[Congressional Record Volume 144, Number 136 (Friday, October 2, 1998)]
[Senate]
[Pages S11347-S11351]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMENDMENTS SUBMITTED

                                 ______
                                 

                        INTERNET TAX FREEDOM ACT

                                 ______
                                 

                BUMPERS (AND GRAHAM) AMENDMENT NO. 3677

  Mr. BUMPERS (for himself and Mr. Graham) proposed an amendment to the 
bill (S. 442) to establish a national policy against State and local 
government interference with interstate commerce on the Internet or 
interactive computer services, and to exercise Congressional 
jurisdiction over interstate commerce by establishing a moratorium on 
the imposition of exactions that would interfere with the free flow of 
commerce via the Internet, and for other purposes.

       At the appropriate place, insert the following new title:

  TITLE ____COLLECTION OF STATE AND LOCAL SALES TAXES ON OUT-OF-STATE 
                                 SALES

     SEC. ____01. SHORT TITLE.

       This title may be cited as the ``Consumer and Main Street 
     Protection Act of 1998''.

     SEC. ____02. FINDINGS.

       Congress finds that--
       (1) merchandise purchased from out-of-State firms is 
     subject to State and local sales taxes in the same manner as 
     merchandise purchased from in-State firms,
       (2) State and local governments generally are unable to 
     compel out-of-State firms to collect and remit such taxes, 
     and consequently, many out-of-State firms choose not to 
     collect State and local taxes on merchandise delivered across 
     State lines,
       (3) moreover, many out-of-State firms fail to inform their 
     customers that such taxes exist, with some firms even falsely 
     claiming that merchandise purchased out-of-State is tax-free, 
     and consequently, many consumers unknowingly incur tax 
     liabilities, including interest and penalty charges,
       (4) Congress has a duty to protect consumers from explicit 
     or implicit misrepresentations of State and local sales tax 
     obligations,
       (5) small businesses, which are compelled to collect State 
     and local sales taxes, are subject to unfair competition when 
     out-of-State firms cannot be compelled to collect and remit 
     such taxes on their sales to residents of the State,
       (6) State and local governments provide a number of 
     resources to out-of-State firms including government services 
     relating to disposal of tons of catalogs, mail delivery, 
     communications, and bank and court systems,
       (7) the inability of State and local governments to require 
     out-of-State firms to collect and remit sales taxes deprives 
     State and local governments of needed revenue and forces such 
     State and local governments to raise taxes on taxpayers, 
     including consumers and small businesses, in such State,
       (8) the Supreme Court ruled in Quill Corporation v. North 
     Dakota, 112 S. Ct. 1904 (1992) that the due process clause of 
     the Constitution does not prohibit a State government from 
     imposing personal jurisdiction and tax obligations on out-of-
     State firms that purposefully solicit sales from residents 
     therein, and that the Congress has the power to authorize 
     State governments to require out-of-State firms to collect 
     State and local sales taxes, and
       (9) as a matter of federalism, the Federal Government has a 
     duty to assist State and local governments in collecting 
     sales taxes on sales from out-of-State firms.

     SEC. ____03. AUTHORITY FOR COLLECTION OF SALES TAX.

       (a) In General.--A State is authorized to require a person 
     who is subject to the personal jurisdiction of the State to 
     collect and remit a State sales tax, a local sales tax, or 
     both, with respect to tangible personal property if--
       (1) the destination of the tangible personal property is in 
     the State,
       (2) during the 1-year period ending on September 30 of the 
     calendar year preceding the calendar year in which the 
     taxable event occurs, the person has gross receipts from 
     sales of such tangible personal property--
       (A) in the United States exceeding $3,000,000, or
       (B) in the State exceeding $100,000, and
       (3) the State, on behalf of its local jurisdictions, 
     collects and administers all local sales taxes imposed 
     pursuant to this title.
       (b) States Must Collect Local Sales Taxes.--Except as 
     provided in section ____04(d), a State in which both State 
     and local sales taxes are imposed may not require State sales 
     taxes to be collected and remitted under subsection (a) 
     unless the State also requires the local sales taxes to be 
     collected and remitted under subsection (a).
       (c) Aggregation Rules.--All persons that would be treated 
     as a single employer under section 52 (a) or (b) of the 
     Internal Revenue Code of 1986 shall be treated as one person 
     for purposes of subsection (a).
       (d) Destination.--For purposes of subsection (a), the 
     destination of tangible personal property is the State or 
     local jurisdiction which is the final location to which the 
     seller ships or delivers the property, or to which the seller 
     causes the property to be shipped or delivered, regardless of 
     the means of shipment or delivery or the location of the 
     buyer.

     SEC. ____04. TREATMENT OF LOCAL SALES TAXES.

