TSA and EPIC Reach Agreement Regarding Production of Documents Regarding CAPPS II

9/5. The Transportation Security Administration (TSA) and the Electronic Privacy Information Center (EPIC) reached an agreement regarding the release of government documents pertaining to TSA's Computer Assisted Passenger Prescreening System (CAPPS II).

On September 4, the EPIC filed a complaint in U.S. District Court (DC) against the TSA under the Freedom of Information Act (FOIA), codified at 5 U.S.C. § 552, seeking the expedited processing and release if records. The EPIC also filed a motion for a temporary restraining order seeking the immediate release release of two documents. See, the EPIC's Memorandum in Support of Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction [16 pages in PDF].

The TSA filed a pleading [2 page PDF scan] on September 5 titled "Praecipe" with the District Court that states that the TSA and EPIC "have agreed as follows: (1) the Transportation Security Administration will complete its processing of the FOIA request at issue in this civil action and deliver by hand to plaintiff's counsel all responsive and non-exempt documents or portions of documents on a rolling basis, to be concluded by 5:00 p.m. on September 25, 2003; (2) plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunction is moot; and (3) the parties will submit a joint status report on or before October 2, 2003 proposing a schedule for further proceedings."

David Sobel, General Counsel, spoke at an event in Washington DC on September 5. He stated that as soon as it obtains records from the TSA regarding the CAPPS II, it will publish them in its web site.

The September 25 deadline may be significant because September 30 is the deadline for the public to submit comments to the TSA in response to its Privacy Act notice in which it proposed to establish a new system of records to support the development of the new version of it passenger screening system. See, Federal Register, August 1, 2003, Vol. 68, No. 148, at Pages 45265 - 45269.

See also, story titled "EPIC Files FOIA Suit For CAPPS II Records" in TLJ Daily E-Mail Alert No. 733, September 5, 2003. The case is numbered 03-1846. Judge Colleen Kotelly is presiding.

More News

9/5. Microsoft announced in a release that Microsoft and Be Inc. "have reached a mutually acceptable mediated settlement of an antitrust lawsuit filed by Be Inc. in February 2002, which is currently pending in the United States District Court for the District of Maryland in Baltimore. Be will receive a payment from Microsoft, after attorney’s fees, in the amount of $23,250,000 (U.S.) to end further litigation, and Microsoft admits no wrongdoing. All other terms of the settlement will remain confidential. Both parties are satisfied with the agreement and believe that it is fair and reasonable."

9/5. Alee Cellular filed a notice of appeal of a Federal Communications Commission's (FCC) order with the U.S. Court of Appeals (DCCir) on September 5, 2003. Alee appeals the FCC Wireless Telecommunications Bureau's (WTB) order of August 8, 2003 implementing revocation of Alee's license for cellular station KNKN271.

9/5. Rep. Robert Menendez (D-NJ) and Rep. John Conyers (D-MI) introduced HR 3027, the "National Minority Media Opportunities Act". The bill would require that the Federal Communications Commission (FCC) "after notice and comment, report to Congress regarding the ownership and control of broadcast stations (including AM, FM, and television broadcast stations) used to serve language minorities. The Commission shall consider the effects, with respect to both competition and diversity concerns, of multiple ownership and undue concentration in the programming and distribution markets specific to a language minority." The bill was referred to the House Commerce Committee.

ILECs File Petitions for Review of FCC Triennial Review Order

9/4. Incumbent local exchanged carriers (ILECs) filed several petitions for review of the Federal Communications Commission's (FCC) triennial review order (TRO) with the U.S. Court of Appeals (DCCir) on September 3 and 4, 2003.

Petitions for Review. Qwest Communications filed a petition for review (Appeals Court No. 03-1266) that states that Qwest "hereby petitions this Court for review of an order of the Federal Communications Commission (``FCC´´) that purports to create new unbundling rules to replace those vacated by this Court in United States Telecom Association v. FCC, 290 F.3d 415 (D.C.Cir. 2002), cert denied, 123 S.Ct. 1571 (2003)".

The U.S. Telecom Association (USTA) and SBC Communications also filed a petition for review (Appeals Court No. 03-1263) of the FCC's TRO. Qwest, SBC and the USTA are represented by Michael Kellogg of the law firm of Kellogg Huber.

Verizon Telephone Companies also filed a petition for review (Appeals Court No. 03-1264) of the FCC's TRO. It is represented by William Barr, of Verizon.

The USTA, a group that represents the interests of ILECs, stated in a release that it seeks "to stay the specific portions of the recently released Triennial Review Order that impose unbundling requirements for elements of traditional narrowband telephone networks". USTA P/CEO Walter McCormick stated that the TRO "blatantly ignores the dynamics of the rapidly evolving, highly competitive communications marketplace and should not be implemented without first being reviewed by the courts."

Background. The FCC announced its triennial review order [576 pages in PDF] on February 20, 2003, but did not release the text until August 21, 2003. See, TLJ story titled "Summary of FCC Triennial Review Order", also published in TLJ Daily E-Mail Alert No. 725, August 25, 2003. See also, stories titled "FCC Announces UNE Report and Order", "FCC Order Offers Broadband Regulatory Relief", "FCC Announces Decision on Switching", "Commentary: Republicans Split On FCC UNE Order", and "Congressional Reaction To FCC UNE Order" in TLJ Daily E-Mail Alert No. 609, February 21, 2003.

On September 2, the FCC published two notices in the Federal Register. First, the FCC published a notice that recites and describes the FCC's new rules regarding the unbundling requirements of incumbent local exchange carriers (ILECs). See, Federal Register: September 2, 2003, Vol. 68, No. 169, at Pages 52275 - 52306.

Second, the FCC published a notice that summarizes the portion of the triennial review order that contains a notice of proposed rulemaking (NPRM) regarding modifications to the FCC's rules implementing 47 U.S.C. § 252(i), which requires local exchange carriers (LECs) to make available to other telecommunications carriers interconnection agreements approved under Section 252.

Petitions for Writ of Mandamus. ILECs have also filed petitions for writ of mandamus with the U.S. Court of Appeals seeking a stay of parts of the FCC's TRO. See, story titled "ILECs File Petitions for Writ of Mandamus Challenging Triennial Review Order" in TLJ Daily E-Mail Alert No. 730, September 2, 2003.

These petitions assert that the FCC's TRO flouts the Court or Appeals opinion overturning the FCC's previous unbundling order. The Supreme Court vacated the FCC's first unbundling order in AT&T v. Iowa Utilities Board, 525 U.S. 366 (1999). The FCC then promulgated another unbundling order. But, the U.S. Court of Appeals (DCCir) vacated this order in USTA v. FCC, 290 F.3d 415 (2002). And, the Supreme Court denied certiorari. The just released TRO contains the FCC third unbundling order.

Federal Reserve Governor Predicts Growth in IT Investment

9/4. Federal Reserve Board (FRB) Governor Ben Bernanke gave a speech in New York City to the Bloomberg Panel for the Outlook on the U.S. Economy regarding his "impressions about what seems likely to unfold in the next year to eighteen months". He predicted that a growth rate of "4 percent or better in 2004 is plausible", and that a rebound in business information technology investment is one reason.

Bernanke (at right) stated that "I have been of the view for quite a while that acceleration of growth to 4 percent or better in 2004 is plausible; and I agree also that the decline in the unemployment rate, though steady, is likely to be slow."

He explained that "What makes the situation today feel particularly encouraging, however, is that we may finally be seeing some signs of a revival in business investment."

He continued that "the best prospects for an investment rebound in the corporate sector lie in the equipment and software sector, particularly in high-tech equipment. Over the summer we have seen indications of at least a moderate pickup in this sector. Notably, according to the preliminary GDP estimates, real investment in equipment and software rose at an annual rate of 8 percent in the second quarter. Real expenditures for high-tech equipment advanced 34 percent (at an annual rate) in the second quarter, a significant step up from the first quarter, and real spending on software rose at a 9 percent rate."

He concluded that "Perhaps managers have finally decided that they can't put off that IT upgrade any longer. Even spending on communications equipment was strong in the second quarter."

