[House Report 106-725]
[From the U.S. Government Publishing Office]



106th Congress                                            Rept. 106-725
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     Part II

======================================================================



 
            WIRELESS TELECOMMUNICATIONS PRIVACY ACT OF 2000

                                _______
                                

                 July 11, 2000.--Ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                        [To accompany H.R. 3489]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3489) amending the Communications Act of 1934 to 
regulate interstate commerce in the use of mobile telephones 
and to strengthen and clarify prohibitions on electronic 
eavesdropping, and for other purposes, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           2
Purpose and Summary........................................           3
Background and Need for the Legislation....................           3
Hearings...................................................           3
Committee Consideration....................................           4
Vote of the Committee......................................           4
Committee Oversight Findings...............................           4
Committee on Government Reform Findings....................           4
New Budget Authority and Tax Expenditures..................           4
Congressional Budget Office Cost Estimate..................           4
Constitutional Authority Statement.........................           7
Section-by-Section Analysis and Discussion.................           7
Changes in Existing Law Made by the Bill, as Reported......           7

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Wireless Telecommunications Privacy 
Act of 2000''.

SEC. 2. GAO DETERMINATION OF FCC REGULATORY FEES.

    Within 180 days after the date of the enactment of this Act, the 
Comptroller General of the United States shall conduct a review of the 
annual regulatory fees collected by the Federal Communications 
Commission pursuant to section 9 of the Communications Act of 1934 (47 
U.S.C. 159) to determine whether such fees have been accurately 
assessed since their inception and shall submit a report to the 
Congress regarding such review and determination.

SEC. 3. COMMERCE IN ELECTRONIC EAVESDROPPING DEVICES.

    (a) Prohibition on Modification.--Section 302(b) of the 
Communications Act of 1934 (47 U.S.C. 302a(b)) is amended by inserting 
before the period at the end thereof the following: ``, or modify any 
such device, equipment, or system in any manner that causes such 
device, equipment, or system to fail to comply with such regulations''.
    (b) Prohibition on Commerce in Scanning Receivers.--Section 302(d) 
of such Act (47 U.S.C. 302a(d)) is amended to read as follows:
    ``(d) Equipment Authorization Regulations.--
            ``(1) Privacy protections required.--The Commission shall 
        prescribe regulations, and review and revise such regulations 
        as necessary in response to subsequent changes in technology or 
        behavior, denying equipment authorization (under part 15 of 
        title 47, Code of Federal Regulations, or any other part of 
        that title) for any scanning receiver that is capable of--
                    ``(A) receiving transmissions in the frequencies 
                that are allocated to the domestic cellular radio 
                telecommunications service or the personal 
                communications service;
                    ``(B) readily being altered to receive 
                transmissions in such frequencies;
                    ``(C) being equipped with decoders that--
                            ``(i) convert digital domestic cellular 
                        radio telecommunications service, personal 
                        communications service, or protected 
                        specialized mobile radio service transmissions 
                        to analog voice audio; or
                            ``(ii) convert protected paging service 
                        transmissions to alphanumeric text; or
                    ``(D) being equipped with devices that otherwise 
                decode encrypted radio transmissions for the purposes 
                of unauthorized interception.
            ``(2) Privacy protections for shared frequencies.--The 
        Commission shall, with respect to scanning receivers capable of 
        receiving transmissions in frequencies that are used by 
        commercial mobile services and that are shared by public safety 
        users, examine methods, and may prescribe such regulations as 
        may be necessary, to enhance the privacy of users of such 
        frequencies.
            ``(3) Tampering prevention.--In prescribing regulations 
        pursuant to paragraph (1), the Commission shall consider 
        defining `capable of readily being altered' to require scanning 
        receivers to be manufactured in a manner that effectively 
        precludes alteration of equipment features and functions as 
        necessary to prevent commerce in devices that may be used 
        unlawfully to intercept or divulge radio communication.
            ``(4) Warning labels.--In prescribing regulations under 
        paragraph (1), the Commission shall consider requiring labels 
        on scanning receivers warning of the prohibitions in Federal 
        law on intentionally intercepting or divulging radio 
        communications.
            ``(5) Definitions.--As used in this subsection, the term 
        `protected' means secured by an electronic method that is not 
        published or disclosed except to authorized users, as further 
        defined by Commission regulation.''.
    (c) Implementing Regulations.--Within 90 days after the date of 
enactment of this Act, the Federal Communications Commission shall 
prescribe amendments to its regulations for the purposes of 
implementing the amendments made by this section.