       (a) Uniform Local Sales Taxes.--
       (1) In general.--Sales taxes imposed by local jurisdictions 
     of a State shall be deemed to be uniform for purposes of this 
     title and shall be collected under this title in the same 
     manner as State sales taxes if--
       (A) such local sales taxes are imposed at the same rate and 
     on identical transactions in all geographic areas in the 
     State, and
       (B) such local sales taxes imposed on sales by out-of-State 
     persons are collected and administered by the State.
       (2) Application to border jurisdiction tax rates.--A State 
     shall not be treated as failing to meet the requirements of 
     paragraph (1)(A) if, with respect to a local jurisdiction 
     which borders on another State, such State or local 
     jurisdiction--
       (A) either reduces or increases the local sales tax in 
     order to achieve a rate of tax equal to that imposed by the 
     bordering State on identical transactions, or
       (B) exempts from the tax transactions which are exempt from 
     tax in the bordering State.
       (b) Nonuniform Local Sales Taxes.--
       (1) In general.--Except as provided in subsection (d), 
     nonuniform local sales taxes required to be collected 
     pursuant to this title shall be collected under one of the 
     options provided under paragraph (2).
       (2) Election.--For purposes of paragraph (1), any person 
     required under authority of this title to collect nonuniform 
     local sales taxes shall elect to collect either--
       (A) all nonuniform local sales taxes applicable to 
     transactions in the State, or
       (B) a fee (at the rate determined under paragraph (3)) 
     which shall be in lieu of the nonuniform local sales taxes 
     described in subparagraph (A).

     Such election shall require the person to use the method 
     elected for all transactions in the State while the election 
     is in effect.
       (3) Rate of in-lieu fee.--For purposes of paragraph (2)(B), 
     the rate of the in-lieu fee for any calendar year shall be an 
     amount equal to the product of--
       (A) the amount determined by dividing total nonuniform 
     local sales tax revenues collected in the State for the most 
     recently completed State fiscal year for which data is 
     available by total State sales tax revenues for the same 
     year, and
       (B) the State sales tax rate.

     Such amount shall be rounded to the nearest 0.25 percent.
       (4) Nonuniform local sales taxes.--For purposes of this 
     title, nonuniform local sales taxes are local sales taxes 
     which do not meet the requirements of subsection (a).
       (c) Distribution of Local Sales Taxes.--
       (1) In general.--Except as provided in subsection (d), a 
     State shall distribute to local jurisdictions a portion of 
     the amounts collected pursuant to this title determined on 
     the basis of--
       (A) in the case of uniform local sales taxes, the 
     proportion which each local jurisdiction receives of uniform 
     local sales taxes not collected pursuant to this title,
       (B) in the case of in-lieu fees described in subsection 
     (b)(2)(B), the proportion which each local jurisdiction's 
     nonuniform local sales tax receipts bears to the total 
     nonuniform local sales tax receipts in the State, and
       (C) in the case of any nonuniform local sales tax collected 
     pursuant to this title, the geographical location of the 
     transaction on which the tax was imposed.

     The amounts determined under subparagraphs (A) and (B) shall 
     be calculated on the basis of data for the most recently 
     completed State fiscal year for which the data is available.
       (2) Timing.--Amounts described in paragraph (1) (B) or (C) 
     shall be distributed by a State to its local jurisdictions in 
     accordance with State timetables for distributing local sales 
     taxes, but not less frequently than every calendar quarter. 
     Amounts described in paragraph (1)(A) shall be distributed by 
     a State as provided under State law.
       (3) Transition rule.--If, upon the effective date of this 
     title, a State has a State law in effect providing a method 
     for distributing local sales taxes other than the method 
     under this subsection, then this subsection shall not apply 
     to that State until the 91st day following the adjournment 
     sine die of that State's next regular legislative session 
     which convenes after the effective date of

[[Page S11348]]

     this title (or such earlier date as State law may provide). 
     Local sales taxes collected pursuant to this title prior to 
     the application of this subsection shall be distributed as 
     provided by State law.
       (d) Exception Where State Board Collects Taxes.--
     Notwithstanding section ____03(b) and subsections (b) and (c) 
     of this section, if a State had in effect on January 1, 1995, 
     a State law which provides that local sales taxes are 
     collected and remitted by a board of elected States officers, 
     then for any period during which such law continues in 
     effect--
       (1) the State may require the collection and remittance 
     under this title of only the State sales taxes and the 
     uniform portion of local sales taxes, and
       (2) the State may distribute any local sales taxes 
     collected pursuant to this title in accordance with State 
     law.

     SEC. ____05. RETURN AND REMITTANCE REQUIREMENTS.

