House passes spy bill and rejects phone immunity

By Thomas Ferraro

WASHINGTON (Reuters) - The Democratic-led U.S. House of Representatives defied President George W. Bush on Friday and passed an anti-terrorism spy bill that permits lawsuits against phone companies.

But the 213-197 vote was far short of the two-thirds majority needed to override a promised veto by Bush. He has demanded that any telecommunication company that participated in his warrantless domestic spying program secretly begun after the September 11 attacks receive retroactive immunity.

The battle over whether to shield companies has been a key reason why the House and Senate have been unable to agree on a bill to replace a law that expired last month that expanded U.S. authority to track enemy targets without a court order.

It has also prompted Republicans to accuse Democrats of undermining national security, while Democrats have accused Bush and his fellow Republicans of election-year fear mongering.

"It is time to reject the scare tactics of the Bush administration and enact this carefully crafted legislation," said Rep. Jerrold Nadler, a New York Democrat.

White House spokesman Tony Fratto fired back: "Their bill would make it easier for class-action trial lawyers to sue companies whose only offense is that they are alleged to have assisted in efforts to protect the country after the attacks of September 11."

About 40 lawsuits have accused AT&T Inc., Verizon Communications Inc and Sprint Nextel Corp of

violating the privacy rights of law-abiding Americans swept up in the electronic surveillance of phone calls and e-mails. Damages could total in the billions of dollars.