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First Meeting: Transcript of June 21

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         3                         Meeting

         4                          of the








                                   held on
                               JUNE 21, 1999

                            THE WILLIAMSBURG LODGE
        18                  WILLIAMSBURG, VIRGINIA





        23                    COOK & WILEY, INC.
                      Registered Professional Reporters
        24                  Post Office Box 14582
                           Richmond, Virginia 23221
        25                      (804) 359-1984


         1  MEMBERS:

         2  The Honorable James S. Gilmore, Chairman
            Governor, Commonwealth of Virginia
         3  State Capitol, Third Floor
            Richmond, Virginia 23219
            Mr. Dean F. Andal
         5  Chairman, California Board of Equalization
            754 Shoreline Drive, Suite D
         6  Stockton, California 95219

         7  Mr. Michael Armstrong
            Chief Executive Office, AT&T
         8  32 Avenue of the Americas
            New York, New York 10013
            Mr. Joseph H. Guttentag
        10  Senior Advisor to the
              Assistant Secretary for Tax Policy
        11  U. S. Department of the Treasury
            1500 Pennsylvania Avenue, NW, Room 3330
        12  Washington, D. C. 20220

        13  The Honorable Paul C. Harris
            Delegate, Virginia House of Delegates
        14  100 Court Square Annex, Suite B
            Charlottesville, Virginia 22902
            Ms. Delna Jones
        16  Commissioner, Washington County
              Administrative Offices
        17  155 North First Avenue, Suite MS22
            Hillsboro, Oregon 97124
            The Honorable Ron Kirk
        19  Mayor, City of Dallas
            1500 Marilla Street, Suite 5EN
        20  Dallas, Texas 75201

        21  The Honorable Michael O. Leavitt
            Governor, State of Utah
        22  State Capitol, Suite 210
            Salt Lake City, Utah 84114



                               COOK & WILEY, INC.


         1  Mr. Gene N. Lebrun
            President, National Conference of
         2    Commissioners on Uniform State Laws
            First National Bank Building, 8th Floor
         3  909 St. Joseph Street
            P. O. Box 8520
         4  Rapid City, South Dakota 57709

         5  The Honorable Gary Locke
            Governor, State of Washington
         6  Legislative Building
            Olympia, Washington 98504
            Mr. Grover Norquist
         8  President, Americans for Tax Reform
            1320 18th Street, NW, Suite 200
         9  Washington, D. C. 20036

        10  Mr. Robert Novick
            Counselor, U. S. Trade Representative
        11  600 17th Street, NW
            Washington, D. C. 20508
            Mr. Andrew Pincus
        13  General Counsel, U. S. Department of Commerce
            14th Street and Constitution Avenue, NW, Room 5858
        14  Washington, D. C. 20230

        15  Mr. David Pottruck
            President and Co-Chief Executive Officer
        16  Charles Schwab Corporation
            101 Montgomery Street, 28th Floor
        17  San Francisco, California 94104

        18  Mr. John W. Sidgmore
            Vice Chairman, MCI Worldcom and Chairman, UUNET
        19  MCI Worldcom
            8620 Willow Oaks
        20  Fairfax, Virginia 22031

        21  Mr. Stanley S. Sokul
            Davidson & Company, Inc.
        22  1101 Pennsylvania Avenue, NW, Suite 810
            Washington, D. C. 20004
            Mr. Theodore Waitt
        24  Chairman and CEO, Gateway, Inc.
            610 Gateway Drive
        25  North Sioux City, South Dakota 57049

                               COOK & WILEY, INC.



         2             MR. CHAIRMAN:  Well, Ladies and Gentlemen,

         3        welcome to Williamsburg.  We're delighted to see

         4        all of you-all here for this first meeting of

         5        the Congressional Commission to the Advisory

         6        Commission on Electronic Commerce.  I want to

         7        welcome you here and call this first meeting to

         8        order.

         9             We are, of course, an unorganized body up

        10        to this point, but we're very excited about the

        11        prospects of the advice that this Commission can

        12        give the Congress as we work through the issues

        13        over the next year.

        14             I want to welcome all of you to

        15        Williamsburg, selected here in Virginia, at

        16        least for the beginning of this Commission, as

        17        the home of the rights, liberties of man, and

        18        that's what we thought we would like to do.

        19             We would like to begin, with a liberating

        20        institution of the Internet and eCommerce, to

        21        begin in a historical location like this.

        22        Naturally, there will be other opportunities to

        23        travel across the rest of the country as well.

        24             Calling the meeting to order, the first

        25        order of business so that we can at least get

                               COOK & WILEY, INC.


         1        started is to have the formal election of the

         2        Chair.

         3             Is there a motion for election of the

         4        Chair?

         5             MR. ARMSTRONG:  I would like to put forward

         6        a motion.

         7             MR. CHAIRMAN:  Mr. Armstrong of AT&T.

         8             MR. ARMSTRONG:  I think possibly one of the

         9        wisest things that Congress did was to delegate

        10        this from the Congress to a body of industry and

        11        state and local leadership, and with leaders

        12        like Locke, Leavitt, and Gilmore that are here

        13        to help, there is no doubt in my mind that we're

        14        going to get this job done.

        15             And I would like to nominate a man who

        16        knows a lot about this subject.  He studied it,

        17        he's been involved, and thus he knows that our

        18        task is not easy.

        19             In fact, he has the most, I think,

        20        knowledge on technology, and, in fact, the

        21        nation's only technology director.  If you

        22        listen to what he has had to say on the subject

        23        or read his speech, you know he comes with a

        24        very balanced view, and he not only supports

        25        what we're going to do, he has financially

                               COOK & WILEY, INC.


         1        supported what we're going to do, and I am proud

         2        to nominate James Gilmore as our Chairman.

         3             MR. CHAIRMAN:  Second?

         4             MR. HARRIS:  I would like to second the

         5        nomination.

         6             MR. CHAIRMAN:  Second by Mr. Harris.

         7             Any other nominations?

         8             All in favor of my election as Chairman,

         9        please say aye.

        10             COMMISSION MEMBERS:  Aye.

        11             MR. CHAIRMAN:  Thank you very much.  Any

        12        opposed?

        13             None opposed?  Okay.  Thank you very much.

        14        So that we can get started on this.

        15             Once again, welcome to Williamsburg, and

        16        also I want to recognize what we're doing here

        17        this afternoon.

        18             This is an organizational meeting.  The

        19        goal, naturally, of the meetings that we will

        20        hold all throughout this conference over the

        21        next year is to hear from people, to examine and

        22        get information, and then to determine what

        23        recommendations, if any, we feel that we can

        24        afford to the Congress.

        25             I expect there will be a lot of discussion

                               COOK & WILEY, INC.


         1        constantly, including tomorrow afternoon,

         2        between the members so we can begin to define

         3        the issues and address the issues.

         4             But this afternoon, this is an opportunity

         5        for us to get together to get some of the

         6        organizational things out of the way.

         7             The next item is an oath of office.  Among

         8        the paperwork that the staff has presented to

         9        you is a document marked Appointment Affidavits.

        10        This is an oath of office as an advisory member

        11        of this Commission.

        12             If you-all would please examine that and

        13        sign it, there is a notary public here in the

        14        room that will collect these and then mark those

        15        down and make those part of the record of our

        16        Commission.

        17             In the meanwhile, I would ask, as a matter

        18        of formality, would the members please be

        19        prepared to take an oath of office.  I will

        20        administer the oath to the group, if you would

        21        raise your right hand, please.

        22             Including myself, please state:  I do

        23        solemnly swear that I will support and defend

        24        the Constitution of the United States against

        25        all enemies, foreign and domestic, that I will

                               COOK & WILEY, INC.


         1        bear truth and allegiance to the same, that I

         2        take this obligation freely without any mental

         3        reservation or purpose of evasion, that I will

         4        well and faithfully discharge the duties of the

         5        office under which I'm about to enter, so help

         6        me God.


         8             (The oath was repeated by the members.)


        10             MR. CHAIRMAN:  Thank you very much, Ladies

        11        and Gentlemen.  Again, if you will endorse the

        12        appointment affidavits that are there, the

        13        notary public will then collect those at the

        14        immediate time and then make those part of the

        15        record.

        16             I want to thank all of you-all for being

        17        here today for this organizational meeting of

        18        the National Advisory Commission on Electronic

        19        Commerce.  I appreciate very much all of you

        20        traveling here to Williamsburg.

        21             I think that, as I have stated, it is a

        22        fine setting for this historic occasion.  So

        23        much of our history as a free nation has been

        24        written here in Williamsburg, and in historic

        25        Jamestown, and Yorktown as well, and today we

                               COOK & WILEY, INC.


         1        begin to write another chapter.  It's a chapter

         2        involving electronic commerce and chartering the

         3        future of electronic commerce in America.

         4             The Commission is charged with one of the

         5        most far-reaching and difficult tasks in

         6        history.  The recommendation will change the

         7        lives of all America's on-line citizens, and I

         8        don't think that I exaggerate with this.

         9             This is the first time that I can think of

        10        that we're dealing with an issue that is

        11        literally global in scope, and the impact that

        12        we have with our recommendations, if enacted by

        13        the Congress, will affect eCommerce across the

        14        globe, particularly with our dominant position

        15        right now in information technology in the

        16        United States.

        17             Never before has there been a medium with

        18        this type of profound and pervasive impact on

        19        more people's lives than the Internet.  It is

        20        the most democratic and commercially explosive

        21        force that I think has ever been invented,

        22        particularly in the free world of communication.

        23             The opportunities for us to advance

        24        civilization are endless, but we, the members of

        25        this Commission, must seize the moment.

                               COOK & WILEY, INC.


         1             I'm honored that you have elected me as

         2        your Chairman.  I want to thank you for that.

         3        The letter that many of you signed earlier in

         4        support of my election was appreciated.