       (a) In General.--A State may not require any person subject 
     to this title--
       (1) to file a return reporting the amount of any tax 
     collected or required to be collected under this title, or to 
     remit the receipts of such tax, more frequently than once 
     with respect to sales in a calendar quarter, or
       (2) to file the initial such return, or to make the initial 
     such remittance, before the 90th day after the person's first 
     taxable transaction under this title.
       (b) Local Taxes.--The provisions of subsection (a) shall 
     also apply to any person required by a State acting under 
     authority of this title to collect a local sales tax or in-
     lieu fee.

     SEC. ____06. NONDISCRIMINATION AND EXEMPTIONS.

       Any State which exercises any authority granted under this 
     title shall allow to all persons subject to this title all 
     exemptions or other exceptions to State and local sales taxes 
     which are allowed to persons located within the State or 
     local jurisdiction.

     SEC. ____07. APPLICATION OF STATE LAW.

       (a) Persons Required To Collect State or Local Sales Tax.--
     Any person required by section ____03 to collect a State or 
     local sales tax shall be subject to the laws of such State 
     relating to such sales tax to the extent that such laws are 
     consistent with the limitations contained in this title.
       (b) Limitations.--Except as provided in subsection (a), 
     nothing in this title shall be construed to permit a State--
       (1) to license or regulate any person,
       (2) to require any person to qualify to transact intrastate 
     business, or
       (3) to subject any person to State taxes not related to the 
     sales of tangible personnel property.
       (c) Preemption.--Except as otherwise provided in this 
     title, this title shall not be construed to preempt or limit 
     any power exercised or to be exercised by a State or local 
     jurisdiction under the law of such State or local 
     jurisdiction or under any other Federal law.

     SEC. ____08. TOLL-FREE INFORMATION SERVICE.

       A State shall not have power under this title to require 
     any person to collect a State or local sales tax on any sale 
     unless, at the time of such sale, such State has a toll-free 
     telephone service available to provide such person 
     information relating to collection of such State or local 
     sales tax. Such information shall include, at a minimum, all 
     applicable tax rates, return and remittance addresses and 
     deadlines, and penalty and interest information. As part of 
     the service, the State shall also provide all necessary forms 
     and instructions at no cost to any person using the service. 
     The State shall prominently display the toll-free telephone 
     number on all correspondence with any person using the 
     service. This service may be provided jointly with other 
     States.

     SEC. ____09. DEFINITIONS.

       For the purposes of this title--
       (1) the term ``compensating use tax'' means a tax imposed 
     on or incident to the use, storage, consumption, 
     distribution, or other use within a State or local 
     jurisdiction or other area of a State, of tangible personal 
     property;
       (2) the term ``local sales tax'' means a sales tax imposed 
     in a local jurisdiction or area of a State and includes, but 
     is not limited to--
       (A) a sales tax or in-lieu fee imposed in a local 
     jurisdiction or area of a State by the State on behalf of 
     such jurisdiction or area, and
       (B) a sales tax imposed by a local jurisdiction or other 
     State-authorized entity pursuant to the authority of State 
     law, local law, or both;
       (3) the term ``person'' means an individual, a trust, 
     estate, partnership, society, association, company (including 
     a limited liability company) or corporation, whether or not 
     acting in a fiduciary or representative capacity, and any 
     combination of the foregoing;
       (4) the term ``sales tax'' means a tax, including a 
     compensating use tax, that is--
       (A) imposed on or incident to the sale, purchase, storage, 
     consumption, distribution, or other use of tangible personal 
     property as may be defined or specified under the laws 
     imposing such tax, and
       (B) measured by the amount of the sales price, cost, charge 
     or other value of or for such property; and
       (5) the term ``State'' means any of the several States of 
     the United States, the District of Columbia, the Commonwealth 
     of Puerto Rico, and any territory or possession of the United 
     States.

     SEC. ____10. EFFECTIVE DATE.

       This title shall take effect 180 days after the date of the 
     enactment of this title. In no event shall this title apply 
     to any sale occurring before such effective date.
                                 ______
                                 

                       ABRAHAM AMENDMENT NO. 3678

  Mr. McCAIN (for Mr. Abraham) proposed an amendment to the bill, S. 
442, supra; as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Government Paperwork 
     Elimination Act.''

     SEC. 2. DIRECTION AND OVERSIGHT OF INFORMATION TECHNOLOGY.

       Section 3504(a)(1)(B)(vi) of title 44, United States Code, 
     is amended to read as follows:
       ``(vi) the acquisition and use of information technology, 
     including the use of alternative information technologies 
     (such as the use of electronic submission, maintenance, or 
     disclosure of information) to substitute for paper, and the 
     use and acceptance of electronic signatures.''.

     SEC. 3. PROCEDURES.

