Senate passes spy bill and phone immunity

By Thomas Ferraro

WASHINGTON (Reuters) - Phone companies that took part in President George W. Bush's warrantless domestic spying program would receive retroactive immunity from lawsuits under a bill approved on Tuesday by the Democratic-led Senate.

But it was unclear if the Democratic-led House of Representatives would also approve the legislation to shield firms from potentially billions of dollars in damages.

About 40 civil lawsuits have been filed accusing AT&T Inc (), Verizon Communications Inc () and Sprint Nextel Corp () of violating Americans' privacy rights in helping the government's warrantless domestic spying program started shortly after the September 11 attacks on the United States.

Passed by the Senate on a largely party line vote, the bill would replace a temporary spy law set to expire this week that expanded the power of U.S. authorities to track enemy targets without a court order.

In addition, the Senate bill would bolster the protection of privacy rights of law-abiding Americans swept up in the hunt for suspected terrorists.

"I don't know what they (House Democrats) are going to do," said Sen. Kit Bond, a Missouri Republican and a chief sponsor of the bill. "I hope they pass it."

If the House rejects or fails to quickly pass the measure, the temporary law would expire on Saturday.

One option would be to approve a short-term extension of the law, as Congress and Bush did last month, to provide more time to resolve their differences.

"Under discussion," a senior aide said when asked what House Democrats leaders may do.

Senate Intelligence Committee Chairman John Rockefeller of West Virginia broke ranks with many fellow Democrats in pushing to immunize phone companies. Yet he criticized Bush for starting the spy program without congressional or court approval.

"Anger over the president's program should not prevent us from addressing the real problems that the president has created," Rockefeller said. He warned that without immunity some private firms may decline to help protect the nation.

Those opposed to granting immunity argued the courts should decide if the phone companies violated the law, and help determine what Bush did in ordering the warrantless surveillance that was first exposed in December 2005 by The New York Times.

The 1978 Foreign Intelligence Surveillance Act (FISA) requires that the government receive the approval of a secret FISA court to conduct surveillance in the United States of suspected foreign enemy targets.

Bush authorized warrantless surveillance of communications between people in the United States and others overseas if one had suspected ties to terrorists.

(Editing by Lori Santos)