         5             I have had, as all of you have, a great

         6        interest and involvement in this.  I have

         7        supported the Internet Tax Freedom Act and have

         8        chaired an Information Technology Commission

         9        that has become law, much of their

        10        recommendations here in the Commonwealth of

        11        Virginia.

        12             But everyone who has been appointed is

        13        deeply involved with the development of this

        14        medium.  Many people here are involved with the

        15        commerce on it.  People are involved with the

        16        regulation of it.

        17             There are members of this Commission who

        18        are very concerned from the point of view of

        19        legislators and local elected firms as well as

        20        three governors.

        21             There is a great deal, I think, of

        22        expertise that the Congress has appointed on

        23        this Commission.  As the Chairman, I want to use

        24        the experience that I bring to this and draw

        25        upon the experience that each of you has to

                               COOK & WILEY, INC.


         1        advance this Commission.

         2             And the concerned citizens that also will

         3        want to have input with us as we go along on

         4        these meetings as well in order to produce

         5        something that is concrete, a useful conclusion

         6        that we could submit to the Congress for their

         7        disposition.

         8             The Congress, of course, will dispose of

         9        this.  This Commission does not legislate, but

        10        it does have, I believe, the ability, through

        11        the strength and wisdom of its activities over

        12        the next year, to have credibility with the

        13        Congress so that we can present something or

        14        perhaps more than one option to the Congress

        15        that will make sense.

        16             It is my intention as Chairman to be fair

        17        and to be as thorough as possible, and that is

        18        the commitment that I have made to each of you

        19        and the commitment I make to the American people

        20        through you.

        21             I want to thank you for your confidence and

        22        your trust.  We should move forward to complete

        23        this mission and meet this greatest commercial

        24        challenge of the information age.

        25             Now, as I said, today is an organizational

                               COOK & WILEY, INC.


         1        meeting, and tomorrow is going to be a much more

         2        substantive meeting.  The meeting that will be

         3        held tomorrow will give the opportunity for

         4        information to be obtained, but when I saw a

         5        proposed draft agenda, I knew immediately that

         6        we had to reserve time at the end of the day for

         7        a great deal of free discussion among the people

         8        who are here for this meeting, and we have, in

         9        fact, reserved a significant amount of time for

        10        the formulation and sharpening up of the issues

        11        as we go forward.

        12             This Commission, I might say, we're meeting

        13        despite all obstacles, you see.  The Congress

        14        didn't give us an awful lot of guidance to go

        15        on.  It defined that we had to pick a Chairman,

        16        and that we had to find some way to fund

        17        ourselves, and we had to find some way to meet,

        18        but they didn't give us a great deal of

        19        guidance.

        20             After your letter and your support as

        21        Chairman, not to be presumptuous, but with the

        22        complete discussions with each and every person

        23        here in this room, I have made an effort to go

        24        forward on the housekeeping to get as much of it

        25        behind us today on this first meeting as

                               COOK & WILEY, INC.


         1        possible so that we can move as quickly as

         2        possible to substantive information and

         3        discussions about the medium and the Internet.

         4             This Committee, of course, will define and

         5        dispose of even the housekeeping measures, and

         6        I'm sensitive to that.  So I have a series of

         7        things that I have done and I'm going to propose

         8        to do today.

         9             If it meets with your approval, we can get

        10        this out of the way.  If there are any

        11        suggestions and amendments anyone has, naturally

        12        we will take them up in proper order here and

        13        we'll continue to move ahead.  But our objective

        14        today was to get this on its way.

        15             First of all, I have taken the liberty to,

        16        so that we could, in fact, have a meeting of

        17        this type of degree, to seek out and find an

        18        appropriate person to be an Executive Director.

        19             I would like to introduce to everyone

        20        Heather Rosenker.  She has been vice president

        21        of Communications Company.  She has worked on

        22        the Council on Environmental Quality in

        23        Washington, D. C.  She was vice president and

        24        group manager of Slack, Bryan and Myers in

        25        Chicago, Illinois.

                               COOK & WILEY, INC.


         1             She has worked as an account manager of the

         2        Kamber Group in Washington, D. C.  She has

         3        worked also as -- for White House presidential

         4        advance.  She has worked on a large number of

         5        other types of organizations like that.

         6             She was the winner in terms of an extensive

         7        interview process for persons that we thought

         8        would be a competent, successful supporter of

         9        this Commission.

        10             So, Ladies and Gentlemen, without

        11        objection, Heather Rosenker will serve as the

        12        Executive Director, unless there is some other

        13        proposal.

        14             She has, in fact, already gone forward and

        15        done all the arrangements for this meeting and

        16        has done the paperwork for the advanced work

        17        that all of you have done.

        18             GOVERNOR LEAVITT:  Mr. Chairman --

        19             MR. CHAIRMAN:  Yes, sir.

        20             GOVERNOR LEAVITT:  -- I have only met

        21        Heather today, and she appears to be a person of

        22        extraordinary ability, and it also seems clear

        23        to me that we have to have someone and she is

        24        certainly a very able person on an interim

        25        basis.

                               COOK & WILEY, INC.


         1             I'm wondering, however, given the nature

         2        and importance of this, if there should be -- if

         3        the Executive Director ought to be hired by the

         4        Commission after some deliberation among the

         5        Commission members as opposed to simply having

         6        had the person to begin with.

         7             I just throw that out as a matter of

         8        question.  I don't know if there are other

         9        Commissioners that feel that way.

        10             It seems to me, hiring a CEO -- no

        11        indeference to Heather -- I'm wondering if we

        12        should have some broader discussion among the

        13        Commissioners of who that should be.

        14             MR. CHAIRMAN:  Certainly the Commission is

        15        available to discuss any matter that they would

        16        like to.  And if there is another proposal for

        17        Executive Director at this or any other meeting,

        18        of course the matter can be taken up.

        19             She has, of course, already done all of the

        20        substantive work in order to get ready for this

        21        meeting, but if there is another proposal --

        22             Would you propose, Mike, that a person be

        23        hired at the next meeting?

        24             GOVERNOR LEAVITT:  I guess I'll make a

        25        formal proposal.  I would suggest that Heather

                               COOK & WILEY, INC.


         1        be appointed the Interim Executive Director and

         2        a Committee be appointed by the Chair for the

         3        purpose of being able to review, first of all,

         4        the criteria.  What is the criteria that this

         5        group wants to have for the Executive Director?

         6             Second of all, I would like to know, do we

         7        have any -- are there any reasons for us to be

         8        looking for one kind of person or another?

         9             I just think it would be valuable for us as

        10        a Commission to appoint Heather.  I would move

        11        for her adoption as Interim Executive Director

        12        but move for the Chair to review it and to make

        13        recommendations either by mail ballot or

        14        adoption at our next meeting on a permanent

        15        basis.

        16             MR. CHAIRMAN:  There is a motion on the

        17        table that I will speak to in a few moments, but

        18        first, Dean Andal.

        19             MR. ANDAL:  I'm not for that proposal.  I

        20        think that one of the difficulties of dealing

        21        with this task that comes before us, we all come

        22        from different walks of life and from all over

        23        the United States.  It's very difficult for us

        24        to get to know each other.  As a matter of fact,

        25        most of us are meeting each other for the first

                               COOK & WILEY, INC.


         1        time today.

         2             We also have a limited time available for

         3        us to conduct our business and report back to

         4        Congress.  Interim is probably what the

         5        permanent is.  This is not likely to last long.

         6        We're going to have, it looks like, three more

         7        meetings.  I think the uncertainty of an interim

         8        appointment would just undermine Heather's

         9        efforts.

        10             I think she is qualified to do the job.

        11        She seems --  From the material I was sent, she

        12        has had experience in other types of Commission

        13        work in Washington.  And I'm not sure that there

        14        is any reason to not appoint her permanently and

        15        give her that license to work on our behalf.

        16             I think it's difficult for us as a

        17        Commission to hire and fire employees.  I think

        18        that's something we're going to have to, because

        19        of logistical problems, leave to our Chairman.

        20             I would rather make a substantive motion to

        21        approve the recommendation by the Chairman and

        22        leave it as it is.

        23             MR. CHAIRMAN:  There is a substitute motion

        24        on the floor to adopt Heather as the permanent

        25        Executive Director.  Other comments on this?

                               COOK & WILEY, INC.


         1        Other persons wish to speak to this?

         2             I would say two things myself.  First of

         3        all, it's been pretty tough to get this thing

         4        going as it is, and we have worked pretty hard

         5        to do that.  And I want to congratulate Heather

         6        for taking this on, you know, as a matter of

         7        hope that she would be in a position to do this

         8        service to the Commission.

         9             I do not see her as a policymaker.  This is

        10        a small enough group that I would expect the

        11        members of the Commission to make all the

        12        policies.

        13             She is, of course, here as the Executive

        14        Director to help us with the direction and

        15        movement of paper and the handling of

        16        arrangements and the coordination of people.

        17        But I would not foresee any staff person

        18        foreclosing any single member of the Commission

        19        in any way.

        20             Is there other discussion on this?

        21             Mr. Guttentag.

        22             MR. GUTTENTAG:  I had a related question,

        23        and the budget will come up later for

        24        discussion, but I'm wondering here about making

        25        this permanent commitment when we have yet to

                               COOK & WILEY, INC.


         1        secure the sources of funds.  As you pointed

         2        out, Mr. Chairman, we don't have a source of

         3        funds yet.

         4             I'm wondering if we should defer making

         5        permanent commitments on the part of the

         6        Commission until at least we have determined

         7        whether we have the source of the funds and

         8        whether we have enough to be able to pay her

         9        salary.

        10             MR. CHAIRMAN:  Sounds fine.  If people

        11        would like to defer this discussion until we

        12        take up the matter of the budget, that will be

        13        perfectly fine.  Why don't we do that unless

        14        there is objection.

        15             Very good.

        16             There is a proposed charter that is in your

        17        books on the Advisory Commission.  The proposed

        18        charter sets down the purpose of the Commission,

        19        the authority as contained within the statute,

        20        the structure as set down within the statute.

        21        It is basically a restatement of the statutory

        22        matter.

