White House says spy bill telecom protection vital

By Thomas Ferraro

WASHINGTON (Reuters) - The White House on Thursday rejected opposition and said liability protection for telecommunication companies that participated in its warrantless spying program was vital to guard against another September 11-like attack.

Many lawmakers agreed. But anticipated final congressional approval of a surveillance bill that contains such a shield was postponed until after the Senate returns from its Fourth of July recess. The Senate had hoped to pass it this week.

Sen. Russ Feingold, a Wisconsin Democrat leading an uphill charge against the legislation, forced the delay.

"I hope that over the July 4th holiday, senators will take a closer look at this deeply flawed legislation and understand how it threatens the civil liberties of the American people," Feingold said.

Senate Majority Leader Harry Reid, after conferring with fellow Democrats and Republicans, scheduled a vote on the measure for July 8, a day after they return from a week-long break.

The Senate is expected to approve the bill, which the House of Representatives overwhelmingly passed last week.

It would revamp U.S. spy laws, increase oversight of U.S. intelligence activities and bolster privacy protection -- but not as much as civil liberties groups and a number of lawmakers want.

The measure would also protect telecommunication companies from potentially billions of dollars in damages from privacy lawsuits. The suits stem from their participation in a warrantless electronic surveillance program Bush secretly began shortly after the September 11 attacks.

"Failure to provide retroactive liability protection would undermine the private sector's willingness to cooperate," the White House said in a statement. "Such cooperation is essential to protecting the country from another terrorist attack."

The measure would enable a federal district court to dismiss a lawsuit if the company can produce certification that the administration told it the program was legal.

Since certification was provided, critics have denounced the so-called compromise drafted by Democratic and Republican negotiators as a sham.

LAWSUITS FILED

Feingold and Sen. Chris Dodd, a Connecticut Democrat, are pushing to strip the lawsuit protection out of the bill. But they seem far short of the number of votes needed to prevail.

Democrats control the House and Senate. Yet they have faced election-year pressure to pass the bill, fearing failure to do so would let Republicans paint them as weak on security and force them to accept what they saw as a more objectionable earlier version of the legislation.

Lawsuit protection has proved to be the most controversial section of the bill, which would replace a temporary surveillance law that expired in February.