Senate Appropriations Committee Marks Up CJS Bill

9/4. The Senate Appropriations Committee met to mark up several appropriations bills for fiscal year 2004, including the Commerce, Justice, State, and the Judiciary (CJS) appropriations bill. This bill includes appropriations for most of the technology related agencies, including the Federal Communications Commission (FCC), Federal Trade Commission (FTC), U.S. Trade Representative (USTR), Department of Justice (DOJ), U.S. Patent and Trademark Office (USPTO), National Telecommunications and Information Administration (NTIA), National Institute of Standards and Technology (NIST), and other Department of Commerce entities.

The Committee released a short summary of the dollar amounts contained in the bill. This release states that the bill provides $6.3 Billion for the DOC, including $85.5 Million for the NTIA, $835.2 Million for the NIST, and $1.2 Billion for the USPTO. The bill includes $189 Million for the FTC, $277.8 Million for the FCC, $841.5 for the SEC, and $18.6 Billion for the DOJ and related agencies.

However, most of the debate and discussion by the Committee at the meeting pertained to several amendments to the bill that legislate substantive provisions with appropriations clauses.

First, the Committee approved a manager's amendment that includes a provision that prohibits the use of funds to grant licenses for a commercial TV broadcast station if the granting of that license would result in such party having an aggregate national audience reach exceeding 35%. This has the effect, during fiscal year 2004, of reversing the FCC's recently announced change to the national TV ownership cap. See, related story, below, titled "Senate Appropriations Bill Prevents FCC From Implementing New National TV Ownwership Rule".

Second, the Committee approved an amendment that, in effect, provides that Northpoint will not have to obtain its spectrum at auction. See, related story, below, titled "Senate Appropriations Bill Includes Northpoint Spectrum Amendment".

Third, the Committee approved an amendment that prohibits the USTR, during fiscal year 2004, from negotiating immigration provisions in free trade agreements. See, related story, below, titled "Senate Appropriations Bill Limits Negotiating Authority of USTR".

Senate Appropriations Bill Prevents FCC From Implementing New National TV Ownership Rule

9/4. The Senate Appropriation Committee approved the appropriations bill for fiscal year 2004 for the Departments of Commerce, Justice, and State, for the the federal judiciary, and for related agencies, at a mark up meeting on September 4, by unanimous roll call vote. The Committee approved a lengthy manager's amendment offered by Sen. Judd Gregg (R-NH), the Chairman of the CJS Subcommittee, and supported by Sen. Ernest Hollings (D-SC), the ranking Democrat on the Subcommittee, that includes language identical to the House CJS appropriations bill regarding the national TV ownership cap.

That is, it prohibits the use of funds to grant licenses for a commercial TV broadcast station if the granting of that license would result in such party having an aggregate national audience reach exceeding 35%.

The House bill provides, at Section 624, that "None of the funds in this Act may be used to grant, transfer or assign a license for a commercial TV broadcast station to any party (including all parties under common control) if the grant, transfer or assignment of such license would result in such party or any of its stockholders, partners, members, officers or directors, directly or indirectly, owning, operating or controlling, or having a cognizable interest in TV stations which have an aggregate national audience reach, as defined in 47 C.F.R. 73.3555, exceeding thirty-five (35) percent." (Parentheses in original.)

This section has the effect of preventing the Federal Communications Commission (FCC) from fully implementing, during FY 2004, the national TV ownership provisions of its June 2, 2003 Report and Order and Notice of Proposed Rulemaking [257 pages in PDF] amending its media ownership rules. See, story titled "FCC Announces Revisions to Media Ownership Rules" in TLJ Daily E-Mail Alert No. 672, June 3, 2003.

On July 23, 2003, the House passed HR 2799, the "Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act for Fiscal Year 2004", by a vote of 400-21. See, Roll Call No. 422. See, story titled "House Passes CJS Bill With Media Ownership Section" TLJ Daily E-Mail Alert No. 705, July 28, 2003.

Sen. Byron Dorgan (D-ND) offered no further amendments at this meeting. However, he announced that he intends to offer an amendment regarding the newspaper broadcast cross ownership provisions of the FCC's new media ownership rules when the full Senate considers the CJS appropriations bill.

Sen. Dorgan (at left) stated that "I was intending to offer an amendment to that that would repeal the provision that the FCC has developed allowing cross ownership between newspapers and broadcast properties. I will not offer that amendment to the provision that Mary has packaged now. I will rather do that on the floor of the Senate."

He continued that "it is very likely that before this bill gets to the floor of the Senate, before we deal with this on the floor of the Senate, we will have under expedited procedures, the Congressional Review Act, and a vote on a resolution of disapproval of the entire FCC rule. My expectation is that that will happen very shortly. There are 35 signatures having been filed at the desk, and the resolution of disapproval is now on the calendar. I have been talking to Sen. Frist and Sen. Daschle about that. So, I will not offer the amendment on cross-ownership today, but we will have that as an amendment on the floor, as well, when this appropriations bill comes to the floor."

Sen. Ted Stevens (R-AK) (at right), the Chairman of the Committee, stated that "with the Circuit Court decision, that decision has the effect of your amendment. I am pleased that you will not offer it here. I want to tell you that I intend to oppose that amendment on the floor, because I believe that the Circuit Court's opinion sort of puts a whole new aspect to this."

On September 3, the U.S. Court of Appeals (3rdCir) issued an order [3 page PDF scan] in Prometheus Radio Project v. FCC, staying the Federal Communications Commission's (FCC) new media ownership rules, pending resolution of the proceeding. See, story titled "3rd Circuit Stays FCC's Media Ownership Rule Changes" in TLJ Daily E-Mail Alert No. 732, September 4, 2003.

Sen. Stevens added that "we are going forward on the cap provision, and that is in the House bill, that will take this FCC provision, really, out of conference, unless another amendment is adopted."

"We don't need to be involved in a moratorium, or any decision concerning cross-ownership", said Sen. Stevens.

Sen. Sam Brownback (R-KS) announced his opposition to the section CJS appropriation bill regarding the national TV ownership cap.

Sen. John McCain (R-AZ), the Chairman of the Senate Commerce Committee, which has jurisdiction over the FCC and regulation of broadcast media, released a statement after the meeting. He said that "I am greatly dismayed that the Senate Appropriations Committee has chosen to usurp the jurisdiction of the Senate Commerce Committee today by including authorizing language on its Commerce, Justice, State Appropriations bill. I have never supported the use of the appropriations process to legislate policy, and it is especially disappointing to see this misuse of the appropriations process when the Commerce Committee has sent a bill to the floor that would address the precise issue added to today's appropriations bill."

"With respect to the substance of today's action, I continue to be mystified by the inconsistency of separating the national television broadcast ownership cap from the local broadcast limits in legislation -- an action that seems only to serve the members of the National Association of Broadcasters", said Sen. McCain.

Sen. Dianne Feinstein (D-CA) spoke with reporters after the meeting. She said that "Most of us just sort of arrived at the fact that 35% is a fairer number. The cap issue was sort of an easy issue. The other issue, on the cross ownership, is a much more difficult issue. ... It depends on whether you have large media markets, or small media markets."

She added, regarding cross ownership, "It is really not the jurisdiction of this Committee".

Senate Appropriations Bill Includes Northpoint Spectrum Amendment

9/4. The Senate Appropriation Committee approved the appropriations bill for fiscal year 2004 for the Departments of Commerce, Justice, and State, for the the federal judiciary, and for related agencies, at a mark up meeting on September 4, by unanimous roll call vote. The Committee also approved by voice vote an amendment offered by Sen. Mary Landrieu (D-LA) and Sen. Kay Hutchison (R-TX) pertaining to fixed terrestrial services in the 12.2-12.7 GHz band, that would enable Northpoint to obtain spectrum without going to auction.

Previously, on June 26, 2003, the Senate Commerce Committee amended and approved HR 1320, the Commercial Spectrum Enhancement Act, with an amendment pertaining to Northpoint. See, story titled "Senate Commerce Committee Approves Commercial Spectrum Enhancement Act" in TLJ Daily E-Mail Alert No. 689, June 27, 2003.