        23             There are some additional matters with

        24        respect to administration, meetings,

        25        compensation, all of this laid down for the

                               COOK & WILEY, INC.


         1        Commission.  It is the proposed charter for us

         2        to proceed.

         3             Has everyone seen a copy of the proposed

         4        charter?

         5             Is there a motion regarding the charter or

         6        any discussion --  Is there a motion for the

         7        adoption of the charter?

         8             MR. LEBRUN:  Mr. Chairman --

         9             MR. CHAIRMAN:  There is a motion to adopt

        10        the charter.

        11             Mr. Lebrun, do you have -- do you think

        12        that we should engage in discussion, or did you

        13        want to make a motion?

        14             MR. LEBRUN:  That's a good question.  The

        15        one in the book is dated June 8, '99, and there

        16        was a handout on your table dated June 17th.  I

        17        assume the 17th is the one we're talking about?

        18             MS. ROSENKER:  Yes, sir.

        19             MR. LEBRUN:  Thank you.

        20             MR. ARMSTRONG:  This is Draft 2 that I

        21        have?

        22             MS. ROSENKER:  That's correct.

        23             MR. ARMSTRONG:  Is it significantly

        24        different?

        25             MR. CHAIRMAN:  The date is different.

                               COOK & WILEY, INC.


         1             Is there any discussion on the content of

         2        the charter?  It is not intended to be a

         3        controversial matter, but merely to set down the

         4        guidelines as set out in the statute.

         5             Is there a motion to adopt the charter?

         6             GOVERNOR LEAVITT:  I make a motion to adopt

         7        the charter.

         8             MR. CHAIRMAN:  All in favor?

         9             COMMISSION MEMBERS:  Aye.

        10             MR. CHAIRMAN:  All opposed?

        11             The charter is adopted.

        12             There are proposed operating rules also in

        13        your paperwork, Advisory Commission on

        14        Electronic Commerce, Operating Rules.  The rules

        15        are, I think, straightforward.  They have been

        16        under some discussion.

        17             Any members who wish to make some comments

        18        regarding the rules, they have been changed and

        19        altered and adopted in order to accommodate the

        20        concerns of anyone, if any.

        21             They are, I think, general in context.

        22        They give us at least a working format with

        23        which to proceed.

        24             Does anyone have any comment on the

        25        proposed rules?  Any changes?

                               COOK & WILEY, INC.


         1             MR. ARMSTRONG:  Mr. Chairman, I just

         2        circled one little item here, that the

         3        Commission shall report its findings to the

         4        Congress by April 21, 2000.

         5             Is that a hard commitment, we're going to

         6        be that smart by that time frame, or is there

         7        any flexibility?

         8             MR. CHAIRMAN:  I think there is not

         9        flexibility.  The statute calls for a report

        10        within 18 months of the formation of the

        11        Commission, which was done on October 21 of

        12        1998.  So we have that date that we are supposed

        13        to report to the Congress.

        14             Naturally, of course, at the end of the

        15        process, the Commission might seek to petition

        16        the Congress for an extension, if one is called

        17        for.  But the proposed work plan that I think we

        18        have put forward on meetings and the framework

        19        we have set out hopefully will get us to a

        20        conclusion by that date but will probably

        21        require additional action.

        22             Governor Leavitt.

        23             GOVERNOR LEAVITT:  Mr. Chairman, I again

        24        want to congratulate you and the staff that's

        25        worked on this to bring us a format.  I would

                               COOK & WILEY, INC.


         1        suggest, however, that these rules are pro forma

         2        perfunctory.  These are very important, and I

         3        was handed, as I came in today, a new copy of

         4        rules that I have not had a chance to look at.

         5        I don't know if there are changes or not.

         6             I would like to propose that we take the

         7        time to go through the rules a paragraph at a

         8        time and make sure we all understand them and

         9        we're comfortable with each part.

        10             I know that is time-consuming.  I don't

        11        think we would do anything more important in the

        12        next two days than understand the rules and the

        13        context under which we will operate.

        14             I would move to go through the rules a

        15        paragraph at a time, if you need a formal motion

        16        on this.

        17             MR. CHAIRMAN:  There is a motion that we

        18        proceed through the rules paragraph by

        19        paragraph.

        20             GOVERNOR LEAVITT:  At least section by

        21        section.

        22             MR. CHAIRMAN:  Or at least section by

        23        section.

        24             Have the members of the Commission had an

        25        opportunity to review the rules?

                               COOK & WILEY, INC.


         1             The choice that is before the Commission

         2        is, if you're comfortable with the rules, we can

         3        adopt them; if you would like to go through them

         4        paragraph by paragraph, we will do that.

         5             That will take us some time here today. I'm

         6        amenable to that if you would like.

         7             David?

         8             MR. POTTRUCK:  Mr. Chairman, I would like

         9        to suggest that, rather than go through them

        10        paragraph by paragraph, perhaps if Governor

        11        Leavitt is uncomfortable moving to adopt if he

        12        hasn't had a chance to read, which I can

        13        certainly understand, we can make it the first

        14        order of business tomorrow morning to approve

        15        them and go over any issues by exception that

        16        come up, presuming many of them will be

        17        straightforward.

        18             Those who have questions, perhaps we can do

        19        it that way and use tonight to study them and

        20        come up with any issues that anybody may have.

        21        That would be a proposal.

        22             GOVERNOR LEAVITT:  That's acceptable to me.

        23             I would like to have a considerable

        24        opportunity for discussion.  There are numerous

        25        points from my previous reading of the last

                               COOK & WILEY, INC.


         1        draft that I had, and I have not had a chance to

         2        have input into these.  I don't know if everyone

         3        has.  I would be very happy with that.

         4             MR. CHAIRMAN:  I want to make it very clear

         5        that anyone can have any input into these rules

         6        or any other matter, that this is going to be a

         7        process that is very open, and we certainly can

         8        take these up as a matter of adoption first

         9        thing in the morning.

        10             However, the timetable that we have for the

        11        morning is planned so as to provide the maximum

        12        amount of information to the Commission so that

        13        we can act in an expeditious manner tomorrow.

        14             If the meeting goes down into several hours

        15        of wrangling over the rules, we're going to at

        16        that point have to cut the agenda short.

        17             Therefore, I would propose that we take up

        18        any issues that we know about right now right

        19        now in this organizational meeting that was

        20        designed, although I am certainly amenable to

        21        David Pottruck's suggestion that we adopt them

        22        first thing in the morning.

        23             But in the meanwhile, Mike, why don't you

        24        let us know what your concerns are with respect

        25        to the rules so that we can have overnight to

                               COOK & WILEY, INC.


         1        think about it.

         2             GOVERNOR LEAVITT:  Well, again, I'm marking

         3        up from a previous draft, so I'm not sure where

         4        they match up.

         5             I would like to talk, for example, in the

         6        Meetings section about how we call ourselves

         7        together.  I would like to talk in the Quorum

         8        section about reference to the proxy voting.  I

         9        understand that that has been taken out.  I

        10        would like to talk about the purpose of that.

        11             I would also like to talk some about the

        12        conduct of business section.  Again I have

        13        looked at two drafts of this.  I'm trying to

        14        reconcile which draft it is in.

        15             If you would like to preserve time, I would

        16        be very pleased to make a list of the concerns I

        17        have and circulate them.  If I'm the only one, I

        18        don't want to hold it up.

        19             There are a couple of things, for example,

        20        I'm wondering why we would operate with a quorum

        21        less than the majority.

        22             MR. ANDAL:  It's in the statute.

        23             MR. CHAIRMAN:  Just one moment.  First of

        24        all, you expressed three concerns, on Meetings,

        25        Proxy, and conduct of business, and by way of a

                               COOK & WILEY, INC.


         1        quorum.  Are those issues that you have concerns

         2        about?

         3             GOVERNOR LEAVITT:  Let me just deal with a

         4        couple of them now.  If I can dispose of them, I

         5        would be very happy to move on the nature of the

         6        rules with an understanding we come back and

         7        have another discussion at a future time.

         8             My purpose isn't to hold the meeting up.

         9        My purpose is to say it's very important.  I

        10        will mention one in particular.  Maybe it's not

        11        in this draft.

        12             The last draft I saw, there were means by

        13        which a proxy vote would occur.  The latest

        14        draft, that is not there.

        15             There is included in Section IVA, second

        16        paragraph, the phrase "unless the procedures for

        17        vote by proxy are followed."

        18             I assume that may be a drafting error where

        19        that should have been deleted, but in that we

        20        have deleted the proxy voting process, it would

        21        seem to me that that ought to be amended,

        22        however.

        23             MR. CHAIRMAN:  As a matter of fact, the

        24        rules, I think, do contain no provision at this

        25        point for proxy other than naturally the

                               COOK & WILEY, INC.


         1        designated by statute Federal members who sit on

         2        the Commission, so there is no provision within

         3        these rules of proxy voting.

         4             To the extent that the language in IVA is

         5        inconsistent, "must be present," the language

         6        "unless the procedures for vote by proxy are

         7        followed" can be stricken, in fact, should be

         8        stricken.

         9             Is there any objection to striking that

        10        language in order to make it consistent with no

        11        proxy voting?

        12             Joe, I'm coming to you in just a second.

        13        Let me see if we can square some of these away.

        14             Meetings, is there an issue on meetings?

        15             GOVERNOR LEAVITT:  The last paragraph on

        16        that page, again, I think I'm on the right

        17        draft, "For votes on substantive findings and

        18        recommendations, including amendments to

        19        findings and recommendations to be included in a

        20        Commission report, the Chairman shall request a

        21        motion for a vote.  Any member of the Commission

        22        present, including the Chairman, may make a

        23        motion for a vote after proper notice to the

        24        Chairman."

        25             The question, "after proper notice to the

                               COOK & WILEY, INC.


         1        Chairman," I'm unfamiliar with that as a

         2        process.

         3             I'm just wondering if we could strike that,

         4        just giving the members of the Commission the

         5        ability to make that or if there is a reason for

         6        that.

