5/20. The Senate Judiciary Committee held a hearing titled "FBI Oversight: Terrorism and Other Topics". The only witness was Robert Mueller, Director of the Federal Bureau of Investigation.

Much of the hearing focused on non-technology related topics, such as treatment of prisoners in Iraq and elsewhere, FBI and CIA interrogation practices, and translations and the hiring of linguists by the FBI.

However, the hearing also addressed extension of various provisions of the USA PATRIOT Act, and the use of information technology at the FBI.

Mueller (at left) submitted prepared testimony, much of which he read at the hearing.

Sen. Leahy questioned Director Mueller in a cold and confrontational manner. Although, he focused mainly on non-technology related issues, such as FBI investigations into custodial conditions in Iraq. Republicans were generally more supportive of Director Mueller.

Sen. Leahy made an opening statement, and submitted a long prepared statement for the hearing record in which he covered several tech issues, including application of CALEA like requirements to broadband internet access.

Extension of the Sunsetting Provisions of the PATRIOT Act. The USA PATRIOT Act is an acronym for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001". It was passed quickly after the terrorist attacks of September 11, 2001 by the 107th Congress as HR 3162. It became Public Law 107-56 on October 26, 2001.

Title II of the PATRIOT Act addresses electronic surveillance and related issues. It also provides that numerous of its provisions "shall cease to have effect on December 31, 2005". These sunsetting provisions have been the subject of debate, and proposed legislation. Some were addressed at the hearing.

For a discussion of the provisions that are scheduled to sunset, and how various pending bills would treat these provisions, see story titled "Bush Proposes to Extend and Expand PATRIOT Act" in TLJ Daily E-Mail Alert No. 880, April 20, 2004; story titled "Bush Opposes Congressional Proposals to Roll Back Parts of PATRIOT Act" in TLJ Daily E-Mail Alert No. 880, April 20, 2004; and story titled "Sen. Leahy Introduces Bill to Expand List of Surveillance Provisions of PATRIOT Act to Be Sunsetted" in TLJ Daily E-Mail Alert No. 757, October 14, 2003.

Sen. Orrin Hatch (R-UT), the Chairman of the Committee, praised Mueller and the FBI in his opening statement. He also said the "before September 2001, we had communications challenges between the law enforcement community and the intelligence community. Sections 203 and 218 of the USA PATRIOT Act -- which are due to expire on December 31, 2005 -- have been instrumental in breaking down the artificial wall of non-communication between the intelligence community and the law enforcement community."

In contrast, Sen. Leahy wrote in his prepared statement that "this Administration just wants a blank check on its extension and recently came before this Committee to ask that the law be expanded further with vague language."

Mueller's Defense of the PATRIOT Act. Mueller wrote in his prepared testimony that "the PATRIOT Act has proved extraordinarily beneficial in the war on terrorism and has changed the way the FBI does business. Many of our counterterrorism successes, in fact, are the direct results."

Mueller praised the information sharing provisions of the PATRIOT Act. He said that they "tore down the wall that stood between the intelligence investigators responding to terrorist threats and the criminal investigators responding to those same threats."

Mueller also stated that "the PATRIOT Act gave federal judges the authority to issue search warrants that are valid outside the issuing judge's district in terrorism investigations" and that "the PATRIOT Act permits similar search warrants for electronic evidence such as email. In the past, for example, if an Agent in one district needed to obtain a search warrant for a subject's email account, but the Internet service provider (ISP) was located in another district, he or she would have to contact an AUSA and Agent in the second district, brief them on the details of the investigation, and ask them to appear before a judge to obtain a search warrant – simply because the ISP was physically based in another district. Thanks to the PATRIOT Act, this frustrating and time-consuming process can be averted without reducing judicial oversight. Today, a judge anywhere in the U.S. can issue a search warrant for a subject's email, no matter where the ISP is based."

§ 220 of the PATRIOT Act pertains to "Nationwide service of search warrants for electronic evidence". The PATRIOT Act, and some pending bills, would sunset this provision.