Specifically, the June 26 amendment, which was offered by Sen. John Sununu (R-NH) and Sen. Maria Cantwell (D-WA), provides that "Section 647 of the ORBIT Act (47 U.S.C. 765f) is amended (1) by striking ``global satellite communications services.´´ and inserting ``global satellite communications services or for the provision of fixed terrestrial services in the 12.2-12.7 GHz band.´´; and (2) by adding at the end the following: ``No license for fixed terrestrial services in the 12.2-12.7 GHz band may be used for the provision of mobile terrestrial telephony services.´´." That is, it amends the ORBIT Act to exempt from auction spectrum fixed terrestrial services in the 12.2-12.7 GHz band.

The House passed its version of the bill on June 11 by a vote of 408-10, without the Northpoint language. See, Roll Call No. 260.

NorthPoint describes its technology as follows: "Northpoint is a patented, digital, wireless, cell based, terrestrial transmission technology that reuses radio frequency spectrum previously reserved for satellite systems. Northpoint can reuse this spectrum by keeping the terrestrial signal below the level to cause interference to the satellite signal, but above the level required to provide reliable terrestrial service. This is accomplished through several means, one of which is directional transmission. The Northpoint system consists of directional broadcast antennas located on towers, poles, buildings or mountains. The transmissions are oriented in a limited azimuth range, based upon the look angles to the satellite systems with which the Northpoint system will share frequencies, allowing harmonious simultaneous co-channel transmissions between satellite and terrestrial services." See, NorthPoint paper [9 pages in PDF]. See also, story titled "FCC Acts on Northpoint Application" in TLJ Daily E-Mail Alert No. 417, April 24, 2003.

Sen. Landrieu (at right) stated that her amendment "has to do with with leveling the playing field between the technologies that are in the video and broadband service sector. Mr. Chairman, many of the members are familiar with this issue. The Commerce Committee has considered it, held a hearing on it, considered it, and approved what I am asking for our Committee to add to the underlying bill. It is, in my opinion, a free enterprise amendment. It is a pro-consumer amendment. It levels the playing field between the between cable, satellite, and the MVDDS, which is the multi-channel video distribution and data service new technology."

"It will do many things. Importantly, it will reach rural areas. Mr. Chairman, you have been supportive of this because Alaska is one of those areas that is very difficult to reach through the standard technologies. It will improve our emergency alert systems. It will provide amber alerts", said Sen. Landrieu.

She concluded that "I generally support auctions, and would not normally support something without an auction process. But, because we exempted satellite technology from auctions three years ago, we should either require all applicants for a particular spectrum band to go to auction, or none at all. So, this amendment levels the playing field, clarifies it, is in line with what the Commerce Committee did."

Sen. Conrad Burns (R-MT), Sen. Ted Stevens (R-AK), and Sen. Kay Hutchison (R-TX) also spoke in favor of the amendment.

Sen. Hollings spoke in opposition to the amendment. He stated that it replaces auctions with Congressional allocation of spectrum, and sets a precedent for not holding spectrum auctions. Sen. Feinstein also opposed the amendment.

Sen. Dianne Feinstein (D-CA) spoke with reporters after the hearing. She said that "this is a public resource. If people are going to use it, they have got to pay something for it. And, you know, these companies are not in there for non-profit. I mean, they make huge profits."

Northpoint issued a release after the meeting in which it stated that the amendment "will pave the way for rapid deployment of a new wireless communications service called MVDDS." It added that the CJS language "is identical to the Sununu-Cantwell Amendment to H.R. 1320, which the Senate Commerce Committee adopted on June 26."

Senate Appropriations Bill Limits Negotiating Authority of USTR

9/4. The Senate Appropriation Committee approved the appropriations bill for fiscal year 2004 for the Departments of Commerce, Justice, and State, for the the federal judiciary, and for related agencies, at a mark up meeting on September 4, by unanimous roll call vote. It also approved an amendment offered by Sen. Dianne Feinstein (D-CA), Sen. Larry Craig (R-ID) and Sen. Byron Dorgan (D-ND) that would prevent the U.S. Trade Representative (USTR) from spending any appropriated funds for negotiating immigration provisions.

Sen. Feinstein (at right) stated that "this amendment would prohibit the Office of the USTR from using '04 appropriations funds to negotiate or enter into trade agreements containing immigration provisions, or to otherwise amend immigration laws".

Sen. Feinstein is a member of the Senate Judiciary Committee, which has jurisdiction over immigration law. She stated that the recently negotiated free trade agreements with Chile and Singapore include immigration programs, "despite the fact that many members had appealed to the USTR not to do so". She said that this is "legislating an immigration program on a trade agreement".

Sen. Craig also spoke in favor of the amendment. He said that "we need to send a very loud message to our USTR".

Sen. Ernest Hollings (D-SC) added "this crowd is way off base." Sen. Robert Byrd (D-WV) spoke in opposition to the entire notion of trade promotion authority.

Sen. Judd Gregg (R-NH), the Chairman of the CJS subcommittee, spoke in opposition to the amendment. Nevertheless, it was adopted, without a roll call vote.

House Subcommittee Holds Hearing on Inaccurate Whois Data

9/4. The House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held an oversight hearing titled "Internet Domain Name Fraud -- the U.S. Government's Role in Ensuring Public Access to Accurate Whois Data".

Benjamin Edelman, of the Berkman Center at Harvard Law School, stated in his prepared testimony [26 pages in PDF] that the way the domain name system is structured, "registrants are under only an honor system to provide accurate Whois data. Meanwhile, it makes no economic sense for registrars to enforce Whois accuracy. The result is that in terms of accuracy, when compared with other compilations of public data (such as driver's licenses and trademark registrations), the Whois database is substantially fiction."

James Farnan, Deputy Assistant Director of the FBI's Cyber Division, stated in his prepared testimony that the Cyber Division regularly used the Whois database in investigations of cyber crimes. He stated "Sometimes the publicly available identifying information in the Whois database is inaccurate but the non-public payment information used to purchase the domain name is valid and legitimate. In those instances, serving a subpoena on the registrar can yield the real identity of the domain owner. Unfortunately, not every domain name registrar authenticates credit card or other payment information at the time the domain name is registered. Therefore, a suspect using a stolen credit card may be able to purchase a domain name with fictitious identifying information which is never checked or verified."

Farnan added that "Whois data is inaccurate, incomplete, outdated, or deliberately falsified. If the Whois data leads to a dead-end, the FBI has other tools at its disposal to obtain information concerning the identity of domain owners."

Theodore Kassinger, General Counsel of the Department of Commerce, stated in his prepared testimony that "The Department has long been concerned about the protection of intellectual property rights on the Internet. In order for the Internet to remain a secure and stable network for electronic commerce, businesses must have confidence that their intellectual property can be protected in the online environment. The Department’s “White Paper” called for, among other mechanisms, a searchable database of registered domain names that provide information necessary to contact a domain name registrant when a conflict arises between a trademark holder and a domain name holder. This public domain name registrant database, known as the “WHOIS” database, serves many important public policy goals and is widely used by intellectual property rights holders, law enforcement, network operators, and consumers."

Steven Metalitz, Counsel for the Copyright Coalition on Domain Names, stated in his prepared testimony that "Access to accurate and reliable Whois data is not only important for enforcing intellectual property rights, but is also vital for consumer protection; law enforcement investigations of online crimes; and network security. The recent epidemic of “phishing” or corporate identity theft involves all these concerns, and accurate Whois data could play a critical role in preventing or investigating such frauds." He also said that "The Whois database remains riddled with inaccurate data".

While the invited witnesses focused on the problems associated with inaccurate Whois data, Alan Davidson of the Center for Democracy and Technology (CDT), wrote a letter [PDF] to the Subcommittee in which he argued that there are privacy risks associated with accurate data. He stated that "we write to urge the Subcommittee to consider the real privacy questions raised for people who register domain names and must put sensitive personal information in the publicly available Whois database. There are valuable technical, consumer protection and enforcement benefits from Whois, but CDT believes a balanced approach can be achieved that preserves enforcement while protecting personal privacy."