         7             MR. CHAIRMAN:  Which point of language?

         8             GOVERNOR LEAVITT:  The fourth line.

         9             MR. CHAIRMAN:  We are in Section IV,

        10        Meetings, Section A, Quorum and Voting

        11        Procedures, third paragraph, "For votes on

        12        substantive findings and recommendations,

        13        including amendments to findings and

        14        recommendations to be included in a Commission

        15        report, the Chairman shall request a motion for

        16        a vote.  Any member of the Commission present,

        17        including the Chairman, may make a motion for a

        18        vote after proper notice to the Chairman."

        19             That language, I believe, was placed there

        20        for the purpose of giving full notice to the

        21        Chairman and all members.  It's there as a

        22        30-day notice requirement, I believe -- this is

        23        reports of the Commission, interim reports of

        24        the Commission, and there would be a motion to

        25        make sure that all motions were on the table and

                               COOK & WILEY, INC.


         1        they were not -- no trial by ambush, so to

         2        speak, so that any motion that came before the

         3        body could be submitted in advance.

         4             But if it is the preference of the

         5        Commission not to do that and simply have any

         6        motion available at the final moment, that's all

         7        right, too.

         8             What is the pleasure of the Commission?

         9        Would you like to strike out proper notice to

        10        the Chairman for substantive votes on final

        11        reports, or would you like to leave that in?

        12             MR. POTTRUCK:  Do you not know what proper

        13        notice means?

        14             GOVERNOR LEAVITT:  It seems improper for a

        15        person to make a motion to have some form of

        16        proper notice to the Chairman.  We are all able

        17        to make motions.  I think it would be cleaner if

        18        we had the capacity --  I'm not sure it's

        19        necessary.

        20             MR. ANDAL:  I will move to strike it.

        21             MR. ARMSTRONG:  Second.

        22             MR. CHAIRMAN:  All in favor of striking the

        23        language, please say aye.

        24             COMMISSION MEMBERS:  Aye.

        25             MR. CHAIRMAN:  All opposed, nay?

                               COOK & WILEY, INC.


         1             It is stricken.

         2             The quorum, we have determined it's

         3        statutory and it has to be in there.

         4             Anything else in the conduct of business or

         5        any other language of the rules that you're

         6        aware of?

         7             GOVERNOR LEAVITT:  I have just received

         8        this draft.  I'm not being critical.  I know

         9        this has been work in progress.

        10             MR. CHAIRMAN:  Sure.

        11             GOVERNOR LEAVITT:  We have taken the proxy

        12        part out.

        13             MR. CHAIRMAN:  Other than the statutory

        14        proxy allowed by the three Federal

        15        representatives.

        16             GOVERNOR LEAVITT:  There was a point in the

        17        previous draft I wanted to make certain we

        18        changed, that "The Chairman shall determine

        19        whether substantive findings and recommendations

        20        to be included in the final report are to be

        21        voted individually or in bloc."  Did we change

        22        that?  It was under the quorum --

        23             MR. PINCUS:  It's in that same paragraph.

        24             GOVERNOR LEAVITT:  I had a question about

        25        that.  There may be a practical reason for that.

                               COOK & WILEY, INC.


         1             It seems to me that that could have some --

         2        could be a substantial -- in terms of where

         3        things are traded off, that could ultimately

         4        have a substantial amount of importance.

         5             It seems to me that a better way to do that

         6        would be an additional way of someone making a

         7        recommendation and letting the Commission vote

         8        up or down whether or not that was appropriate.

         9             MR. CHAIRMAN:  Is there agreement in the

        10        body that recommendations shall simply be

        11        offered by members without regard to whether

        12        they will be individually or in bloc?

        13             The language that is addressed is again in

        14        Section IVA, third paragraph, right below the

        15        language we were just addressing a few moments

        16        ago.  "The Chairman shall determine whether

        17        substantive findings and recommendations to be

        18        included in the final report are to be voted

        19        individually or in bloc, including approval of

        20        Commission reports and amendments to Commission

        21        reports."

        22             In short, the language would be, if we come

        23        to an issue where we have it all together, then

        24        we can all vote it in bloc or we could vote it

        25        individually as the Chairman would suggest.

                               COOK & WILEY, INC.


         1             But if the Commission would prefer to have

         2        that ability to vote on each individual item,

         3        that's perfectly all right.

         4             GOVERNOR LEAVITT:  Or make a motion to say

         5        I would like to take the following things in

         6        bloc and do one at a time.

         7             The Commission ought to control, in my

         8        assessment, the level at which we vote it in.

         9             MR. CHAIRMAN:  Acceptable to the Chairman.

        10             MR. ARMSTRONG:  That is reasonable.

        11             MR. ANDAL:  Second.

        12             MR. CHAIRMAN:  All in favor of reducing

        13        that language say aye?

        14             COMMISSION MEMBERS:  Aye.

        15             MR. CHAIRMAN:  All opposed?

        16             Very good.  Anything else?

        17             GOVERNOR LEAVITT:  Again, I'm struggling to

        18        find the right point here.  There was a point

        19        where there was discussion on the appointment of

        20        committees.  I wanted to make certain that the

        21        committees --  It seems to me the committees

        22        would be appointed by the Chair but ratified

        23        by --  The Commission ought to be appointing --

        24        developing its own committees, not --

        25             MR. PINCUS:  Section 6.

                               COOK & WILEY, INC.


         1             MR. ANDAL:  It appears that that change was

         2        made.

         3             GOVERNOR LEAVITT:  I think that's a

         4        valuable change.

         5             MR. CHAIRMAN:  I believe that was raised

         6        and we responded to that.

         7             MR. ANDAL:  How would that work?  The

         8        Chairman would suggest it and be ratified by the

         9        Commission?

        10             MR. CHAIRMAN:  I believe that's right.

        11             GOVERNOR LEAVITT:  Or the Commission would

        12        desire to have a committee and enact it by

        13        adoption.

        14             Under Waiver of Rules, section number X, it

        15        would again seem to me the Commission ought to

        16        be waiving the rules.  Maybe that's made by

        17        two-thirds of the voting members.

        18             MR. CHAIRMAN:  The language involved is

        19        "The Chairman may, in his discretion, waive any

        20        rule herein not otherwise inconsistent with

        21        Public Law 105-277 upon a vote of at least

        22        two-thirds of the members of the Commission

        23        currently serving, present, and eligible to

        24        vote."

        25             I believe that looks like more of an

                               COOK & WILEY, INC.


         1        organizational issue as opposed to anything

         2        else.

         3             If it makes the language feel more

         4        comfortable, I think this is more or less

         5        administrative.

         6             GOVERNOR LEAVITT:  I'm prepared to withdraw

         7        that.

         8             Let's look at VII.  This is an awkward one,

         9        because I haven't met Heather.  I don't mean any

        10        of this pointed at her.

        11             I'm wondering about the relationship of the

        12        Executive Director and the Commission.  "The

        13        Executive Director shall serve as the

        14        Commission's agent for all matters related to

        15        the Commission's activities."

        16             I think in a previous draft, I saw that was

        17        under the Chairman.  I think I'm probably

        18        satisfied with that.

        19             MR. CHAIRMAN:  Is this language

        20        satisfactory to every member of the Commission?

        21        It basically designates an Executive Director

        22        serving as the agent for this Commission.

        23             Obviously, if she wants to set up rooms or

        24        arrange for speakers or do any of the matters,

        25        the administrative business, we need a person to

                               COOK & WILEY, INC.


         1        do that.

         2             MR. POTTRUCK:  It looks more like the chief

         3        administrative officer than a CEO, at least I

         4        hope so.

         5             MR. SIDGMORE:  We certainly don't want to

         6        be doing this.

         7             MR. CHAIRMAN:  Without objection --  Is

         8        there objection to any language in that

         9        provision by any member of the Commission?

        10             Mike, any other issue?

        11             GOVERNOR LEAVITT:  There may be.  Rather

        12        than holding this up, I'm comfortable with the

        13        assurance we can come back and revisit this if

        14        we want to.

        15             MR. CHAIRMAN:  I see no reason why the

        16        Commission can't reassess rules if it seeks to

        17        do that.  The exercise is to get organized and

        18        get moving.

        19             MR. GUTTENTAG:  Just on that point, I would

        20        like to suggest that after we move forward after

        21        tomorrow, we're going to be adopting a plan for

        22        moving ahead.  I think the staff has done a

        23        wonderful job of providing us with a set of

        24        rules.  They have certainly taken into account,

        25        I think, the comments Governor Leavitt has made.

                               COOK & WILEY, INC.


         1             I think, following up on this,

         2        Mr. Chairman, we need a set of rules to guide us

         3        for tomorrow's meeting.

         4             I would suggest that we put in the rules

         5        and put it on the agenda for the next meeting of

         6        the Commission, with the understanding it's

         7        without prejudice to the fact that they were

         8        adopted here today, and if new issues come up

         9        after a thorough reading, or what happens

        10        tomorrow or what happens in the future causes a

        11        need for new rules, I think we could reconsider

        12        them.

        13             MR. ANDAL:  I'll move approval of the rules

        14        on that basis, that the next meeting would be an

        15        opportunity for anybody who doesn't like the

        16        rules to make amendments to it at that time.

        17             GOVERNOR LEAVITT:  Second.

        18             MR. CHAIRMAN:  All in favor say aye.

        19             COMMISSION MEMBERS:  Aye.

        20             MR. CHAIRMAN:  Opposed?

        21             Rules are adopted.  They will be placed

        22        back on the agenda for the meeting that will be

        23        held at a future time, assuming you want to have

        24        a second meeting.

        25             Thank you.  Now for the real fun.  We'll

                               COOK & WILEY, INC.


         1        move on to the issue of the budget.

         2             Now, Ladies and Gentlemen, has everyone

         3        within their package of materials identified the

         4        proposed budget?  Now, let me speak to you about

         5        this just for a moment.

         6             Please recall that Congress did not provide

         7        any money for the operation of this Commission.