SEC. 4. UNAUTHORIZED INTERCEPTION OR PUBLICATION OF COMMUNICATIONS.

    Section 705 of the Communications Act of 1934 (47 U.S.C. 605) is 
amended--
            (1) in the heading of such section, by inserting 
        ``interception or'' after 
        ``unauthorized'';
            (2) in the first sentence of subsection (a), by striking 
        ``Except as authorized by chapter 119, title 18, United States 
        Code, no person'' and inserting ``No person'';
            (3) in the second sentence of subsection (a)--
                    (A) by inserting ``intentionally'' before 
                ``intercept''; and
                    (B) by striking ``communication and divulge'' and 
                inserting ``communication, and no person having 
                intercepted such a communication shall intentionally 
                divulge'';
            (4) in the fourth sentence of subsection (a)--
                    (A) by inserting ``(A)'' after ``intercepted, 
                shall''; and
                    (B) by striking ``thereof) or'' and inserting 
                ``thereof); or (B)'';
            (5) by striking the last sentence of subsection (a) and 
        inserting the following: ``Nothing in this subsection prohibits 
        an interception or disclosure of a communication as authorized 
        by chapter 119 of title 18, United States Code.'';
            (6) in subsection (e)(1)--
                    (A) by striking ``fined not more than $2,000 or''; 
                and
                    (B) by inserting ``or fined under title 18, United 
                States Code,'' after ``6 months,'';
            (7) in subsection (e)(3), by striking ``any violation'' and 
        inserting ``any receipt, interception, divulgence, publication, 
        or utilization of any communication in violation'';
            (8) in subsection (e)(4), by striking ``any other activity 
        prohibited by subsection (a)'' and inserting ``any receipt, 
        interception, divulgence, publication, or utilization of any 
        communication in violation of subsection (a)''; and
            (9) by adding at the end of subsection (e) the following 
        new paragraph:
    ``(7) Notwithstanding any other investigative or enforcement 
activities of any other Federal agency, the Commission shall 
investigate alleged violations of this section and may proceed to 
initiate action under section 503 of this Act to impose forfeiture 
penalties with respect to such violation upon conclusion of the 
Commission's investigation.''.

    Amend the title so as to read:

      A bill to amend the Communications Act of 1934 to 
strengthen and clarify prohibitions on electronic 
eavesdropping, and for other purposes.

                          Purpose and Summary

    The provisions of H.R. 3489 contained in the bill as 
introduced provided a uniform method for fairly and simply 
determining how State and local jurisdictions may tax wireless 
telecommunications. Among its goals are to provide customers 
with simpler billing statements, reduce the chances of double 
taxation of wireless telecommunications services, and simplify 
and reduce the costs of tax administration for carriers and 
State and local governments.
    The Committee on the Judiciary struck all provisions of 
H.R. 3489 relating to these State tax issues, because it had 
previously addressed those identical issues in H.R. 4391. The 
bill as reported by the Committee on the Judiciary contains no 
provisions within the subject matter jurisdiction of the 
Committee on the Judiciary.

                Background and Need for the Legislation

    For a discussion of the background and need for legislation 
addressing the State tax issues relating to wireless 
telecommunication services, see the Report of the Committee on 
the Judiciary to H.R. 4391, the ``Mobile Telecommunications 
Sourcing Act.''

                                Hearings

    The committee's Subcommittee on Commercial and 
Administrative Law held a hearing on H.R. 3489 on May 4, 2000. 
Testimony was received from Congressman Chip Pickering, 
principal sponsor of the bill; Ray Scheppach, on behalf of the 
National Governors' Association; Thomas Wheeler, President and 
CEO of the Cellular Telecommunications Industry Association; 
Harley Duncan, on behalf of the Federation of Tax 
Administrators; and Joseph Brooks, representing the National 
League of Cities.

                        Committee Consideration

    On May 24, 2000, the committee met in open session and 
ordered favorably reported the bill H.R. 3489 with an amendment 
by voice vote, a quorum being present.