Davidson continued that "In an era of concern about identity theft and online security, it is unwise to require millions of individual registrants to place their home phone numbers, home addresses, and personal email accounts into a publicly available database that places no restrictions on the use of that data."

He concluded that "The best way to achieve accuracy in the Whois database will be to guarantee registrants privacy and security for their information."

EPIC Files FOIA Suit For CAPPS II Records

9/4. The Electronic Privacy Information Center (EPIC) filed a complaint in U.S. District Court (DC) against the Transportation Security Administration (TSA) under the Freedom of Information Act (FOIA), codified at 5 U.S.C. § 552, seeking the expedited processing and release of agency records concerning the Computer Assisted Passenger Prescreening System (CAPPS II).

The EPIC also filed a motion for a temporary restraining order seeking the immediate release release of two documents. See, the EPIC's Memorandum in Support of Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction [16 pages in PDF].

Before the terrorist attacks of September 11, 2001, the airlines conducted passenger screening, and administered the CAPPS I, subject to federal guidelines. In late 2001, the Congress passed the Aviation and Transportation Security Act, which created the TSA as a unit of the Department of Transportation (DOT). This Act gave the TSA responsibility for airport passenger screening. In late 2002, the Congress passed the Homeland Security Act, which, among other things, created the Department of Homeland Security (DHS), and transferred the TSA from the DOT to the new DHS.

The new CAPPS II, the next generation passenger screening system, will be a government (TSA) run system that replaces CAPPS I. The EPIC, and others, have privacy related concerns about the CAPPS II.

The TSA published a Privacy Act notice and request for comments in the Federal Register on January 15, 2003 in which it proposed to establish a new system of records to support the development of the new version of the CAPPS. See, Federal Register, January 15, 2003, January 15, 2003, Vol. 68, No. 10, at Pages 2101 - 2103.

The TSA published a second Privacy Act notice and request for comments in the Federal Register on August 1, 2003, in which it announced that it received "substantial comments ... in response to the prior notice", and that "significant changes have been made to date to the proposed CAPPS II system and to the CAPPS II Privacy Act notice in light of these comments".

This second notice further states that "Additional comments are sought on the modifications to this Privacy Act notice". This second notice sets a September 30, 2003 deadline for public comments. See, Federal Register, August 1, 2003, Vol. 68, No. 148, at Pages 45265 - 45269.

The two items requested by the EPIC in its FOIA request that are the subject of this TRO motion are (1) "any ``Capital Asset Plan and Business Case´´ materials (Exhibit 300) submitted to the Office of Management and Budget", and (2) "any ``Privacy Impact Assessments´´ prepared for the CAPPS II project".

The EPIC asserts that it is urgent that these records be produced on an expedited basis because they contain relevant information about the CAPPS II system, and because persons who submit comments to the TSA in response to its second Privacy Act notice would benefit from having access these records before the September 30, 2003 deadline for public comments.

The EPIC memorandum was written by EPIC General Counsel David Sobel (at right). He argues that "any further delay in the processing of plaintiff’s FOIA request will irreparably harm plaintiff’s ability (and that of the public) to engage in informed discussion and debate on the privacy and constitutional implications of TSA's controversial CAPPS II program." He concludes that "Without the expedited access to information about the CAPPS II program to which it is legally entitled, plaintiff's ability to engage in an urgent and current public policy debate will be irretrievably lost."

TSA Explanation of CAPPS II. The second Privacy Act notice, published on August 1, provides information about the new CAPPS II. It states that the "TSA will obtain electronically, either from airlines or from Global Distribution Systems, a passenger's ``passenger name record´´ (PNR) as collected from the passenger by a reservation system. PNR includes the routine information collected at the time a passenger makes a flight reservation. A PNR may include each passenger's full name, home address, home telephone number, and date of birth, as well as some information about that passenger's itinerary. No additional information beyond this data is required to be collected from passengers for the operation of CAPPS II."

The notice continues that the "CAPPS II system will access PNRs prior to the departure of the passenger's flight. Selected information will be securely transmitted to commercial data providers, for the sole purpose of authenticating passenger identity. This authentication will be accomplished not by a permanent co-mingling of data, but merely by the commercial data providers transmitting back to TSA a numeric score, which is an indication of the percentage of accuracy of the match between the commercial data and the data held by TSA. This will enable TSA to have a reasonable degree of confidence that each passenger is who he or she claims to be. TSA recognizes that inaccuracies in the commercial data may exist and that the CAPPS II system must allow for and compensate for such inaccuracies; this test phase is intended to test and further develop such capabilities in the system."

The TSA's notice also states that "Commercial data providers will receive a limited amount of identifying information from TSA with regard to each passenger, and will provide TSA with an authentication score and code indicating a confidence level in that passenger's identity. The commercial data providers will not provide TSA with any additional information about the individual. They will not acquire ownership of the data, nor will they be permitted to retain the data in any commercially usable form. TSA will not permit the commercial data providers to use this data for any purpose other than in connection with the CAPPS II program. Importantly, the commercial data provider will not retain information about the response they provide to TSA in any record about the individual that they maintain. Further, no persistent link between an individual's records in the private sector and that person's records within the CAPPS II system will be created."

The TSA elaborates that "Once CAPPS II has authenticated a passenger's identity, it will conduct its risk assessment. The risk assessment function is conducted internally within the U.S. government and will determine the likelihood that a passenger is a known terrorist, or has identifiable links to known terrorists or terrorist organizations. National security information from within the Federal Government, as well as information reflecting Federal officials with high levels of security clearance, will be part of this analysis function."

And, the TSA notice states that "After the CAPPS II system becomes operational, it is contemplated that information regarding persons with outstanding state or Federal arrest warrants for crimes of violence may also be analyzed and applied in the context of this system."

On August 25, 2003, the DHS's Chief Privacy Officer, Nuala Kelly (at right), and the TSA Administrator, Admiral James Loy, issued a joint statement regarding the CAPPS II. They stated that "CAPPS II will use limited passenger information to make flying more secure without impinging on individual privacy rights."

Opposition to CAPPS II. Also on August 25, the American Civil Liberties Union (ACLU) and other groups held a forum in Washington at which the CAPPS II was criticized.

The ACLU released a report that lists a number of objections to CAPPS II. First, the ACLU states that "The biggest problem with CAPPS II is that, simply put, we have no idea what it will do."

Second, the report asserts that CAPPS II will not achieve its stated purpose -- catching terrorists. "Even a known, wanted terrorist could sail right through this system simply by committing identity theft (which as we all know is all too easy today) and obtaining a false driver's license or passport (which is even easier)." (Parentheses in original.)

Third, the report asserts that CAPPS II will be subject to "mission creep". If it is built, it will first be used to detect terrorists, but may soon also be expanded to categories ranging from drug dealers to deadbeat dads.

Fourth, the ACLU report states that CAPPS II provides no due process. There is no notice, and no appeal. It states that the "Kafkaesque potential of this system has been starkly demonstrated by the government’s existing “no-fly” lists, under which many innocent, law abiding Americans have found themselves subject to relentless hassles, interrogation and searches every time they try to travel by air -- and have been unable to clear their names in the federal bureaucracy."

Finally, the report suggests that there is a potential discriminatory impact. That is, "there is a very real possibility that it will treat Americans unequally based on characteristics such as race, religion, and ethnic origin."

See also, the EPIC's web page titled Air Travel Privacy.

Telemarketers Sue FCC To Get Names, Addresses, and Phone Numbers of Consumers Who Complained to FCC

9/4. The American Teleservices Association (ATA) filed a complaint in U.S. District Court (DC) against the Federal Communications Commission (FCC) alleging violation of the Freedom of Information Act (FOIA), codified at 5 U.S.C. § 552, in connection with the ATA's efforts to obtain from the FCC personally identifying information about the over 10,000 consumers who have complained to the FCC about telemarketing practices.

