiver of UWB Rules for GPR
7/11. Rep. Billy Tauzin (R-LA), the
Chairman of the House Commerce
Committee, and six other members of the Committee, wrote a letter to Federal Communications Commission (FCC) Chairman Michael Powell regarding FCC
rules affecting ground penetrating radar.
The seven Congressmen wrote "to express our strong concerns regarding the
consequences of the recent FCC revision of Part 15 of the Commission's rules
regarding ultra wideband (UWB) transmission systems (FCC 02-48 released April
22, 2002). Specifically, the new rules could have the effect of
eliminating numerous existing businesses that employ Ground Penetrating Radar (GPR).
In order to prevent this, we believe that the FCC should immediately provide a
blanket waiver for the manufacture and operation of GPR equipment at the Class B
emissions limit with no other restrictions."
They also pointed out that "By its very nature, GPR is pointed at the
ground (not into the air) for limited periods of time, thus making any
See, FCC's First
Report and Order [118 pages in PDF] in the proceeding titled "In the
matter of Revision of Part 15 of the Commission’s Rules Regarding Ultra
Wideband Transmission Systems", and numbered ET Docket 98-153.
NTIA Director Addresses Broadband, Spectrum and ICANN Issues
7/11. Nancy Victory,
head of the National Telecommunications and
Information Administration (NTIA), gave speech
at the GBDe Sherpa meeting in
Washington DC in which she addressed broadband, spectrum management and ICANN
She again addressed the theme that rights of way obstacles are delaying
broadband deployment. She said that "The Administration has also been
working to identify and eliminate unnecessary government impediments to
broadband competition and deployment. One issue where NTIA is taking the lead is
on rights of way management. This is one issue where all sectors of the
broadband industry -- Bell Operating Companies, CLECs, cable providers,
overbuilders, and wireless providers -- actually share the same point of view.
All participants are concerned that restrictions by certain municipalities and
federal government landowners on accessing public rights of way and tower sites
might be inhibiting or at least delaying broadband network construction."
She also predicted that "the FCC will be taking action in one or all of the
broadband proceedings by the end of the year."
She next addressed spectrum management by the NTIA and other federal agencies.
She said that the various government agencies must work collaboratively, and
"develop policies that encourage spectrum efficiency".
She also said that government "must establish forward looking policies that
enable technological advances and eliminate legacy regulations that stand in the
way of innovation", such as "creating secondary markets that would
permit parties to ``lease´´ their spectrum to others", and unlicensed
She also stated that ICANN should focus on core DNS management responsibilities.
She said that "ICANN was formed by private sector interests in 1998 to
bring more coordination and sustainability to the domain name management system,
as the Internet grew into a large-scale global network. The Department entered
into a Memorandum of Understanding with ICANN to carry out these functions.
Recently, there have been calls for ICANN to review its mission, structure and
processes for their efficacy and appropriateness in light of the needs of
today's Internet. ICANN itself has initiated its own process of reform. The
Department believes these discussions are healthy and essential to ensuring the
best path for stable and secure Internet management in the future. My goal is to
ensure that ICANN reforms take place in a timely manner, are focused on core DNS
management activities, and instill confidence and legitimacy in ICANN's
Also, on July 8, Michael Gallagher, Deputy Director of the NTIA, gave a speech
at a Center for Strategic and International
Studies event on spectrum management. He addressed government management,
Third Generation wireless services, ultra wide band, receiver standards,
introduction of some market like approaches, and the international spectrum
SEC Official Addresses Accounting, Governance, and Reporting
7/11. Alan Beller, Director of the Securities and
Exchange Commission's (SEC) Division of Corporation
Finance, gave a speech
to the American Society of Corporate Secretaries
in Toronto, Ontario.
He reviewed recent accounting scandals involving Enron, WorldCom and other
companies. He then addressed increased accountability for corporate CEOs and
CFOs, including certification of annual and quarterly reports, corporate
governance issues, and expanding the reporting requirements on Form 8-K.