                         Vote of the Committee

    There were no recorded votes during the consideration of 
H.R. 3489 by the committee.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
findings and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the committee sets forth, with 
respect to the bill, H.R. 3489, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 2, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3489, the Wireless 
Telecommunications Privacy Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark Hadley 
(for federal costs), who can be reached at 226-2860, Hester 
Grippando (for revenues), who can be reached at 226-2720, 
Shelley Finlayson (for the state and local impact), who can be 
reached at 225-3220, and Jean Wooster (for the private-sector 
impact), who can be reached at 226-2940.
            Sincerely,
                                  Dan L. Crippen, Director.

cc:
        Honorable John Conyers Jr.
        Ranking Democratic Member
H.R. 3489--Wireless Telecommunications Privacy Act of 2000.

                                SUMMARY

    CBO estimates that enactment of H.R. 3489 would have a 
negligible effect on the federal budget.
    H.R. 3489 would amend the Communications Act of 1934 to 
prohibit modifying any equipment used to communicate 
electronically in any manner that would not comply with 
regulations affecting electronic eavesdropping. In addition, 
the bill would require the General Accounting Office to issue a 
report on whether the Federal Communications Commission (FCC) 
has accurately assessed regulatory fees.
    The bill would impose criminal penalties for intercepting, 
publishing, or divulging a communication that is not 
authorized. Because H.R. 3489 could affect direct spending and 
receipts; therefore, pay-as-you-go procedures would apply, but 
CBO estimates that any such effects would be negligible. CBO 
estimates that net discretionary costs to the FCC to implement 
the provisions of this bill also would be negligible.
    H.R. 3489 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    The bill would impose a new private-sector mandate, as 
defined in UMRA, on manufacturers, importers, sellers, and 
those who modify scanning receivers. The direct cost of the 
mandate would be well below the annual threshold established in 
UMRA for private-sector mandates ($109 million in 2000, 
adjusted for inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    H.R. 3489 would amend the Communications Act of 1934 to 
prohibit modifying any equipment used to communicate 
electronically in any manner that would not comply with 
regulations affecting electronic eavesdropping. The bill would 
direct the FCC to prepare regulations to deny the authorization 
to use FCC equipment for certain scanning receivers that may be 
capable of unauthorized interception of communication 
transmissions. Based on information from the FCC, CBO estimates 
that these regulations would cost less than $500,000 to 
promulgate, assuming availability of appropriated funds.
    The bill also would amend the Communications Act of 1934 to 
impose criminal penalties for intercepting, publishing, or 
divulging a communication that is not authorized; consequently, 
the federal government might collect additional penalties if 
H.R. 3489 is enacted. Collections of penalties are recorded in 
the budget as governmental receipts (revenues), which are 
deposited in the Crime Victims Fund and spent in subsequent 
years. CBO estimates that any additional receipts and direct 
spending that would occur under this bill would be negligible. 
Under current law, any enforcement costs that the agency incurs 
are offset by fees charged to the industries that the FCC 
regulates. As a result, we estimate that this provision would 
not result in any significant net cost to the federal 
government.
    CBO estimates that the other provisions of the bill would 
have no significant budgetary impact. The costs of this 
legislation would fall within budget function 370 (commerce and 
housing credit).

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. As noted above, H.R. 3489 could affect 
direct spending and receipts, but CBO estimates that any such 
effects would be negligible.

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    H.R. 3489 contains no intergovernmental mandates as defined 
in UMRA and would not affect the budgets of state, local, or 
tribal governments.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    H.R. 3489 would impose a new private-sector mandate, as 
defined by UMRA, on manufacturers, importers, sellers, and 
those who modify scanning receivers. The bill would expand the 
FCC's criteria for certifying equipment before it can be 
imported or marketed. Based on information provided by the 
leading manufacturer of scanning receivers and the FCC, CBO 
estimates that the direct cost of complying with H.R. 3489 
would fall well below the statutory threshold for private-
sector mandates ($109 million in 2000, adjusted annually for 
inflation).

