TLJ News from September 16-20, 2006

House Judiciary Committee Holds Mark Up Session

9/20. The House Judiciary Committee (HJC) amended and approved HR 5825, the "Electronic Surveillance Modernization Act", a bill that amends the Foreign Intelligence Surveillance Act (FISA). The vote on final approval was 20-16. See also, HJC release [PDF].

This bill has also been referred to the House Intelligence Committee.

The HJC also approved HR 6054, the "Military Commissions Act", without amendment. The vote on final approval was 20-19.

As a result of the length of the debate on these two bills, the HJC did not mark up the other two bills on its agenda, one of which was HR 6052 [100 pages in PDF], the "Copyright Modernization Act of 2006". This bill includes revised versions of the "Section 115 Reform Act of 2006", or SIRA, and the "Orphan Works Act of 2006". It also provides for increased investigative and forensic resources for law enforcement agencies investigating computer hacking and intellectual property crimes. See also, story titled "Rep. Smith Combines Orphan Works Bill, SIRA, and Other Copyright Act Amendments" in TLJ Daily E-Mail Alert No. 1,447, September 12, 2006.

The next likely date for a mark up of this copyright bill is Wednesday, September 27, 2006.

Stearns and Upton Introduce Bills to Prohibit Deception in Video and Computer Games Rating Process

9/20. Rep. Cliff Stearns (R-FL) introduced HR 6113, the "Truth in Video Game Rating Act". This bill would direct the Federal Trade Commission (FTC) to write rules to prohibit certain deceptive conduct in the rating of video and computer games. Also on September 20, Rep. Fred Upton (R-MI) introduced HR 6120, the "Video Game Decency Act of 2006". This bill would amend the Federal Trade Commission Act (FTCA) to prohibit deceptive acts and practices in the content rating and labeling of video games.

The Stearns bill would amend the FTCA to require the FTC to write rules that "shall prohibit any rating organization from assigning a content rating to any video or computer game that is to bear a label containing such content rating when sold or distributed in interstate commerce unless such rating organization has reviewed the playable content of the video or computer game."

It would also require that "Such rules shall prohibit any person who produces, sells, or otherwise distributes video or computer games in interstate commerce from withholding or hiding any playable content of a video or computer game from, or in any other manner failing to disclose any playable content of a video or computer game to, a rating organization, with the intent of obtaining a less-restrictive content rating than the video or computer game would likely receive if such rating organization were to review the withheld or hidden content."

The Upton bill would not require a rulemaking proceeding. It would provide that "It shall be unlawful for any person to ship or otherwise distribute in interstate commerce any video game that contains a rating label containing an age-based content rating for that video game where the person, with the intent of obtaining a less restrictive age-based content rating, failed to disclose content of the video game that was required to be disclosed to the independent ratings organization that assigned such age-based content rating, and which resulted in the video game receiving a less-restrictive age-based content rating than otherwise would have resulted."

Both bills were referred to the House Commerce Committee (HCC). The Stearns bill has two original cosponsors. The Upton bill has eleven original cosponsors, including bipartisan support on the HCC.

FCC Completes First Advanced Wireless Services Spectrum Auction

9/20. The Federal Communications Commission (FCC) completed its Auction No. 66, its first Advanced Wireless Services (AWS-1) auction of spectrum in the 1710-1755 MHz and 2110-2155 MHz bands on September 18, 2006. See, full story.

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9/20. The Free Press released a report [41 pages in PDF] titled "Out of the Picture: Minority & Female TV Station Ownership in the United States Current Status, Comparative Statistical Analysis & the Effects of FCC Policy and Media Consolidation".

9/20 The Office of the U.S. Trade Representative (USTR) released its 2006 report [128 pages in PDF] required by the Government Performance and Results Act (GPRA).

9/20. The Institute for Policy Innovation (IPI) released a report titled "The True Cost of Motion Picture Piracy to the U.S. Economy". The author is Stephen Siwek, a principal of Economists, Inc.

FCC Releases Agenda for September 26 Event

9/19. The Federal Communications Commission (FCC) released an agenda [PDF] for its event on Tuesday, September 26, titled "Open Meeting".