With respect to filing requirements, Beller stated that "In this era of
investor access to sophisticated trading and information technology and instant
communications, investors demand and require more current information regarding
the most important events about a company. Today we are facing an environment
where preventing unfair informational advantage, which has historically been the
objective of many of the Commission's disclosure requirements, is not enough. We
must promote affirmative current disclosure to enable investors to make the best
capital allocation and investment decisions."
House Commerce Committee Adds Cyber Security Program to
Homeland Security Bill
7/11. The House Commerce Committee
amended and approved those portions of HR 5005,
the Homeland Security Act, that may fall within its jurisdiction. The Committee
approved its Committee
Print [PDF] by a unanimous voice vote.
This version of the bill adds new cyber security responsibilities for the Under
Secretary for Information Analysis and Infrastructure Protection of the new
Department of Homeland Security (DHS). It creates an Under Secretary for
Research, Development, and Technology Systems. It transfers the Computer
Security Division to the DHS. And, it leaves out any reference to the creation
of any new Freedom of Information Act exemption.
Cyber Security. The version of the bill approved by the Committee
contains additional language in Title II, which pertains to information analysis
and infrastructure protection. It adds a new Section 205, titled "Federal
Rep. Billy Tauzin (R-LA), the
Chairman of the Committee, stated that this "will be a resource to other
Federal agencies to help identify and correct weaknesses in critical Federal
computer systems." He said that it was drafted with input from Rep. Heather Wilson (R-NM), Rep. Jane Harman (D-CA), and others.
This section provides that "The Secretary, acting through the Under
Secretary for Information Analysis and Infrastructure Protection, shall
establish and manage a program to improve the security of Federal critical
information systems ..."
It further provides that the duties under this section are "(1) to evaluate
the increased use by civilian executive agencies of techniques and tools to
enhance the security of Federal critical information systems, including, as
appropriate, consideration of cryptography; (2) to provide assistance to
civilian executive agencies in protecting the security of Federal critical
information systems, including identification of significant risks to such
systems; and (3) to coordinate research and development for critical information
systems relating to supervisory control and data acquisition systems, including,
as appropriate, the establishment of a test bed."
This new section also provides that "the Secretary shall establish, manage,
and support a Federal information system security team whose purpose is to
provide technical expertise to civilian executive agencies to assist such
agencies in securing Federal critical information systems by conducting
information security audits of such systems, including conducting tests of the
effectiveness of information security control techniques and performing logical
access control tests of interconnected computer systems and networks, and
related vulnerability assessment techniques."
FOIA Exemption. Section 204 of the bill, as introduced, provides, in
full, that "Information provided voluntarily by non-Federal entities or
individuals that relates to infrastructure vulnerabilities or other
vulnerabilities to terrorism and is or has been in the possession of the
Department shall not be subject to section 552 of title 5, United States
Code." The version passed by the House Commerce Committee leaves out this
Rep. John Shimkus (R-IL) said that
"freedom of information might be a freedom to publish, which might be a
freedom to target. And I think that that is a valid concern, especially as we
talk about cyber security, in working with corporate entities."
Rep. Billy Tauzin (R-LA), the
Chairman of the Committee, then explained the reason that Section 204 is not in
the committee version of the bill. He said that there is concern "about
publishing unnecessary road maps for those who might want to harm this
country." He then said that "we understand that the administration is
working with the House in regards to that issue, and we will have language for
us by the time we get to the floor. And, I suspect, we will have a chance to
revisit this at the proper time. The gentleman's concerns are indeed
Harman Amendment. Rep. Jane Harman
(D-CA) offered, but withdrew, an amendment that would have established a single
point of entry at the new DHS for private sector entities with commercial
technologies for homeland security.
Her amendment would have amended Title III of the bill, pertaining to research
and development. Specifically, it would have amended Section 301, which lists
the responsibilities of the Under Secretary for Research, Development, and
Technology Systems, by adding a new paragraph 8.