                         PREVIOUS CBO ESTIMATES

    On May 22, 2000, CBO transmitted a cost estimate of H.R. 
3489, as ordered reported by the House Committee on Commerce on 
May 17, 2000. On February 22, 1999, CBO transmitted a cost 
estimate of H.R. 514, the Wireless Privacy Enhancement Act of 
1999, as ordered reported by the House Committee on Commerce on 
February 11, 1999. The Judiciary Committee's version of H.R. 
3489 is nearly identical to H.R. 514 and to the provisions of 
the Commerce Committee's version of H.R. 3489 that concern 
electronic eavesdropping, and our cost estimates are the same 
for these provisions. The Commerce Committee's version of H.R. 
3489 also contained provisions that concern state taxation of 
mobile telephone services.

                         ESTIMATE PREPARED BY:

Federal Costs: Mark Hadley (226-2860)
Revenues: Hester Grippando (226-2720)
Impact on State, Local, and Tribal Governments: Shelley 
        Finlayson (225-3220)
Impact on the Private Sector: Jean Wooster (226-2940)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, clause 8, section 3 of the 
Constitution.

               Section-by-Section Analysis and Discussion

    H.R. 3489, as reported by the Committee on the Judiciary, 
contains no sections within the committee's jurisdiction.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *


                TITLE III--PROVISIONS RELATING TO RADIO

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 302. DEVICES WHICH INTERFERE WITH RADIO RECEPTION.

    (a)  * * *
    (b) No person shall manufacture, import, sell, offer for 
sale, or ship devices or home electronic equipment and systems, 
or use devices, which fail to comply with regulations 
promulgated pursuant to this section, or modify any such 
device, equipment, or system in any manner that causes such 
device, equipment, or system to fail to comply with such 
regulations.

           *       *       *       *       *       *       *

    [(d)(1) Within 180 days after the date of enactment of this 
subsection, the Commission shall prescribe and make effective 
regulations denying equipment authorization (under part 15 of 
title 47, Code of Federal Regulations, or any other part of 
that title) for any scanning receiver that is capable of--
            [(A) receiving transmissions in the frequencies 
        allocated to the domestic cellular radio 
        telecommunications service,
            [(B) readily being altered by the user to receive 
        transmissions in such frequencies, or
            [(C) being equipped with decoders that convert 
        digital cellular transmissions to analog voice audio.
    [(2) Beginning 1 year after the effective date of the 
regulations adopted pursuant to paragraph (1), no receiver 
having the capabilities described in subparagraph (A), (B), or 
(C) of paragraph (1), as such capabilities are defined in such 
regulations, shall be manufactured in the United States or 
imported for use in the United States.]
    (d) Equipment Authorization Regulations.--
            (1) Privacy protections required.--The Commission 
        shall prescribe regulations, and review and revise such 
        regulations as necessary in response to subsequent 
        changes in technology or behavior, denying equipment 
        authorization (under part 15 of title 47, Code of 
        Federal Regulations, or any other part of that title) 
        for any scanning receiver that is capable of--
                    (A) receiving transmissions in the 
                frequencies that are allocated to the domestic 
                cellular radio telecommunications service or 
                the personal communications service;
                    (B) readily being altered to receive 
                transmissions in such frequencies;
                    (C) being equipped with decoders that--
                            (i) convert digital domestic 
                        cellular radio telecommunications 
                        service, personal communications 
                        service, or protected specialized 
                        mobile radio service transmissions to 
                        analog voice audio; or
                            (ii) convert protected paging 
                        service transmissions to alphanumeric 
                        text; or
                    (D) being equipped with devices that 
                otherwise decode encrypted radio transmissions 
                for the purposes of unauthorized interception.
            (2) Privacy protections for shared frequencies.--
        The Commission shall, with respect to scanning 
        receivers capable of receiving transmissions in 
        frequencies that are used by commercial mobile services 
        and that are shared by public safety users, examine 
        methods, and may prescribe such regulations as may be 
        necessary, to enhance the privacy of users of such 
        frequencies.
            (3) Tampering prevention.--In prescribing 
        regulations pursuant to paragraph (1), the Commission 
        shall consider defining ``capable of readily being 
        altered'' to require scanning receivers to be 
        manufactured in a manner that effectively precludes 
        alteration of equipment features and functions as 
        necessary to prevent commerce in devices that may be 
        used unlawfully to intercept or divulge radio 
        communication.
            (4) Warning labels.--In prescribing regulations 
        under paragraph (1), the Commission shall consider 
        requiring labels on scanning receivers warning of the 
        prohibitions in Federal law on intentionally 
        intercepting or divulging radio communications.
            (5) Definitions.--As used in this subsection, the 
        term ``protected'' means secured by an electronic 
        method that is not published or disclosed except to 
        authorized users, as further defined by Commission 
        regulation.