The ATA's complaint states that this dispute pertains to the FCC's notice of proposed rulemaking (NPRM) [51 page PDF scan] regarding the Telephone Consumer Protection Act of 1991 (TCPA). The FCC stated that this NPRM was "prompted, in part, by the increasing number and variety of inquiries and complaints involving our rules on telemarketing". The FCC adopted this NPRM on September 12, 2002, and released it on September 18, 2002. See, notice in the Federal Register, October 8, 2002, Vol. 67, No. 195, at Pages 62667 - 62681. This is CG Docket No. 02-278, CC Docket No. 92-90, and FCC 02-250.

The ATA complaint states that it asked the FCC for "access to telemarketing complaints", and that FCC "staff responded by requiring that ATA file a FOIA request to obtain the documents". The complaint further states that the FCC Consumer and Governmental Affairs Bureau (CGB) indicated that the FCC "would redact personally identifiable information from the complaints and inquiries, such as names, addresses, and telephone numbers".

The ATA complaint further states that the "ATA to date has received only 2,420 -- or less than 25 percent -- of the requested TCPA complaints, no predictive dialer inquiries, and only a handful of non-responsive non-public FCC citations arising from TCPA complaints."

It alleges that "There was no legal basis to require proceeding under the FOIA rather than simply making the documents publicly available."

The ATA seeks a judgment declaring that the "FCC's failure to disclose the records requested by plaintiff is unlawful" and "enjoining the FCC from withholding the requested records".

The complaint does not state why the ATA wants these consumer complaints, or what it plans to do with the personally identifying information. But then, the FOIA does not require that the requester state a reason for requesting records.

The FCC has not yet filed an answer.

This case is American Teleservices Association v. FCC, D.C. No. 03-CV-1848, Judge Richard Leon presiding. The complaint was signed by Robert Corn-Revere of the law firm of Davis Wright Tremaine. It was filed on September 4, 2003.

Also, on July 25, 2003, the ATA and others filed a petition for review [4 pages in PDF] with the U.S. Court of Appeals (10thCir) of the FCC's order establishing a national do not call list in the same rulemaking proceeding referenced in the FOIA complaint. The FCC adopted this order on June 26, 2003, and released it on July 3, 2003. See also, FCC notice in the Federal Register, July 25, 2003, Vol. 68, No. 143, at Pages 44143 - 44179. This is CG Docket No. 02-278, and FCC 03-153. Corn-Revere is also counsel for the ATA in this petition for review.

The FCC instituted this rulemaking proceeding, and issued this order, to protect the privacy of consumers from the telemarketers represented by the ATA. Now, the ATA seeks to use administrative and legal processes to further invade the privacy of these consumers.

Estrada Withdraws From Consideration For DC Circuit Judgeship

9/4. Miquel Estrada, President Bush's nominee to be a Judge of the U.S. Court of Appeals (DCCir), withdrew his name from consideration. He was first nominated in May of 2001, but Senate Democrats have delayed and then filibustered his nomination. The full Senate never voted on his nomination.

President Bush released a statement: "Mr. Estrada received disgraceful treatment at the hands of 45 United States Senators during the more than two years his nomination was pending. Despite his superb qualifications and the wide bipartisan support for his nomination, these Democrat Senators repeatedly blocked an up-or-down vote that would have led to Mr. Estrada's confirmation. The treatment of this fine man is an unfortunate chapter in the Senate's history."

Sen. Orrin Hatch (R-UT), the Chairman of the Senate Judiciary Committee, also released a statement, in which he said that "The Senate ought to be ashamed of its unfair treatment of Miguel Estrada. It repeatedly denied him the dignity of an up or down vote on his nomination."

See also, statement by Sen. Patrick Leahy (D-VT), who opposed the nomination: "This nomination is another casualty of the White House’s insistence on dividing instead of uniting the American people over the President’s decisions for the federal courts". See also, and People for the American Way release.

People and Appointments

9/4. The Senate approved the nomination of Steven Colloton to be a Judge of the U.S. Court of Appeals (8thCir) by a vote of 94-1. See, Roll Call No. 327.

More News

9/4. Qwest Communications filed a Section 271 application with the Federal Communications Commission (FCC) to provide in region interLATA services in the state of Arizona. See, Qwest release.

9/4. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) announced that it seeks comments on its draft Special Publication 800-38C, Recommendation for Block Cipher Modes of Operation: the CCM Mode for Authentication and Confidentiality [PDF]. The NIST stated that "the CCM mode of the Advanced Encryption Standard (AES) algorithm is specified for the protection of sensitive, unclassified data. The CCM algorithm combines the counter (CTR) mode for confidentiality with the cipher block chaining-message authentication code (CBC-MAC) technique for authentication." Comments should be sent to EncryptionModes@nist.gov by October 20, 2003.

9/4. A trial jury of the U.S. District Court (CDCal) returned a verdict of guilty against Richard I. Berger on one count of conspiracy, six counts of loan fraud, one count of falsifying corporate books and records, one count of making false statements to company accountants and three counts of making false statements in SEC filings. The U.S. Attorneys Office stated in a release that "Berger was the president, chief executive officer, and chairman of the board of Craig Consumer Electronics. Craig was based in Cerritos and sold consumer electronic products such as car stereos and small personal stereos to retailers such as Best Buy and Circuit City."

FTC Will Not Enforce GLB Rule Against Attorneys Pending Resolution of Court Challenge

9/3. The U.S. District Court (DC) held a status hearing in New York State Bar Association v. FTC. This suit, and a related action brought by the American Bar Association (ABA), challenge the Federal Trade Commission (FTC) rule that applies the financial privacy provisions of the Gramm Leach Bliley Act (GLBA) to practicing attorneys.

The FTC stated that it will file a letter in which it states that it will not investigate, or enforce its rule against, attorneys pending resolution of this challenge.

The Congress passed the Financial Modernization Act of 1999, Pub. L. No. 106-102, 113 Stat. 1338 (1999), which is better known as the Gramm Leach Bliley Act or GLB, to enable financial institutions, such as banks and insurance companies, to associate. Since this process provides financial institutions with increased access to the personal financial information of customers, the Congress included provisions intended to protect financial privacy.

The GLB Act's privacy provisions apply only to "financial institutions". The definition does not reference law firms or lawyers. The entire legislative history is almost devoid of reference to lawyers. Moreover, lawyers are already subject to client confidentiality rules. Nevertheless, the FTC and other agencies adopted rules extending the GLB privacy provisions to practicing lawyers.

The New York State Bar Association (NYSBA) and the ABA both filed complaints against the FTC in the District Court, and many state bar associations have file amicus curiae briefs in support.

See, NYSBA complaint [34 page PDF scan]. See also, TLJ story titled "Court Hears Arguments on Bar Associations' Challenges to FTC's Financial Privacy Rules", June 2, 2003.

The Court also set the schedule for further briefing on cross motions for summary judgment, which will wrap up with final replies in late November.

Bush Signs Chile and Singapore FTA Bills

9/3. President Bush signed HR 2738, the "United States-Chile Free Trade Agreement Implementation Act", and HR 2739, the "United States-Singapore Free Trade Agreement Implementation Act".

Both free trade agreements (FTAs) contain provisions relating to protection of intellectual property rights, electronic commerce, and telecommunications. See, texts of the U.S. Singapore Free Trade Agreement and the U.S. Chile Free Trade Agreement.

President Bush also spoke at a signing ceremony. He stated that "When Congress passed trade promotion authority last year, I promised to use that tool aggressively to open up new markets for American exporters and to help create high paying jobs for American workers. And we moved."  See, transcript.

"The agreement with Chile also includes new projections for intellectual property", said Bush. He added that the Singapore FTA "contains state of the art protections for Internet commerce and intellectual property that will help drive growth and innovation in our technology sectors."

Secretary of Commerce Don Evans issued a statement in which he wrote that "President Bush today created greater job opportunities for American workers by signing free trade agreements with Chile and Singapore. The agreements are the first free trade agreements signed since the president achieved trade promotion authority. President Bush understands that free and fair trade expands opportunities abroad and creates better, higher-paying jobs here at home. The Chile and Singapore Free Trade Agreements are a start to building on our economy’s strengths and identifying to the world that America is serious about expanding free trade."