       (a) Within 18 months after enactment of this Act, in order 
     to fulfill the responsibility to administer the functions 
     assigned under chapter 35 of title 44, United States Code, 
     the Clinger-Cohen Act of 1996 (P.L. 104-106), and the 
     provisions of this Act, the Director of the Office of 
     Management and Budget shall develop procedures and guidelines 
     for executive agency use.
       (1) The procedures shall be compatible with standards and 
     technology for electronic signatures as may be generally used 
     in commerce and industry and by State government, based upon 
     consultation with appropriate private sector and State 
     government standard setting bodies.
       (2) Such procedures shall not inappropriately favor one 
     industry or technology.
       (3) An electronic signature shall be as reliable as is 
     appropriate for the purpose, and efforts shall be made to 
     keep the information submitted intact.
       (4) Successful submission of an electronic form shall be 
     electronically acknowledged.
       (5) In accordance with all other sections of the Act, to 
     the extent feasible and appropriate, and described in a 
     written finding, an agency, when it expects to receive 
     electronically 50,000 or more submittals of a particular 
     form, shall take all steps necessary to ensure that multiple 
     formats of electronic signatures are made available for 
     submitting such forms.

     SEC. 4. AUTHORITY AND FUNCTIONS OF THE DIRECTOR OF THE OFFICE 
                   OF MANAGEMENT AND BUDGET.

       In order to fulfill the responsibility to administer the 
     functions assigned under chapter 35 of title 44, United 
     States Code, the Clinger-Cohen Act of 1996 (P.L. 104-106), 
     and the provisions of this Act, the Director of the Office of 
     Management and Budget shall ensure that, within five years of 
     the date of enactment of this Act, executive agencies provide 
     for the optional use of electronic maintenance, submission, 
     or disclosure of information where practicable, as an 
     alternative information technology to substitute for paper, 
     and the use and acceptance of electronic signatures where 
     practicable.

     SEC. 5. ELECTRONIC STORAGE OF FORMS.

       Within 18 months of enactment of this Act, in order to 
     fulfill the responsibility to administer the functions 
     assigned under chapter 35 of title 44, United States Code, 
     the Clinger-Cohen Act of 1996 (P.L. 104-106), and the 
     provisions of this Act, the Director of the Office 
     of Management and Budget shall develop procedures and 
     guidelines for executive agency use to permit employer 
     electronic storage and filing of forms containing 
     information pertaining to employees

     SEC. 6. STUDY.

       In order to fulfill the responsibility to administer the 
     functions assigned under chapter 35 of title 44, United 
     States Code, the Clinger-Cohen Act of 1996 (P.L. 104-106), 
     and the provisions of this Act, the Director of the Office of 
     Management and Budget, shall conduct an ongoing study of 
     paperwork reduction and electronic commerce, the impact on 
     individual privacy, and the security and authenticity of 
     transactions due to the use of electronic signatures pursuant 
     to this Act, and shall report the findings to Congress.

     SEC. 7. ENFORCEABILITY AND LEGAL EFFECT OF ELECTRONIC 
                   RECORDS.

       Electronic records submitted or maintained in accordance 
     with agency procedures and guidelines established pursuant to 
     this title, or electronic signatures or other forms of 
     electronic authentication used in accordance with such 
     procedures and guidelines, shall not be denied legal effect, 
     validity or enforceability because they are in electronic 
     form.

     SEC. 8. DISCLOSURE OF INFORMATION.

       Except as provided by law, information collected in the 
     provision of electronic signature services for communications 
     with an agency, as provided by this Act, shall only be used 
     or disclosed by persons who obtain, collect, or maintain such 
     information as a business or government practice, for the 
     purpose of facilitating such communications, or with the 
     prior affirmative consent of the person about whom the 
     information pertains.

     SEC. 9. APPLICATION WITH OTHER LAWS.

       Nothing in this title shall apply to the Department of the 
     Treasury or the Internal Revenue Service, to the extent 
     that--
       (1) it involves the administration of the internal revenue 
     laws; and
       (2) it conflicts with any provision of the Internal Revenue 
     Service Restructuring and

[[Page S11349]]

     Reform Act of 1998 or the Internal Revenue Code of 1986.

     SEC. 10. DEFINITIONS.

       For purposes of this Act:
       (1) Executive agency.--The term ``executive agency'' has 
     the meaning given that term in section 105 of title 5, United 
     States Code.
       (2) Electronic signature.--The term ``electronic 
     signature'' means a method of signing an electronic message 
     that--
       (A) identifies and authenticates a particular person as the 
     source of such electronic message; and
       (B) indicates such person's approval of the information 
     contained in such electronic message.
       (3) Form, questionnaire, or survey.--The terms ``form'', 
     ``questionnaire'', and ``survey'' include documents produced 
     by an agency to facilitate interaction between an agency and 
     non-government persons.
                                 ______
                                 

                        BRYAN AMENDMENT NO. 3679

  Mr. McCAIN (for Mr. Bryan) proposed an amendment to the bill, S. 442, 
supra; as follows:

       At the end of the bill, add the following:

             TITLE II--CHILDREN'S ONLINE PRIVACY PROTECTION

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Children's Online Privacy 
     Protection Act of 1998''.

