[Congressional Record Volume 144, Number 16 (Thursday, February 26, 1998)]
[House]
[Pages H636-H645]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   WIRELESS TELEPHONE PROTECTION ACT

  Ms. PRYCE of Ohio. Mr. Speaker, by the direction of the Committee on 
Rules, I call up House Resolution 368 and ask for its immediate 
consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 368

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 1(b) of rule 
     XXIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 2460) to amend title 18, United States Code, 
     with respect to scanning receivers and similar devices. The 
     first reading of the bill shall be dispensed with. Points of 
     order against consideration of the bill for failure to comply 
     with clause 2(l)(6) of rule XI are waived. General debate 
     shall be confined to the bill and shall not exceed one hour 
     equally divided and controlled by the chairman and ranking 
     minority member of the Committee on the Judiciary. After 
     general debate the bill shall be considered for amendment 
     under the five-minute rule. It shall be in order to consider 
     as an original bill for the purpose of amendment under the 
     five-minute rule the amendment in the nature of a substitute 
     recommended by the Committee on the Judiciary now printed in 
     the bill. Each section of the committee amendment in the 
     nature of a substitute shall be considered as read. During 
     consideration of the bill for amendment, the Chairman of the 
     Committee of the Whole may accord priority in recognition on 
     the basis of whether the Member offering an amendment has 
     caused it to be printed in the portion of the Congressional 
     Record designated for that purpose in clause 6 of rule XXIII. 
     Amendments so printed shall be considered as read. The 
     Chairman of the Committee of the Whole may: (1) postpone 
     until a time during further consideration in the Committee of 
     the Whole a request for a recorded vote on

[[Page H637]]

     any amendment; and (2) reduce to five minutes the minimum 
     time for electronic voting on any postponed question that 
     follows another electronic vote without intervening business, 
     provided that the minimum time for electronic voting on the 
     first in any series of questions shall be fifteen minutes. At 
     the conclusion of consideration of the bill for amendment the 
     Committee shall rise and report the bill to the House with 
     such amendments as may have been adopted. Any Member may 
     demand a separate vote in the House on any amendment adopted 
     in the Committee of the Whole to the bill or to the committee 
     amendment in the nature of a substitute. The previous 
     question shall be considered as ordered on the bill and 
     amendments thereto to final passage without intervening 
     motion except one motion to recommit with or without 
     instructions.
       Sec. 2. After passage of H.R. 2460, it shall be in order to 
     consider in the House S. 493. It shall be in order to move 
     that the House strike all after the enacting clause of the 
     Senate bill and insert in lieu thereof the provisions of H.R. 
     2460 as passed by the House.

  The SPEAKER pro tempore (Mr. Tiahrt). The gentlewoman from Ohio (Ms. 
Pryce) is recognized for 1 hour.
  Ms. PRYCE of Ohio. Mr. Speaker, for purposes of debate only, I yield 
the customary 30 minutes to my good friend, the gentleman from Ohio 
(Mr. Hall), pending which I yield myself such time as I may consume. 
During consideration of this resolution, all time yielded is for the 
purpose of debate only.
  Mr. Speaker, House Resolution 368 is a fair and open rule providing 
for the consideration of H.R. 2460, the Wireless Telephone Protection 
Act.
  The rule provides for 1 hour of general debate equally divided 
between the chairman and ranking member of the Committee on the 
Judiciary. For the purposes of amendment, the rule makes in order the 
Committee on the Judiciary amendment in the nature of a substitute as 
an original bill and, under this rule, any germane amendment may be 
offered, with priority recognition given to those Members who have 
preprinted their amendments in the Congressional Record.
  In addition, the rule provides for the customary motion to recommit, 
with or without instructions.
  In order to bring this legislation to the floor today, it is 
necessary to waive clause 2(L)(6) of Rule XI, which requires a 3-day 
layover of the committee report, and this rule provides such a waiver.
  Further, to expedite consideration of H.R. 2460, the chairman of the 
committee will be permitted to postpone votes during consideration of 
the bill and reduce voting time to 5 minutes on a postponed question as 
long as it follows a 15-minute vote.
  Finally, the rule provides that upon House passage, it will be in 
order to move to insert the House language in the Senate bill number. 
This provision is included because the Senate has already passed the 
Wireless Telephone Protection Act.
  Mr. Speaker, I hope all of my colleagues will support this fair and 
open rule so that we may proceed with a thorough debate of the 
underlying legislation, which the Committee on the Judiciary reported 
favorably by voice vote.
  The goal of 2460 is straightforward. It seeks to deter cellular 
telephone fraud. As our society becomes increasingly reliant on 
cellular technology it is important that we have the tools to 
discourage and prosecute fraud in the wireless telephone industry.
  The pervasiveness of such fraud is startling. In fact, calls made 
from stolen or cloned telephones are responsible for losses to the 
industry of close to $710 million.
  The dollars lost are very significant, but perhaps more worrisome are 
the much more serious crimes which are related to cellular fraud. For 
example, it is becoming common practice for drug dealers to use cloned 
telephones to avoid detection when making calls to their sources and 
clients.
  Under current law, prosecutors must prove that a person who possessed 
or used technology to obtain unauthorized access to telecommunications 
services had the ``intent to defraud.'' But law enforcement officials 
have pointed out that this is often too hard to meet the standard and 
prove a violation of Federal law.
  H.R. 2460 responds to this legal obstacle by removing the ``intent to 
defraud'' standard, recognizing that there is no reason why any person 
not working in the wireless telephone industry or in law enforcement 
would need such high-tech equipment unless they are intending to use it 
to clone cellular telephones. This change in the law will enable the 
government to successfully prosecute and punish the fraudulent use of 
cellular technology.
  Another provision of H.R. 2460 will clean up existing law by 
clarifying the penalties which may be imposed for cellular telephone 
fraud, allowing for a 15-year maximum penalty for violations.
  Mr. Speaker, the gentleman from Florida (Mr. McCollum), the chairman 
of the Subcommittee on Crime, explained to the Committee on Rules that 
this legislation is not controversial; and he requested that the 
legislation be considered under an open rule so that any Member who may 
be uncomfortable with the bill will have the opportunity to amend it.
  The Committee on Rules was pleased to honor that request. In fact, 
the rule was reported out of committee by voice vote without dissent.
  So I urge my colleagues to support a free and fair debate on the 
Wireless Telephone Protection Act by voting ``yes'' on this rule.
  Mr. Speaker, I reserve the balance of my time.
  (Mr. HALL of Ohio asked and was given permission to revise and extend 
his remarks.)
  Mr. HALL of Ohio. Mr. Speaker, I yield myself such time as I may 
consume, and I want to thank my colleague, the gentlewoman from Ohio 
(Ms. Pryce) for yielding me this time.
  This is an open rule. It will allow for full and fair debate.
  As my colleague just described, this rule provides for 1 hour of 
general debate, equally divided and controlled by the chairman and 
ranking minority member of the Committee on the Judiciary. Under this 
rule, amendments will be allowed under the 5-minute rule. This is the 
normal amending process in the House. All Members on both sides of the 
aisle will have the opportunity to offer amendments.
  Fraud involving cellular telephones is a significant criminal problem 
in this country. Cell phone fraud is often linked to other, more 
serious crimes when criminals use illegal phones to avoid detection of 
their activities.
  This measure will make it easier to obtain convictions against 
criminals involved in cell phone fraud. It is a bipartisan bill with 
support on both sides of the aisle. The Committee on Rules approved 
this by a voice vote, and I urge adoption of the rule.
  Ms. PRYCE of Ohio. Mr. Speaker, I have no further requests for time, 
and I yield back the balance of my time.
  Mr. HALL of Ohio. Mr. Speaker, I have no further requests for time, 
and I yield back the balance of my time.
  Ms. PRYCE of Ohio. Mr. Speaker, I move the previous question on the 
resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.
  The SPEAKER pro tempore. Pursuant to House Resolution 368 and rule 
XXIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for consideration of the bill, H.R. 2460.

