Congress Wrestles With the Net

As the Internet increasingly affects Americans' personal lives and business, Congress this year may try to address some of the issues raised by on-line services. Members are wrestling over how to apply familiar concepts such as taxation, copyright, and gambling to the new medium, as well as questions raised solely by computer technology--such as encryption. Several significant bills are making their way through the House and Senate, but the complexity and unfamiliarity of the issues may impede them.

The question of easing U.S. restrictions on the export of encryption technology remains one of the most complicated issues. The software protects sensitive data--something many businesses want. But the protection scares law enforcement authorities who believe criminals and terrorists will use it to their advantage.

Three House committees approved similar proposals that would relax the controls, but two others--which do not have primary jurisdiction--added amendments to address the security concerns.

Those provisions are "completely contrary to the original intent of the bill," said Rep. Bob Goodlatte, R-Va., one of the bill's sponsors. GOP leaders and the Rules Committee will sort out the different versions. Goodlatte said he has "very favorable vibes" the bill will be brought to the floor without the additions, but votes will be allowed on the amendments.

The Senate Commerce Committee, including Chairman John McCain, R-Ariz., passed an encryption bill that addresses the security concerns. But it does not have the backing of Majority Leader Lott. McCain is trying to come up with a compromise, his spokeswoman said.

Somewhat less controversial is legislation to regulate taxation on the Internet. Similar bills sponsored by Rep. Christopher Cox, R-Calif., and Sen. Ron Wyden, D-Ore., would place a five- or six-year moratorium on state and local taxation of Internet services. The legislation, however, would treat retail sales on the Internet like mail order transactions.

State and local governments originally opposed the plan, fearing it would deny them tax revenue, but have somewhat eased their objections. Cox discussed the issue last month with Utah GOP Gov. Mike Leavitt, a former chairman of the Republican Governors Association, and a Cox spokesman said it is now "just a matter of finalizing language" before the bill is ready to be passed in two committees. Lott told Wyden last year he wants further discussion on the measure before bringing it to the floor. A Wyden spokesman said the bill is "something that will move--not right away--but before the year is out."

Goodlatte also has been engaged in negotiations aimed at reaching a compromise on Internet copyright legislation, although copyright holders and service providers remain bitterly divided on who would ultimately be responsible for copyright violations on the Internet. Aides to Senate Judiciary Chairman Hatch are also setting up negotiations on the issue.

Goodlatte is the sponsor of another bill that would give states the authority to regulate or ban Internet gambling. Hearings are expected in the spring, but the House version will contend with a measure passed by the Senate Judiciary Committee that would ban such activity.