Clock Ticking on Spam, ‘Net Access Bills

WASHINGTON — With House and Senate leaders hoping to close this year’s congressional session on Friday (Wednesday at the latest), debates over other issues may not allow time to pass legislation on spam, or the Internet access tax moratorium, which expired Nov. 1.

Negotiators have unsuccessfully met for weeks to resolve differences on the Internet access tax ban and to craft an anti-spam bill. With two of the president’s pet policies, health care reform and a sweeping new energy bill, and unresolved budget bills consuming congressional debates this week, time may be running out for this year’s two major technology initiatives.

The House passed a bill calling for a permanent ban on Internet connection taxes, but similar legislation hit a roadblock in the Senate over interpretation of the language, and whether a ban should be permanent. The Senate approved an anti-spam bill, but the House is mired in a committee dispute over penalties and the definition of spam .

“It all depends on the adjournment date,” a key House staffer told internetnews.com on Monday. “If it turns out to be Friday, it’s going to be tough to get the bills through by the end of the year. If we meet into next week, the chances improve, but not by much.”

If neither bill passes before adjournment, legislation will he held until January when the second session of the 108th Congress resumes.

Of the two pending issues, House and Senate committee staffers and attorneys surveyed by internetnews.com predict the Internet access tax ban has the best chance for passage this year.

The Senate legislation, sponsored by Ron Wyden (D.-OR) and George Allen (R.-VA), is similar to the House bill. It not only makes taxes on Internet access permanent, but also phases out a grandfather clause that preserves state and local taxes on Internet access imposed and actually enforced prior to Oct. 1, 1998.

The bill expands the definition of Internet access to prevent states from taxing telecommunications services used to provide Internet access, particularly DSL, which some states interpret as a telecommunications service open to taxation. Cable modem access is not taxed by states.

“I think everyone agrees the moratorium works and there are only a few aggressive senators blocking it,” a Republican legislative director said. “If we can get it on the floor for a vote, I think it’ll fly through.”

Opponents to the access tax ban claim the new definitions of access are too broad and could cost states as much as $9 billion in taxes annually. A number of states contend the new definitions would exempt not only certain telecommunications services used for Internet access, but also expand the pre-emption to include bundled telecom services offering high-speed connections, and local and long distance telephone service in one package.

Allen hopes to introduce an amendment this week to clarify the definitions in hope of demonstrating legislative intent is to exempt taxes only on dial-up and high-speed access connections. His amendment would make the ban permanent.

A Senate Democratic legislative manager predicts a permanent ban with tweaked access definitions would pass the Senate, if it can reach the floor for a vote.

“If they (senators opposing the bill) had the votes to stop it, they would have called for a straight up-and-down vote,” he said. “They don’t, and that’s why they’re playing all these games by putting a hold on the bill and threatening a type of filibuster.”

A press spokesperson for Sen. Lamar Alexander (R.-TN), one of the lawmakers opposing the tax ban, said the Senator removed his hold on the bill, adding, “It could come up this week, but the negotiations are so fluid right now, it’s hard to say.”

Anti-spam legislation is more problematic, according to sources.

Last month, the Senate approved legislation known as the Can Spam Act, sponsored by Wyden and Conrad Burns (R.-MT). Last week, the bill was endorsed by the American Association of Advertising Agencies (AAAA), the Association of National Advertisers (ANA) and the Direct Marketing Association (DMA).

Marketing groups support federal legislation as a better alternative than attempting to comply with a proliferating number of state anti-spam laws. The groups especially fear the recently passed California spam law, effective Jan. 1, that effectively bans ad-supported email newsletters, among other tight restrictions.

The ‘Can Spam Act’ requires bulk commercial emailers to include opt-out provisions and valid header and subject lines in solicitations. It provides civil and criminal penalties for violations of the law. The bill defines spam as an “unsolicited commercial electronic message” that’s not a “transactional or relationship” message which is sent to a recipient without prior affirmative or implied consent.

While providing for no private right of action by spam recipients, the bill allows Internet service providers (ISPs) adversely affected by violations to bring civil action. It sets a maximum $1.5 million civil penalty for knowing and willful violations. The bill triples monetary damages for spammers who engage in email address harvesting and dictionary attacks.

The bill includes an amendment championed by Sen. Charles Schumer (D.-NY) directing the Federal Trade Commission (FTC) to come up with a plan for a federal do-not-spam database, similar to the agency’s popular do-not-call registry. The legislation gives the FTC, which opposes the amendment, six months to report to Congress regarding potential drawbacks to such a registry.

Disputes about civil action, damage caps and definitions of what constitutes spam continue to divide House Energy and Commerce committee members. Its chairman, Billy Tauzin (R.-LA), predicted the House would pass an anti-spam bill this year.

“There are no hearings or mark-ups scheduled so far this week on the anti-spam bills,” a House Energy and Commerce staffer said. “We could take the Can Spam Act to the floor for a straight up-and-down vote or let members amend it. There’s a chance we might get something out of committee. What direction do we take? I honestly don’t know right know.”

He optimistically added, “We still hope to have a spam bill on the president’s desk this year.”

Prabhat Hajela, a science and technology fellow in Burns’ office, said last week at Bigfoot Interactive’s “Spam Summit” in New York that he hoped the Senate would adjourn this week, but held out hope the House would pass Can Spam. Hajela says the bill is written so certain amendments can be changed or removed without nullifying the whole.

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