                              {time}  1040


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 2460) to amend title 18, United States Code, with respect to 
scanning receivers and similar devices, with Mr. Collins in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Florida (Mr. McCollum) and the 
gentleman from Florida (Mr. Wexler) each will control 30 minutes.
  The Chair recognizes the gentleman from Florida (Mr. McCollum).
  Mr. McCOLLUM. Mr. Chairman, I yield myself such time as I may 
consume.
  I am pleased to rise in support of H.R. 2460, the Wireless Protection 
Act. This bill, introduced by the gentleman from Texas (Mr. Sam 
Johnson), is truly a bipartisan effort. I am proud to say that I was an 
original cosponsor of the bill, together with the gentleman from New 
York (Mr. Schumer), who is the ranking minority member of the 
Subcommittee on Crime, which I chair.

[[Page H638]]

  This bill will close a loophole in a statute Congress passed in 1994 
to fight cellular telephone fraud.
  At a hearing before the Subcommittee on Crime last year, witnesses 
from both the wireless industry and law enforcement testified that 
cellular telephone fraud is a significant criminal activity in the 
United States. In 1996, the wireless telephone industry lost over $700 
million in revenue as a result of calls made from stolen or cloned 
phones.
  As important as that loss is, it is important that Members bear in 
mind that criminals often use these illegal telephones as a means to 
evade detection while they plan and commit other crimes. This 
phenomenon is most prevalent in drug crimes, where criminals frequently 
use several cloned phones in a day, or routinely switch from one cloned 
phone to another each day in order to evade detection.
  In 1994, Congress amended section 1029 of Title 18 to make it a crime 
to knowingly and with intent to defraud possess hardware or software 
configured to clone wireless telephones. However, law enforcement 
officials have testified before the Subcommittee on Crime that it is 
often impossible to prove the intent to defraud element of this 
section.
  Even in the most common case, law enforcement officials will arrest 
criminals for other crimes and find the telephone cloning equipment in 
the possession of the criminals, which has been, of course, used to 
make the cloned phones. However, they do so without finding specific 
evidence that the criminals intended to use this equipment to clone the 
wireless telephones; and if they do not find that evidence, law 
enforcement officials often have been thwarted in proving a violation 
of this statute.
  Because there is no legitimate reason why an ordinary person would 
possess this equipment, there is no doubt that the intent of these 
criminals was to use that equipment to clone cellular phones. In order 
to remedy this problem, H.R. 2460 amends section 1029 to eliminate the 
``intent to defraud'' requirement concerning the possession of this 
equipment.
  In order to ensure that telecommunications company employees may 
continue to use these devices, however, the bill provides that it is 
not a violation of the amended statute for an officer, employee or 
agent of a facilities-based carrier to use, produce, have custody or 
control of or possess the hardware or software described in that 
subsection if they are doing it for the purpose of protecting the 
property or legal rights of that carrier.

                              {time}  1045

  The bill provides a definition of facilities-based carrier to make it 
clear to whom the exception applies. The bill also clarifies the 
penalties which may be imposed for violations of section 1029. Under 
existing law, violations of some subsections of this statute are 
subject to two different maximum penalties. The bill deletes this 
duplicative language and restates the entire punishment section of 1029 
to more clearly state the maximum punishments for each possible 
violation of that section. Finally, the bill directs the United States 
Sentencing Commission to review and, if appropriate, amend its 
guidelines and policy statements so as to provide an appropriate 
penalty for each of the offenses involving the cloning of wireless 
telephones.
  Mr. Chairman, I would like to again reiterate the thrust of this 
bill. It is to provide for a situation where we can gain more 
prosecutions successfully, gain more convictions of those who are out 
there cloning telephones. The idea is that if one has this telephone 
cloning equipment, there is no possible earthly reason for him to have 
it unless he has got it there to clone phones. The only people who 
should have that equipment are the folks who are the manufacturers, the 
people who are in the telephone equipment company business who are 
professionals designed to have it. Therefore, in order to gain these 
convictions, since proving the intent to clone is not something that we 
have been able to do, we are making it in this case a criminal 
violation to possess in essence this equipment without having to prove 
the intent element.
  It is a very simple bill, a very important bill, because telephone 
cloning is a very big business in this country and it involves a lot of 
criminal activity at all levels. Mr. Chairman, with that in mind, I 
urge the adoption of this bill.
  Mr. Chairman, I reserve the balance of my time.
  Mr. WEXLER. Mr. Chairman, I yield myself such time as I may consume. 
I rise in support of this bill and commend the gentleman from Texas 
(Mr. Sam Johnson) along with the gentleman from Florida (Mr. McCollum) 
and the gentleman from New York (Mr. Schumer), the ranking member, for 
their work on this bill.
  Mr. Chairman, cell phone cloning is the hottest new scam on the 
street. Cloning costs phone companies and their customers more than 
$650 million a year. It lets drug cartels operate in secrecy, away from 
the reach of law enforcement surveillance. Cloned cell phones are 
rapidly becoming the main communication network of drug runners and 
street gangs. The reason is that cloned phones not only allow the 
criminals to cheat the phone company, but they also evade wire taps. A 
drug dealer will often have 20 or more cloned phones, constantly 
switching among them to cover his tracks.
  The gentleman from Florida (Mr. McCollum) has already explained how 
the cloning process works. This bill will ban the copycat machines that 
criminals use to make cloned phones. These machines are freely 
advertised in magazines and on the Internet from anywhere from $1100 to 
$2500. Yet the only reason anyone would buy these devices is to defraud 
innocent consumers. Under current law, copycat machines are illegal 
only if the government can prove an intent to defraud. That is often 
impossible to prove and it permits unscrupulous manufacturers to keep 
making the machines and offering them for sale. This bill will ban the 
copycat machines outright.
  There has been one concern raised about the bill. Some cell phone 
companies are concerned that the language of the bill might 
inadvertently apply to machinery used by legitimate companies to test 
or reprogram their equipment. I understand that the gentleman from 
Florida (Mr. McCollum) will offer an amendment in the nature of a 
substitute that cures this problem. I expect to fully support the bill 
after that amendment.
  I also want to note that with the amendment, the wireless industry 
fully supports the bill. In fact, at a hearing before the Subcommittee 
on Crime, representatives from both the cell phone industry and from 
law enforcement testified about the rapid increase they are seeing in 
cloning activity and the need to take these copycat devices out of 
circulation among the general public.
  Mr. Chairman, I urge support for this bill.
  Mr. Chairman, I yield back the balance of my time.
  Mr. McCOLLUM. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Texas (Mr. Sam Johnson), the author of this bill.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I thank the gentleman from 
Florida (Mr. McCollum) for yielding me this time and for his valuable 
assistance in helping make this bill possible.
  The Wireless Telephone Protection Act is really another effort of 
ours to stop crime in this country. It is going to outlaw equipment 
which is used to steal cellular telephone numbers. For those who are 
not familiar with cellular cloning, the process is simple. Criminals 
sit in parked cars outside airports or along roadways and use special 
software and equipment to steal the electronic serial numbers from any 
person who uses a cellular phone within range. The stolen numbers are 
then programmed into other cell phones, called clones, and finally 
charges are made to the unsuspecting person's account, like me, for 
instance. My phone was cloned last year while I was standing on the 
curb at D-FW Airport, that is Dallas-Fort Worth, waiting for my wife. I 
ended up with over a $6,000 phone bill for calls that I did not make. 
There were calls made to places all over the world, including Spain, 
Colombia and Mexico. Later while I was on my phone with the telephone 
company trying to get this problem resolved, my personal phone number 
was still being used to make calls while I was talking to the phone 
company.