     SEC. 202. DEFINITIONS.

       In this title:
       (1) Child.--The term ``child'' means an individuals under 
     the age of 13.
       (2) Operator.--The term ``operator''--
       (A) means any person who operates a website located on the 
     Internet or an online service and who collects or maintains 
     personal information from or about the users of or visitors 
     to such website or online service, or on whose behalf such 
     information is collected or maintained, where such website or 
     online service is operated for commercial purposes, including 
     any person offering products or services for sale through 
     that website or online service, involving commerce--
       (i) among the several States or with 1 or more foreign 
     nations;
       (ii) in any territory of the United States or the District 
     of Columbia, or between any such territory and--
       (I) another such territory; or
       (II) any State or foreign nation; or
       (iii) between the District of Columbia and any State, 
     territory, or foreign nation; but
       (B) does not include any non-profit entity that would 
     otherwise be exempt from coverage under section 5 of the 
     Federal Trade Commission Act (15 U.S.C. 45).
       (3) Commission.--The term ``Commission'' means the Federal 
     Trade Commission.
       (4) Disclosure.--The term ``disclosure'' means, with 
     respect to personal information--
       (A) the release of personal information collected from a 
     child in identifiable form by an operator for any purpose, 
     except where such information is provided to a person other 
     than the operator who provides support for the internal 
     operations of the website and does not disclose or use that 
     information for any other purposes; and
       (B) making personal information collected form a child by a 
     website or online service directed to children or with actual 
     knowledge that such information was collected from a child, 
     publicly available in identifiable form, by any means 
     including by a public posting, through the Internet, or 
     through--
       (i) a home page of a website;
       (ii) a pen pal service;
       (iii) an electronic mail services;
       (iv) a message board; or
       (v) a chat room.
       (5) Federal agency.--The term ``Federal agency'' means an 
     agency, as that term is defined in section 551(1) of title 5, 
     United States Code.
       (6) Internet.--The term ``Internet'' means collectively the 
     myriad of computer and telecommunications facilities, 
     including equipment and operating software, which comprise 
     the interconnected world-wide network of networks that employ 
     the Transmission Control Protocol/Internet Protocol, or any 
     predecessor or successor protocols to such protocol, to 
     communicate information of all kinds by wire or radio.
       (7) Parent.--The term ``parent'' includes a legal guardian.
       (8) Personal information.--The term ``personal 
     information'' means individually identifiable information 
     about an individual collected online, including--
       (A) a first and last name;
       (B) a home or other physical address including street name 
     and name of a city or town;
       (C) an e-mail address;
       (D) a telephone number;
       (E) a Social Security number;
       (F) any other identifier that the Commission determines 
     permits the physical or online contacting of a specific 
     individual; or
       (G) information concerning the child or the parents of that 
     child that the website collects online from the child and 
     combines with an identifier described in this paragraph.
       (9) Verifiable parental consent.--The term ``verifiable 
     parental consent'' means any reasonable effort (taking into 
     consideration available technology), including a request for 
     authorization for future collection, use, and disclosure 
     described in the notice, to ensure that a parent of a child 
     receives notice of the operator's personal information 
     collection, use, and disclosure practices, and authorizes the 
     collection, use, and disclosure, as applicable, of personal 
     information and the subsequent use of that information before 
     that information is collected from that child.
       (10) Website or online service directed to children.--
       (A) In general.--The term ``website or online service 
     directed to children'' means--
       (i) a commercial website or online service that is targeted 
     to children; or
       (ii) that portion of a commercial website or online service 
     that is targeted to children.
       (B) Limitation.--A commercial website or online service, or 
     a portion of a commercial website or online service, shall 
     not be deemed directed to children solely for referring or 
     linking to a commercial website or online service directed to 
     children by using information location tools, including a 
     directory, index, reference, pointer, or hypertext link.
       (11) Person.--The term ``person'' means any individual, 
     partnership, corporation, trust, estate, cooperative, 
     association, or other entity.
       (12) Online contact information.--The term ``online contact 
     information'' means an e-mail address or another 
     substantially similar identifier that permits direct contact 
     with a person online.

     SEC. 203. REGULATION OF UNFAIR AND DECEPTIVE ACTS AND 
                   PRACTICES IN CONNECTION WITH THE COLLECTION AND 
                   USE OF PERSONAL INFORMATION FROM AND ABOUT 
                   CHILDREN ON THE INTERNET.

