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ADMINISTRATION: Investigating The Investigators

Homeland Security
House Lawmakers Squabble Over FISA Bill
     House Republicans walked off the floor late this week to protest the Democratic leadership's decision to allow the Foreign Intelligence Surveillance Act to expire at the end of this week. President Bush and Republican lawmakers say allowing the FISA provisions to expire Saturday would endanger the nation. They urged House lawmakers to pass the FISA bill backed by the Senate earlier this week. But House Democrats, who broke for a weeklong recess Friday without taking action on FISA, countered that even if the law expires, its provisions remain in effect for a year -- giving Congress time to debate a new measure. Speaker Pelosi said of Bush, "His fear mongering is not constructive." Still, Bush said he was willing to delay his departure for a trip to Africa to try to work out a compromise on the FISA measure before lawmakers left for the recess. The House failed to approve a three-week extension of the law Wednesday and Democratic leaders have pledged to keep pushing to conference the bill with the Senate. The House Democratic leaders oppose provisions in the Senate bill that provide liability protections for telecommunication companies that cooperated with the administration's warrantless-wiretapping program.

Homeland Security
Action Urged To Rein In Abuses Of State Secrets
     Senate Judiciary Chairman Leahy said this week that lawmakers must act to curb the Bush administration's exploitation of the state secrets privilege, which bars public disclosure of information that could harm national security. The common law doctrine has most recently been employed to stymie civil lawsuits against telecommunications firms involved in the government's wiretapping program. The Senate passed an intelligence bill this week that would give the firms retroactive legal immunity. "The state secrets privilege serves important goals when properly invoked. But there are serious consequences for litigants and for the American public when the privilege is used to terminate litigation alleging serious government misconduct," Leahy said at a hearing on the topic. Leahy and Judiciary ranking member Arlen Specter, R-Pa., are co-sponsors of a bill introduced in January by Sen. Edward Kennedy, D-Mass., that seeks to clarify the definition of a "state secret." The House Judiciary Committee held a similar hearing last month and House Judiciary Constitution Subcommittee Chairman Jerrold Nadler, D-N.Y., is crafting a companion bill. Deputy Assistant Attorney General Carl Nichols said the privilege plays "an important role in times of war and times of peace" and has a "constitutional pedigree" codified by the Supreme Court.

Telecommunications
Panel Sees Looming Problem For Viewers With DTV Shift
     Fresh concerns were raised this week about the nation's shift to digital television signals -- as a key House lawmaker warned that some consumers will not receive the new signals. The problem arises because digital broadcasts do not always replicate their analog coverage areas. Most viewers will be fine, but some will discover that local broadcasts they are accustomed to receiving in analog will not be accessible in digital. During a House hearing on the DTV transition exchange, FCC Chairman Kevin Martin said agency engineers estimate that approximately 5 percent of over-the-air households may require new outdoor antennas to pull in digital broadcasts. Said House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass.: ""This is going to be a big issue. We have to make sure that this part of it works." With the National Association of Broadcasters estimating that 20 million households rely exclusively on over-the-air reception, up to 1 million households could be affected. Martin said Congress must decide whether financial assistance should be provided to these citizens. Meanwhile, Senate Commerce Chairman Inouye and House Energy and Commerce Chairman Dingell sent a letter this week to President Bush proposing an interagency task force to oversee the DTV transition.

Telecommunications
Panel Sees Looming Problem For Viewers With DTV Shift
     Fresh concerns were raised this week about the nation's shift to digital television signals -- as a key House lawmaker warned that some consumers will not receive the new signals. The problem arises because digital broadcasts do not always replicate their analog coverage areas. Most viewers will be fine, but some will discover that local broadcasts they are accustomed to receiving in analog will not be accessible in digital. During a House hearing on the DTV transition exchange, FCC Chairman Kevin Martin said agency engineers estimate that approximately 5 percent of over-the-air households may require new outdoor antennas to pull in digital broadcasts. Said House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass.: ""This is going to be a big issue. We have to make sure that this part of it works." With the National Association of Broadcasters estimating that 20 million households rely exclusively on over-the-air reception, up to 1 million households could be affected. Martin said Congress must decide whether financial assistance should be provided to these citizens. Meanwhile, Senate Commerce Chairman Inouye and House Energy and Commerce Chairman Dingell sent a letter this week to President Bush proposing an interagency task force to oversee the DTV transition.