He also stated that "the PATRIOT Act updated the law to match current technology, so that we no longer have to fight a 21st-century battle with antiquated weapons. Terrorists exploit modern technology such as the Internet and cell phones to conduct and conceal their activities. The PATRIOT Act leveled the playing field, allowing investigators to adapt to modern techniques. For example, the PATRIOT Act clarified our ability to use court-ordered pen registers and trap-and-trace devices to track Internet communications.

§ 214 of the PATRIOT Act pertains to "Pen register and trap and trace authority under FISA".  The PATRIOT Act, and some pending bills, would sunset this provision.

He continued that "The Act also enabled us to seek court-approved roving wiretaps, which allow investigators to conduct electronic surveillance on a particular suspect, not a particular telephone -- this allows them to continuously monitor subjects without having to return to the court repeatedly for additional authorizations. This technique has long been used to investigate crimes such as drug trafficking and racketeering. In a world in which it is standard operating procedure for terrorists to rapidly change locations and switch cell phones to evade surveillance, terrorism investigators must have access to the same tools."

§ 206 of the PATRIOT Act pertains to "Roving surveillance authority under the FISA". The PATRIOT Act, and some pending bills, would sunset this provision.

Mueller concluded that "I strongly believe it is vital to our national security to keep each of these provisions intact. Without them, the FBI could be forced back into pre-September 11 practices, attempting to fight the war on terrorism with one hand tied behind our backs."

Sen. Feingold. Sen. Russ Feingold (D-WI) focused on the USA PATRIOT Act. He was the only Senator to vote against the bill in 2001. See, Roll Call No. 107-313. He is now one of the leading critics of some of its provisions.

Sen. Feingold (at right) is is the sponsor of S 1701, the "Reasonable Notice and Search Act", a bill to limit the use of delayed notice warrants, also know as sneak and peak warrants. See, story titled "Sen. Feingold Introduces Bill to Limit Delayed Notice Warrants" in TLJ Daily E-Mail Alert No. 753, October 6, 2003.

However, S 1709, the "Security and Freedom Ensured Act of 2003" (SAFE Act), has become the main vehicle for opposition to the Bush administration's position on extending and expanding the PATRIOT Act. Sen. Feingold is an original cosponsor of S 1709.

See, story titled "Senators Craig and Durbin Introduce Bill to Modify PATRIOT Act" in TLJ Daily E-Mail Alert No. 753, October 6, 2003.

Bait and Switch. Sen. Feingold stated to Mueller that "it does pain me to hear you using the same approach that almost everyone else in the administration uses to defend USA PATRIOT Act. I've heard the President do it. I've heard the Attorney General do it. You say the bill has to be reenacted in exactly the same form. Then you cite a bunch of provisions, Mr. Mueller, that nobody objects to. It's a bait and switch. Nobody's against taking down the wall. Nobody wants to put the wall back up."

It may be pertinent to Sen. Feingold's statement regarding "bait and switch" advocacy to review the statements President Bush, Attorney General Ashcroft and Director Mueller have made in defense of the PATRIOT Act. The President's most detailed discussions of the PATRIOT Act came in his April 19 speech in Hershey, Pennsylvania, and his April 20 speech in Buffalo, New York. In both of these speeches he spoke about information sharing, or, as Sen. Feingold stated, "taking down the wall".

However, the President also spoke on April 19 in detail about the extension of provisions regarding roving wiretaps, delayed notice of search warrants (sneak and peak), and access to business records under the FISA. On April 20 he spoke about roving wiretaps and sneak and peak.

AG Ashcroft's most specific statement on the subject came in his January 28, 2004 letter [4 page PDF scan] to Senators. He discussed, as did President Bush, roving wiretaps, sneak and peak, and access to business records under the FISA. In addition, Ashcroft addressed treatment of libraries as electronic communications service providers, and extending the provisions regarding pen register and trap and trace devices (PR&TTDs) to electronic communications, such as e-mail.

The SAFE Act, as well as Sen. Leahy's bill, Sen. Murkowski's bill, and Sen. Feingold's bill, recite the areas were there is difference between the Bush administration and certain Senators. The topics addressed by these bills include roving wiretaps, sneak and peak, access to business records under the FISA, treatment of libraries as electronic communications service providers, and PR&TTDs.