The agenda includes consideration of an 11th Report regarding its annual report on the competitive market conditions regarding Commercial Mobile Radio Services (CMRS). This is WT Docket No. 06-17.

The agenda includes consideration of a 2nd Order on Reconsideration and Second Report and Order concerning children's television obligations. This is MM Docket No. 00-167.

The agenda includes consideration of an Order regarding the Rural Health Care Support Mechanism of the Universal Service Fund. This is WC Docket No. 02-60.

The FCC amended its rules regarding health clinics in November of 2003. See, story titled "FCC Expands Universal Service Support for Rural Clinics and Telemedicine" in TLJ Daily E-Mail Alert No. 779, November 14, 2003. It further amended its rules by adopting, on December 15, 2004, its "Second Report and Order, Order on Reconsideration, and Further Notice of Proposed Rulemaking". See, story titled "FCC Expands Rural Telemedicine Subsidy Program" in TLJ Daily E-Mail Alert No. 1,040, December 17, 2004.

Finally, the agenda includes presentation of a report by the new Public Safety and Homeland Security Bureau regarding its establishment.

This event is scheduled for 9:30 AM on Tuesday, September 26, 2006 in the FCC's Commission Meeting Room, Room TW-C305, 445 12th Street, SW. The event will be webcast by the FCC. The FCC does not always consider all of the items on its published agenda. The FCC sometimes adds items to the agenda without providing the "one week" notice required 5 U.S.C. § 552b. The FCC does not always start its monthly meetings at the scheduled time. The FCC usually does not release at its meetings copies of the items that it adopts at its meetings.

Senate Approves US Oman FTA

9/19. The Senate approved HR 5684, the "U.S.-Oman Free Trade Agreement Implementation Act", by a vote of 63 to 31. This agreement addresses, among other topics, telecommunications, electronic commerce, and protection of intellectual property rights.

See especially, Chapter 13 [13 pages in PDF] of the FTA, titled "Telecommunications", Chapter 14 [2 pages in PDF], titled "Electronic Commerce", Chapter 15 [25 pages in PDF], titled "Intellectual Property Rights", side letter [7 pages in PDF] regarding liability for service providers and limitations, and side letter [3 pages in PDF] regarding optical discs.

This is the fifth bilateral free trade agreement with nations in this region. The U.S. already has entered into FTAs with Israel, Jordan, Morocco, and Bahrain.

Sen. Charles Grassley (R-IA), stated in the Senate that this FTA "will also serve as a model for other free trade agreements in the Middle East. In this way, the U.S.-Oman Free Trade Agreement will contribute to the formation of a Middle East Free Trade Area, a development that would provide major economic and political benefits for the United States."

The Office of the U.S. Trade Representative (USTR) issued a statement that praised Senate approval, and predicted that this FTA "will provide substantial market access across its entire services regime, provide a secure, predictable legal framework for U.S. investors operating in Oman, provide for effective enforcement of labor and environmental laws, and protect intellectual property."

The House approved HR 5684 on July 20, 2006, by a vote of 221 to 205. See, Roll Call No. 392.

People and Appointments

9/19. The Senate confirmed Alice Fisher to be Assistant Attorney General in charge of the Department of Justice's (DOJ) Criminal Division by a vote of 61-35. All of the no votes were cast by Democrats. See, Roll Call No. 251, and statement by President Bush.

9/19. Attorney General Alberto Gonzales praised the Senate's confirmation of Alice Fisher, and added that "I also urge the Senate to confirm Ken Wainstein as Assistant Attorney General, so that we can move forward in establishing the Department's new National Security Division." (Emphasis added.)

John Kneuer9/19. The Senate Commerce Committee (SCC) approved the nomination of John Kneuer (at right) to be Administrator of the National Telecommunications and Information Administration (NTIA). See, SCC release.

9/19. The Senate Commerce Committee (SCC) approved the nomination of Kevin Martin to be a Commissioner of the Federal Communications Commission (FCC). See, SCC release. See also, story titled "Senate Commerce Committee Holds Hearing on Nominations of Martin and Kneuer" in TLJ Daily E-Mail Alert No. 1,448, September 13, 2006.