       (a) Acts prohibited.--
       (1) In general.--It is unlawful for an operator of a 
     website or online service directed to children, or any 
     operator that has actual knowledge that it is collecting 
     personal information from a child, to collect personal 
     information from a child in a manner that violates the 
     regulations prescribed under subsection (b).
       (2) Disclosure to parent protected.--Notwithstanding 
     paragraph (1), neither an operator of such a website or 
     online service nor the operator's agent shall be held to be 
     liable under any Federal or State law for any disclosure made 
     in good faith and following reasonable procedures in 
     responding to a request for disclosure of personal 
     information under subsection (b)(1)(B)(iii) to the parent of 
     a child.
       (b) Regulations.--
       (1) In general.--Not later than 1 year after the date of 
     the enactment of this Act, the Commission shall promulgate 
     under section 553 of title 5, United States Code, regulations 
     that--
       (A) require the operator of any website or online service 
     directed to children that collects personal information from 
     children or the operator of a website or online service that 
     has actual knowledge that it is collecting personal 
     information from a child--
       (i) to provide notice on the website of what information is 
     collected from children by the operator, how the operator 
     uses such information, and the operator's disclosure 
     practices for such information; and
       (ii) to obtain verifiable parental consent for the 
     collection, use, or disclosure of personal information from 
     children;
       (B) require the operator to provide, upon request of a 
     parent under this subparagraph whose child has provided 
     personal information to that website or online service, upon 
     proper identification of that parent, to such parent--
       (i) a description of the specific types of personal 
     information collected from the child by that operator;
       (ii) the opportunity at any time to refuse to permit the 
     operator's further use or maintenance in retrievable form, or 
     future online collection, of personal information from that 
     child; and
       (iii) notwithstanding any other provision of law, a means 
     that is reasonable under the circumstances for the parent to 
     obtain any personal information collected from that child;
       (C) prohibit conditioning a child's participation in a 
     game, the offering of a prize, or another activity on the 
     child disclosing more personal information than is reasonably 
     necessary to participate in such activity; and
       (D) require the operator of such a website or online 
     service to establish and maintain reasonable procedures to 
     protect the confidentiality, security, and integrity of 
     personal information collected from children.
       (2) When consent not required.--The regulations shall 
     provide that verifiable parental consent under paragraph 
     (1)(A)(ii) is not required in the case of--
       (A) online contact information collected from a child that 
     is used only to respond directly on a one-time basis to a 
     specific request from the child and is not used to recontact 
     the child and is not maintained in retrievable form by the 
     operator;
       (B) a request for the name or online contact information of 
     a parent or child that is used for the sole purpose of 
     obtaining parental consent or providing notice under this 
     section and where such information is not maintained in 
     retrievable form by the operator if parental consent is not 
     obtained after a reasonable time;
       (C) online contact information collected from a child that 
     is used only to respond more than once directly to a specific 
     request from the child and is not used to recontact the child 
     beyond the scope of that request--
       (i) if, before any additional response after the initial 
     response to the child, the operator

[[Page S11350]]

     uses reasonable efforts to provide a parent notice of the 
     online contact information collected from the child, the 
     purposes for which it is to be used, and an opportunity for 
     the parent to request that the operator make no further use 
     of the information and that it not be maintained in 
     retrievable form; or
       (ii) without notice to the parent in such circumstances as 
     the Commission may determine are appropriate, taking into 
     consideration the benefits to the child of access to 
     information and services, and risks to the security and 
     privacy of the child, in regulations promulgated under this 
     subsection;
       (D) the name of the child and online contact information 
     (to the extent reasonably necessary to protect the safety of 
     a child participant on the site)--
       (i) used only for the purpose of protecting such safety;
       (ii) not used to recontact the child or for any other 
     purpose; and
       (iii) not disclosed on the site,

     if the operator uses reasonable efforts to provide a parent 
     notice of the name and online contact information collected 
     from the child, the purposes for which it is to be used, and 
     an opportunity for the parent to request that the operator 
     make no further use of the information and that it not be 
     maintained in retrievable form; or
       (E) the collection, use, or dissemination of such 
     information by the operator of such a website or online 
     service necessary--
       (i) to protect the security or integrity of its website;
       (ii) to take precautions against liability;
       (iii) to respond to judicial process; or
       (iv) to the extent permitted under other provisions of law, 
     to provide information to law enforcement agencies or for an 
     investigation on a matter related to public safety.
       (3) Termination of service.--The regulations shall permit 
     the operator of a website or an on-line service to terminate 
     service provided to a child whose parent has refused, under 
     the regulations prescribed under paragraph (1)(B)(ii), to 
     permit the operator's further use or maintenance in 
     retrievable form, or future online collection, of personal 
     information from that child.
       (c) Enforcement.--Subject to sections 204 and 206, a 
     violation of a regulation prescribed under subsection (a) 
     shall be treated as a violation of a rule defining an unfair 
     or deceptive act or practice prescribed under section 
     18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
     57a(a)(1)(B)).
       (d) Inconsistent State Law.--No State or local government 
     may impose any liability for commercial activities or actions 
     by operators in interstate or foreign
     commerce in connection with an activity or action described 
     in this title that is inconsistent with the treatment of 
     those activities or actions under this section.

