Techs Capitol Hill Hurdles

Are the decks stacked against two tech issues: a bill controlling how stock options are treated by enterprises and legislation covering the copying of digital recordings?

There are less than 10 days left until Congress takes another break, and the sound and fury of the tech industrys positioning to get its way is echoing from the halls of Capitol Hill to Sand Hill Road.

Tech faces a selection of unappealing possibilities: one, that a bill controlling the ways in which stock options are treated by corporations will not pass and that the Financial Accounting Services Board will require all options to be treated as expenses beginning next year. Another, that legislation covering the copying of digital recordings will be approved and that new laws designed to inhibit peer-to-peer file sharing will become law. Three, both of the above occur. Four, none of the above happens.

The last few days of any legislative session are always busy as lawmakers and lobbyists work to get pet projects and ideas approved. But this year, action has been stalled by unusually acrimonious bickering between political parties. That means much of whats happening this week is in anticipation of what might happen the month after next.

"Were just checking the boxes to get to the lame duck, said one tech lobbyist who is familiar with the stock options strategy.

"Lame duck" sessions, named because they often include members of Congress who lost or didnt seek re-election, are becoming less rare; they have been part of the last three sessions of Congress. This year when Congress and the U.S. Senate—where Democratic presidential candidates Sens. John Kerry and Edwardsck hold seats—are even more sharply divided, such a session is seen as inevitable.

Regardless of who wins the elections—House and Senate races are also under way in addition to the presidential contest and congressional leadership could change next year—political retribution will definitely be on the menu. The fear on the part of both lobbying groups is that a Republican-controlled Congress would seek to enact its pet projects—passing copyright, blocking stock options—in triumph if President Bush is re-elected and they keep control of Congress or in revenge if they lose.

/zimages/5/28571.gifCheck out Chris Nolans columns on Bush and technology and Kerry and technology.

This is particularly important given what Congress hasnt done: put the nations financial house in order. As broad budget and spending authorization bills go through Congress at the last minute, they are often changed to include smaller pieces of legislation that go unnoticed until theyre approved. Thats the strategy tech could employ on options but would have to fight on copyright.

To make matters worse, in terms of pure political power, the decks are stacked against tech on both issues.

Senate Republicans, particularly Alabama Sen. Richard Shelby, who heads the Banking Committee, are adamantly opposed to legislation that would change how companies treat stock options. Shelby has said he think the law proposed by Silicon Valleys TechNet lobby is unnecessary interference in the affairs of an independent regulatory body, the Financial Accounting Service Board.

Copyright legislation has support from two powerful Washington lobbies, the Motion Picture Association of America (now headed by former Kansas Congressman Dan Glickman, a former member of the House Committee charged with overseeing these issues) and the Recording Industry Association of America.

A markup on copyright legislation that would penalize anyone who "induced" another to make illegal copies of songs, movies or television shows has been scheduled by the Senate Judiciary Committee, with a final vote expected next Thursday. That vote would tee-up the Induce legislation for action when Congress comes back after the election.

Its a bill, supported by the motion picture and record industry, that goes too far, says Public Knowledge President Gigi Sohn. "This is what the digital copyright debate has become. Its become a debate over who is going to control the design of new technology," she said. "They want design control over machinery."

If the Induce Act passes the Senate, it will still need to win approval in the House, and that could slow action on the measure to a dead halt. But stock options legislation has already cleared the House. That put the legislation tech wants in a stronger position.

"Its a heavy lift for anyone who tries to move anything in a lame duck," says Jeff Peck, one of the lobbyists who has been coordinating techs options fight. Hes optimistic. "I feel good about where we are," he says. "Ill take my chances with where we are now."

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