[[Page H639]]

  The tactic of using stolen phone numbers is commonly employed by drug 
dealers and gang members who are trying to evade law enforcement 
wiretaps or other surveillance. It is estimated that the cellular 
industry loses about $650 million per year due to this illegal 
activity. It increases the cost to every cellular phone user in the 
country.
  I hope that as a result of this bill, we can stop this fraud and help 
keep costs down for both the industry and the consumer. Cellular phone 
use is expanding by about 40 percent per year. With this increase, the 
Secret Service has doubled the number of arrests due to fraud every 
year since 1991. I am certain our law enforcement personnel could 
prosecute more criminals, as the gentleman from Florida (Mr. McCollum) 
says, if the current law permitted it, and it does not.
  Current law requires prosecutors to prove that a criminal acted with 
the intent to defraud. This means that an officer must catch the crook 
in the act of cloning to be arrested, which is next to impossible. The 
bill removes this burden. Now criminals will be arrested for possessing 
or manufacturing the cloning equipment, which has no other purpose than 
to steal a phone number.
  I have got an advertisement here that shows how easy it is to buy 
this cloning equipment. If we look at the fine print, it states that 
the equipment is used for educational or experimental purposes. That is 
kind of false. In fact, it is against the law. According to the Secret 
Service, there is no lawful purpose to possess, produce or sell 
hardware or software used to clone a wireless telephone.
  This is good, common sense legislation that is supported on both 
sides of the aisle. As my colleagues can see here, it is also supported 
by the Department of Justice, the U.S. Secret Service, and the cellular 
wireless industry, as my colleague has already stated. Every Member of 
this House has constituents who have been the victim of cell phone 
cloning. It causes them great stress, and I can tell my colleagues when 
you get a bill for 6,000 bucks on your phone, it is a shock.
  Let me just tell Members how James Kallstrom, the former head of the 
FBI, New York office, describes phone cloners. He says, quote, they are 
hard core criminals, murderers, kidnappers, terrorists, major drug 
dealers, child pornographers and pedophiles, violent criminals who use 
technology to avoid the law. We must stop this criminal activity now. 
This bill will do it. I urge Members' support.
  Mr. McCOLLUM. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from Maryland (Mrs. Morella).
  Mrs. MORELLA. Mr. Chairman, I thank the gentleman for yielding me 
this time. I would like to engage the gentleman in a colloquy on 
cellular extension phones.
  Mr. Chairman, I understand that many cellular subscribers find it 
advantageous to have two cellular phones with the same number. In this 
way, someone trying to reach a subscriber need only dial one number and 
the subscriber will be able to receive the call on either his or her 
car phone or on his or her portable hand-held phone. I also understand 
that the FCC currently prohibits companies from altering the electronic 
serial number of a cellular phone to allow more than one phone to have 
the same telephone number, but that the commission has been asked to 
reconsider that rule. I wonder, how would this bill affect the petition 
for reconsideration of this matter that is now pending before the FCC?
  Mr. McCOLLUM. Mr. Chairman, will the gentlewoman yield?
  Mrs. MORELLA. I yield to the gentleman from Florida.
  Mr. McCOLLUM. I thank the gentlewoman for her inquiry. In passing 
H.R. 2460, we do not intend to direct the FCC to act in one way or 
another on the pending petition for reconsideration that she has 
described. If the FCC were to change its rules, however, I think it is 
important for Members to understand that even though they did change 
those rules, the bill would still prevent the use, possession, 
production, and so forth, of hardware or software to insert or modify 
electronic serial numbers or other telecommunication identifying 
information to create extension phones. If the FCC does decide that a 
change in its rules serves the public interest, I would be willing to 
consider amending section 1029 in such a way as to conform the bill to 
the spirit of the FCC's decision, yet still making sure that this 
equipment would be unlikely to fall into the hands of criminals.
  Mrs. MORELLA. Mr. Chairman, that sounds reasonable.
  Mr. McCOLLUM. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Arkansas (Mr. Hutchinson), a member of the 
committee.
  Mr. HUTCHINSON. Mr. Chairman, I rise in strong support of H.R. 2460, 
the Wireless Telephone Protection Act, and commend the gentleman from 
Texas (Mr. Sam Johnson) for introducing the legislation. I also want to 
commend the leadership of the gentleman from Florida (Mr. McCollum) for 
his excellent work in behalf of this important legislation.
  We have known for some time that a significant amount of criminal 
activity in the United States involves the use of cellular telephones 
and cloned phone numbers. Each year the cellular telephone industry 
loses millions of dollars in revenue as a result of the use of cell 
phones that are being illegally cloned. But more important, the 
greatest difficulty is in the arena of law enforcement. Those people 
who are trying to put drug dealers in jail have difficulty with the 
illegal use of cloned phones. Criminals frequently clone the cell phone 
number of an unsuspecting, innocent party and then use this cloned 
number to engage in criminal activity, especially drug-related crimes.
  The process of cloning involves the use of a device which captures 
the identifying information in the telephone and a second device which 
is used to reprogram the subsequent phones. Current Federal law 
requires a prosecutor to prove that persons in possession of those 
devices had an intent to defraud. This standard is very difficult to 
meet and since these devices have no legitimate purpose except for the 
use by the telephone companies themselves, then I believe it is very 
important to remove the intent requirement and make possession itself a 
crime.
  As a parent of teenagers, very concerned about the drug culture that 
is so prominent in our society, as a former Federal prosecutor, I 
believe this is critically important in order to address the problems 
of drugs in our society and the use of cloned phones by the drug 
dealers.
  Mr. Chairman, about a year ago the Subcommittee on Crime held a 
hearing on drug interdiction efforts in the Caribbean. One of the 
issues that repeatedly resurfaced during our discussions with law 
enforcement was the problems posed by cloned cell phones. This 
legislation provides an important tool for prosecutors to use in the 
war against drugs and as such I urge my colleagues to support it.
  Mr. PAUL. Mr. Speaker, I rise today in opposition of H.R. 2460, The 
Wireless Telephone Protection Act. Setting aside the vital and relevant 
question of whether the enumerated powers and tenth amendment allow the 
federal government to make possession of electronic scanning devices 
criminal, another aspect of this bill should have met with harsh 
criticism from those who hold individual liberties in even some regard.
  Under current ``anti-cloning'' law, prosecutors must prove a 
defendant intended to use scanning equipment illegally, or have an 
``intent'' to defraud. This bill shifts the burden of proof of 
``innocent use'' from the prosecutor to the defendant.
  The United States Constitution prohibits this federal government from 
depriving a person of life, liberty, or property without due process of 
law. Pursuant to this constitutional provision, a criminal defendant is 
presumed to be innocent of the crime charged and, pursuant to what is 
often called ``the Winship doctrine,'' the persecution is allocated the 
burden of persuading the fact-finder of every fact necessary to 
constitute the crime . . . charged.'' The prosecution must carry this 
burden because of the immense interests at stake in a criminal 
prosecution, namely that a conviction often results in the loss of 
liberty or life (in this case, a sentence of up to ten years).
  This radical departure from the long held notion of ``innocent until 
proven guilty'' warrants opposition to this bill.
  Mr. McCOLLUM. Mr. Chairman, I have no further requests for time, and 
I yield back the balance of my time.
  The CHAIRMAN. All time for general debate has expired.
  The committee amendment in the nature of a substitute printed in the 
bill shall be considered by section as an

[[Page H640]]

original bill for the purpose of amendment, and pursuant to the rule 
each section is considered read.
  During consideration of the bill for amendment, the Chair may accord 
priority in recognition to a Member offering an amendment that he has 
printed in the designated place in the Congressional Record. Those 
amendments will be considered read.
  The Chairman of the Committee of the Whole may postpone a request for 
a recorded vote on any amendment and may reduce to a minimum of 5 
minutes the time for voting on any postponed question that immediately 
follows another vote, provided that the time for voting on the first 
question shall be a minimum of 15 minutes.
  The Clerk will designate section 1.
  The text of section 1 is as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wireless Telephone 
     Protection Act''.

                              {time}  1100

  The CHAIRMAN. Are there any amendments to section 1?
  If not, the Clerk will designate section 2.
  The text of section 2 is as follows:

     SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH 
                   COUNTERFEIT ACCESS DEVICES.