     SEC. 204. SAFE HARBORS.

       (a) Guidelines.--An operator may satisfy the requirements 
     of regulations issued under section 203(b) by following a set 
     of self-regulatory guidelines, issued by representatives of 
     the marketing or online industries, or by other persons, 
     approved under subsection (b).
       (b) Incentives.--
       (1) Self-regulatory incentives.--In prescribing regulations 
     under section 203, the Commission shall provide incentives 
     for self-regulation by operators to implement the protections 
     afforded children under the regulatory requirements described 
     in subsection (b) of that section.
       (2) Deemed compliance.--Such incentives shall include 
     provisions for ensuring that a person will be deemed to be in 
     compliance with the requirements of the regulations under 
     section 203 if that person complies with guidelines that, 
     after notice and comment, are approved by the Commission upon 
     making a determination that the guidelines meet the 
     requirements of the regulations issued under section 203.
       (3) Expedited response to requests.--The Commission shall 
     act upon requests for safe harbor treatment within 180 days 
     of the filing of the request, and shall set forth in writing 
     its conclusions with regard to such requests.
       (c) Appeals.--Final action by the Commission on a request 
     for approval of guidelines, or the failure to act within 180 
     days on a request for approval of guidelines, submitted under 
     subsection (b) may be appealed to a district court of the 
     United States of appropriate jurisdiction as provided for in 
     section 706 of title 5, United States Code.

     SEC. 205. ACTIONS BY STATES.

       (a) In General.--
       (1) Civil actions.--In any case in which the attorney 
     general of a State has reason to believe that an interest of 
     the residents of that State has been or is threatened or 
     adversely affected by the engagement of any person in a 
     practice that violates any regulation of the Commission 
     prescribed under section 203(b), the State, as parens 
     patriae, may bring a civil action on behalf of the residents 
     of the State in a district court of the United States of 
     appropriate jurisdiction to--
       (A) enjoin that practice;
       (B) enforce compliance with the regulation;
       (C) obtain damage, restitution, or other compensation on 
     behalf of residents of the State; or
       (D) obtain such other relief as the court may consider to 
     be appropriate.--
       (2) Notice.--
       (A) In general.--Before filing an action under paragraph 
     (1), the attorney general of the State involved shall provide 
     to the Commission--
       (i) written notice of that action; and
       (ii) a copy of the complaint for that action.
       (B) Exemption.--
       (i) In general.--Subparagraph (A) shall not apply with 
     respect to the filing of an action by an attorney general of 
     a State under this subsection, if the attorney general 
     determines that it is not feasible to provide the notice 
     described in that subparagraph before the filing of the 
     action.
       (ii) Notification.--In an action described in clause (i), 
     the attorney general of a State shall provide notice and a 
     copy of the complaint to the Commission at the same time as 
     the attorney general files the action.
       (b) Intervention.--
       (1) In general.--On receiving notice under subsection 
     (a)(2), the Commission shall have the right to intervene in 
     the action that is the subject of the notice.
       (2) Effect of intervention.--If the Commission intervenes 
     in an action under subsection (a), it shall have the right--
       (A) to be heard with respect to any matter that arises in 
     that action; and
       (B) to file a petition for appeal.
       (3) Amicus curiae.--Upon application to the court, a person 
     whose self-regulatory guidelines have been approved by the 
     Commission and are relied upon as a defense by any defendant 
     to a proceeding under this section may file amicus curiae in 
     that proceeding.
       (c) Construction.--For purposes of bringing any civil 
     action under subsection (a), nothing in this title shall be 
     construed to prevent an attorney general of a State from 
     exercising the powers conferred on the attorney general by 
     the laws of that State to--
       (1) conduct investigations;
       (2) administer oaths or affirmations; or
       (3) compel the attendance of witnesses or the production of 
     documentary and other evidence.
       (d) Actions by the Commission.--In any case in which an 
     action is instituted by or on behalf of the Commission for 
     violation of any regulation prescribed under section 203, no 
     State may, during the pendency of that action, institute an 
     action under subsection (a) against any defendant named in 
     the complaint in that action for violation of that 
     regulation.
       (e) Venue; Service of Process.--
       (1) Venue.--Any action brought under subsection (a) may be 
     brought in the district court of the United States that meets 
     applicable requirements relating to venue under section 1391 
     of title 28, United States Code.
       (2) Service of process.--In an action brought under 
     subsection (a), process may be served in any district in 
     which the defendant--
       (A) is an inhabitant; or
       (B) may be found.