Sen. Charles Grassley (R-IA), the Chairman of the Senate Finance Committee, which has jurisdiction over most trade issues, stated in a release that without trade promotion authority (TPA), "the United States fell behind on trade. But now we're back on track. Knocking down barriers to trade and allowing U.S. companies to compete on a level playing field around the world is the goal of TPA. So, with the signing of these trade agreements, we send a strong message to the world that the United States is back in the game. Just as TPA benefited our work on these agreements, I fully expect the power of TPA to have a positive impact on the upcoming World Trade Organization negotiations in Cancun, Mexico, next week. Because of TPA, Ambassador Zoellick goes to Cancun empowered to negotiate the best trade deal for America. I'll be watching the negotiations closely to make sure we achieve a strong result for our farmers and workers."

2nd Circuit Hears Oral Argument in Internet Wine Sales Case

9/3. The U.S. Court of Appeals (2ndCir) heard oral argument in Swedenburg v. Kelly. The three judge panel, comprised of Judges John Newman, Richard Wesley, and Sonia Sotomayor, did not indicate how it will rule, or when it might issue its opinion.

On November 12, 2002, the U.S. District Court (SDNY) issued its opinion [32 page PDF scan] in Swedenburg v. Kelly, holding that New York state's ban on the direct shipment of out of state wine is unconstitutional. See, story titled "Court Holds New York's Ban on Internet Wine Sales Is Unconstitutional", in TLJ Daily E-Mail Alert No. 551, November 18, 2002.

In this case, small wineries and wine consumers challenge the constitutionality of a New York state liquor control law, which prohibits out of state wineries from selling directly to New York residents.

The winery plaintiffs are the Swedenburg Winery in the state of Virginia, which is owned by Juanita Swedenburg, and the Lucas Winery, located in Lodi, California. The plaintiffs are represented by the Institute for Justice.

This state statute at issue is not directed solely at internet sales. However, it has the effect of restricting internet sales.

The plaintiffs' argument is based upon the dormant Commerce Clause. Article I, Section 8, of the Constitution provides that "The Congress shall have Power ... to regulate Commerce with foreign Nations, and among the several States ..." The dormant commerce clause is the judicial concept that the Constitution, by delegating certain authority to the Congress to regulate commerce, thereby bars the states from legislating on certain matters that affect interstate commerce, even in the absence of Congressional legislation. It is applied to block states from regulating in a way that materially burdens or discriminates against interstate commerce. See, Gibbons v. Ogden, 22 U.S. 1 (1824), and Cooley v. Board of Wardens, 53 U.S. 299 (1851). However, the plaintiffs' argument is complicated by the 21st Amendment, which gives the states certain powers to regulate alcohol sales. (The plaintiffs also argued briefly that the New York statute violates the Privileges and Immunities Clause.)

The plaintiffs argued in their appeal brief that "These regulatory constraints on interstate commerce occur at a time when technology, particularly the Internet, is enabling like never before highly personalized transactions between producers and consumers and reducing the need for a middle-man ... As a recent working paper for the U.S. Federal Trade Commission found, ``legalized direct shipping offers consumers access to hundreds of wineries and retailers across the nation, rather than the limited number that a typical consumer would likely seek out and visit in the course of shopping offline.´´" See, FTC paper [50 pages in PDF].

Several other courts have addressed the issue of state bans on direct sales of wines, with a variety of results.

4th Circuit. On April 8, 2003, the U.S. Court of Appeals (4thCir) issued its opinion [20 pages in PDF] in Beskind v. Easley, holding that North Carolina's ban on direct shipment of wine from out of state wineries to North Carolina residents violates the Commerce Clause. See, TLJ story titled "4th Circuit Holds North Carolina Ban On Internet Wine Sales Is Unconstitutional", April 8, 2003 (also published in TLJ Daily E-Mail Alert No. 640, April 9, 2003).

Also, the U.S. District Court (EDVa), which is in the Fourth Circuit, held that Virginia's statute unconstitutionally discriminated against out of state wine and beer manufacturers and sellers and was not saved by the 21st Amendment. See, Bolick v. Roberts, 199 F. Supp. 2d 397. However, the Virginia state legislature subsequently amended its statute. Then, on May 23, 2003, the Court of Appeals issued its per curiam opinion [6 pages in PDF] in Bolick v. Danielson, vacating the District Court opinion, and remanding for consideration of the statute as amended. See, story titled "4th Circuit Vacates District Court Opinion in Case Affecting Internet Alcohol Sales" in TLJ Daily E-Mail Alert No. 671, June 2, 2003.

5th Circuit. On June 26, 2003, the U.S. Court of Appeals (5thCir) issued its opinion [39 pages in PDF] in Dickerson v. Bailey, a constitutional challenge to Texas' ban on direct sale by out of state wine sellers. The Appeals Court held that the Texas statute violates the dormant commerce clause. See, story titled "5th Circuit Holds Texas Wine Sales Statute Unconstitutional" in TLJ Daily E-Mail Alert No. 690, June 30, 2003.

7th Circuit. The U.S. Court of Appeals (7thCir) reached a different conclusion in its opinion in Bridenbaugh v. Wilson. In that case, the plaintiffs challenged the constitutionality of an Indiana statute that made it unlawful for persons in another state to ship an alcoholic beverage directly to an Indiana resident. The District Court held that the Indiana direct shipment regulation was unconstitutional under the Commerce Clause, and granted the plaintiffs' summary judgment motion (Bridenbaugh v. O'Bannon, 78 F. Supp.2d 828 (N.D. Ind. 1999)). Then, the Seventh Circuit reversed, upholding the constitutionality of the state ban.

The 7th Circuit wrote that "Indiana insists that every drop of liquor pass through its three-tier system and be subjected to taxation. Wine originating in California, France, Australia, or Indiana passes through the same three tiers and is subjected to the same taxes. Where’s the functional discrimination?"

In Swedenburg v. Kelly, Beskind v. Easley, and Dickerson v. Bailey, the state statutes provided exemptions for in state wineries, and thus discriminated against out of state wine sellers. In Bridenbaugh v. Wilson, the state statute applied equally to in state and out of state wine sellers.

Other Cases. See also, Bainbridge v. Bush, 148 F.Supp.2d 1306 (M.D.Fla. 2001), in which the District Court upheld Florida's ban on direct shipment of wine. However, it was vacated and remanded by the 11th Circuit in Bainbridge v. Turner, 311 F.3d 1104, 1112 (2002). See also, Heald v. Engler (E.D.Mich., 2001).

Treasury Secretary Addresses Trade With China

9/3. Secretary of the Treasury John Snow gave a speech in Beijing, China in which he addressed trade and intellectual property rights.

Snow (at right) stated that "Our trade with you makes your economy stronger. Your trade with us makes our economy stronger. As our economies are stronger, benefits are extended to the rest of our trading partners. So just as China benefits from our market, U.S. businesses and consumers should benefit from China's growth. Clearly, investments and technology from the United States help to sustain high growth in China."

He added that "In recent years, China has made historic strides in reforming its economy and moving to a market-based system. We applaud that and urge continued progress."

Then, he stated that an "area of concern for me is that U.S. companies continue to lose billions of dollars because of the piracy of intellectual property. Enforcement of the good intellectual property laws which China has put in place is essential to our continued economic relationship."

Survey Estimates the 10 Million Americans Have Been Victims of ID Theft in Last Year

9/3. The Federal Trade Commission (FTC) released a document [12 pages in PDF] titled "Report: Federal Trade Commission Overview of the Identity Theft Program: October 1998 -- September 2003". It reviews the activities of the FTC to date relating to identity theft. The FTC also released a report [93 pages in PDF] titled "Federal Trade Commission: Identity Theft Survey Report", that was prepared for the FTC by Synovate, a market research firm. It contains survey results that estimate, for example, that "almost 10 million Americans have discovered that they were the victim of some form of ID Theft within the last year".

Howard Beales, Director of the FTC's Bureau of Consumer Protection, stated in a release that "For several years we have been seeing anecdotal evidence that identity theft is a significant problem that is on the rise. Now we know. It is affecting millions of consumers and costing billions of dollars. This information can serve to galvanize federal, state, and local law enforcers, the business community, and consumers to work together to combat this menace."