       (a) Unlawful Acts.--Section 1029(a) of title 18, United 
     States Code, is amended--
       (1) by redesignating paragraph (9) as paragraph (10); and
       (2) by striking paragraph (8) and inserting the following:
       ``(8) knowingly and with intent to defraud uses, produces, 
     traffics in, has control or custody of, or possesses a 
     scanning receiver;
       ``(9) knowingly uses, produces, traffics in, has control or 
     custody of, or possesses hardware or software, knowing it has 
     been configured for altering or modifying a 
     telecommunications instrument so that such instrument may be 
     used to obtain unauthorized access to telecommunications 
     services; or''.
       (b) Penalties.--
       (1) Generally.--Section 1029(c) of title 18, United States 
     Code, is amended to read as follows:
       ``(c) Penalties.--The punishment for an offense under 
     subsection (a) of this section is--
       ``(1) in the case of an offense that does not occur after a 
     conviction for another offense under this section--
       ``(A) if the offense is under paragraph (1), (2), (3), (6), 
     (7), or (10) of subsection (a), a fine under this title or 
     imprisonment for not more than 10 years, or both; and
       ``(B) if the offense is under paragraph (4), (5), (8), or 
     (9), of subsection (a), a fine under this title or 
     imprisonment for not more than 15 years, or both; and
       ``(2) in the case of an offense that occurs after a 
     conviction for another offense under this section, a fine 
     under this title or imprisonment for not more than 20 years, 
     or both.''.
       (2) Attempts.--Section 1029(b)(1) of title 18, United 
     States Code, is amended by striking ``punished as provided in 
     subsection (c) of this section'' and inserting ``subject to 
     the same penalties as those prescribed for the offense 
     attempted''.
       (c) Definitions.--Section 1029(e)(8) of title 18, United 
     States Code, is amended by inserting before the period ``or 
     to intercept an electronic serial number, mobile 
     identification number, or other identifier of any 
     telecommunications service, equipment, or instrument''.
       (d) Applicability of New Section 1029(a)(9).--
       (1) In general.--Section 1029 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(g) It is not a violation of subsection (a)(9) for an 
     officer, employee, or agent of, or a person under contract 
     with, a facilities-based carrier, for the purpose of 
     protecting the property or legal rights of that carrier, to 
     use, produce, have custody or control of, or possess hardware 
     or software configured as described in that subsection 
     (a)(9).''.
       (2) Definition.--Section 1029(e) of title 18, United States 
     Code is amended--
       (A) by striking ``and'' at the end of paragraph (6);
       (B) by striking the period at the end of paragraph (7) and 
     inserting a semicolon;
       (C) by striking the period at the end of paragraph (8) and 
     inserting ``; and''; and
       (D) by adding at the end the following:
       ``(9) the term `facilities-based carrier' means an entity 
     that owns communications transmission facilities, is 
     responsible for the operation and maintenance of those 
     facilities, and holds an operating license issued by the 
     Federal Communications Commission under the authority of 
     title III of the Communications Act of 1934.''.
       (e) Amendment of Federal Sentencing Guidelines for Wireless 
     Telephone Cloning.--
       (1) In general.--Pursuant to its authority under section 
     994 of title 28, United States Code, the United States 
     Sentencing Commission shall review and amend the Federal 
     sentencing guidelines and the policy statements of the 
     Commission, if appropriate, to provide an appropriate penalty 
     for offenses involving the cloning of wireless telephones 
     (including offenses involving an attempt or conspiracy to 
     clone a wireless telephone).
       (2) Factors for consideration.--In carrying out this 
     subsection, the Commission shall consider, with respect to 
     the offenses described in paragraph (1)--
       (A) the range of conduct covered by the offenses;
       (B) the existing sentences for the offenses;
       (C) the extent to which the value of the loss caused by the 
     offenses (as defined in the Federal sentencing guidelines) is 
     an adequate measure for establishing penalties under the 
     Federal sentencing guidelines;
       (D) the extent to which sentencing enhancements within the 
     Federal sentencing guidelines and the court's authority to 
     sentence above the applicable guideline range are adequate to 
     ensure punishment at or near the maximum penalty for the most 
     egregious conduct covered by the offenses;
       (E) the extent to which the Federal sentencing guideline 
     sentences for the offenses have been constrained by statutory 
     maximum penalties;
       (F) the extent to which Federal sentencing guidelines for 
     the offenses adequately achieve the purposes of sentencing 
     set forth in section 3553(a)(2) of title 18, United States 
     Code;
       (G) the relationship of Federal sentencing guidelines for 
     the offenses to the Federal sentencing guidelines for other 
     offenses of comparable seriousness; and
       (H) any other factor that the Commission considers to be 
     appropriate.

  The CHAIRMAN. Are there any amendments to section 2?


    Amendment in the Nature of a Substitute Offered by Mr. Mc Collum

  Mr. McCOLLUM. Mr. Chairman, I offer an amendment in the nature of a 
substitute.
  The Clerk read as follows:

       Amendment in the nature of a substitute offered by Mr. 
     McCollum:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wireless Telephone 
     Protection Act''.

     SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH 
                   COUNTERFEIT ACCESS DEVICES.

       (a) Unlawful Acts.--Section 1029(a) of title 18, United 
     States Code, is amended--
       (1) by redesignating paragraph (9) as paragraph (10); and
       (2) by striking paragraph (8) and inserting the following:
       ``(8) knowingly and with intent to defraud uses, produces, 
     traffics in, has control or custody of, or possesses a 
     scanning receiver;
       ``(9) knowingly uses, produces, traffics in, has control or 
     custody of, or possesses hardware or software, knowing it has 
     been configured to insert or modify telecommunication 
     identifying information associated with or contained in a 
     telecommunications instrument so that such instrument may be 
     used to obtain telecommunications service without 
     authorization; or''.
       (b) Penalties.--
       (1) Generally.--Section 1029(c) of title 18, United States 
     Code, is amended to read as follows:
       ``(c) Penalties.--
       ``(1) Generally.--The punishment for an offense under 
     subsection (a) of this section is--
       ``(A) in the case of an offense that does not occur after a 
     conviction for another offense under this section--
       ``(i) if the offense is under paragraph (1), (2), (3), (6), 
     (7), or (10) of subsection (a), a fine under this title or 
     imprisonment for not more than 10 years, or both; and
       ``(ii) if the offense is under paragraph (4), (5), (8), or 
     (9), of subsection (a), a fine under this title or 
     imprisonment for not more than 15 years, or both;
       ``(B) in the case of an offense that occurs after a 
     conviction for another offense under this section, a fine 
     under this title or imprisonment for not more than 20 years, 
     or both; and
       ``(C) in either case, forfeiture to the United States of 
     any personal property used or intended to be used to commit 
     the offense.
       ``(2) Forfeiture procedure.--The forfeiture of property 
     under this section, including any seizure and disposition of 
     the property and any related administrative and judicial 
     proceeding, shall be governed by section 413 of the 
     Controlled Substances Act, except for subsection (d) of that 
     section.''.
       (2) Attempts.--Section 1029(b)(1) of title 18, United 
     States Code, is amended by striking ``punished as provided in 
     subsection (c) of this section'' and inserting ``subject to 
     the same penalties as those prescribed for the offense 
     attempted''.
       (c) Definitions.--Section 1029(e)(8) of title 18, United 
     States Code, is amended by inserting before the period ``or 
     to intercept an electronic serial number, mobile 
     identification number, or other identifier of any 
     telecommunications service, equipment, or instrument''.
       (d) Applicability of New Section 1029(a)(9).--
       (1) In general.--Section 1029 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(g)(1) It is not a violation of subsection (a)(9) for an 
     officer, employee, or agent of, or a person engaged in 
     business with, a facilities-based carrier, to engage in 
     conduct (other than trafficking) otherwise prohibited by that 
     subsection for the purpose of protecting the property or 
     legal rights of that