     SEC. 206. ADMINISTRATION AND APPLICABILITY OF ACT.

       (a) In General.--Except as otherwise provided, this title 
     shall be enforced by the Commission under the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.).
       (b) Provisions.--Compliance with the requirements imposed 
     under this title shall be enforced under--
       (1) section 8 of the Federal Deposit Insurance Act (12 
     U.S.C. 1818), in the case of--
       (A) national banks, and Federal branches and Federal 
     agencies of foreign banks, by the Office of the Comptroller 
     of the Currency;
       (B) member banks of the Federal Reserve System (other than 
     national banks), branches and agencies of foreign banks 
     (other than Federal branches, Federal agencies, and insured 
     State branches of foreign banks), commercial lending 
     companies owned or controlled by foreign banks, and 
     organizations operating under section 25 or 25(a) of the 
     Federal Reserve Act (12 U.S.C. 601 et seq. and 611 et seq.), 
     by the Board; and
       (C) banks insured by the Federal Deposit Insurance 
     Corporation (other than members of the Federal Reserve 
     System) and insured State branches of foreign banks, by the 
     Board of Directors of the Federal Deposit Insurance 
     Corporation;
       (2) section 8 of the Federal Deposit Insurance Act (12 
     U.S.C. 1818), by the Director of the Office of Thrift 
     Supervision, in the case of a savings association the 
     deposits of which are insured by the Federal Deposit 
     Insurance Corporation;
       (3) the Federal Credit Union Act (12 U.S.C. 1751 et seq.) 
     by the National Credit Union Administration Board with 
     respect to any Federal credit union;
       (4) part A of subtitle VII of title 49, United States Code, 
     by the Secretary of Transportation with respect to any air 
     carrier or foreign air carrier subject to that part;
       (5) the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et 
     seq.) (except as provided in section 406 of that Act (7 
     U.S.C. 226, 227)), by the Secretary of Agriculture with 
     respect to any activities subject to that Act; and
       (6) the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) by 
     the Farm Credit Administration with respect to any Federal 
     land bank, Federal land bank association, Federal 
     intermediate credit bank, or production credit association.
       (c) Exercise of Certain Powers.--For the purpose of the 
     exercise by any agency referred to in subsection (a) of its 
     powers under any Act referred to in that subsection, a 
     violation of any requirement imposed under this title shall 
     be deemed to be a violation of a requirement imposed under 
     that Act. In addition to its powers under any provision of 
     law specifically referred to in subsection (a), each of the 
     agencies referred to in that subsection may exercise, for the 
     purpose of enforcing compliance with any requirement

[[Page S11351]]

     imposed under this title, any other authority conferred on it 
     by law.
       (d) Actions by the Commission.--The Commission shall 
     prevent any person from violating a rule of the Commission 
     under section 203 in the same manner, by the same means, and 
     with the same jurisdiction, powers, and duties as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act (15 U.S.C. 41 et seq.) were incorporated into 
     and made a part of this title. Any entity that violates such 
     rule shall be subject to the penalties and entitled to the 
     privileges and immunities provided in the Federal Trade 
     Commission Act in the same manner, by the same means, and 
     with the same jurisdiction, power, and duties as though all 
     applicable terms and provisions of the Federal Trade 
     Commission Act were incorporated into and made a part of this 
     title.
       (e) Effect on Other Laws.--Nothing contained in the Act 
     shall be construed to limit the authority of the Commission 
     under any other provisions of law.

     SEC. 207. REVIEW.

       (a) In General.--Not later than 5 years after the effective 
     date of the regulations initially issued under section 203, 
     the Commission shall--
       (1) review the implementation of this title, including the 
     effect of the implementation of this title on practices 
     relating to the collection and disclosure of information 
     relating to children, children's ability to obtain access to 
     information of their choice online, and on the availability 
     of websites directed to children; and
       (2) prepare and submit to Congress a report on the results 
     of the review under paragraph (1).

     SEC. 208. EFFECTIVE DATE.

       Sections 203(a), 205, and 206 of this title take effect on 
     the later of--
       (1) the date that is 18 months after the date of enactment 
     of this Act; or
       (2) the date on which the Commission rules on the first 
     application for safe harbor treatment under section 204 if 
     the Commission does not rule on the first such application 
     within one year after the date of enactment of this Act, but 
     in no case later than the date that is 30 months after the 
     date of enactment of this Act.

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