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.

CLOSED-DOOR COURT

While the House-passed bill would not grant immunity, it would allow phone companies to present their cases in a closed-door court, with the judge given access to confidential documents about the surveillance and the authorization for it.

The bill would revamp the 1978 Foreign Intelligence Surveillance Act to keep up with ever-changing technology, like e-mails, which didn't exist when the law was written.

The measure would also expand U.S. spy power, but not as much as the administration has demanded. In addition, it would increase congressional and judicial oversight.

Bush has backed a competing bill overwhelmingly approved by the Senate last month that would bolster U.S. electronic surveillance and grant phone companies retroactive immunity.

The House bill was approved shortly before lawmakers left for a two-week recess, leaving behind questions about if and when the House and Senate can agree on a measure to send Bush to sign into law.

House Republican Whip Roy Blunt said, "The security of the country over the next two weeks while we're gone will not be what it would have been if we would have passed the (Senate) bill today in a bipartisan majority."