The President, the Attorney General, and Director Mueller have dwelt upon information sharing and bringing down the wall of separation between government entities, as Sen. Feingold stated. However, as Bush's speeches, Ashcroft's letter, and Mueller testimony (summarized above) illustrate, they have also addressed the areas where there are substantial differences.

For more on President Bush's speeches on the PATRIOT Act, see, April 17 radio address and story titled "Bush Addresses PATRIOT Act" in TLJ Daily E-Mail Alert No. 879, April 19, 2004; April 19 speech in Hershey, Pennsylvania, and stories titled "Bush Proposes to Extend and Expand PATRIOT Act" and "Bush Opposes Congressional Proposals to Roll Back Parts of PATRIOT Act" in TLJ Daily E-Mail Alert No. 880, April 20, 2004; April 20 speech in Buffalo, New York, and story titled "Bush Continues to Speak About PATRIOT Act" in TLJ Daily E-Mail Alert No. 881, April 21, 2004; and April 21 speech in Washington DC and story titled "Bush Addresses Broadband Policy, Free Trade and the PATRIOT Act" in TLJ Daily E-Mail Alert No. 882, April 22, 2004.

Roving Wiretaps. Sen. Feingold went on to state to Director Mueller that, "Then you cite the idea on the roving wire taps. Everybody in this Congress wants us to be able to get at the other telephone."

"It's simply not anything that anyone has proposed that I know of." He added that "Nobody opposed the idea of nationwide search warrants, the sort of thing you mention. And here's the problem: The problem is that you suggest to the American people that somehow these provisions are in dispute".

Mueller responded that "you start off by saying that the roving part of the statute is not an issue. But part of the SAFE Act would modify that part".

Sen. Feingold responded, "I didn't say that, Mr. Director. I said that the issue that you brought up, of being able to get at multiple telephones, is not at issue."

The SAFE Act, S 1709, at Section 2, would amend Section 105(c) of the FISA, which is codified at 50 U.S.C. § 1805. This is the section that provides for the roving wiretaps that are the subject of this debate. Sen. Feingold is a cosponsor.

Currently, orders authorizing these roving wiretaps are available when the identity of the target of the surveillance is not known. Also, currently, these orders are available when "the nature and location of each of the facilities or places at which the electronic surveillance will be directed" is not known.

The SAFE Act would limit these provisions. It would require that an order authorizing electronic surveillance under this section shall direct that "in cases where the facility or place at which the surveillance will be directed is not known at the time the order is issued, that the surveillance be conducted only when the presence of the target at a particular facility or place is ascertained by the person conducting the surveillance".

The phrase "get at the other telephone" is not found in the current statute, or any of the pending bills. It is an undefined phrase. Nevertheless, there is an argument that the SAFE Act would limit the FBI's ability to "get at the other telephone", and hence, that this issue is in dispute.

Sen. Specter. Sen. Arlen Specter (R-PA) raised several of the sections of Title II of the PATRIOT Act. He argued that there should be higher standards for delayed notification of search warrants, and access to business records under the FISA. In particularly, he expressed concern about law enforcement access to library records.

Mueller defended § 213 of the PATRIOT Act, which allows for delayed notification of search warrants. This section provides that the court may order that notice be delayed if "the court finds reasonable cause to believe that providing immediate notification of the execution of the warrant may have an adverse result".

Mueller stated that the standard for issuing such an order is less that the standard for issuing a search warrant (probable cause), because a delay of notification is not a search.

Sen. Specter also discussed § 215 of the PATRIOT Act pertaining to business records. It amended the Foreign Intelligence Surveillance Act (FISA) at §§ 501 et seq.

The FISA only applies to foreign powers, and agents of foreign powers, including international terrorists. Section 501 enables the FBI to obtain from a judge or magistrate an order requiring the production business records. While the statute does not expressly include library records, it is not disputed that library records could be obtained.

Currently, Section 501 requires that the application to the judge or magistrate "shall specify that the records concerned are sought for an authorized investigation conducted in accordance with subsection (a)(2) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities."

Sen. Specter asked, for example, why should the government not be required also to explain why the records are being sought.