[[Page H641]]

     carrier, unless such conduct is for the purpose of obtaining 
     telecommunications service provided by another facilities-
     based carrier without the authorization of such carrier.
       ``(2) In a prosecution for a violation of subsection 
     (a)(9), (other than a violation consisting of producing or 
     trafficking) it is an affirmative defense (which the 
     defendant must establish by a preponderance of the evidence) 
     that the conduct charged was engaged in for research or 
     development in connection with a lawful purpose.''.
       (2) Definitions.--Section 1029(e) of title 18, United 
     States Code is amended--
       (A) by striking ``and'' at the end of paragraph (6);
       (B) by striking the period at the end of paragraph (7) and 
     inserting a semicolon; and
       (C) by striking the period at the end of paragraph (8); and
       (D) by adding at the end the following:
       ``(9) the term `telecommunications service' has the meaning 
     given such term in section 3 of title I of the Communications 
     Act of 1934 (47 U.S.C. 153));
       ``(10) the term `facilities-based carrier' means an entity 
     that owns communications transmission facilities, is 
     responsible for the operation and maintenance of those 
     facilities, and holds an operating license issued by the 
     Federal Communications Commission under the authority of 
     title III of the Communications Act of 1934; and
       ``(11) the term `telecommunication identifying information' 
     means electronic serial number or any other number or signal 
     that identifies a specific telecommunications instrument or 
     account, or a specific communication transmitted from a 
     telecommunications instrument.''.
       (e) Amendment of Federal Sentencing Guidelines for Wireless 
     Telephone Cloning.--
       (1) In general.--Pursuant to its authority under section 
     994 of title 28, United States Code, the United States 
     Sentencing Commission shall review and amend the Federal 
     sentencing guidelines and the policy statements of the 
     Commission, if appropriate, to provide an appropriate penalty 
     for offenses involving the cloning of wireless telephones 
     (including offenses involving an attempt or conspiracy to 
     clone a wireless telephone).
       (2) Factors for consideration.--In carrying out this 
     subsection, the Commission shall consider, with respect to 
     the offenses described in paragraph (1)--
       (A) the range of conduct covered by the offenses;
       (B) the existing sentences for the offenses;
       (C) the extent to which the value of the loss caused by the 
     offenses (as defined in the Federal sentencing guidelines) is 
     an adequate measure for establishing penalties under the 
     Federal sentencing guidelines;
       (D) the extent to which sentencing enhancements within the 
     Federal sentencing guidelines and the court's authority to 
     sentence above the applicable guideline range are adequate to 
     ensure punishment at or near the maximum penalty for the most 
     egregious conduct covered by the offenses;
       (E) the extent to which the Federal sentencing guideline 
     sentences for the offenses have been constrained by statutory 
     maximum penalties;
       (G) the extent to which Federal sentencing guidelines for 
     the offenses adequately achieve the purposes of sentencing 
     set forth in section 3553(a)(2) of title 18, United States 
     Code;
       (H) the relationship of Federal sentencing guidelines for 
     the offenses to the Federal sentencing guidelines for other 
     offenses of comparable seriousness; and
       (I) any other factor that the Commission considers to be 
     appropriate.

  Mr. McCOLLUM (during the reading). Mr. Chairman, I ask unanimous 
consent that the amendment be considered as read and printed in the 
record.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Florida?
  There was no objection.
  Mr. McCOLLUM. Mr. Chairman, I will be brief in supporting this 
amendment in the nature of a substitute, but it does contain a number 
of technical amendments that we need to talk about. The manager's 
amendment makes changes to H.R. 2460 from the form in which the bill 
was reported from the full Committee on the Judiciary. It reflects the 
input of minority members of the Committee on the Judiciary, the 
cellular telephone industry, the Justice Department of the United 
States, Secret Service and members of the Committee on the Judiciary of 
the other body which passed a bill similar to H.R. 2460 at the end of 
last year.
  Mr. Chairman, the minority has indicated support of this amendment, 
but for the benefit of all Members, I will briefly outline the 
differences between the manager's amendment in the bill as it was 
reported by the Committee on the Judiciary.
  The purpose of H.R. 2460 is to clarify the provisions of section 1029 
of Title 18 relating to equipment that could be used to clone wireless 
telephones. H.R. 2460 amends that section to make it clear that the 
mere possession of this equipment will be illegal in most instances.
  The bill as reported by the committee prohibited the possession of 
equipment which had been configured for altering or modifying 
telecommunications instruments. Upon further reflection and after 
receiving input from the computer and telecommunications trade 
associations, the decision was made to further refine this language in 
order to make it more clear what types of devices would be prescribed.
  The manager's amendment will modify the bill to refer to hardware or 
software which has been, quote, configured to insert or modify 
telecommunication identifying information associated with or contained 
in a telecommunications instrument, unquote.
  The bill defines the term ``telecommunication'' identifying 
information to mean the electronic serial number or any other number or 
signal that identifies a specific telecommunications instrument and 
account relating to its specific telecommunication or the actual 
communication itself. The effect of this amendment is to make it clear 
that only devices which can insert or modify telecommunication 
identifying information contained in or otherwise associated with a 
telecommunications instrument are made illegal by the bill.
  Mr. Chairman, H.R. 2460 as reported by the full committee amended the 
penalty provisions of section 1029 to make them more clear and to 
correct an unintended redundancy in that section. The manager's 
amendment adds an asset forfeiture provision to the bill for all 
violations of section 1029. This provision requires forfeiture to the 
government of any personal property used or intended to be used to 
commit an offense. I note that this provision does not require the 
forfeiture of real property. Further, the property subject to 
forfeiture is only that personal property which the offender used or 
intended to use to commit the offense in question.
  Additionally, the bill as reported by the subcommittee contains an 
exception to the prohibition on possessing cellular telephone cloning 
equipment for officers, employees, agents and persons under contract 
with telecommunications carriers so long as their use of this equipment 
is for the purposes of protecting the property or legal rights of the 
carrier.
  The manager's amendment eliminates the requirement that third 
persons, quote, ``be under contract with,'' unquote, a facilities-based 
carrier and requires merely the person be engaged in business with a 
facilities-based carrier. The purpose of this phrase is to include 
within the exception third parties which have a business relationship 
with the carrier, but where that relationship may not be evidenced by 
written contract.
  In most cases, these parties will be persons and companies with 
technical expertise hired by carriers to assist them in protecting 
their property and legal rights. The phrase should not be interpreted 
to include within its meaning subscribers to the services of the 
telecommunications carrier.
  The manager's amendment also adds a further modification to this 
exception to make it clear that telecommunication carriers cannot use 
these devices to obtain telecommunication services provided by other 
carriers without the other carrier's authorization.
  Finally, the manager's amendment to the bill also adds a new 
provision creating an affirmative defense to a prosecution under new 
section 1029(a)(9) in instances where the charge involved was the use, 
custody or control or possession of the equipment described in the 
bill. The affirmative defense is available if the defendant can prove 
that his or her use, custody or control or possession of this equipment 
was for the purpose of research or development in connection with a 
lawful purpose. The defendant bears the burden of proving the facts 
relating to his or her conduct by a preponderance of the evidence, and 
I point out that the affirmative defense is not available as a defense 
to a charge of production or trafficking in this type of hardware or 
software.
  Mr. Chairman, I believe the amendments made in the manager's 
amendment strengthen the bill, are entirely consistent with the intent 
of the legislation introduced by the gentleman

[[Page H642]]

from Texas (Mr. Sam Johnson) and I want to again thank him for his 
leadership on this issue. I also want to thank the gentleman from 
Massachusetts (Mr. Frank) and the gentlewoman from California (Ms. 
Lofgren) for their helpful suggestions as well as those who have also 
been reporting information to us on this bill.