         8        We have a Commission here to offer a

         9        recommendation on a proposed piece of

        10        legislation with respect to the operation of

        11        eCommerce on the Internet, and this Commission

        12        ought to be handled in a professional way.  Yet

        13        there are no funds that have been offered for

        14        this Commission.

        15             Obviously, a challenge ahead of us is to

        16        deal with this and to handle it.  We have put

        17        forth proposals for you-all that we believe does

        18        address these issues in a proper way.

        19             First of all, with respect to the expense

        20        side of this, it reflects what we believe are

        21        going to be reasonable expenses of the

        22        Commission, and then I want to take up the

        23        revenue issue with you separately.

        24             This has been developed after examining

        25        what typically other Commissions similarly

                               COOK & WILEY, INC.


         1        situated do and what they are obligated to do,

         2        and again, anticipating we would have a total of

         3        four meetings in different geographical areas of

         4        the United States, particularly areas very

         5        involved with information technology.

         6             Naturally, if it is the desire of this

         7        Commission to have more meetings or fewer

         8        meetings, it will change the budget.  This is a

         9        budget we have put forward for all of you-all.

        10             In fact, should there be an extension at a

        11        later time, we would have to address the

        12        financial issues all over again at a later time.

        13        But this does reflect any contributions we have

        14        already secured.

        15             My Chairmanship and the Executive Director

        16        and the staff people in Virginia working to get

        17        this thing up and running, we have already

        18        secured permanent office space for the

        19        Commission as an in-kind contribution.

        20             We have drafted, if you will, legal counsel

        21        that has offered to give us his services.

        22        Thomas Griffith, who is, in fact, here in the

        23        room who has also offered in- kind

        24        contributions.

        25             There are others as well.  In fact, the

                               COOK & WILEY, INC.


         1        Commonwealth of Virginia has already placed in

         2        to the budget $150,000 cash.  We have already

         3        donated.

         4             GOVERNOR LEAVITT:  Which I think we should

         5        give you a round of applause.

         6             MR. CHAIRMAN:  I hope you will be clapping

         7        again in a few minutes.

         8             I will take that as a sign of unanimity as

         9        we move on.  Before we begin, and we will talk

        10        about this later a little bit more, but I'm

        11        going to ask our counsel, Tom Griffith, of

        12        Wiley, Rein & Fielding from Washington, D. C.,

        13        to discuss for a moment this gift acceptance

        14        language that exists in the act.  Tom Griffith

        15        of Wiley, Rein & Fielding.

        16             MR. GRIFFITH:  Congress was clear in its

        17        intent that the role of the Federal government

        18        in this Commission was minimal.  Congress

        19        expressed this intent in a few ways.

        20             It gave the Commission gift authority but

        21        did not appropriate the Commission any funds.

        22        The purpose of that, as we have had extensive

        23        discussion with the principal drafters, was to

        24        provide for the Commission the maximum amount of

        25        flexibility to raise funds or to accept in-kind

                               COOK & WILEY, INC.


         1        donations of property or service.

         2             That is the freedom that you now have.  By

         3        and large, the work of the Commission as it

         4        regards funding issues, is exempt from the

         5        Federal Procurement laws or procurement

         6        regulations.

         7             That is a significant benefit to the

         8        Commission.  It makes the work of the Commission

         9        a great deal easier than it would otherwise be.

        10             You should have in your packet of materials

        11        a letter that I wrote and addressed to the

        12        Governor's staff to be provided to you about the

        13        intent of the statute.

        14             There is a proposal -- I believe that the

        15        Governor will describe to you in a moment the

        16        mechanism -- to accept in-kind donations on

        17        behalf of the Commission.

        18             We are working with the General Accounting

        19        Office, who has given us preliminary indications

        20        that their understanding of the arrangement is

        21        consistent with the intent of Congress and

        22        consistent with Federal law.

        23             We would be happy to answer any questions

        24        that you might have about it.  I believe the

        25        Governor is going to explain the particular

                               COOK & WILEY, INC.


         1        arrangements to you.

         2             MR. CHAIRMAN:  Does anyone have any

         3        questions of the lawyer?  It's your chance to

         4        get free legal advice.

         5             If you will examine the budget for just a

         6        moment, you will see that we are planning for

         7        once again a total of four meetings with the

         8        arrangements being proper, I think, for the

         9        members of the Commission of this caliber.

        10             There is, of course, a need also for staff

        11        to supply the data and information necessary for

        12        the members at the end of this year to vote in a

        13        way that they believe is consistent with the

        14        best interests of the people of the United

        15        States.

        16             There are also funds that are set aside

        17        potentially for consultants, and also public

        18        outreach is very critical, that the public, as

        19        they become more and more aware of the

        20        activities of this Commission through the news

        21        media and other people, have the opportunity to

        22        have their input included, and there is a web

        23        site which will give the opportunity for

        24        complete input from people across the country.

        25             There are office administration and

                               COOK & WILEY, INC.


         1        supplies, although much of that is, I'm pleased

         2        to say, we have arranged for that to be in kind.

         3        The total proposed budget is $1,976,960.

         4             The in-kind contributions already secured

         5        through the activities of the Executive Director

         6        are 358,200.  As stated, the Commonwealth,

         7        because of its stake in the Internet and

         8        eCommerce, we felt it was appropriate to get

         9        started by getting this thing up and running by

        10        putting in $150,000, which we have done.  This

        11        leaves a balance remaining to be secured in

        12        order to operate, in our judgment, this

        13        Commission in a proper way, $1,468,760.

        14             Now, again, the Commission has been --

        15        elected the task of funding all costs associated

        16        with carrying out this agenda.  I would propose

        17        that we discuss and come to a consensus today of

        18        how we're going to fund this Commission.

        19             I propose that we raise these needed funds,

        20        which, as I have said, is a little less than 1.5

        21        million dollars, through the Commission members.

        22        I ask that the organizations that you represent

        23        consider contributing a sum of not more than

        24        $150,000, I would think the Commonwealth's

        25        contribution should probably be the topside of

                               COOK & WILEY, INC.


         1        this, or whatever amount any organization you

         2        represent is willing to contribute in order to

         3        make this budget a reality.

         4             I believe that we should, to the greatest

         5        extent we can, balance the amount of the

         6        contributions.  We should anticipate getting a

         7        balanced funding from both the eCommerce

         8        companies, who I believe could fund this based

         9        upon my knowledge.  I believe they could fund

        10        this.

        11             But I believe also it would be appropriate

        12        to have contributions from any state, local

        13        governments, the Federal government, or anyone

        14        else or any associations that many people are

        15        connected with here, because virtually everyone

        16        is a member of an association that has an

        17        interest in this as well.

        18             So that would be what I would propose to

        19        do.  We have offered our financial support

        20        first, of course, and we believe that others,

        21        hopefully, will make a contribution as well.

        22             I believe that the Commission members, all

        23        of the Commission members, are going to want to

        24        make a contribution to show the belief in the

        25        value of the work in this Commission.  But I

                               COOK & WILEY, INC.


         1        would encourage that we agree to, as a group, to

         2        fund the activities of the Commission, which I

         3        believe was contemplated by Congress.

         4             Now, in the event that we can't reach these

         5        budget goals by contributions from the

         6        Commissioners, but I believe that we can, but if

         7        we cannot, I believe, within the public and

         8        private sectors, that many others would like to

         9        contribute to the success through either

        10        financial or in-kind donations as well.

        11             As counsel has said and as the statute I

        12        think makes it very clear, the Congress

        13        contemplated we do precisely this, that we move,

        14        in fact, to secure those funds.

        15             With your agreement, in fact, in the event

        16        that we do not secure the total funds from the

        17        group's associations and members of this

        18        Commission, then I would propose to form a

        19        subcommittee for the purpose of raising the

        20        balance from the community in general.

        21             That would be to develop a plan and ask

        22        others to join us in contributing these

        23        necessary funds.

        24             Now, I would propose, that in the event

        25        that that is necessary, I hope it is not, but if

                               COOK & WILEY, INC.


         1        it is necessary, then I would propose the

         2        subcommittee be composed of myself, a member

         3        from the electronic commerce business, and one

         4        from state and local in order to secure these

         5        funds.

         6             In addition to raising the money, the goal

         7        would be, as great as possible, to make sure we

         8        balance these contributions among all interested

         9        groups that are here.

        10             As a reminder, I would say any gifts or

        11        grants not used at the expiration of this

        12        Commission would be returned to the donors or

        13        guarantors as is, in fact, set out in Section

        14        102 C from the Internet Tax Freedom Act.

        15             That is the best proposal I can do.  If

        16        someone has a better idea, the floor is open.  I

        17        would ask that that proposal be adopted.

        18             Is there a discussion?

        19             MR. POTTRUCK:  First of all, I would like

        20        to congratulate you on this work.  This is a

        21        very thoughtful presentation of the budget.

        22        There is one element of the budget that I think

        23        is going to be necessary.  I guess I'm reviewing

        24        my own perspective and perhaps naivete.

        25             My guess is that a fair amount of work --

                               COOK & WILEY, INC.


         1        There is a lot of work that has to be done.

         2        Some of that work, I believe, is going to have

         3        to be done in subcommittees.  I don't see any

         4        funding here explicit, unless I missed it, for

         5        subcommittee meetings.

         6             My suspicion is we will have several

         7        subcommittees, and they will meet fairly

         8        frequently, probably more than the Commission,

         9        itself, to get all the work done that has to get

        10        done.

        11             I would recommend that we do two things:

        12        Number one, I would recommend that we put more

        13        money in this budget for subcommittees, perhaps

        14        take the budget up to say 1.6 million, or 1.65,

        15        almost 200,000 or so --

        16             Let's say -- I'll be specific with my

        17        proposal -- 1,650,000 to put some money in there

        18        for the subcommittee work, and just to make sure

        19        there is a little bit of a cushion.  I don't see

        20        any explicit cushion here other than 700,000.

        21             The work here is so important.  We want to

        22        make sure we're not unable to function because

        23        of the lack of funds.