Telecommunications
Outcry Over FCC Plan To Cap Universal Service Fund
     The FCC has triggered a storm of protests over a plan to temporarily cap the multi-billion dollar universal service fund while providing an exemption that critics insist would largely benefit an Alaska-based telecommunications carrier. The carve-out is viewed by some as a nod to Senate Commerce ranking member Ted Stevens, R-Alaska, who had expressed opposition to imposing a threshold. The move also might help FCC Chairman Kevin Martin secure a crucial third vote from Commissioner Robert McDowell, who landed at the agency with Stevens' backing. Officials with the FCC and General Communications, Inc., of Anchorage, insisted that the proposed exception for "tribal" lands, including in Alaska, is open to any eligible carrier. But a wireless industry attorney said the broadband build-out requirements outlined in the provision are most easily met by GCI. Competitive carriers that secure subsidies alongside landline incumbents have been blamed for the exploding growth of the fund, which expanded by $1 billion in recent years. The fund is aimed at making telecom and Internet service more affordable in rural and low-income areas. Most competitive carriers are mobile service providers, prompting complaints that the restriction mainly burdens them.

Telecommunications
Lawmakers Debate Tax Rates For Satellite, Cable
     Lawmakers this week debated ways to level the playing field for satellite television viewers who pay a higher tax rate than those watching cable programming. During a hearing before the House Judiciary Commercial and Administrative Law Subcommittee, Rep. Ric Keller, R-Fla., said any tax changes should not result in an increase in rates for both systems. Six states - Florida, Kentucky, North Carolina, Ohio, Tennessee and Utah -- levy video service taxes on satellite television that are higher than those levied on cable television. In Ohio, satellite viewers are subject to a 5.5 percent tax, from which cable viewers have been exempt -- while in Tennessee, cable and satellite consumers pay an 8.35 percent sales tax but the first $15 of monthly cable service charges are exempted from the tax. A bill introduced in September by House Judiciary Chairman Conyers aims to prevent states from imposing discriminatory taxes on any form of multichannel video programming distribution services, namely direct broadcast satellite, cable television services and the Internet. Conyers said the bill appears to have broad bipartisan support, although Commercial and Administrative Law Subcommittee Chairwoman Linda Sanchez, D-Calif., has not said whether she backs the measure.

Telecommunications
Markey, Pickering Offer Net Neutrality Bill
     House Energy and Commerce Telecommunications and the Internet Subcommittee Chairman Edward Markey, D-Mass., and Rep. Charles (Chip) Pickering, R-Miss., introduced legislation this week that seeks to prevent cable and telecom providers of high-speed Internet service from blocking or degrading content. The bill would require the FCC to conduct "an assessment of broadband practices and consumer rights," Markey said in a new release. The agency also would be required to hold eight field hearings on the issue and report back to Congress with findings and recommendations for further action. The bill's goal "is to assure consumers, content providers, and high tech innovators that the historic, open architecture nature of the Internet will be preserved and fostered," Markey said. But Verizon lobbyist Tom Tauke told reporters that his firm doesn't "see the need for congressional action." He added, "Our concern is that putting rigid regulations into place to govern a very fast-moving sector doesn't make a lot of sense."

Intellectual Property
Small Business Groups Divided Over Patent Bill
     As the Senate nears debate on legislation that would overhaul the U.S. patent system, the small business sector is becoming a more visible warrior in the battle that has pitted high-tech giants and others who support the reforms against a range of vocal opponents. Groups representing small-scale enterprises and innovators have recently come out on both sides of the debate. A report released this week by the Small Business & Entrepreneurship Council makes the case for reform, arguing that legislation sponsored by Senate Judiciary Committee Chairman Leahy would "bring the U.S. patent system into the modern era" and would have a positive impact on mom-and-pop shops. But the National Small Business Association has come out against the House and Senate bills and is in the process of organizing a letter-writing campaign to lawmakers, a spokeswoman said. The group opposes the bills' "first-to-file" proposal, which would bring the United States in line with a number of nations that give priority to the first person to send a patent application to the Patent and Trademark Office regardless of the invention date. The Innovation Alliance, which represents a number of small high-tech firms and has resisted the patent reform push, released a new analysis of jury damage awards in 93 recent infringement cases. The group said its study proves that claims of "runaway jury verdicts in patent cases" are unsubstantiated.