The Synovate report states that "1.5 percent of survey participants reported that in the last year they had discovered that their personal information had been misused to open new credit accounts, take out new loans, or engage in other types of fraud, such as misuse of the victim’s name and identifying information when someone is charged with a crime, when renting an apartment, or when obtaining medical care."

The report refers to this as "New Accounts & Other Frauds' ID Theft". It adds that "This result suggests that almost 3.25 million Americans discovered that their personal information had been misused in this kind of fraud in the past year."

The Synovate report also states that "2.4 percent of survey participants reported misuse of their information in the last year that was limited to the misuse of one or more of their existing credit cards or credit card account numbers". Also, "0.7 percent of participants reported misuse of one or more of their existing accounts other than credit cards -- for example checking or savings accounts or telephone accounts".

It also states that "Including all types of ID Theft, a total of 4.6 percent of survey participants indicated that they had discovered they were victims of ID Theft in the past year. This result suggests that almost 10 million Americans have discovered that they were the victim of some form of ID Theft within the last year."

The report also addresses losses. "On average, victims of ``New Accounts & Other Frauds´´ ID Theft indicated that the person or persons who misused the victim’s personal information had obtained money or goods and services valued at $10,200 using the victim's information. This result suggests that the total loss to businesses, including financial institutions, from this type of ID Theft was $33 billion in the last year."

Wayne Abernathy, Assistant Secretary of the Treasury for Financial Institutions, said in a written statement that the Bush administration "has called for legislation that, among other provisions, would establish a national fraud alert system, improve the accuracy of credit reports, identify the tell tale signs -- or red flags -- to alert lenders so they can thwart identity theft attempts, and put more information in the hands of consumers -- including annual free copies of their credit reports.  The proposals would also make it easier for victims to restore their credit histories and impose penalties if a company puts false information on credit records."

Abernathy added that "The problem is so great, and its impact on consumers so terrible, that we should not delay giving consumers and law enforcers these important new tools to fight identity theft."

3rd Circuit Stays FCC's Media Ownership Rule Changes

9/3. The U.S. Court of Appeals (3rdCir) issued an order [3 page PDF scan] in Prometheus Radio Project v. FCC, staying the Federal Communications Commission's (FCC) new media ownership rules, pending resolution of the proceeding. The Appeals Court granted this preliminary relief without making any finding of likelihood of success on the merits. See, full story.

FCC Announces Agenda for September 10 Meeting

9/3. The Federal Communications Commission (FCC) published in its web site the agenda [3 pages in PDF] for its September 10 meeting.

The FCC will consider a notice of proposed rulemaking (NPRM) to examine ways of amending spectrum regulations and policies in order to promote the rapid and efficient deployment of quality spectrum based services in rural areas. This is WT Docket No. 02-381 and WT Docket No. 01-14.

The FCC will consider a NPRM concerning modifications to Parts 2 and 15 of its rules regarding the design and authorization of unlicensed devices.

The FCC's International Bureau (IB) will report on the first in a series of annual reports on the commercial satellite industry.

The FCC's Wireless Telecommunications Bureau (WTB) and the National Coordination Committee (NCC) Chair will report on the NCC's recommendations for interoperable public safety use of the 700 MHz band.

The FCC will consider a NPRM regarding the conditions under which 47 U.S.C. § 251(c) and § 271 should be deemed to be "fully implemented" under Section 10(d) of the Communications Act.

The FCC will consider a NPRM to review the FCC's cost-based pricing rules for unbundled network elements.

Finally, the FCC will consider a Second Report and Order regarding regulations to facilitate the connection of customer premises equipment purchased from retail outlets to multichannel video programming distibutor systems. This is CS Docket No. 97-80 and PP Docket No. 00-67.

People and Appointments

9/3. President Bush nominated Gordon England to be Secretary of the Navy. This is a reappointment. He had previously been Secretary of the Navy, but was briefly appointed to the Department of Homeland Security to assist in its establishment. See, White House release.

9/3. President Bush nominated Michael Wynne to be Under Secretary of Defense for Acquisition, Technology, and Logistics (ATL). He replaces Edward Aldridge. Wynne is currently Deputy Under Secretary of Defense for ATL. He previously spent 23 years working for General Dynamics. See, White House release and release. See also, website for the Office of the Under Secretary of Defense for ATL. This Office oversees, among other things, the Defense Advanced Research Projects Agency (DARPA), which is involved in numerous information technology related projects.

9/3. President Bush nominated Paul Atkins to be a Member of the Securities and Exchange Commission (SEC) for a term expiring June 5, 2008. This is a reappointment. See, White House release.

9/3. President Bush announced his intent to nominate Jeffrey Rosen to be General Counsel of the Department of Transportation. He is currently a partner in the law firm of Kirkland & Ellis. See, White House release.

9/3. President Bush announced his intent to appoint Karen Evans to be Administrator of the Office of Electronic Government in the Office of Management and Budget (OMB). She is currently Chief Information Officer at the Department of Energy. See, White House release.

9/3. Edward Merlis was named Senior Vice President, Law and Policy, for the U.S. Telecom Association (USTA). See, USTA release.

More News

9/3. The U.S. District Court (NDCal) sentenced Rusty McDowell to serve 24 months in prison and 12 months community confinement. He was convicted in November of 2002 of eight felony counts arising from the misappropriation of confidential parts drawings from Applied Materials. The District Court also ordered McDowell & Company, Inc. to pay a fine of $750,000. The U.S. Attorneys Office stated in a release that McDowell engaged "in a scheme to defraud Applied Materials, a Santa Clara corporation, by secretly obtaining Applied Materials semiconductor parts drawings from a former Applied Materials employee and then using the drawings to have spare parts manufactured without the permission of Applied Materials."

House to Take Up Treasury & Transportation Appropriations Bill

9/2. The House is scheduled to consider on Thursday and Friday HR 2989, a bill making appropriations for the Department of the Treasury, the Department of Transportation, and certain independent agencies for the fiscal year ending September 30, 2004. This is not a technology related bill. However, a few provisions are noteworthy.

For example the bill provides, "For necessary expenses of the Internal Revenue Service, $429,000,000, to remain available until September 30, 2006, for the capital asset acquisition of information technology systems, including management and related contractual costs of said acquisitions, including contractual costs associated with operations authorized by 5 U.S.C. 3109", which pertains to the employment of experts and consultants.

The bill also provides, at Section 732, a prohibition of federal agency monitoring of personal information on use of the internet. It states that "None of the funds made available in this or any other Act may be used by any Federal agency -- (1) to collect, review, or create any aggregate list, derived from any means, that includes the collection of any personally identifiable information relating to an individual's access to or use of any Federal Government Internet site of the agency; or (2) to enter into any agreement with a third party (including another government agency) to collect, review, or obtain any aggregate list, derived from any means, that includes the collection of any personally identifiable information relating to an individual's access to or use of any nongovernmental Internet site."

9th Circuit Rules on Personal Jurisdiction Over Internet Retailers

9/2. The U.S. Court of Appeals (9thCir) issued its opinion [16 pages in PDF] in Gator.com v. L.L.Bean, holding that personal jurisdiction over an out of state defendant may be based upon its operation of a web site that engages in electronic commerce. This case adds to the growing number of cases, and confusion, regarding when internet based activity gives rise to personal jurisdiction. The Supreme Court has yet to take a case in this area.

Background. L.L.Bean is a corporation based in the state of Maine that sells clothing and related items to consumers by direct mail and over the internet. Its offices, and manufacturing and distribution facilities, are located in Maine. It has some stores, but none in the state of California. While it sells to customers in California by mail and internet, and mails catalogues to persons in California, it has no presence there.

Gator.com is Delaware corporation with its principle place of business in California. It develops and distributes software for use by consumers that, among other things, causes pop up ads to appear over the e-commerce web sites visited by consumers using the software.