        24             Secondly, I would propose at least we

        25        consider a rather specific proposal.  In other

                               COOK & WILEY, INC.


         1        words, take this group into two branches, the

         2        business people and the people from the

         3        not-for-profit sector, and define a specific

         4        contribution level for each, a fair share, if

         5        you will, that would be quite different.

         6             Understand, businesses have a large stake

         7        at this, actually, everybody has a large stake.

         8        The businesses could certainly absorb this.  It

         9        would be a rounding issue at one of our

        10        companies, not mine.

        11             MR. ARMSTRONG:  No one in particular.

        12             MR. POTTRUCK:  No way, no way.  Just

        13        someone, perhaps.  I will mention no names.  But

        14        we could discuss this forever, and the issue of

        15        fairness and representation here and perception

        16        is very important, and perhaps if we could come

        17        up -- I haven't done the math in my head, but

        18        the math of a fair share for the not-for-profit,

        19        a fair share for the business, we could dispense

        20        with this fairly quickly and move on.

        21             MR. CHAIRMAN:  I believe there is some

        22        information, as a matter of fact, since this

        23        will be donated through a foundation, George

        24        Mason Foundation, as we have set this up, and

        25        the president of George Mason is in the room.

                               COOK & WILEY, INC.


         1             I'm advised that donations may very well be

         2        tax deductible, which will be a little bonus

         3        here.  The proposal here is twofold.  Number

         4        one, to take this up.  The balance that is

         5        necessary, looks like, if you rounded it, it's

         6        still 1.5 million.  Would you propose to go to

         7        1.7 to make that work for subcommittee activity?

         8             MR. POTTRUCK:  Sure.

         9             MR. CHAIRMAN:  The second is to designate a

        10        reasonable fair share, perhaps by subcommittee,

        11        for each group, and then to, in the absence of

        12        the group, to call upon each group by the

        13        Executive Director and get checks committed;

        14        right?  That is the proposal on the table.

        15             GOVERNOR LEAVITT:  Mr. Chairman, I think

        16        there will be several groups represented at this

        17        table who will have difficulty in coming up with

        18        $150,000 or anything.  As committed as we are, I

        19        don't have any appropriation authority to be

        20        able to do this.  National Governors Association

        21        has three members at this table.  That would be

        22        $450,000.

        23             I can tell you, and you're familiar with

        24        this as well, we don't have that budget.  It

        25        would be my guess that the Federal agencies may

                               COOK & WILEY, INC.


         1        have some difficulty in being able to deal with

         2        that.

         3             Grover is going to have to get consumers.

         4        You have made provision for that, that there

         5        would be a means to get it from other big

         6        places.  I'm wondering if the issue that David

         7        raises is so important that perception, I'm

         8        wondering --

         9             I would like to ask a question and make a

        10        suggestion.  The question is how are we in the

        11        short term?  Could we make this operate for a

        12        short period of time so we could get a sense for

        13        where we are?

        14             I believe we ought to be forming a working

        15        group, maybe the one you announced, that could

        16        include developing some guidelines on how we

        17        balance this in a fashion so it's very clear

        18        that no one interest overwhelms the process so

        19        we discredit the product in the end.

        20             I will ask the question.  I would be

        21        prepared to make -- put an idea on the table.

        22        How are we in the short run?  Can we make this

        23        thing work for a month or two as we get together

        24        as a group?  Can we arrange a loan from

        25        somebody?

                               COOK & WILEY, INC.


         1             MR. CHAIRMAN:  I don't think we are doing

         2        any debt financing in this Commission.

         3             Heather, would you like to speak to this

         4        matter?  You have been developing this.

         5             MS. ROSENKER:  Governor, if I understand

         6        your question correctly, how long can we operate

         7        currently on the $150,000 that the State

         8        graciously committed?  I think it would be two

         9        months.  I can't use those funds to pay vendors

        10        for this meeting.

        11             GOVERNOR LEAVITT:  Perhaps there would be

        12        an organization that is willing to put some

        13        money up.  I hate us to leave here --  I would

        14        like to suggest that the Chair appoint the

        15        Budget Committee that could do three things:

        16             One, establish some guidelines to propose

        17        to the Commission where we get the money and how

        18        we do this so that we do have balance coming out

        19        of this with this product.

        20             Second, make the kinds of recommendations

        21        that we talked about, formalize the budget,

        22        given our resources.

        23             And third, to actually go out and raise the

        24        money.

        25             It would seem to me, if we have the ability

                               COOK & WILEY, INC.


         1        to keep ourselves together for another two or

         2        three months on the basis of the money you have

         3        put in and maybe some that respond or have the

         4        ability to respond, we should move on in that

         5        context.

         6             I would like to second Mike's comment that

         7        this probably wouldn't look real good if the

         8        members of the Commission paid for this.

         9             Even though we're probably capable of doing

        10        that, I don't think that would be the intent of

        11        Congress, and I think it would injure the

        12        recommendations that would come forward.

        13             On the other hand, maybe, before the first

        14        course of wine tonight, the members that are

        15        from business who would probably have the most

        16        flexibility could meet with Heather and find out

        17        what it takes to get some interim financing,

        18        because I think the best idea is the one you

        19        had, was to appoint some members of us to come

        20        forward with a recommendation as to how to fund

        21        this thing.

        22             In the meantime, I think at least I would

        23        offer up, I don't mean to speak for anybody, my

        24        own company and myself to put forth what it

        25        might take to get interim financing.

                               COOK & WILEY, INC.


         1             MR. SIDGMORE:  I would like to agree with

         2        Mike on that.  If we wound up, let's say, where

         3        50 percent of the funds came from AT&T and 50

         4        percent from MCI, it probably would not look

         5        good to other industries, no less the

         6        government.

         7             On the other hand, I do think there is a

         8        certain amount of money that we could come up

         9        with that would look reasonable, certainly in a

        10        short term, and certainly fund the first few

        11        months and not create these other concerns.

        12             I support Mike on that proposal.

        13             MR. NORQUIST:  I just want to second your

        14        original motion, because I think all the

        15        comments that follow it fit into it.  We move

        16        exactly what you said, put a committee of three

        17        to work out how much resources we can come up

        18        with from this Commission.

        19             If we need to make up a budget, let's go

        20        outside to do that.  I think we should be

        21        concerned about appearance or whatever.

        22             The members of the Commission is set.  It's

        23        not based on whether or not one company or

        24        another comes up with more money.  You don't get

        25        more votes if you put in more money.

                               COOK & WILEY, INC.


         1             Somebody can whine if they want to.  It has

         2        nothing to do with the integrity of the

         3        Commission.  I think we should be careful and

         4        respectful of the people's ability to whine.  I

         5        don't think we should be terribly concerned

         6        about that.

         7             I want to second and move your original

         8        point, which -- I think the comments made sense,

         9        all fit into it.  I think everyone was agreeing

        10        with you and giving some guidance on what your

        11        committee should do.

        12             MR. CHAIRMAN:  Mr. Pincus?

        13             MR. PINCUS:  I think I agree with that,

        14        Mr. Chairman.  First of all, one thing I think

        15        we could probably all agree on now is

        16        disclosure.  I wonder --  I guess I amend the

        17        motion.

        18             I think the first thing we want to do is

        19        make sure on the web site that you have

        20        developed that every contribution, whether in

        21        kind or cash, be immediately disclosed, because

        22        that's obviously a part of the way of dealing

        23        with these issues.

        24             I think the second part is, in your

        25        proposal you mentioned two variables.  I think

                               COOK & WILEY, INC.


         1        that has to be fleshed out more by this

         2        Committee.

         3             One is to avoid disproportionality between

         4        the two groups that are represented on the

         5        Commission, and second is a cap on individual

         6        contributions by any one entity.

         7             I guess my hope would be the subcommittee

         8        could deal with both of those issues and come

         9        back to the Commission with a proposal that

        10        addresses both cap and a mechanism to deal with

        11        disproportionate funding from one side or the

        12        other.

        13             MR. LEBRUN:  Depending on whom you read,

        14        who you listened to, I have been referred to as

        15        a private citizen, former legislator, former

        16        Speaker of the House, and president of the

        17        National Conference of Commissioners on Uniform

        18        State Laws.  When Senator Dashle asked if I would be interested in

        19        serving on this Commission, he didn't ask if I

        20        would help fund it.

        21             I think all of us bring some expertise to

        22        this Commission, and we're here because we have

        23        some expertise and can contribute something.  I

        24        do think there are some of us around this table

        25        that don't represent any particular organization

                               COOK & WILEY, INC.


         1        or organizations that have funds in their

         2        budgets even to the tune of $150,000.

         3             I happen to be President of NCCUSL

         4        Our total budget is 1 million 5.  I know that

         5        they don't have that kind of money in the

         6        budget, so I would support the idea of a

         7        subcommittee to look into this.  I think it

         8        would be unfair to ask every organization, every

         9        Commissioner to come up with $150,000.

        10             GOVERNOR LEAVITT:  Mr. Chairman, my only

        11        suggestion --  I agree with what Grover said.

        12        However, the one difference I had that I think

        13        is reflected is, we likely ought to start with a

        14        Committee and recognize that we ought to ask the

        15        public to fund this as opposed to the Committee

        16        funding it.

        17             If we start there and recognize there may

        18        be people that sit around this table that should

        19        not be precluded from making contributions, we

        20        ought to be seeking a balanced public funding

        21        through gifts and donations and grants.  I feel

        22        confident we can get that done.

        23             I'm just arguing that we should make our

        24        budget proposal temporary while we work this out

        25        and come back with a formal adoption.

                               COOK & WILEY, INC.


         1             MR. POTTRUCK:  I have a couple of points.

         2        Number one, I think we might consider going

         3        ahead, and although businesses -- if we do it

         4        this way, go ahead and approve the budget in

         5        terms of the spending.

         6             It looks like it's a very reasonable amount

         7        of money, and some way, somehow, we have to come

         8        up with the money that could effectively operate

         9        under if we're going to do something productive.