 Explanatory Statement and Section-by-Section Analysis of H.R. 2460 as 
Amended by the Manager's Amendment Submitted by Rep. Sam Johnson, Rep. 
                Bill McCollum, and Rep. Charles Schumer


                          purpose and summary

       H.R. 2460 amends section 1029 of Title 18 of the United 
     States Code, relating to fraud and related activity in 
     connection with access devices. The bill amends subsection 
     (a)(8) of section 1029 by deleting the ``intent to defraud'' 
     requirement which exists under current law in order to prove 
     a violation of that section. This section relates to persons 
     who knowingly use, produce, traffic in, have custody or 
     control of, or possess hardware or software which has been 
     configured for altering or modifying a telecommunications 
     instrument. As a result of the amendments made by the bill, 
     in order to prove a violation of section 1029, law 
     enforcement officials will no longer have to prove that a 
     defendant possessing such hardware or software did so with 
     the intent to defraud another person.
       The amendment to the statute is being made because law 
     enforcement officials occasionally have been thwarted in 
     proving true violations of the statute by the ``intent to 
     defraud'' requirement. But as the hardware and software in 
     question can be used only for the purpose of altering or 
     modifying telecommunications instruments, persons other than 
     those working in the telecommunications industry have no 
     legitimate reason to possess the equipment. Therefore, 
     requiring the government to prove an ``intent to defraud'' in 
     order to prove a violation of the section for possessing this 
     equipment is not necessary. By eliminating this requirement 
     from existing law this bill will make it easier to obtain 
     convictions against criminals who possess this equipment 
     before they actually use it for illegal purposes.


                background and need for the legislation

       Cellular telephone fraud is a significant criminal activity 
     in the United States. Each year the wireless telephone 
     industry loses hundreds of millions of dollars in revenue as 
     the result of calls made from stolen telephones or cloned 
     telephones. In 1996, the last year for which data is 
     available, the wireless telephone industry reported that the 
     aggregate loss to the industry was approximately $710 
     million. While the industry estimates that the losses for 
     1997 will be less, largely attributable to anti-fraud 
     technologies it has developed and employed, the loss to this 
     industry is still unacceptably high.
       As significant as is the loss of revenue to the wireless 
     telephone industry, cellular telephone fraud poses another, 
     more sinister, crime problem. A significant amount of the 
     cellular telephone fraud which occurs in this country is 
     connected with other types of crime. In most cases, criminals 
     used cloned phones in an effort to evade detection for the 
     other crimes they are committing. This phenomenon is most 
     prevalent in drug crimes, where dealers need to be in 
     constant contact with their sources of supply and 
     confederates on the street. These criminals often use several 
     cloned phones in a day, or switch from one cloned phone to 
     another each day, in order to evade detection. Most 
     significantly, this technique thwarts law enforcement's 
     efforts to use wiretaps in order to intercept the criminals' 
     conversations in which they plan their illegal activity.
       In 1994, Congress passed the Communications Assistance for 
     Law Enforcement Act (Public Law 193-414) which, in part, 
     amended 18 U.S.C. Sec. 1029, which concerns fraud and related 
     activity in connection with access devices. That act added a 
     new provision to section 1029 to make it a crime for persons 
     to knowingly, and with intent to defraud, use, produce, 
     traffic in, or have custody or control of, or possess a 
     scanning receiver or hardware or software used for altering 
     or modifying telecommunications instruments to obtain 
     unauthorized access to telecommunications services.
       Law enforcement officials have testified before the 
     Subcommittee on Crime that it is often hard to prove the 
     intent to defraud aspect of this section with respect to the 
     possession of hardware or software used for altering or 
     modifying telecommunications instruments to obtain 
     unauthorized access to telecommunications services. In the 
     most common case, law enforcement officials will arrest 
     criminals for other crimes and find telephone cloning 
     equipment in the possession of the criminals. Without finding 
     specific evidence that the criminals intended to use this 
     equipment to clone cellular telephones, law enforcement 
     officials often have been thwarted in an effort to prove a 
     violation of this statute. But because there is no legitimate 
     reason why any person not working for wireless telephone 
     industry carriers would possess this equipment, there is no 
     question that these criminals intended to use that equipment 
     to clone cellular telephones. Law enforcement officials have 
     informed the Subcommittee that deleting the ``intent to 
     defraud'' requirement from section 1029(a)(8) with respect to 
     this equipment would enable the government to punish a person 
     who merely possesses this equipment, as well as those who 
     produce, traffic in, or have custody or control over it.
       While we believe that, generally speaking, Congress should 
     be hesitant to criminalize the mere possession of technology 
     without requiring proof of an intent to use it for an 
     improper purpose, the testimony before the Subcommittee on 
     Crime, both by law enforcement agencies and representatives 
     of the wireless telephone industry, confirms that the only 
     use for this type of equipment, other than by persons 
     employed in the wireless telephone industry and law 
     enforcement, is to clone cellular telephones. Although 
     wireless telecommunications companies use this equipment to 
     test the operation of legitimate cellular telephones, to test 
     the anti-fraud technologies their companies employ to thwart 
     the use of cloned telephones, and in other ways to protect 
     their property and legal rights, the equipment has no other 
     legitimate purpose. Thus, there is no legitimate reason for 
     any other person to possess this equipment. In short, the 
     requirement in existing law to prove an intent to use this 
     equipment for an illegal purpose is unnecessary.
       The bill H.R. 2460, amends existing law by deleting the 
     intent to defraud requirement currently found in section 
     1029(a)(8). The bill strikes current subsection (a)(8) of 
     section 1029 and replaces it with two separate subsections. 
     New paragraph (8) restates the language presently found in 
     section 1029(a)(8)(A). New paragraph (9) restates the 
     introductory phrase of existing paragraph (8), but omits the 
     ``intent to defraud'' requirement and essentially restates 
     the text of existing subparagraph (B) of current paragraph 
     (8).
       The bill also clarifies the penalties which may be imposed 
     for violations of section 1029. Under existing law, 
     violations of subsections (a) (5), (6), (7), or (8) are 
     subject to a maximum penalty of 10 years under section 
     1029(c)(1). However, these same violations are also subject 
     to a maximum penalty of 15 years under subsection (c)(2) of 
     that same section. This unintentional duplication of penalty 
     provisions for these crimes should be corrected. The bill 
     corrects this problem by restating the punishment section of 
     section 1029 to more clearly state the maximum punishment for 
     violations of each paragraph of section 1029(a).
       In order to ensure that telecommunications companies may 
     continue to use these devices, the bill provides that it is 
     not a violation of new subsection (a)(9) for an officer, 
     employee, or agent of, or a person doing business with, a 
     facilities-based carrier to use, produce, have custody or 
     control of, or possess hardware or software as described in 
     that subsection if they are doing so for the purpose of 
     protecting the property of or legal rights of that carrier. 
     Section 1029 presently contains an exception to that 
     section's prohibition for any lawful investigative, 
     protective, or intelligence activities of law enforcement 
     agencies of the United States, a State, or a political 
     subdivision of a State, or of an intelligence agency of the 
     United States. The bill also defines ``facilities-based 
     carrier'' in order to make it clear that the exception to new 
     subsection (a)(9) is only available to officers, employees, 
     or agents of, or persons doing business with, companies that 
     actually own communications transmission facilities, and 
     persons under contract with those companies, because only 
     those persons have a legitimate reason to use this property 
     to test the operation of and perform maintenance on those 
     facilities, or otherwise to protect the property or legal 
     rights of the carrier.
       The bill also amends the definition of scanning receiver 
     presently found in subsection (e)(8) of section 1029. Under 
     that definition, a scanning receiver is a device or apparatus 
     ``that can be used to intercept a wire or electronic 
     communication in violation of Chapter 119'' of Title 18. the 
     bill will add to that definition to ensure that the term 
     ``scanning receiver'' will be understood to also include 
     devices which intercept electronic serial numbers, mobile 
     identification numbers, or other identifiers of 
     telecommunications service, equipment, or instruments.
       Finally, the bill provides direction to the United States 
     Sentencing Commission to review and amend, if appropriate, 
     its guidelines and policy statements so as to provide an 
     appropriate penalty for offenses involving cloning of 
     wireless telephones. The bill states eight factors which the 
     Commission is to consider in reviewing existing guidelines 
     and policy statements.


