Legislative Update

Internet Access Tax Battle Heats Up in Senate

A U.S. senator recently said that he would hold up a massive year-end spending bill if it included a ban on Internet-access taxes that he and several colleagues fear would harm state and local finances.

Delaware Sen. Thomas Carper, a Democrat, told reporters he would try to keep the omnibus bill from coming to the Senate floor if the ban was included in its present form, which he said infringed on the rights of state and local governments to raise revenues.

“If we end up with just an awful … provision I would certainly object to bringing the omnibus spending bill to the floor and I suspect others will join me,” Carper told reporters after a news briefing on the issue.

Although Senate rules offer many ways for individual senators to hold up bills they disagree with, it would be hard for Carper to do more than delay the bill for a few days.

Colleagues said they hoped to reach a deal with lawmakers on the other side of the issue before matters reached a head.

The ban is meant to replace a 1998 moratorium that kept state and local government from imposing taxes on the monthly fees Internet providers such as EarthLink Inc. charge their customers. The moratorium expired on Nov. 1.

As written, the replacement measure would permanently ban those taxes as well as taxes on high-speed cable and DSL services not covered under the original moratorium.

The new version, which cleared the House of Representatives in September, would also eliminate access taxes that were in place in some states before 1998. Senate leaders brought the bill to the floor several weeks ago but pulled it back after it became apparent the measure might not pass easily.

State and local governments fear the legislation is worded so broadly that it would restrict them from collecting all manner of other taxes on the telecommunications industry.

They say it could cost them as much as $9 billion in tax revenues a year by 2006 as phone calls, music sales and other activities migrate to the Internet.

The Congressional Budget Office estimates these jurisdictions would lose $195 million that year but said the true cost of the provision could not be determined and could be much higher.

Calling the ban proposal an unfunded mandate on states and a massive tax break for the telecommunications industry, Republican Sen. Lamar Alexander of Tennessee said he and his colleagues had proposed a compromise two-year ban.

The compromise would ban access taxes both on DSL and in states previously allowed to tax Internet access services.

He said there was also a chance that the two sides could simply agree to extending the terms of the expired moratorium for a few months while they agreed on what should come afterward.

But Virginia Republican Sen. George Allen, whose state boasts a large high-tech business community and who supports the permanent ban proposal, said he could not accept an extension either for a few months or two years.

“Senator Allen does not believe a two-year extension provides either consumers or businesses with adequate stability to plan future significant buildout of broadband,” his spokesman said, adding that Allen's goal was to keep industry costs down to make Internet access affordable for all.

A spokeswoman for Oregon Sen. Ron Wyden, a Democrat, said Wyden was similarly unmoved by proposals presented thus far. Extension of the terms of the previous ban simply gave states more time to institute new taxes on the Internet, she said.

---

Web Sites Must Post Privacy Policy in California

Before leaving office, California Gov. Gray Davis signed into law A.B. 68, the Online Privacy Protection Act of 2003. Introduced by Assemblyman Joe Simitian, 21st District, the legislation makes California the first state to require online companies that collect personal information to disclose that they do so.

Beginning July 1, 2004, Internet companies accessible by Californians will have to identify information they collect and disclose with whom they share it. Affected Web sites must also include a description of how site visitors may review and request changes to personal information, and companies will be required to notify consumers of material changes to their privacy policies and clearly post effective dates.

Personally identifiable information includes:

1. First and last name.

2. Home or other physical address, including a street name and name of a city or town.

3. An e-mail address or telephone number.

4. A Social Security Number.

5. Any other identifier that permits actual or online contact with a specific person.

The law does not apply to Internet service providers who store or transmit personally identifiable information at the request of third parties or entities that manage or host commercial site.

---

California Wins Its First Anti-Spam Judgment

California won its first anti-spam judgment recently when a court fined a marketing firm $2 million for sending out millions of unsolicited e-mails telling people how to spam, the state's attorney general said.

Attorney General Bill Lockyer brought the case against PW Marketing of Los Angeles County and its owners Paul Willis and Claudia Griffin in 2002 under a 1998 state anti-spam law. The law was strengthened last month to make it easier to sue spammers.

Lockyer's spokesman Tom Dressler says while this case was decided under the original statute, the attorney general's office expects in the future it will be easier to try cases under the updated, tougher law.

PW Marketing and Willis and Griffin were charged with sending out millions of e-mails advertising “how to” guides on spamming and long lists of e-mail addresses.

The judgment, which Lockyer says will be the model for future spam injunctions, forbids PW Marketing from sending unsolicited commercial e-mail, accessing computers that belong to other people without their permission and disguising its identity by sending e-mails that appear to originate from a different address.

The injunction also forbids Willis and Griffin from owning or managing any business that advertises over the Internet for 10 years.

The tougher measures in the new statute include allowing individuals to sue spammers and collect damages of up to $1000 per e-mail. Another provision forbids sending unsolicited e-mail advertisements unless recipients give prior permission to receive such e-mails.

The old law made it illegal to send to recipients who had specified they did not want to receive e-mail advertising. It also required senders to provide a phone number or valid e-mail address for opting out on each e-mail ' something the company did not do, the attorney general's office says.

Wire service reports contributed to this article.