           *       *       *       *       *       *       *


TITLE VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


SEC. 705. UNAUTHORIZED INTERCEPTION OR PUBLICATION OF COMMUNICATIONS.

    (a) [Except as authorized by chapter 119, title 18, United 
States Code, no person] No person receiving, assisting in 
receiving, transmitting, or assisting in transmitting, any 
interstate or foreign communication by wire or radio shall 
divulge or publish the existence, contents, substance, purport, 
effect, or meaning thereof, except through authorized channels 
of transmission or reception, (1) to any person other than the 
addressee, his agent, or attorney, (2) to a person employed or 
authorized to forward such communication to its destination, 
(3) to proper accounting or distributing officers of the 
various communicating centers over which the communication may 
be passed, (4) to the master of a ship under whom he is 
serving, (5) in response to a subpena issued by a court of 
competent jurisdiction, or (6) on demand of other lawful 
authority. No person not being authorized by the sender shall 
intentionally intercept any radio [communication and divulge] 
communication, and no person having intercepted such a 
communication shall intentionally divulge or publish the 
existence, contents, substance, purport, effect, or meaning of 
such intercepted communication to any person. No person not 
being entitled thereto shall receive or assist in receiving any 
interstate or foreign communication by radio and use such 
communication (or any information therein contained) for his 
own benefit or for the benefit of another not entitled thereto. 
No person having received any intercepted radio communication 
or having become acquainted with the contents, substance, 
purport, effect, or meaning of such communication (or any part 
thereof) knowing that such communication was intercepted, shall 
(A) divulge or publish the existence, contents, substance, 
purport, effect, or meaning of such communication (or any part 
[thereof) or] thereof); or (B) use such communication (or any 
information therein contained) for his own benefit or for the 
benefit of another not entitled thereto. [This section shall 
not apply to the receiving, divulging, publishing, or utilizing 
the contents of any radio communication which is transmitted by 
any station for the use of the general public, which relates to 
ships, aircraft, vehicles, or persons in distress, or which is 
transmitted by an amateur radio station operator or by a 
citizens band radio operator.] Nothing in this subsection 
prohibits an interception or disclosure of a communication as 
authorized by chapter 119 of title 18, United States Code.

           *       *       *       *       *       *       *

    (e)(1) Any person who willfully violates subsection (a) 
shall be [fined not more than $2,000 or] imprisoned for not 
more than 6 months, or fined under title 18, United States 
Code, or both.

           *       *       *       *       *       *       *

    (3)(A) Any person aggrieved by [any violation] any receipt, 
interception, divulgence, publication, or utilization of any 
communication in violation of subsection (a) or paragraph (4) 
of this subsection may bring a civil action in a United States 
district court or in any other court of competent jurisdiction.

           *       *       *       *       *       *       *

    (4) Any person who manufactures, assembles, modifies, 
imports, exports, sells, or distributes any electronic, 
mechanical, or other device or equipment, knowing or having 
reason to know that the device or equipment is primarily of 
assistance in the unauthorized decryption of satellite cable 
programming, or direct-to-home satellite services, or is 
intended for [any other activity prohibited by subsection (a)] 
any receipt, interception, divulgence, publication, or 
utilization of any communication in violation of subsection 
(a), shall be fined not more than $500,000 for each violation, 
or imprisoned for not more than 5 years for each violation, or 
both. For purposes of all penalties and remedies established 
for violations of this paragraph, the prohibited activity 
established herein as it applies to each such device shall be 
deemed a separate violation.

           *       *       *       *       *       *       *

    (7) Notwithstanding any other investigative or enforcement 
activities of any other Federal agency, the Commission shall 
investigate alleged violations of this section and may proceed 
to initiate action under section 503 of this Act to impose 
forfeiture penalties with respect to such violation upon 
conclusion of the Commission's investigation.

           *       *       *       *       *       *       *


                                
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