CALEA. Sen. Leahy also addressed the Communications Assistance for Law Enforcement Act (CALEA). He suggested that the subject of the FBI's pending petition to the Federal Communications Commission (FCC) should be addressed by the Congress, not the FCC. (This is the FCC's RM 10865.)

He wrote in his prepared testimony that "we need to make sure that the FBI has the capability of dealing with new technologies for communicating over the Internet that may not have been covered by the CALEA. Congress passed CALEA in 1994 to address the law enforcement concerns that emerging technologies such as call forwarding and mobile phones had on wiretap efforts. CALEA required telecommunication services to rewire their networks to support easy wiretapping."

Sen. Leahy continued that "The FBI recently asked the FCC to extend CALEA to broadband Internet providers, but this is an issue that needs to be addressed by this Committee. I hope that Chairman Hatch agrees, and that we can work together on this. We must now grapple with the new technologies that have transformed the world since CALEA was signed into law a decade ago."

FBI's Information Technology. Sen. Leahy wrote in his prepared statement that "the FBI has not solved even its most basic problem: Its information technology systems are hopelessly out of date. In this regard, the FBI is not much better off today than it was before September 11, 2001, when it was unable to do a computer search of its own investigative files to make critical links and connections. By all accounts, the Trilogy solution has been a disaster."

He added, in the abbreviated statement that he made at the outset of the hearing that "I suspect most small county sheriff's departments have better computer systems."

Mueller stated in his prepared testimony that "Over the past two and a half years, the FBI has made tremendous efforts to overhaul our information technology, and we have made significant process."

He added that "during the past year we have encountered some setbacks regarding the deployment of Trilogy's Full Site Capability (FSC) and the Virtual Case File. Our goal is to deliver Virtual Case File capabilities by the end of this year."

Sen. Hatch stated that "It is not an easy task to update both local and wide area networks and install 30,000 new desktop computers, but you have accomplished that and I congratulate you. I understand that you have been consulting with various outside experts seeking their advice on the Trilogy project and have received much praise for working cooperatively with them and being receptive to their recommendations."

He added that "I know that you still have a very long way to go on this project and that you are still working with various experts on the Virtual Case File system as well as other aspects of Trilogy. I have every confidence that you will continue to be responsive and will do whatever it takes to get an effective IT system up and running."

5/14. Attorney General John Ashcroft gave a speech regarding the National Criminal Intelligence Sharing Plan. He once again advocated permanent extension of those portions of the PATRIOT Act that are scheduled to expired at the end of 2005.

He stated that "The National Criminal Intelligence Sharing Plan is a work of tremendous initiative. And its impact will be that much greater because it builds on the critical tools for law enforcement won with the passage of the USA PATRIOT Act. Today, 32 months after the attacks of September 11, we know that the PATRIOT Act has helped the FBI and state and local police wage a winning war again terrorism. In the past two and a half years, we have dismantled terrorist cells in Oregon, Washington, New York, North Carolina and Virginia. We have arrested terrorist operatives in California, Ohio, Texas, Florida and Idaho. We have frozen more than $138 million of funds from organizations suspected of supporting terror. More importantly, we have not suffered another major terrorist attack on our shores."

"Armed with the tools provided in the PATRIOT ACT, local law enforcement is making the critical difference in the war on terror", said Ashcroft (at left).

He added that "The PATRIOT Act has been key to law enforcement's ability to protect Americans. But many of the PATRIOT Act's most critical anti-terrorism tools will expire next year. Congress must once again do its part. Congress must keep these tools in place for law enforcement. Congress must make the PATRIOT Act's provisions permanent."

AG Ashcroft's most specific statement on extending the sunsetting provisions of the PATRIOT Act is his January 28, 2004 letter [4 page PDF scan] to Senate leaders in which he opposed passage of S 1709, the "Security and Freedom Ensured Act of 2003" (SAFE Act). See, story titled "Ashcroft Opposes Senate Bill to Roll Back PATRIOT Act Provisions", TLJ Daily E-Mail Alert No. 827, February 2, 2004.