Her amendment provides that the Under Secretary shall have responsibility for
"serving as a single point of entry for private sector entities with
commercial technologies for homeland security, through which the Secretary --
(A) identifies homeland security commercial technological needs and capabilities
to improve federal, state, or local homeland security activities; (B) reviews
solicited and unsolicited homeland security commercial technology proposals; (C)
directs homeland security commercial technology proposals to appropriate Federal
entities for additional review, purchase, or use; and (D) advises the Secretary
on the development or streamlining of homeland security procurement
Computer Security Division. President Bush's original proposal provided
for the transfer of the National Institute of
Standards and Technology's (NIST) Computer
Security Division (CSD) to the new DHS. On July 10, the House Science Committee (HSC), passed a
version of the bill that would keep the CSD at the NIST. The House Commerce
Committee's bill follows the President's proposal of transferring the CSD to the
DHS. The Computer & Communications
Industry Association (CCIA) and Members of Congress who are active on
technology issues have opposed transferring the CSD to the DHS.
Markey Amendments. Much of the time at the two hour mark up was devoted
to consideration of an amendment offered by Rep. Ed Markey (D-MA) regarding
radioactive materials. After a lively and lengthy debate, it was ultimately
ruled not germane to the underlying bill.
Rep. Markey also offered, but withdrew, a second
amendment [PDF] that would have added a new Section 206 to provide that
"The Secretary shall require that the private sector provide at least 50
percent of the costs of private sector compliance with Federal requirements with
respect to the security of critical infrastructure owned and operated by the
Government Reform Committee Revises FOIA Exemption in DHS Bill
7/11. The House Government Reform
Committee marked up HR 5005,
the Homeland Security Act of 2002. This Committee's version of the bill includes
a new Section 214 which provides, among other things, a Freedom of Information
Act exemption for certain critical infrastructure information voluntarily shared
with the federal government. It would replace Section 204 of the bill as
Section 214 provides, in part, that "Notwithstanding any other provision of
law, critical infrastructure information (including the identity of the
submitting person or entity) that is voluntarily submitted to a covered Federal
agency for use by that agency regarding the security of critical infrastructure
and protected systems, if analysis, warning, interdependency study, recovery,
reconstitution, or other informational purpose, when accompanied by an express
statement specified in paragraph (2) -- (A) shall be exempt from disclosure
under section 552 of title 5, United States Code (commonly referred to as the
Freedom of Information Act); (B) shall not be subject to any agency rules or
judicial doctrine regarding ex parte communications with a decision making
official; (C) shall not, without the written consent of the person or entity
submitting such information, be used directly by such agency, any other Federal,
State, or local authority, or any third party, in any civil action arising under
Federal or State law if such information is submitted in good faith; (D) shall
not, without the written consent of the person or entity submitting such
information, be used or disclosed by any officer or employee of the United
States for purposes other than the purposes of this subtitle, except ..."
in certain enumerated situations.
Select Committee Holds Hearing on Homeland Security Act
7/11. The House Select Committee on Homeland
Security held a hearing on HR 5005,
the Homeland Security Act. Secretary of State Colin Powell, Secretary of Defense
Donald Rumsfeld, Secretary of Treasury Paul O'Neill, and Attorney General John
Ashcroft testified in support of the creation of the new Department of Homeland
See, prepared testimony of witnesses: Colin Powell, Paul O'Neill, Paul Wolfowitz (Deputy
Secretary of Defense), and John
Ashcroft. See also, prepared statements of Committee members: Rep. Dick Armey
(R-TX), Rep. Tom DeLay
(R-TX), Rep. J.C. Watts
(R-OK), Rep. Deborah Pryce
(R-OH), Honorable Rob
Portman (R-OH), Rep.
Nancy Pelosi (D-CA), Rep.
Martin Frost (D-TX), Rep.
Robert Menendez (D-NJ), Rep.
Rosa DeLauro (D-CT).