Intellectual Property
Biotech Group Outlines Concerns With Patent Bill
     The Biotechnology Industry Organization, a relatively silent but influential critic of current congressional proposals to revamp the U.S. patent system, released a report this week that warns the legislation "could dampen or discourage innovation with potentially serious consequences for the American economy." The Senate could take up the legislation after the President's Day recess. The Senate bill's proposal to change the rules for apportioning damages in patent lawsuits would likely increase infringement, the study found. The idea to replace or supplement the current patent re-examination process at the Patent and Trademark Office with a post-grant review system also is problematic, BIO President Jim Greenwood said. The report contends that private costs of adjudicating patents would skyrocket from the current $15 million a year to $1.6 billion. Language to codify in law and perhaps broaden the process for handling "inequitable conduct" cases, which requires patents to be ruled invalid if plaintiffs were not forthcoming in their applications, is "nonsensical" because it would enshrine a practice that should be eliminated, Greenwood said.

Intellectual Property
Berman To Chair Foreign Affairs And Judiciary Panels -- For Now
     While Rep. Howard Berman, D-Calif., will succeed the late Rep. Tom Lantos, D-Calif., as chairman of the House Foreign Affairs Committee in the coming weeks, Berman plans to also retain his chairmanship of the House Judiciary Courts, the Internet and Intellectual Property Subcommittee, an aide said. Under House Democratic Caucus rules, Berman can hold both chairmanships for the remainder of the current 110th Congress. But, assuming Berman is re-elected in November and the Democrats retain control of the House, he would have to give up the Judiciary subcommittee chairmanship next January - when the 111th Congress is sworn in -- if he wants to remain head of the Foreign Affairs panel. Lantos died Monday after a battle with cancer of the esophagus. Berman has played an active role as chairman of the Judiciary subcommittee, especially with regard to the pending effort to overhaul the U.S. patent system. Next in line for the Judiciary subcommittee chairmanship is Rep. Rick Boucher, D-Va. But Boucher currently chairs the Energy and Commerce Committee's Energy and Air Quality Subcommittee, which he would have to relinquish.

Intellectual Property
Coalition Urges USTR To Warn Canada Over Piracy
     A coalition of seven trade associations representing U.S. copyright-based industries urged the Bush administration's chief trade negotiator this week to add Canada to a list of countries that risk losing trade privileges unless they make progress on curbing piracy and counterfeiting. The International Intellectual Property Alliance said that, unlike other developed economies, Canada "has taken no meaningful steps toward modernizing its copyright law" to meet global minimum standards of the World Intellectual Property Organization's Internet treaties, the group said. While parliamentary and other government officials have acknowledged deficiencies in Canadian law and promised to make copyright reform a priority, they have not taken "concrete" actions, the IIPA said. The group said Canada's legal regime is particularly ill-equipped to deal with illegitimate online file-sharing and said laws there do not give Internet service providers the incentive to take down infringing material. Meanwhile, other U.S. groups may be anticipating action on the issue. Global Internet giants Google and Yahoo have joined a number of Internet service providers to push for favorable language in the yet-to-be-released Canadian version of the Digital Millennium Copyright Act, the 1998 U.S. law that criminalized the use of technologies that circumvent content protection mechanisms used for digital media files. The group's recommendations include expanded copyright "fair use" provisions; limited anti-circumvention measures; ISP liability protection; and the removal of a private copying levy.