5/20. Rep. James Sensenbrenner (R-WI) and Rep. John Conyers (D-MI), the Chairman and ranking Democrat on the House Judiciary Committee (HJC), introduced HR 4412, the "Clarification of Antitrust Remedies in Telecommunications Act of 2004", a bill that provides that violations of the Telecommunications Act of 1996 may be actionable under antitrust law. It comes in reaction to the Supreme Court's decision in January in the Trinko case.

The bill would amend the Clayton Act to provide that "It shall be unlawful for an incumbent local exchange carrier or an affiliate to create or to preserve (or to attempt to create or to preserve) a monopoly in any part of commerce by using its network (or by providing a service over its network) to engage in an anti-competitive practice (which may include a failure to comply with either section 251(c) or 271 of the Communications Act of 1934 or with any agreement, rule, or order in effect under such section)." (All parentheses in original.)

The bill would further provide that "Whether any agency regulates or is authorized to consider, review, or redress the conduct proscribed by this section shall not affect the applicability of this section, except that conduct required by an agency regulation or rule shall not be construed to create liability under this section."

The bill would affect the availability of antitrust remedies for violation of Telecommunications Act of 1996, as construed in the opinion [22 pages in PDF] of the Supreme Court in Verizon v. Trinko and the opinion of the U.S. Court of Appeals (7thCir) in Goldwasser v. Ameritech.

The Supreme Court held that a claim alleging a breach of an incumbent local exchange carrier's (ILEC) duty under the 1996 Act to share its network with competitors does not state a violation of Section 2 of the Sherman Act. See, story titled "Supreme Court Holds That There is No Sherman Act Claim in Verizon v. Trinko" in TLJ Daily E-Mail Alert No. 815, January 14, 2004.

Justice Antonin Scalia wrote the opinion of the Court. He reviewed the obligations of ILECs (in this case, Verizon) under 47 U.S.C. § 251. He wrote, "That Congress created these duties, however, does not automatically lead to the conclusion that they can be enforced by means of an antitrust claim."

"Indeed, a detailed regulatory scheme such as that created by the 1996 Act ordinarily raises the question whether the regulated entities are not shielded from antitrust scrutiny altogether by the doctrine of implied immunity" Scalia continued. "Congress, however, precluded that interpretation. Section 601(b)(1) of the 1996 Act is an antitrust-specific saving clause providing that ``nothing in this Act or the amendments made by this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.´´"

"But just as the 1996 Act preserves claims that satisfy existing antitrust standards, it does not create new claims that go beyond existing antitrust standards; that would be equally inconsistent with the saving clause's mandate that nothing in the Act ``modify, impair, or supersede the applicability´´ of the antitrust laws." Hence, Scalia next examined whether Verizon violated  "pre-existing antitrust standards".

Scalia concluded that pre-existing antitrust standards do not make Verizon's conduct a Sherman Act case. Moreover, wrote Scalia, the Supreme Court should not now add a new standard. He added that "we do not believe that traditional antitrust principles justify adding the present case to the few existing exceptions from the proposition that there is no duty to aid competitors."

On November 19, 2003, the House Judiciary Committee held an oversight hearing titled "Saving the Savings Clause: Congressional Intent, the Trinko Case, and the Role of the Antitrust Laws in Promoting Competition in the Telecom Sector". Rep. Sensenbrenner wrote in his prepared statement that "If Trinko is overturned, the historic role of the antitrust laws in promoting competition in the telecom sector and the clear intent of Congress will be judicially subverted. If this occurs, a swift and decisive legislative correction will be necessary and it will be forthcoming. Everyone can rest assured that the antitrust laws will continue to apply to this industry."

HR 4412 would restore the availability of an antitrust remedy. The House Judiciary Committee issued a release on May 20 that states that "The Telecom Act of 1996 contained a clear and forceful antitrust savings clause to preserve the application of the antitrust laws in this field. This clause has been eroded by erroneous judicial decisions, including the Goldwasser and Trinko cases. H.R. 4412, the “Clarification of Antitrust Remedies in Telecommunications Act of 2004," reaffirms that violations of the Telecom Act may be actionable under the antitrust laws. The Sensenbrenner/Conyers legislation restores the clear meaning of the Telecom Act to ensure that the antitrust laws continue to provide a catalyst to promote competition and consumer choice in the telecommunications marketplace."