House Passes Enterprise Integration Act
7/11. The House passed HR 2733,
the Enterprise Integration Act, by a vote of 397-22. See, Roll
Call No. 293. It would authorize the National
Institute of Standards and Technology (NIST) to work with major
manufacturing industries on an initiative of standards development and
implementation for electronic enterprise integration.
The bill's sponsor, Rep. James Barcia
(D-MI), stated that the bill "will lead to dramatically shortened design
cycle times and reduce the costs of manufacturing complex products. Information
on design flaws will be instantly transmitted from repair shops to manufacturers
and their supply chains. Companies will be able to exchange information of all
types with their suppliers at the speed of light."
The bill also authorizes the appropriation of $47 Million over four years to the
Senate Judiciary Committee Delays Action on Anticounterfeiting
7/11. The Senate Judiciary Committee
held an executive business meeting. The agenda included mark up of S 2395,
the Anticounterfeiting Amendments of 2002. The Committee lacked a quorum, and
held over the matter. However, the Committee did circulate an amendment
in the nature of a substitute which substantially revises the bill. The bill
prohibits trafficking in, and tampering with, authentication features of
Abernathy Addresses Nascent Services Doctrine
7/11. Federal Communications Commission (FCC)
Abernathy gave a speech
titled "The Nascent Services Doctrine" to the Federal Communications Bar Association in New
York City on July 11.
She stated that "I have developed the Nascent Services Doctrine. This
doctrine holds that regulators should exercise restraint when faced with new
technologies and services. Such restraint should facilitate the development of
new products and services without the burden of anachronistic regulations, and
in turn promote the goal of enhancing facilities based competition. Once the new
facilities based competitor has demonstrated its viability, regulators must
reexamine the overall regulatory scheme applicable to all providers in the
marketplace in light of the new provider to assess whether existing regulations
can be modified or repealed."
People and Appointments
7/11. The Senate Commerce Committee
scheduled a hearing for Jonathan Adelstein, Senate Majority Leader Tom Daschle's (D-SD) choice to be a
Commissioner of the Federal Communications
Commission (FCC). The hearing will be held on Tuesday, July 16 at 2:30 PM.
7/11. Alden Adkins was named Associate Director of the Securities and Exchange Commission's (SEC) Division of Market
Regulation. He succeeds Belinda Blaine, who left the SEC last month.
He previously worked for the law firm of Bingham McCutchen.
Before that, he worked for the National
Association of Securities Dealers. And before that, he worked at the SEC.
See, SEC release.
(Bingham Dana, a Boston based firm, and McCutchen Doyle, a California firm,
merged on July 1, 2002 to form Bingham McCutchen. See, release
7/11. President Bush nominated Alia Ludlum to be a judge of the U.S. District Court for the Western
District of Texas. See, White
House release. She is a former prosecutor. She is currently a U.S.
Magistrate Judge in Del Rio, Texas.
7/11. The Senate Judiciary Committee
approved without objection the nomination of John Rogers to be a judge of
the U.S. Court of Appeals (6thCir).
7/11. President Bush nominated Ben Bernanke a Member of the Board of
Governors of the Federal Reserve System for the unexpired term of fourteen years
from February 1, 1990.
7/11. President Bush nominated Donald Kohn to be a member of the Board of
Governors of the Federal Reserve System for a term of fourteen years from
February 1, 2002.
7/11. Rep. Mike Oxley (R-OH), Chairman
of the House Financial Services
Committee, wrote a letter
[PDF] to Michael Powell,
Chairman of the Federal Communications Commission
(FCC) regarding FCC oversight of WorldCom
and other telecommunications carriers.
7/11. The Federal Communications Commission's
(FCC) Daily Digest for July 11 states that the FCC's Office of Plans and Policy (OPP) released OPP
Working Paper No. 36 titled "The Potential Relevance to the United States
of the European Union's Newly Adopted Regulatory Framework for
Telecommunications". However, the provided hyperlink [PDF]
is not active. For more information, contact the author, Scott Marcus, at 202
Go to News from July 6-10, 2002.