9/19. The Senate Judiciary Committee (SJC) met on September 19 to consider numerous pending judicial nominees. The list included Terrence Boyle (to be a Judge of the U.S. Court of Appeals for the 4th Circuit), William Haynes (4th Circuit), Kent Jordan (3rd Circuit), Peter Keisler (DC Circuit), William Myers (9th Circuit), Randy Smith (9th Circuit), Valerie Baker (USDC for the Central District of California), Philip Gutierrez (Central District of California), Marcia Howard (Middle District of Florida), John Jarvey (Southern District of Iowa), and Sara Elizabeth Lioi (Northern District of Ohio). The SJC took no action on any of these nominees. The SJC has another meeting scheduled for 9:30 AM on September 21. The agenda again includes consideration of these judges. Senate Democrats have been blocking consideration of some of these nominees for years. Keisler is a recent nomination. Senate Democrats are blocking him too. Baker and Gutierrez, two California District Court nominees, may be confirmed with bipartisan support. Also, Sen. Patrick Leahy (D-VT), the ranking Democrat on the SJC, wrote in an opening statement for the meeting on September 19 that "I believe that the elevation of Judge Jordan to the Third Circuit can be such a consensus nomination." Senate Democrats have little incentive to allow consideration of judicial nominees so close to an election in which they hope to take control of the Senate.

More News

9/19. The Federal Communications Commission (FCC) released an FCC report [PDF] dated 2003 that pertains to a "Review of the Radio Industry".

Mandelson Discusses Doha and Globalization

9/18. Peter Mandelson, the European Commissioner for Trade, gave a speech in Berlin, Germany titled "The Tragedy and Triumph of Europe". He again blamed the U.S. for the impasse in Doha negotiations, and lamented China's barriers to trade, including its failure to protect intellectual property rights.

He advocated "Reform and rejection of protectionism at home". He said that Europe should participate in the "multilateral system" and continue to pursue the Doha Development Round.

He touched on some internal problems that Europe faces. For example, he said that "We are not investing enough in research and development or in education. We are losing ground in the highest technology products. Internationally, our businesses perform strongly in countries where demand is static. But in rapidly growing regions, particularly in Asia, we are underperforming."

He also hinted at a need to make "more flexible" Europe's "social systems"

Peter MandelsonMandelson (at right) also discussed the U.S. role in Doha negotiations. He said that "we face an impasse". He continued that "it is the United States which at this juncture holds the crucial piece. That missing piece is a commitment by the United States to substantial reform of the 2002 Farm Bill to match the nature and scope of reform that Europe has been putting in place since 2003. I recognise the political constraints of the United States and their concerns about what others are giving. The EU and US have huge shared interests in this Round. Nobody expects a complete reversal or re-write of the Farm Bill. But a real start has to be agreed if the negotiation is to survive."

He also spoke about the People's Republic of China. He said that "China is probably the single biggest challenge and opportunity of economic globalisation facing Europe; the source of a major proportion of global growth; source too of many of the competitive pressures we face." He added that "We must support China in tackling these challenges and integrating fully into the global economy."

However, he added, "But we can only do so on the basis of mutual benefit. For us to sustain the political case for openness, China must be seen to be playing its part: removing barriers to trade and steadily opening up to others. Improving protection for intellectual property."

Moreover, he said that openness on the part of China "is no longer simply a question of tariffs. Increasingly the most serious obstacles to European trade are behind borders. Poor protection of intellectual property right and patents. Closed markets for services and investment. Unfair state intervention which distorts prices and fair competition. Public procurement markets that remain closed to fair competition, unlike those in Europe."

While Mandelson, who is British, frequently argues that China should strengthen the IPR regime in China, the UK government's British Library is arguing for a weakening of the IPR regime in the UK. See also, story titled "British Library Advocates Exemption to Ban on Circumvention and Other Limitations on IPR" in TLJ Daily E-Mail Alert No. 1,456, September 26, 2006.

Greg Garcia Named Assistant Secretary for Cyber Security and Telecommunications at DHS

9/18. Michael Chertoff, the Secretary of Homeland Security, issued a statement in which he announced that Greg Garcia "has been appointed" Assistant Secretary for Cyber Security and Telecommunications at the Department of Homeland Security (DHS).