                      section-by-section analysis

       Section 1. Short title. Section 1 of the bill states the 
     short title of the bill as the ``Wireless Telephone 
     Protection Act.''
       Section 2. Fraud and Related Activity in Connection with 
     Counterfeit Access Devices. Section 2 of the bill sets forth 
     the amendments made by the bill to section 1029 of Title 18 
     of the United States Code.
       Section 2(a) of the bill deletes existing paragraph (8) 
     from section 1029(a) and replaces it with two new paragraphs. 
     New paragraph (8) restates in its entirety the text of old 
     paragraph (8)(A). The text of new paragraph (9) is 
     essentially the text of existing paragraph (8)(B), except 
     that the existing requirement that the government show an 
     ``intent to defraud'' in order to prove a violation has been 
     deleted. Therefore, as section 1029 will be amended, in order 
     to prove a violation of new subsection (a)(9), the government 
     need only prove that the defendant knowingly used, produced, 
     trafficked in, had custody or control of, or possessed 
     hardware or

[[Page H643]]

     software with the knowledge that it had been configured to 
     insert or modify telecommunication identifying information 
     associated with or contained in a telecommunications 
     instrument so that the instrument could be used to obtain 
     telecommunications service without authorization.
       As amended, new subsection (a)(9) does not make it a crime 
     to simply possess a wireless telephone or other access device 
     that has been manufactured or modified to obtain unauthorized 
     use of telecommunications services. Under other subsections 
     of section 1029, however, it will continue to be illegal to 
     use, produce, traffic in, have custody or control of, or 
     possess such a device if the act was done with the intent to 
     defraud another person. This is current law, and it remains 
     unchanged by the bill.
       The statute, as amended, also does not prohibit persons 
     from simply possessing equipment that only intercepts 
     electronic serial numbers or wireless telephone numbers 
     (defined as ``scanning receivers'' under section 1029, as 
     amended by the bill). For example, companies which produce 
     technology to sell to carriers or state and local governments 
     that ascertains the location of wireless telephones as part 
     of enhanced 911 services do not violate section 1029 by their 
     actions. Under new subsection (a)(8), however, it will 
     continue to be illegal to use, produce, traffic in, have 
     custody or control of, or possess a scanning receiver if such 
     act was done with the intent to defraud another person. This 
     also is current law, and it remains unchanged by the bill.
       While not specifically defined in the bill, the term 
     ``telecommunications instrument'' as used in new subsection 
     (a)(9) should be construed to mean the type of device which 
     can be used by individuals to transmit or receive wireless 
     telephone calls. The term should be construed to include 
     within its definition the microchip or card which identifies 
     the device or communications transmitted through the device.
       Section 2(b) of the bill amends all of existing subsection 
     (c) of section 1029. Due to a previous amendment to this 
     subsection, an inconsistency exists in current law with 
     respect to the maximum punishment which may be imposed for 
     violations of current paragraphs (a)(5), (6), (7), or (8). 
     Currently, the maximum punishment for violations of these 
     paragraphs is 10 years under subsection (c)(1) but 15 years 
     under subsection (c)(2). Clearly, it is inappropriate for 
     there to be different maximum punishments which may be 
     imposed for violations of these paragraphs. Section 2(b) of 
     the bill eliminates this inconsistency by clearly stating the 
     maximum punishments which may be imposed for all violations 
     of section 1029.
       Section 2(b) of the bill also amends existing subsection 
     (b)(1) of section 1029 to state more clearly the maximum 
     punishment which may be imposed for attempts to commit the 
     crimes described in section 1029. As amended, subsection 
     (b)(1) will provide that convictions for attempts under 
     section 1029 are to be subject to the same penalties as those 
     proscribed for the offense attempted.
       Section 2(b) of the bill further amends existing subsection 
     (b)(1) of section 1029 to add a criminal asset forfeiture 
     provision for violations of section 1029(a). In the event of 
     a conviction for a violation of this subsection, the 
     defendant will be required to forfeit to the United States 
     any personal property used or which was intended to be used 
     to commit the offense. This section of the bill also provides 
     that the forfeiture procedure to be used is that contained in 
     section 413 of the Controlled Substances Act (except for 
     subsection (d) of that section).
       Section 2(c) of the bill amends the definition of 
     ``scanning receiver'' currently found in section 1029(e)(8). 
     The bill adds to the definition of scanning receiver 
     additional language to ensure that the defined term is 
     understood to include a device or apparatus that can be used 
     to intercept an electronic serial number, mobile 
     identification number, or other identifier of any 
     telecommunications service, equipment, or instrument.
       Section 2(d) of the bill creates an exception to the crime 
     described in new subsection (a)(9) for persons who are 
     employed by or are engaged in business with certain 
     telecommunications carriers. The new exception provides that 
     it is not a violation of new subsection (a)(9) for an 
     officer, employer, or agent of a facilities-based carrier, or 
     a person engaged in business with a facilities-based carrier, 
     to engage in conduct (other than trafficking) otherwise 
     prohibited by that subsection in limited situations. 
     Therefore, the behavior permitted by this subsection is 
     the use, production, custody or control of, or possession 
     of the hardware or software described in subsection 
     (a)(9). The exception is only available to those persons 
     described if their actions were taken for the purpose of 
     protecting the property or legal rights of the facilities-
     based carrier.
       The purpose of the phrase ``person engaged in business with 
     a facilities-based carrier'' is to include within the 
     exception third parties which have a business relationship 
     with the carrier but where that relationship may not be 
     evidenced by a written contract. In most cases, these parties 
     will be persons and companies with technical expertise hired 
     by carriers to assist them in protecting their property and 
     legal rights. The phrase should not be interpreted to include 
     within its meaning parties whose business relationship with 
     the carrier is only by virtue of having subscribed to the 
     services of the telecommunications carrier.
       The phrase ``for the purpose of protecting the property or 
     legal rights'' of the carrier should be narrowly construed. 
     Only such actions which might be deemed to be part of the 
     ordinary course of business of a telecommunications carrier, 
     such as actions involving maintenance on or modifications to 
     its telecommunications system, or which are designed to test 
     the operation of the system or the system's ability to deter 
     unauthorized usage (including the reverse engineering of 
     hardware or software configured as described in new 
     subsection (a)(9)), should be deemed to fall within this 
     exception. Acts taken with the intent to defraud another, 
     even if taken by officers, employees, or agents of a 
     facilities-based carrier, or by persons under contract with a 
     facilities-based carrier, would still violate the statute.
       We take particular note of the fact that under certain 
     under some circumstances a facilities-based carrier may wish 
     to use this type of equipment to intercept signals carried on 
     another telecommunications carrier's system for the purpose 
     of testing whether its customers may be able to utilize the 
     other carrier's system when those customers initiate or 
     receive calls while inside the other carrier's geographic 
     area of operation. It is our understanding that these types 
     of interceptions have always occurred with the express 
     consent of the two carriers involved. We believe that this is 
     the appropriate practice. Therefore, the bill has been 
     amended to include an ``exception to the exception.'' The 
     excepted conduct is not excepted (i.e., the conduct should be 
     deemed to violate the statute) if the conduct was undertaken 
     for the purpose of obtaining telecommunications service 
     provided by another facilities-based carrier without the 
     authorization of that carrier. Thus, the exception created by 
     subsection (d) of the bill only applies to situations where 
     the other carrier has consented to the use of this equipment 
     to obtain the service provided on its system.
       Subsection (d) of the bill also creates an affirmative 
     defense to the crime described in new subsection (a)(9) for 
     violations other than those consisting of producing or 
     trafficking. The section provides that it is a defense to a 
     prosecution for such a violation if the conduct charged was 
     engaged in for research or development in connection with a 
     lawful purpose. The defendant bears the burden of proving the 
     facts supporting this defense by a preponderance of the 
     evidence. The defendant must prove that the purpose of its 
     acts was otherwise lawful and that its conduct was limited to 
     research and development activities. Acts which go beyond 
     research and development, even if connected to a lawful 
     purpose, fall outside the scope of the affirmative defense. 
     The defense is only available to defend against the charges 
     of use, custody or control of, or possessing the hardware or 
     software described in subsection (a)(9). In the event that a 
     defendant is charged with one of these violations together 
     with a charge for which the defense is not available (e.g., 
     the defendant is charged with both use and trafficking) the 
     defense may still be used by the defendant but only as 
     against the charge permitted by the statute (e.g., use).
       Section (d) of the bill also adds new paragraph (9) to 
     subsection (e) of section 1029 in order to define the term 
     ``telecommunications service'' and provides that the term is 
     to have the meaning given that term in section 3 of title 1 
     of the Communications Act of 1934 (47 U.S.C. Section 153).
       Section (d) of the bill also adds new paragraph (10) 
     section 1029(e) in order to define the term ``facilities-
     based carrier'' as it is used in the exception to new 
     subsection (a)(9). That term is defined to mean an entity 
     that owns communications transmissions facilities, is 
     responsible for the operation and maintenance of those 
     facilities, and holds an operating license issued by the 
     Federal Communications Commission. Thus, it does not include 
     so-called ``resellers'' of wireless telephone air time, 
     companies which buy blocks of air time and resell it to 
     retail customers. The definition also does not include 
     companies which hold nominal title to telecommunications 
     equipment but which have no responsibility for their 
     operations or for performing maintenance on them. Finally, 
     the definition does not include persons or companies which 
     may own and operate tangible telecommunications equipment but 
     which do not hold the appropriate license for that purpose 
     issued by the Federal Communications Commission.
       Finally, the bill also defines ``telecommunication 
     identifying information,'' one of the key terms in new 
     subsection (a)(9). That term is defined to mean an electronic 
     serial number or any other number or signal that identifies a 
     specific telecommunications instrument. The intent of this 
     term is to identify the unique components or features of a 
     telecommunications instrument which can be inserted or 
     modified by the devices described in new subsection (a)(9) 
     such that the instrument can be used to obtain 
     telecommunications service without authorization.
       Section 2(e) of the bill directs the United States 
     Sentencing Commission to review and amend its sentencing 
     guidelines and policy statements, if appropriate, to provide 
     an appropriated penalty for offenses involving the cloning of 
     wireless telephones. This section of the bill states a number 
     of factors which the Sentencing Commission is directed to 
     consider during its review. We are concerned that violations 
     of section 1029 are not punished as severely as other, 
     similar, fraud crimes are punished under the Sentencing 
     Commission's sentencing guidelines and, in any event, are not 
     punished as severely as