Robert McDowell of CompTel/ASCENT, a group that represents competitive local exchange carriers, praised the bill. He wrote in a statement that "The legislation introduced today eliminates the illogical conclusion that a violation of the 1996 Telecommunications Act could serve as a defense against anticompetitive behavior that should be punishable by antitrust laws. This legislation is urgently needed because the Trinko decision, in combination with the Federal Communications Commission's consistent failure to enforce the Telecom Act, has empowered the Bells to believe that they are above the law."

The Congress is in the later part of the second session of the current Congress, with House, Senate and Presidential elections increasingly commanding the attention of legislators and others. It is unlikely that a bill of this nature could be enacted at this late stage of the current Congress.

The House and Senate will not meet on May 24 through May 31. The House will convene at 2:00 PM on June 1. See, Republican Whip Notice.

Day two of a two day conference hosted by the Electronic Privacy Information Center (EPIC) titled "Freedom 2.0: Distributed Democracy". The topics to be addressed include the reliability of electronic voting systems, enabling public participation, government accountability, secrecy and surveillance, Freedom of Information Act, open government initiatives, privacy enhancing technologies, anonymity and identity, trans border data flows, radio frequency identification (RFID), biometrics, Civil Society, World Summit on the Information Society, United Nations Information and Communications Technology Task Force, ICANN, and UNESCO. See, conference web site. Location: Washington Club, 15 Dupont Circle.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) regarding deployment of advanced telecommunications capability to all Americans in a reasonable and timely fashion, and possible steps to accelerate such deployment. The FCC is required by Section 706 of the Telecommunications Act of 1996 to provide an annual report to the Congress on this subject. See, notice in the Federal Register, April 8, 2004, Vol. 69, No. 68, at Pages 18508 - 18515. This is GN Docket No. 04-54.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the Emergency Alert System (EAS). See, notice in the Federal Register, April 9, 2004, Vol. 69, No. 69, at Pages 18857 - 18859.

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

10:00 AM. The Federal Communications Commission (FCC) will hold a Pre-Auction Seminar for the 24 GHz Service. Location: FCC, 445 12th Street, SW.

11:45 AM - 2:00 PM. The DC Bar Association's Intellectual Property Law Section will host a lunch. The speaker will be Nicholas Godici, Commissioner for Patents at the U.S. Patent and Trademark Office (USPTO). Prices range from $35 to $65. See, notice. Location: The Westin Grand, 2350 M Street, NW.

12:00 NOON. The Cato Institute will host a debate titled "The FCC’s Media Ownership Decision One Year Later". The speakers will be Adam Thierer (Cato) and Andrew Schwartzman (Media Access Project). Lunch will be served. See, notice and registration page. Location: Room B-339, Rayburn Building, Capitol Hill.

5:30 - 9:00 PM. The Federal Communications Commission's (FCC) Localism Task Force will hold a field meeting in Rapid City, South Dakota. The FCC states in its notice [PDF] that "A live audiocast of the hearing will be available at the FCC’s website at www.fcc.gov on a first-come, first-served basis" and "The public may also file comments or other documents with the Commission and should reference RM-10803". See also, notice in the Federal Register, May 19, 2004, Vol. 69, No. 97, at Page 28888.

Deadline to submit comments to the European Commission regarding its draft regulation [16 pages in PDF] implementing the EC's January 20, 2004 merger regulation [22 pages in PDF]. The merger regulation is No. 139/2004.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) [97 pages in PDF] regarding issues relating to services and applications utilizing internet protocol (IP). This NPRM is FCC 04-28 in WC Docket No. 04-36. See, notice in the Federal Register, March 29, 2004, Vol. 69, No. 60, at Pages 16193 - 16202. See also, story titled "FCC Adopts NPRM Regarding Regulation of Internet Protocol Services" in TLJ Daily E-Mail Alert No. 837, February 16, 2004.

Memorial Day. The FCC and other federal agencies will be closed. There will be no issue of the TLJ Daily E-Mail Alert.