Lobbying
Cable Chief Tops List Of Highest Paid Tech Execs
     Kyle McSlarrow, president and chief executive officer of the National Cable & Telecommunications Association, was the top paid executive in the communications and information technology association sector in 2006, according to National Journal magazine's biennial survey of association executives' compensation. McSlarrow joined the cable lobbying group in 2005 and received a total compensation package, including benefits and allowances, of $1.75 million. Walter McCormick, president and CEO of the United States Telecom Association, was second with a total pay package of $1.4 million, while Consumer Electronics Association President and CEO Gary Shapiro came in third with a total package of $1.24 million. Other millionaire earners with interests in the IT sector include the heads of the Recording Industry Association of America and the Motion Picture Association of America. RIAA Chairman and CEO Mitch Bainwol received $1.47 million in total compensation, while MPAA Chairman and CEO Dan Glickman -- a former Democratic House member from Kansas and former Agriculture secretary -- was paid $1.31 million. But the overall top earner in the National Journal survey came from the finance rather than the tech sector: Robert Glauber, former chief of the Financial Industry Regulatory Authority (formerly the National Association of Securities Dealers) received $6.82 million in 2006, which included retirement compensation.

Science
Gordon Bashes Bush Over R&D Funding
     House Science Chairman Gordon blasted the Bush administration this week for shortchanging U.S. competitiveness and innovation in its FY09 budget request to Congress. While the $3.11 trillion budget includes $147 billion for research and development, Gordon said at a hearing that he was "deeply disappointed" that the president's proposal does not make the National Science Foundation's math and science training programs a priority. "Unfortunately, our students are far from measuring up compared to other industrialized countries," Gordon told White House Office of Science and Technology Director John Marburger. Last August, the president signed into law the America Competes Act, which authorized big boosts in federal science, math and technology funding. Although the budget calls for increased funding for basic research at NSF, a special scholarship program to train math, science and technology teachers and students is drastically under-funded, Gordon said. Marburger said the budget request is "a very strong one for science and is responsive to the goals and priorities expressed in the America Competes Act."

Trade
Administration Pushing Hard For Colombia Trade Deal
     House Speaker Pelosi met this week with Secretary of State Rice to discuss the national security implications of pending trade legislation, including the U.S.-Colombia free trade deal that the Bush administration is working hard to push through. The two met Wednesday to discuss the Colombia deal, which most Democrats in Congress oppose. In addition to the economic benefits of opening Colombian markets to U.S. goods, the administration has been arguing the deal is necessary to shore up support for the Colombian government in a hostile environment with anti-American leaders such as Venezuela's Hugo Chavez next door. Trade Representative Schwab's entreaties have thus far fallen flat with Democrats. But playing the national security card indicates the Bush administration is taking their lobbying effort to another level, House Ways and Means Chairman Rangel said. Rangel spoke after the Ways and Means Committee approved a 10-month extension of trade preferences for Colombia, Peru, Bolivia and Ecuador, which expires Feb. 29. Meanwhile, former Trade Representative Rob Portman, a former GOP House member from Ohio, said this week that the trade preferences measure "cannot be a substitute for real two-way trade." Virginia Rep. Jim Moran, one of the few House Democrats to support the Colombia agreement, said if Congress fails to approve it, "in reality, we will just be penalizing our businesses and leaving them at a market disadvantage."

Trade
Trade Deficit Figures Prompt New China Concerns
     Trade deficit figures released this week by the Commerce Department showed that while the overall deficit declined 6.8 percent to $711.6 billion for 2007, the trade deficit with China grew to $256.3 billion, a 10 percent increase over the previous year. That gave ammunition to backers of legislation to impose penalties on China for devaluing its currency, which has led to cheaper prices for Chinese imports at the expense of U.S. goods. "Things are getting worse, not better," said Rep. Timothy Ryan, D-Ohio, who has introduced legislation with House Armed Services ranking member Duncan Hunter, R-Calif., to define currency manipulation as an illegal export subsidy and allow the United States to impose countervailing duties. China's trade practices have raised questions among members of Congress and the Bush administration, as well as U.S. manufacturers. But the White House opposes legislation, arguing the issue should instead be resolved by multilateral talks. House Ways and Means Chairman Rangel in a statement said allowing countries like China to manipulate their currencies represents a "flagrant and longstanding breach of international rules." He is working on a comprehensive bill with Ways and Means Trade Subcommittee Chairman Sander Levin, D-Mich., and other panel Democrats, but it is still in the vetting stage.