        10             I can't imagine any of us wants to come up

        11        with a product that we wouldn't be proud of.  I

        12        think the budget seems quite reasonable.  I

        13        think we have to come up with the revenue.

        14             I would suggest to the Committee for

        15        consideration to give approval, number one, to

        16        the expenditure level that has been proposed.

        17             Secondly, I just want to be clear that I

        18        wasn't suggesting before that everybody would

        19        put in the same amount of money, rather that

        20        there be several different levels, perhaps, and

        21        I just want to be clear on that.

        22             Third, as I listened to the idea of having

        23        the public fund this, I just want us to consider

        24        the danger of perception.  In a sense, we

        25        already have with the election of finance.  We

                               COOK & WILEY, INC.


         1        don't want it to look like people are buying

         2        access, buying influence.  I think we just have

         3        to be very careful.

         4             It seems to me to open up a potential

         5        quagmire if we're not careful, and cap those at

         6        very small donations on any individual or

         7        corporate level so that there doesn't seem to

         8        be -- there is so much at stake -- a perception

         9        of influence-pedalling, even though it's one

        10        person, one vote.  I think perception is so

        11        important to the issue of fairness around what

        12        we do that we have to proceed extremely

        13        thoughtfully.

        14             Finally, I think Mike's suggestion of

        15        arranging for a loan, an interim financing to

        16        front the money, if we could approve the

        17        expenditure level, would be a way to keep the

        18        ball rolling while further consideration is

        19        done.  I would certainly support that.

        20             MR. NOVICK:  In the spirit of full

        21        disclosure, it seems to me that anyone making a

        22        substantial in-kind contribution ought to also

        23        disclose any interest or particular interest

        24        they have in the outcome of the Commission.

        25             MR. CHAIRMAN:  Other comments?

                               COOK & WILEY, INC.


         1             Let me see if I can sum up several things.

         2        There is an agreement that there should be a

         3        subcommittee in order to determine the potential

         4        solution of the revenue problem.  That seems to

         5        be, I think, the consensus position.  The

         6        objective of presenting this budget in this way,

         7        including proposal for revenue, was to get

         8        something on the table.

         9             Let me mention again that we have one year

        10        to do our work.  The housekeeping has to be

        11        gotten out of the way.  The objective was to get

        12        that done and to get it behind us, at least free

        13        us to do what we have to do to achieve this.

        14             I agree with the Commission's concerns.  I

        15        believe absolutely full disclosure, not only of

        16        any amount, but any interest anybody has.  That

        17        is absolutely correct.

        18             The agreement, the proposal we have would

        19        be to solicit the funds from the members and

        20        solicit from outside as well.  That is a matter

        21        that can be taken up by the subcommittee.

        22             Let me remind you all, we cannot get bogged

        23        down and delayed.  An original delay was created

        24        with this Commission by the filing of a lawsuit

        25        which was then withdrawn.

                               COOK & WILEY, INC.


         1             With the absence of any funding, with the

         2        absence of the correct amount of people

         3        appointed to be able to proceed, with the

         4        absence of any ability to operate with any

         5        rules, nonetheless we are here.  We are moving

         6        ahead decisively to get this done.

         7             I wish you all to consider as we proceed to

         8        any type of adoption here, that if we get bogged

         9        down too far on any of the administrative

        10        matters of this, it will take away from the

        11        opportunity for the Commission to do what it

        12        really was charged to do, and that is to

        13        consider the different policy implications of

        14        this and what choices have to be made so we can

        15        present a proposal.

        16             Nonetheless, I think that the points are

        17        very well taken that the funding should not be

        18        put into a position to undermine the credibility

        19        of the substantive work of the Commission.  I

        20        absolutely agree with that.

        21             So with the proposal that we have, which is

        22        to adopt the subcommittee --  First of all, to

        23        adopt a spending proposal, to amend that to add

        24        $250,000 to go for a position of 1.7 million

        25        dollars, to form a committee to determine how

                               COOK & WILEY, INC.


         1        that is to be done, but I warn the Commission

         2        that in the event that a subcommittee is not

         3        able to satisfactorily get this funded over the

         4        months ahead, this Commission will cease.  That

         5        will be a violation, I think, of the charter

         6        that we have been given by the Congress of

         7        United States.  Bear all of that in mind.

         8             The proposal we have on the table is to

         9        form a subcommittee of three people to determine

        10        the funding of these issues, to have full

        11        disclosure totally, and to adopt the spending of

        12        1.7 million dollars.  That is the proposal.

        13             MR. ARMSTRONG:  Could I maybe make a

        14        suggestion.  It could be my roots, or because

        15        I'm a businessman.  Could I ask to separate the

        16        establishment of the Commission and the

        17        conditions that Commission would operate under

        18        and the disclosure from the approval of the

        19        authority to spend to the level of 1.7 million

        20        dollars.

        21             I think we're going to get together and

        22        figure out with Heather how much we can put

        23        together and over what time frame.  By

        24        definition we're going to come up with the

        25        committee's recommendation to the Commission on

                               COOK & WILEY, INC.


         1        how to go about getting all of this money.

         2             I'm a little nervous in having raised three

         3        daughters who would never give me their budget

         4        without how they are going to raise that money.

         5        And I just feel uncomfortable giving anybody the

         6        authority to spend before we have an

         7        understanding of how to cover what we're

         8        spending.  Is that acceptable if I may request?

         9             MR. CHAIRMAN:  Perfectly all right.  I

        10        might say, that as Chairman of this Commission,

        11        it would be unthinkable if we spend so much as a

        12        dollar without the money being in the bank,

        13        unthinkable.  The idea of a borrowing frightens

        14        me to death.  If everybody wishes to divide up

        15        and sign that note, I'll be happy to allow you-

        16        all to do it.

        17             MR. ARMSTRONG:  I didn't want the budget

        18        approved because that's an authorization to

        19        spend it.

        20             MR. CHAIRMAN:  Governor Locke?

        21             GOVERNOR LOCKE:  I would like to second

        22        those sentiments.  I'm very concerned about the

        23        expenses, and obviously, if we commit ourselves

        24        to 1.7 million dollars and fall short of that or

        25        realize the appropriate amount is less than

                               COOK & WILEY, INC.


         1        that, we need to make sure we're not committing

         2        ourselves to a spending that exceeds our

         3        revenues.

         4             As I go through these, I have some

         5        questions about whether some of the spending or

         6        the expenses is necessary for the Commission

         7        meetings or level of staffing.  I would like to

         8        be able to have the opportunity talk with

         9        Heather or others before I can commit to that

        10        level of expenditure.

        11             MR. CHAIRMAN:  What is the pleasure of the

        12        Commission?

        13             GOVERNOR LEAVITT:  Mr. Chairman, I would

        14        like to -- I think Mike made an offer to get a

        15        group together tonight to help us figure out a

        16        way to raise 3 or $400,000 that would not

        17        seem -- from categories that, in the totality of

        18        1.7 million, that would not seem unreasonable

        19        for industry and for other groups represented at

        20        this table to have donated.

        21             That would require us not to borrow,

        22        require us not to spend money we don't have, but

        23        would get us going, and then I think we could

        24        approve a first-quarter budget independent of

        25        that.  That would give us a sense of certainty

                               COOK & WILEY, INC.


         1        as to not spending more money than we have.

         2             I would like to just suggest one other

         3        thing for your list.  I would hope that this

         4        subcommittee could come back with a policy

         5        proposal for the group to adopt related to

         6        guidelines for both disclosure and for

         7        appropriate limits, and some means of balance so

         8        we can formalize that process.

         9             MR. CHAIRMAN:  I would propose, then, that

        10        we form a subcommittee.  Why don't I suggest,

        11        for starters, Michael Armstrong and Delna Jones

        12        and myself.  There is no reason why we can't

        13        have input from anybody else that wishes to

        14        participate on that commission or that

        15        committee.  Anyone else that would like to?

        16             MR. NOVICK:  I wasn't volunteering.  Before

        17        we violate our rules right away, we ought to not

        18        waive the rules of the corresponding section on

        19        subcommittee members and appoint five.

        20             MR. CHAIRMAN:  Appoint five.

        21             MR. ARMSTRONG:  I would like John on there.

        22             MR. CHAIRMAN:  I would propose this group

        23        meet and have a proposal tomorrow so we could

        24        move ahead.  We will put this back on the agenda

        25        for tomorrow afternoon.

                               COOK & WILEY, INC.


         1             The idea, I think, of proceeding by half

         2        measures on this is going to stop the Commission

         3        from being able to do what it needs to do.

         4             I'm going to call on Tom Griffith to give

         5        us a briefing on Heather's requirements and the

         6        Federal Report Claims Act.

         7             MR. GRIFFITH:  This will be very brief.  If

         8        I can be allowed just a moment.  The oath that

         9        you just took a few moments ago is important.

        10        My comments will relate to that oath.

        11             The importance of an oath became very

        12        apparent to me recently.  Before I

        13        returned to private practice, I was the Senate's

        14        legal counsel during the late, great 

        15        unpleasantness of the impeachment trial.  You

        16        may remember that that instance in our history

        17        was all about oaths, oaths of presidents, oaths

        18        of senators.

        19             You all just took an oath.  That oath gives

        20        you real protection.   That oath also carries with it

        21        some responsibilities.  The protection relates

        22        to the Federal Tort Claims Act.

        23             You are now public officials of the United

        24        States.  You're officers of the legislative

        25        branch.  As such, your actions in connection

                               COOK & WILEY, INC.


         1        with your official work are the actions of the

         2        United States.  Were litigation to arise

         3        relating to your actions here, the overwhelming

         4        probability is that you would be represented by

         5        the United States Department of Justice.

         6        Your activities here are by and large immune

         7        from liability.  That's the good news about

         8        taking the oath.

         9             The responsibility side about taking the

        10        oath is that you are public officials and are

        11        now subject to statutes governing the conduct of

        12        public officials, particularly the bribery

        13        statute.  I would point out, some of the issues

        14        you have been raising right now about

        15        solicitation of funds are complicated issues.