The Appeals Court describes the Gator.com software: "The Gator program provides a ``digital wallet´´ which stores computer user passwords to various websites, user personal information, and credit card in formation. In addition, when a user visits a website on the internet, the Gator program analyzes the Uniform Resource Locator (``URL´´) associated with that web page. When it recognizes certain URLs that have been pre-selected by Gator, the program displays a pop-up window offering a coupon for a competitor. Gator users who visit L.L. Bean’s website are offered coupons for one of L.L. Bean's competitors, Eddie Bauer, via a pop-up window that at least partially obscures L.L. Bean’s website."

The Washington Post and other publications have also sued Gator.com in connection with this software, alleging, among other things, trademark claims. See, stories titled "District Court Issues Injunction Order in Washington Post v. Gator" in TLJ Daily E-Mail Alert No. 471, July 17, 2002; and "Court Grants Preliminary Injunction in Washington Post v. Gator" in TLJ Daily E-Mail Alert No. 469, July 15, 2002.

L.L.Bean wrote a letter to Gator.com, in California, demanding that it cease violating its trademark rights.

District Court. Gator filed a complaint in U.S. District Court (NDCal) against L.L.Bean seeking declaratory relief that its software does not violate L.L.Bean's state or federal trademark or other rights. L.L.Bean moved to dismiss the complaint for lack of personal jurisdiction over it. The District Court dismissed the complaint. Gator appealed.

Appeals Court. The Appeals Court reversed. It held that L.L. Bean has substantial or continuous and systematic contacts with California sufficient to support a finding of general jurisdiction.

The Court wrote that "It is increasingly clear that modern businesses no longer require an actual physical presence in a state in order to engage in commercial activity there. With the advent of ``ecommerce,´´ businesses may set up shop, so to speak, without ever actually setting foot in the state where they intend to sell their wares. Our conceptions of jurisdiction must be flexible enough to respond to the realities of the modern marketplace." It added that "Businesses who structure their activities to take full advantage of the opportunities that virtual commerce offers can reasonably anticipate that these same activities will potentially subject them to suit in the locales that they have targeted."

The Court did however distinguish L.L.Bean from some other smaller entities that engage in e-commerce, or merely operate a web site. It wrote that L.L.Bean is "a multi-million dollar company that concedes that its agents regularly do business around the country, including flying to California to meet with vendors. Nor does this case present issues whose disposition will rely on access to L.L. Bean's facilities or records. Moreover, the burden on Gator if it were forced to proceed in Maine would be at least equal to, if not more severe, than the burden faced by L.L. Bean."

Other Cases. The Supreme Court has yet to take a case involving internet based jurisdiction. However, there have been numerous opinions by other courts in the last year. See, related TLJ coverage:
 • "Court Rules Operation of Website Does Not Create Personal Jurisdiction Over Out of State Defendant" in TLJ Daily E-Mail Alert No. 693, July 8, 2003.
 • "Supreme Court Denies Cert in Case Involving Personal Jurisdiction in Internet Defamation Suit" in TLJ Daily E-Mail Alert No. 665, May 20, 2003.
 • "Supreme Court Denies Certiorari in Internet Jurisdiction Case" in TLJ Daily E-Mail Alert No. 652, April 30, 2003.
 • "Supreme Court Denies Certiorari in Personal Jurisdiction Case" in TLJ Daily E-Mail Alert No. 582, January 14, 2003.
 • "District Court Squeezes Sharman on Internet Based Personal Jurisdiction" in TLJ Daily E-Mail Alert No. 581, January 13, 2003.
 • "4th Circuit Rules in Internet Jurisdiction Case" in TLJ Daily E-Mail Alert No. 568, December 16, 2002.
 • "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication" in TLJ Daily E-Mail Alert No. 564, December 10, 2002.
 • "Internet Shoes: Two Appeals Courts Address Internet Based Personal Jurisdiction", "Fourth Circuit Holds No Personal Jurisdiction Over Out of State Web Host", and "DC Circuit Suggests Personal Jurisdiction Over Out of State Online Brokerage" in TLJ Daily E-Mail Alert No. 452, June 17, 2002.

The present case is Gator.com Corp. v. L.L.Bean, Inc., No. 02-15035, an appeal from the U.S. District Court for the Northern District of California, Magistrate Judge Maria-Elena James presiding, D.C. No. CV-01-01126-MEJ.

FCC Publishes Notices Regarding Triennial Review Order

9/2. The Federal Communications Commission (FCC) published two notices in the Federal Register regarding its recently released  triennial review order [576 pages in PDF].

First, the FCC published a notice in the Federal Register that recites and describes the FCC's new rules regarding the unbundling requirements of incumbent local exchange carriers (ILECs). See, Federal Register: September 2, 2003, Vol. 68, No. 169, at Pages 52275 - 52306. This notice further states that these rules take effect on October 2, 2003.

Legal challenges to parts of these rules have already been filed, and more challenges will come.

Second, the FCC published a notice in the Federal Register that summarizes the portion of the triennial review order that contains a notice of proposed rulemaking (NPRM) regarding modifications to the FCC's rules implementing 47 U.S.C. § 252(i), which requires local exchange carriers (LECs) to make available to other telecommunications carriers interconnection agreements approved under Section 252.

The deadline to submit comments in response to this NPRM is October 2, 2003. The deadline to submit reply comments is November 3, 2003. See, Federal Register, September 2, 2003, Vol. 68, No. 169, at Pages 52307 - 52312. Actually, the Federal Register notice states that the reply comment deadline is October 23. However, the FCC then issued a release [3 pages in PDF] stating that this was in error, and that a correction will soon be published in the Federal Register.

See also, TLJ story titled "Summary of FCC Triennial Review Order", also published in TLJ Daily E-Mail Alert No. 725, August 25, 2003. See also, stories titled "FCC Announces UNE Report and Order", "FCC Order Offers Broadband Regulatory Relief", "FCC Announces Decision on Switching", "Commentary: Republicans Split On FCC UNE Order", and "Congressional Reaction To FCC UNE Order" in TLJ Daily E-Mail Alert No. 609, February 21, 2003.

FCC Sets Deadlines for Comments Regarding Spectrum Reallocations Relating to 3G Services

9/2. The Federal Communications Commission (FCC) published a notice in the Federal Register that recites and describes its proposed rule changes "to make spectrum available for Federal Government operations that will be displaced from the band 1710-1850 MHz as a result of making the 1710-1755 MHz segment available to support the introduction of new non-Federal Government advanced wireless services (AWS)".

Current plans call for reallocating the 1710-1755 MHz band, which is used by the Department of Defense, for advanced wireless services (AWS), such as third generation wireless (3G) services. 3G is intended to bring broadband internet access to portable devices. In the present 4th NPRM, the FCC proposes to make spectrum available for federal government operations that will be moved to make room for AWS and 3G services.

The FCC adopted this Fourth Notice of Proposed Rulemaking [49 pages in PDF] on June 3, 2003, but did not release the text until July 7, 2003. See, story titled "FCC Releases NPRM Regarding Allocating Spectrum to DOD to Replace Spectrum Allocated for 3G Services" in TLJ Daily E-Mail Alert No. 694, July 9, 2003.

This Federal Register notice contains deadlines for public comments. Written comments are due November 3, 2003. Reply comments are due December 1, 2003.

See, Federal Register, September 2, 2003, Vol. 68, No. 169, at Pages 52156 - 52168. This is ET Docket No. 00-258 and WT Docket No. 02-8.

People and Appointments

9/2. David Aufhauser, General Counsel of the Department of the Treasury, announced his resignation, effective September 30, 2003. See, letter [MS Word] from Aufhauser to President Bush, and statement by Treasury Secretary John Snow.

More News

9/2. AT&T filed a complaint in U.S. District Court (EDVa) against MCI WorldCom and Onvoy alleging fraud, civil conspiracy, unjust enrichment, racketeering conspiracy and substantive racketeering through a pattern of multiple acts of mail fraud and wire fraud in connection with what AT&T describes as "orchestrating a scheme called the ``Canadian Gateway Project,´´ in which they worked with other telecommunications companies to reroute MCI customers' domestic phone calls through Canada to deceive and defraud AT&T into paying hefty termination fees for terminating calls to high-cost independent telephone companies in the U.S." See, AT&T release. See also, Onvoy responses to AT&T's allegations.

Go to News from August 26-31, 2003.