What Congress really did

A closer look at new high-tech laws reveals that some are merely interim solutions and others provide surprising groundbreaking rules.

9 min read
Silicon Valley executives had something to toast this week, and for a change it wasn't the latest spike on Nasdaq.

With the end of the 105th Congress, online and computer industry lobbyists celebrated some significant victories. During the final hours this session, the tide turned toward stakeholders in the so-called New Economy, but government and industry observers say a lot of work remains to be done when it comes to such issues as privacy, encryption, and unsolicited bulk email.

In fact, while some legislation set groundbreaking rules for future business on the Net, a closer look at the new high-tech laws reveals that some are merely interim, partial solutions to huge ongoing problems.

On Wednesday, President Clinton ushered most of the tech legislation into law by signing a critical $500 billion federal spending bill that Congress had made into a pork sandwich, slapping on last-minute fixings like a three-year Net tax ban and more visas for foreign engineers and other highly skilled workers. Clinton also approved a congressional probe into sexism in the technology and science fields, online privacy protections for preteens, and a bill to push forward the government's use of digital signatures.

But remaining are some decidedly loose ends.

The president has yet to sign a handful of standalone bills, including a sweeping update of the copyright law that gives new protections for digital works and makes it a crime to create or sell any technology that could be used to break copyright protection devices or to commit an act of circumvention.

Also queued for passage is a bill to limit shareholder lawsuits against companies with volatile stock prices and legislation to impose stricter punishments for using the Net to sexually solicit minors, knowingly send "obscene" material to a person under 16, or transmitting child porn online.

"These bills basically ensure the continued growth of the Internet and also encourage people to make use of these new technologies," said Pia Pialorsi, a spokeswoman for the Senate Commerce Committee, the de facto gatekeeper for Net bills.

Passage of the high-tech laced budget bill was bittersweet for some Net factions, however.

For example, it contained the controversial Child Online Protection Act to require commercial site operators who offer "harmful" material to either check visitors' identifications or face up to $50,000 in fines and six months in prison each time a minor gets access to the content. Civil liberties groups already filed a lawsuit to overturn the law.

This major First Amendment scrape aside, the high-tech industry squeaked most of its issues by Congress and eventually came out ahead. Now the question is whether the proposals will be effective and what will top the agenda next year.

The Workforce Improvement and Protection Act, which was tacked on to the omnibus spending bill, raises the cap on the number of H1-B visas for technical and well-educated workers from 65,000 to 115,000 for 1999 and 2000.

While proponents of the bill carved out millions of dollars for science and technology scholarships to bolster the number of eligible workers for H1-B positions, this doesn't mean that the pipeline for the most lucrative high-tech jobs will be bulging in just two years. So the high-tech industry will likely go back to Congress to ask for another expansion of the program.

"The H1-B issue is a very important part of a much more extensive commitment that must be made to improve the skills of incumbent workers, dislocated or unemployed workers and the U.S. education system," said David Byer, vice president of government affairs for the Software Publishers Association.

The same scenario is true for the three-year moratorium on taxing Net access and services, which safeguards levies passed before October 1. The Internet Tax Freedom Act sets up a national "time out" to give local, state, and federal lawmakers an opportunity to set up uniform definitions for online goods and services to determine when and if they can be taxed.

E-bills: Congress bows to high-tech
Signed by President Clinton

Year 2000 Information and Readiness Disclosure Act: Limits legal liability if companies share information about the best ways to deal with the millennium computer problem.

Child Online Protection Act: Calls for commercial Web site operators who offer "harmful" material to check visitors' IDs or face up to $50,000 in fines and six months in prison each time a minor gets access to the content.

Workforce Improvement and Protection Act: Boosts the number of H1-B visas for technical and well-educated workers from 65,000 to 115,000 for 1999 and 2000.

Internet Tax Freedom Act: Calls a national three-year moratorium on "discriminatory" taxes on online services and access. Sites that offer "harmful" material are exempt from the time-out, and ISPs have to offer customers products to screen out this material.

Children's Online Privacy Protection Act: Requires that Web sites get parental consent before collecting information from children age 12 or younger.

Government Paperwork Elimination Act: Makes it possible to use electronic signatures for federal forms submitted via the Net, and requires agencies to post more documents online.

Advancement of Women in Science, Engineering, and Technology Development Act : Creates a one-year, 11-member commission to determine whether employers recruit, promote, pay, and retain women in these industries at the same rate as their male counterparts.

Research and Development Tax Credit: Extends tax credit for high-tech and science industries through next June.

Awaiting Clinton's signature

Digital Millennium Copyright Act: Imposes new safeguards for software, music, and written works on the Net, and would outlaw technologies that can crack copyright-protection devices.

Securities Litigation Uniform Standards Act: Limits lawsuits against companies with volatile stock prices by requiring class-action shareholder suits brought for failed corporate earnings to be filed in federal court.

Child Protection and Sexual Predator Punishment Act: Imposes stiff penalties for using the Net to sexually solicit minors or for knowingly sending "obscene" material to a person under 16 via the Internet. ISPs would be liable for failing to report child pornography once they are made aware of the illegal material, and could be fined up to $100,000.

But if congressional wrangling over the moratorium is any indication, the commission set up to study Net taxation could have a tough time finding a solution in three years.

"It will be hard," Byer noted. "But my view is that, in three years, the nature of the Net and the business models will be more solidified, and we will have a real sense of the marketplace and where the commercial flows are."