Internet Access Tax Battle Heats Up in Senate

A U.S. senator recently said that he would hold up a massive year-end spending bill if it included a ban on Internet-access taxes that he and several colleagues fear would harm state and local finances.

Delaware Sen. Thomas Carper, a Democrat, told reporters he would try to keep the omnibus bill from coming to the Senate floor if the ban was included in its present form, which he said infringed on the rights of state and local governments to raise revenues.

“If we end up with just an awful … provision I would certainly object to bringing the omnibus spending bill to the floor and I suspect others will join me,” Carper told reporters after a news briefing on the issue.

Although Senate rules offer many ways for individual senators to hold up bills they disagree with, it would be hard for Carper to do more than delay the bill for a few days.

Colleagues said they hoped to reach a deal with lawmakers on the other side of the issue before matters reached a head.

The ban is meant to replace a 1998 moratorium that kept state and local government from imposing taxes on the monthly fees Internet providers such as EarthLink Inc. charge their customers. The moratorium expired on Nov. 1.

As written, the replacement measure would permanently ban those taxes as well as taxes on high-speed cable and DSL services not covered under the original moratorium.

The new version, which cleared the House of Representatives in September, would also eliminate access taxes that were in place in some states before 1998. Senate leaders brought the bill to the floor several weeks ago but pulled it back after it became apparent the measure might not pass easily.

State and local governments fear the legislation is worded so broadly that it would restrict them from collecting all manner of other taxes on the telecommunications industry.

They say it could cost them as much as $9 billion in tax revenues a year by 2006 as phone calls, music sales and other activities migrate to the Internet.

The Congressional Budget Office estimates these jurisdictions would lose $195 million that year but said the true cost of the provision could not be determined and could be much higher.

Calling the ban proposal an unfunded mandate on states and a massive tax break for the telecommunications industry, Republican Sen. Lamar Alexander of Tennessee said he and his colleagues had proposed a compromise two-year ban.

The compromise would ban access taxes both on DSL and in states previously allowed to tax Internet access services.

He said there was also a chance that the two sides could simply agree to extending the terms of the expired moratorium for a few months while they agreed on what should come afterward.

But Virginia Republican Sen. George Allen, whose state boasts a large high-tech business community and who supports the permanent ban proposal, said he could not accept an extension either for a few months or two years.

“Senator Allen does not believe a two-year extension provides either consumers or businesses with adequate stability to plan future significant buildout of broadband,” his spokesman said, adding that Allen's goal was to keep industry costs down to make Internet access affordable for all.

A spokeswoman for Oregon Sen. Ron Wyden, a Democrat, said Wyden was similarly unmoved by proposals presented thus far. Extension of the terms of the previous ban simply gave states more time to institute new taxes on the Internet, she said.

---

Web Sites Must Post Privacy Policy in California

Before leaving office, California Gov. Gray Davis signed into law A.B. 68, the Online Privacy Protection Act of 2003. Introduced by Assemblyman Joe Simitian, 21st District, the legislation makes California the first state to require online companies that collect personal information to disclose that they do so.

Beginning July 1, 2004, Internet companies accessible by Californians will have to identify information they collect and disclose with whom they share it. Affected Web sites must also include a description of how site visitors may review and request changes to personal information, and companies will be required to notify consumers of material changes to their privacy policies and clearly post effective dates.

Personally identifiable information includes:

1. First and last name.

2. Home or other physical address, including a street name and name of a city or town.

3. An e-mail address or telephone number.

4. A Social Security Number.

5. Any other identifier that permits actual or online contact with a specific person.

The law does not apply to Internet service providers who store or transmit personally identifiable information at the request of third parties or entities that manage or host commercial site.

---

California Wins Its First Anti-Spam Judgment

California won its first anti-spam judgment recently when a court fined a marketing firm $2 million for sending out millions of unsolicited e-mails telling people how to spam, the state's attorney general said.

Attorney General Bill Lockyer brought the case against PW Marketing of Los Angeles County and its owners Paul Willis and Claudia Griffin in 2002 under a 1998 state anti-spam law. The law was strengthened last month to make it easier to sue spammers.

Lockyer's spokesman Tom Dressler says while this case was decided under the original statute, the attorney general's office expects in the future it will be easier to try cases under the updated, tougher law.

PW Marketing and Willis and Griffin were charged with sending out millions of e-mails advertising “how to” guides on spamming and long lists of e-mail addresses.

The judgment, which Lockyer says will be the model for future spam injunctions, forbids PW Marketing from sending unsolicited commercial e-mail, accessing computers that belong to other people without their permission and disguising its identity by sending e-mails that appear to originate from a different address.

The injunction also forbids Willis and Griffin from owning or managing any business that advertises over the Internet for 10 years.

The tougher measures in the new statute include allowing individuals to sue spammers and collect damages of up to $1000 per e-mail. Another provision forbids sending unsolicited e-mail advertisements unless recipients give prior permission to receive such e-mails.

The old law made it illegal to send to recipients who had specified they did not want to receive e-mail advertising. It also required senders to provide a phone number or valid e-mail address for opting out on each e-mail ' something the company did not do, the attorney general's office says.

Wire service reports contributed to this article.