[[Page H644]]

     they should be in light of the magnitude of loss resulting 
     from this crime and the fact that this crime is often used to 
     facilitate more serious crimes. This section of the bill 
     directs the Sentencing Commission to consider these and other 
     factors in making to Congress as part of its annual reporting 
     process whatever recommendations it deems appropriate with 
     respect to the guidelines for imposing punishment for 
     violations of section 1029.
  Mr. McCOLLUM. Mr. Chairman, I yield back the balance of my time on 
this amendment.
  Mr. WEXLER. Mr. Chairman, I rise in support of the McCollum 
amendment.
  The gentleman from Florida (Mr. McCollum) has described what this 
amendment does. It simply makes clear that FCC license carriers can use 
the type of equipment described by the bill for their legitimate 
business purposes. On behalf of the gentleman from Michigan (Mr. 
Conyers) I want to thank Chairman McCollum and his counsel, Glen 
Schmitt, for their willingness to work through this issue. I also want 
to make it clear because there have been some questions on this point 
that the bill before us does not affect scanners. Scanners do have 
legitimate uses and will remain available.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I move to strike the last 
word.
  Mr. Chairman, in closing I just want to say that this bill will make 
cellular telephones across America more secure. It is high time in our 
society that the victim rather than the criminal is protected. No 
longer will the hard-core criminal be able to steal cellular phone 
numbers and rack up huge phone bills which cost all of us.
  Mr. Chairman, this bill is about freedom and security, the right of 
each American to freely and safely use their phones without the fear of 
their number being stolen. This bill is going to help our law 
enforcement agencies and ensure a safer America for all.
  The CHAIRMAN. The question is on the amendment in the nature of a 
substitute offered by the gentleman from Florida (Mr. McCollum).
  The amendment in the nature of a substitute was agreed to.
  The CHAIRMAN. Are there other amendments?
  If not, the question on the committee amendment in the nature of a 
substitute, as amended.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Gilchrest) having assumed the chair, Mr. Collins, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 2460) to 
amend title 18, United States Code, with respect to scanning receivers 
and similar devices, pursuant to House Resolution 368, he reported the 
bill back to the House with an amendment adopted by the Committee of 
the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on the amendment to the committee 
amendment in the nature of a substitute adopted by the Committee of the 
Whole? If not, the question is on the committee amendment in the nature 
of a substitute.
  The committee amendment in the nature of a substitute was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. McCOLLUM. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 414, 
nays 1, not voting 15, as follows:

                             [Roll No. 25]

                               YEAS--414

     Abercrombie
     Ackerman
     Aderholt
     Allen
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berman
     Berry
     Bilbray
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady
     Brown (CA)
     Brown (OH)
     Bryant
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Cardin
     Carson
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Coburn
     Collins
     Combest
     Condit
     Conyers
     Cook
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crapo
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (FL)
     Davis (IL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Eshoo
     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Fawell
     Fazio
     Filner
     Foley
     Forbes
     Fossella
     Fowler
     Fox
     Frank (MA)
     Franks (NJ)
     Frelinghuysen
     Frost
     Furse
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Granger
     Green
     Greenwood
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hansen
     Harman
     Hastert
     Hastings (FL)
     Hayworth
     Hefley
     Hefner
     Herger
     Hill
     Hilleary
     Hilliard
     Hinchey
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (WI)
     Johnson, E. B.
     Johnson, Sam
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kilpatrick
     Kim
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Klug
     Knollenberg
     Kolbe
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Lowey
     Lucas
     Maloney (CT)
     Maloney (NY)
     Manton
     Manzullo
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDade
     McDermott
     McGovern
     McHale
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Metcalf
     Mica
     Millender-McDonald
     Miller (FL)
     Minge
     Mink
     Moakley
     Mollohan
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Oxley
     Packard
     Pallone
     Pappas
     Parker
     Pascrell
     Pastor
     Paxon
     Payne
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pickett
     Pitts
     Pombo
     Pomeroy
     Porter
     Portman
     Price (NC)
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Redmond
     Regula
     Reyes
     Riggs
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Roybal-Allard
     Royce
     Rush
     Ryun
     Sabo
     Salmon
     Sanchez
     Sandlin
     Sanford
     Sawyer
     Saxton
     Schaefer, Dan
     Schaffer, Bob
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Snyder
     Solomon
     Souder
     Spence
     Spratt
     Stabenow
     Stark
     Stearns
     Stenholm
     Stokes
     Strickland
     Stump
     Stupak
     Sununu
     Talent
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thompson
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tierney
     Torres
     Towns
     Traficant
     Turner
     Upton
     Velazquez
     Vento
     Visclosky
     Walsh
     Wamp
     Waters
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Weygand
     White
     Whitfield
     Wicker
     Wise
     Wolf
     Woolsey
     Wynn
     Yates
     Young (AK)
     Young (FL)

                                NAYS--1

       
     Paul
       

                             NOT VOTING--15

     Brown (FL)
     Campbell
     Fattah
     Ford
     Gonzalez
     Hastings (WA)
     Klink
     Luther
     Miller (CA)
     Northup
     Pelosi
     Poshard
     Sanders
     Scarborough
     Schiff

                              {time}  1132

  So the bill was passed.

[[Page H645]]

  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________