Rules for the long haul
Although the H1-B program is a quick fix to the high-tech worker shortage, there is some prolonged government support on the training front.

Clinton's celebrated 1999 education package passed this week, earmarks $75 million for technology training for teachers and set aside another $425 million for the Technology Literacy Challenge Fund, which gives states money to purchase computers, Net connections, and software for schools that apply for grants.

In addition, critics of the so-called e-rate never managed to pass legislation this session to overhaul and scale back the $1.275 billion program, which is set this year to dole out discounts of up to 90 percent on Net access and internal wiring costs for schools and libraries.

The high-tech industry was glad to see the e-rate untouched because it enables companies to sell more products and should foster a better-trained workforce.

Moreover, Congress's National Science Policy Study, completed this fall, concludes that lawmakers need to strengthen the education investment in science and engineering, which would no doubt bolster the domestic worker pool for the computer industry.

"We have major problems with our math and science education in this country: We rank among the lowest for developed countries," said Rep. Vernon Ehlers (D-Michigan), the first physicist elected to Congress, who oversaw the study. "We urged stronger steps to improve math and science education, and Congress has adopted our report as a framework for future decisions in the area of science and technology."

Education isn't the only area where Congress made moves that will affect the long-term future of the information economy.

In passing the Digital Millennium Copyright Act, lawmakers drastically altered consumer rights in online research and e-commerce. The bill, which will likely influence other governments, makes it a crime to create or sell any technology that could be used to break copyright protection devices or to commit an act of circumvention of the law. The provisions will take effect 18 months and two years after the bill is signed, respectively. Violators could be charged up to $2,500 per act of circumvention.

Although exceptions were made for encryption research and computer security, some in academia still worry that content providers will be able to build a digital toll gate around their content, hindering current "fair use" rights that now let citizens and educators copy and share some material.

Another landmark bill passed without much fanfare was Sen. Spencer Abraham's (R-Michigan) Government Paperwork Elimination Act. That law requires agencies to put more forms online and to set up systems to accept "digital signatures" within 18 months of the bill's passage.

Digital signatures, seen as a critical component to e-commerce, are attached to email messages or forms sent over the Net to verify a person's identity and to ensure that the message wasn't tampered with during transmission. Certification authorities such as the government, which would have to take certain steps to confirm a person's identification, could hand out digital signatures.

Abraham's bill sets a privacy precedent for digital signatures by ensuring that firms have to secure the sensitive information they collect when they verify a person's identity, such a Social Security number, credit card account, or driver's license number, along with contact or employment information.

"This bill says people should not have to sacrifice their privacy to use these systems online," said Alan Davidson, staff counsel at the Center for Democracy and Technology, which lobbied for the privacy provision. "This says those companies can't use or disclose [digital] signature information without the person's permission."

For better or for worse, some Information Age bills slipped through the cracks and died this year.

Most notably, Congress failed to pass the Internet Gambling Prohibition Act, which aimed to eliminate most online gambling. With just one roll of the dice, Net users could have faced up to a $500 fine and three months in prison. Cybercasino operators would face up to $20,000 in fines and up to four years in prison.

The Senate passed the bill in July, but due to the budget battle and White House sex scandal, Congress ran out of time the clear the bill.

"The Kyl bill would have forced responsible operators of Internet games in other legal jurisdictions underground," said Sue Schneider, chair of the Interactive Gaming Council, which opposed the law.

"In doing so, it would have eliminated any incentives for operators to keep children out of gambling sites," she added. "I am hopeful that the U.S. Congress will recognize that the best way to protect the interests of American businesses and individuals is to impose a strict, but fair regulatory regime instead of an unenforceable prohibition."

Despite a new law that says Web sites have to get parental permission before collecting personal information from children, the biggest issue sidestepped by lawmakers, consumer advocates say, was data security.

See special report: Congress shapes high-tech, Net
policy Proposals to impose broad privacy protections for digital records and personal information on the Net went nowhere.

"So far the administration has been reluctant to talk about the lack of online privacy legislation this session," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "The kids bill was the easy political play, but it left wide open true privacy protection in the online world."

Also dead for now are a handful of bills to lift the export limits on strong encryption to end the six-year battle over the restrictions. Encryption scrambles electronic data so that only the rightful recipient can read a message.

Although the White House has eased some restrictions, U.S. manufacturers still face an array of red tape and regulations in shipping products because law enforcement says encryption can help tech-savvy criminals cover their tracks.

Privacy and encryption will likely remain hot-button issues next year in Congress.

"I'm sure the first day of Congress next session we will see slew of privacy legislation introduced," said Brian O'Shaughnessy, director of public policy for the Internet Alliance , which favors industry self-regulation in this area.

"By that point there will be much more consumer awareness about what tools and efforts are out there to protect them," he noted.

Last but not least, Net users saw no federal help in eliminating spam, no doubt the most detested item on the Net. There was a myriad of bills introduced to curb spam ranging from proposals to eliminate it all together to requiring that senders of unsolicited bulk email label their messages and remove people from their mailing lists upon requests.

Nonetheless, spam is expected to clog Congress's agenda once again next year.

"I think we'll see more bills introduce on unsolicited email because it is the bane of every online users' experience," O'Shaughnessy said. "But legislation solutions are not the answer to unsolicited email or privacy. The Net is a global medium, and Congress can't make these decisions in a vacuum."