The DHS created this position last year. See, story titled "DHS Announces Reorganization Plans" in TLJ Daily E-Mail Alert No. 1,174, July 14, 2005.

A DHS spokesman told TLJ that this position does not require Senate confirmation. Also, a start date for Garcia has not yet been set, but the DHS anticipates that he will begin work in early October.

Garcia has been VP for Information Security Programs at the Information Technology Association of America (ITAA) since 2003. He is also Secretary for the IT Sector Coordinating Council. Phil Bond, head of the ITAA, praised the appointment in a release.

Garcia previously worked on the majority staff of the House Science Committee. Chertoff stated that "Greg helped to draft and enact the Cyber Security Research and Development Act of 2002 during his tenure with the U.S. House of Representatives Committee on Science. Greg has also worked to strengthen encryption control regulations while with the Americans for Computer Privacy and he was active on international trade and IT policy at the Americans Electronics Association."

See, HR 3499 (107th Congress), the "Cyber Security Research and Development Act of 2002", which is now Public Law No. 107-355.

Robert Holleyman, head of the Business Software Alliance (BSA), also praised the appointment. He stated in a release that Garcia "understands that government has a critical role to play, and his experience in the private sector provides a unique perspective on industry’s critical role in strengthening our collective approach to protecting the data security infrastructure".

Bill Connor, P/Ch/CEO of Entrust, stated in a release that Garcia is "the right person for this job".

He also stated that "Now that this position has been filled, we hope Mr. Garcia will be given the resources he needs to help guide Congress and the DHS on cyber security issues". He added that "Many cyber security initiatives have been stalled waiting for this position to be filled ... Now that it has, we hope to see movement on key issues like the national data breach legislation that sits in Congressional subcommittee".

AeA Seeks Scaled Approach to SOX 404

9/18. The American Electronics Association (AeA) submitted a comment to the Securities and Exchange Commission (SEC) regarding the requirements imposed by Section 404 of the Sarbanes Oxley Act, as implemented by the SEC.

The AeA wrote that "Many millions of dollars are being drained annually from the innovative and productive activities of businesses that have merited access to our public capital markets. If the problems associated with Section 404 of the Sarbanes-Oxley Act (SOX) are not addressed, it will negatively impact U.S. competitiveness by hindering the ability of smaller, innovative companies to grow and compete in global markets and by encouraging companies to list on foreign exchanges. This will continue to negatively impact the U.S. economy as a whole."

The AeA recommended, first, that "the SEC should issue guidance that is scaled and appropriate depending on the size and complexity of a company". It elaborated that "the current costs associated with Section 404 compliance continue to outweigh the perceived benefits in terms of fraud detection. To date, auditors have controlled implementation by applying a one-size-fits-all approach to Section 404. Audit compliance and documentation steps are not scaled down to be proportionate to the risks at smaller companies, and consequently, smaller companies thus far required to comply are diverting an unreasonable amount of funding and attention away from operational matters, which in turn lowers shareholder value and negatively impacts U.S. competitiveness overall."

It added that "Companies operate differently depending on their size and the internal controls rules should reflect this. Investors in smaller public companies are more likely to benefit from “tone at the top” and high-level monitoring controls, rather than documentation and testing, which appear to be more useful in larger companies."

Second, it recommended that "the guidance should clearly provide that management, and not the external auditor, is primarily responsible for identifying and maintaining internal controls"

Third, it recommended that "the SEC should clearly state the need for a risk-based focus on those internal controls most likely to materially impact a company’s financial statements.

See also, the AeA's February 2005 report titled "Sarbanes-Oxley Section 404: The 'Section' of Unintended Consequences and its Impact on Small Business", and TLJ story titled "GAO Reports that Section 404 of Sarbanes Oxley Burdens Small Public Companies" in TLJ Daily E-Mail Alert No. 1,366, May 9, 2006.

The "Sarbanes-Oxley Act of 2002" was HR 3763 in the 107th Congress. It is now Public Law No. 107-204.

Go to News from September 11-15, 2006.