5/19. Federal Reserve Board Governor Susan Bies gave a speech titled "Corporate Governance: Where Do We Go From Here?", in which she talked about the role of information technology in corporate governance.

Bies (at right) spoke at a conference of the Institute of Internal Auditors Financial Services in Arlington, Virginia on May 19, 2004.

She said that "I would also like to add that internal auditors are the eyes and ears of the audit committee around the organization. As the complexity of financial products and technology has grown, the financial services industry has increased its reliance on vendors and third-party service providers for a host of technological solutions. Be mindful that these outsourcing arrangements may pose additional types of risks for the organization, such as security or data privacy risks. Internal auditors should remain vigilant in identifying risks as the organization changes or new products are delivered to the marketplace."

She continued that "Operations risk was a primary focus of Y2K preparations a few years ago. Identification of critical computer-reliant systems and infrastructures gave us a much clearer understanding of the financial system's dependence on technology and of the complexities of managing operations risk. Once institutions understood the considerable business risks that would result if they could not serve customers, they moved the management of Y2K preparations out of the back office and onto the desks of product-line and senior managers -- where it belonged."

Moreover, she said that "it became clear that financial institutions needed to plan for the possibility that an external threat -- a failure in the critical infrastructure or by a major service provider or material counterparty -- might severely impact a financial institution's business operations. There was an increased understanding of the interdependencies across market participants and of how credit, liquidity, and operations risks at one organization could have a cascading impact on other financial institutions."

5/20. The Senate confirmed Raymond Gruender to be a Judge of the U.S. Court of Appeals for the 8th Circuit. by a vote of 97-1. See, Roll Call No. 102.

5/20. The Senate confirmed Franklin Van Antwerpen to be a Judge of the U.S. Court of Appeals for the 3rd Circuit by a vote of 96-0. See, Roll Call No. 103.

5/20. The Senate Finance Committee unanimously approved the nomination of Stuart Levey to be Under Secretary of the Treasury for Enforcement.

5/20. The Senate Finance Committee unanimously approved the nomination of Juan Zarate to be Assistant Secretary of the Treasury (Terrorist Financing and Financial Crimes).

5/21. The Federal Trade Commission (FTC) extended to July 9, 2004 the deadline to submit comments on the uses, efficiencies, and implications for consumers associated with radio frequency identification (RFID) technology. The FTC will hold a workshop on June 21. The FTC previously announced that the deadline for submitting comments would be May 21, 2004. See, original notice in the Federal Register, April 15, 2004, Vol. 69, No. 73, at Pages 20523 - 20525, and notice [PDF] to be published in the Federal Register extending the deadline to July 9. See also, FTC web page for this workshop.

5/19. Microsoft published in its web site an opinion piece titled "Patents Pending: A vital engine of the U.S. economy needs a tune-up". The piece states that "By enabling inventors to profit from their creativity, patents became a powerful engine for progress." It adds that there is now a backlog of patent applications, and therefore, the Congress should pass the USPTO fee bill. The House passed this bill, HR 1561, the "United States Patent and Trademark Fee Modernization Act of 2004", on March 3, 2004 by a vote of 379-28. See, story titled "House Passes USPTO Fee Bill" in TLJ Daily E-Mail Alert No. 849, March 4, 2004. The Senate Judiciary Committee (SJC) unanimously approved this bill on April 29, 2004. The full Senate has yet to act. The bill contains increases in user fees that implement the U.S. Patent and Trademark Office's (USPTO) 21st Century Strategic Plan. It also provides for U.S. outsourcing of patent searches, and an end to the diversion of user fees to subsidize other government programs.

5/18. The Department of Justice filed its witness list for the trial in U.S. v. Oracle.

5/18. The U.S. District Court (CDCal) issued its Order Dismissing Complaint Without Prejudice [14 pages in PDF] in VeriSign v. ICANN., dismissing count one, which alleges violation of Section 1 of the Sherman Act. The order does not affect the various state law claims plead by VeriSign. This case is VeriSign v. Internet Corporation for Assigned Names and Numbers, U.S. District Court for the Central District of California, D.C. No. CV 04-1292AHM(CTx), Judge Howard Matz presiding.