        16        We will work closely with the subcommittee to

        17        steer the way to do the right thing.

        18             I think the two principles were correctly

        19        identified, disclosure and limitations.

        20        Those are the hallmarks of Federal law governing

        21        public officials.

        22             Finally, what I would point out, this is

        23        perhaps some more good news. The nature of your

        24        office is such that the Senate -- if the Senate

        25        Ethics Committee, which is the ethics committee

                               COOK & WILEY, INC.


         1        of jurisdiction here, if the Senate Ethics

         2        Committee determines it is reasonable to expect

         3        your work will consume less than 60 calendar

         4        days in the next year, you are exempt from the

         5        requirement of financial disclosure.

         6             That is not to say the Commission, itself,

         7        if it so determines, can not adopt its own

         8        disclosure requirements.  It's something you

         9        ought to realize, that that requirement probably

        10        does not apply to you.

        11             In the past week we have been working with

        12        the Senate Ethics Committee and continue to do

        13        so to get a final determination on that.

        14             I want to reiterate, you have great

        15        protection from the oath you have taken, and you

        16        have some responsibilities.  We will be happy to

        17        work with you to understand what those

        18        responsibilities are.

        19             If you have any questions, I'll be happy to

        20        entertain them.

        21             Thank you.

        22             MR. CHAIRMAN:  Thank you very much.

        23             Tomorrow there will be a press conference

        24        that is scheduled for the Commission for members

        25        of the media.  Understanding the historic nature

                               COOK & WILEY, INC.


         1        about what we're about to undertake, I hope that

         2        all the members of the Commission will

         3        participate.

         4             The purpose of the press conference is not

         5        to announce policies, since obviously, after one

         6        day of consideration, we won't be in a position

         7        to do that, but instead to discuss the tasks

         8        ahead and the different points of view that may

         9        exist among the Commission members as we go

        10        forward.

        11             This is scheduled immediately, as an

        12        availability for the press, immediately

        13        following lunch tomorrow at 1:30 at the College

        14        of William & Mary University Center.

        15             Now, there has been a memo that has been

        16        circulated for future meeting dates.  Has

        17        everyone seen that memo?

        18             Now, as I have said, the objective of this

        19        organizational work that is being done from this

        20        point to bring it to the Commission is to keep

        21        us moving, and Mike and I discussed a few

        22        minutes ago, April 21 of next year is the date

        23        that is considered.

        24             These are proposed locations that we have

        25        come forward with and proposed dates.  They have

                               COOK & WILEY, INC.


         1        been, I think, previously circulated.

         2             New York City, September 14 and 15; Silicon

         3        Valley, California, December 14 and 15; Austin,

         4        Texas, March 20 and 21st.

         5             This is designed to give the appearance of

         6        some geographical balance: east, west, north,

         7        south, and so on, but at the same time to allow

         8        the Commission to have enough meeting dates to

         9        be able to consider the work of its

        10        subcommittees and interact with staff groupings

        11        in between.

        12             We can take this up tomorrow, or, if you-

        13        all have had an opportunity to check your dates

        14        and would like to adopt this now and make it as

        15        housekeeping, we can get it out of the way.

        16             Is there consensus among the Commission

        17        that we should, in fact, adopt the dates and

        18        locations?

        19             Mr. Pincus is shaking his head no.

        20             MR. PINCUS:  I know for some of us in the

        21        government, the September dates, there are two

        22        meetings.  The APEC leaders meeting is just

        23        before that, and a global business dialogue

        24        meeting on the 13th in Europe that Secretary

        25        Daley would be participating in and therefore I

                               COOK & WILEY, INC.


         1        will be participating in, that will make it hard

         2        to do the 14th and 15th.

         3             MR. CHAIRMAN:  It will not be possible for

         4        this group to have a uniform consensus meeting

         5        date, probably, and some flexibility by members

         6        will be required to meet at all.

         7             That being said, we do want to create the

         8        most convenient date and location we possibly

         9        can.  I'm not aware of what those conferences

        10        are, as to whether or not there is any

        11        flexibility on your part or not.  What is APECQ,

        12        is that an association?

        13             MR. NOVICK:  Asian Pacific Economic

        14        Corporation Quorum for the president and all of

        15        its principals, and at least I will be there

        16        participating in New Zealand.

        17             MR. CHAIRMAN:  I'm presently chairing for

        18        the Commission of the Department of Defense on

        19        domestic preparedness for terrorism.  It has not

        20        yet been able to get a uniform consensus of all

        21        its members on every meeting date.

        22             Within that recognition, we can either take

        23        this up again after you have had a chance to do

        24        this.  We can assign this out to the Executive

        25        Director to try to coordinate something, or

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         1        adopt it now.

         2             What is the pleasure of the Commission?

         3             MR. ANDAL:  It seems as though the

         4        gentlemen that represent the administration may

         5        have an advantage that the rest of us don't.  We

         6        cannot send designees to the meeting.  You, I

         7        think three of you, are, in fact, designees.

         8             Rumor has it there are a lot of people that

         9        work in the Treasury Department that trade off.

        10        Could you send someone else?  In other words,

        11        could we send a different designee for that

        12        meeting so we can get this off the ground?

        13             We're having a hard time meeting.  It's

        14        going to be very difficult for us to agree on a

        15        date.

        16             MR. NOVICK:  I would like to suggest, as

        17        the Governor did, that maybe the Executive

        18        Director be able to see whether an alternative

        19        date in that same time frame is possible, at

        20        least explore the option before we lock in those

        21        dates.

        22             MR. ARMSTRONG:  Mr. Chairman, I did not get

        23        these dates until I just pulled them out of the

        24        back of this little package.  I haven't the

        25        faintest idea where in the world I am.

                               COOK & WILEY, INC.


         1             I'm wondering, could we be given the

         2        opportunity to check with our offices and report

         3        back?

         4             MR. CHAIRMAN:  Is it the consensus of the

         5        Commission they would like to check this without

         6        adoption?  We thought we had sent this out

         7        earlier, but that's all right.

         8             Let's take some time and see what date is

         9        the best date.  If you would, please consult

        10        with the Executive Director.  We can either

        11        adopt the meetings tomorrow, or at least

        12        structure the three meetings, or we can do that

        13        at a later time in between meetings.

        14             Mayor Kirk?

        15             MAYOR KIRK:  Governor, thank you.  I'm

        16        thrilled to be here and sorry I'm late.

        17             Only because my new best friend, Mr. Waitt

        18        here, is so bashful, he suggested or whispered

        19        in my ear, he thought it would be a lot more

        20        appropriate -- the dates are fine -- if we met

        21        in Dallas rather than Austin.  I kicked him

        22        under the table.

        23             If there are other members of the Committee

        24        that find it's much easier to get to Dallas/Fort

        25        Worth than other places.  I just wanted you to

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         1        know we would be thrilled to host you in the

         2        real high tech capitol of the state.

         3             Other than that, I bring you greetings from

         4        the Stanley Cup champions, Dallas Stars.

         5             We're just happy to be here.

         6             MR. CHAIRMAN:  Thank you.

         7             MAYOR KIRK:  That was only semitongue-

         8        in-cheek.

         9             GOVERNOR LOCKE:  I appreciate the Chairman

        10        giving us some time to look at not only the

        11        dates, I would ask that we be able to look at

        12        the location of some of these meetings so they

        13        are really in the heart of major transportation

        14        corridors.

        15             I'm sure everyone is going to be very busy,

        16        and being able to minimize ground transportation

        17        or taking flights to some far reaches of the

        18        United States where we have to make connecting

        19        flights as it is, that would be most helpful.

        20             I'm wondering whether or not Dallas is a

        21        better place, or we want to consider right in

        22        the center, Denver.

        23             MAYOR KIRK:  No, no.  You were doing fine.

        24             GOVERNOR LOCKE:  Connecting flights is a

        25        concern to a lot of us.  If there is a way we

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         1        can explore a major hub, that would be great.

         2        That would apply, although I have relatives from

         3        Silicon Valley, if we were able to meet very

         4        close to the San Francisco airport.  There is no

         5        need we have to be in Silicon Valley.

         6             MR. CHAIRMAN:  Do I detect some concerns

         7        about Williamsburg, Virginia?

         8             We are at the Commission's disposal on all

         9        of these matters.  These locations were designed

        10        as major information technology hubs as opposed

        11        to transportation hubs.

        12             If the Commission would prefer to have a

        13        transportation hub, this is the Commission's

        14        schedule.  Why don't we ask each of you-all to,

        15        over the next day, check your schedules against

        16        the proposal, and any changes, if you would

        17        present them to the Executive Director

        18        designated, we will take this up tomorrow and

        19        see if we can reach an agreement on location and

        20        dates.

        21             It doesn't have to be, by the way, on a

        22        date that, Mr. Pincus or Mr. Novick, that is in

        23        conflict with you.  It doesn't have to be that

        24        way.  We can try to find a way to work with

        25        everyone to the greatest extent we can.

                               COOK & WILEY, INC.


         1             Now, other than that, that I think

         2        concludes the administrative business that we

         3        have on our agenda.  I'm going to ask Heather to

         4        give you some information regarding the rest of

         5        the evening and the availability tomorrow prior

         6        to adjournment.

         7             Before we do that, are there other matters

         8        that any members of the Commission wishes to

         9        bring forward at this time?

        10             Mike Leavitt?

        11             GOVERNOR LEAVITT:  I remind you, we did not

        12        conclude the matter on the Executive Director.

        13        We were referring that for the budget and may

        14        leave that in some way of a quandary.  I thought

        15        I would remind you of that and seek the Chair's

        16        advice on how to proceed.

        17             MR. CHAIRMAN:  My intention was to present

        18        that tomorrow at the time that we resolved the

        19        budget.

        20             It need not be.  Is there a motion to adopt

        21        the Chair's appointment for Executive Director?

        22             MR. ANDAL:  I will move that.

        23             MR. CHAIRMAN:  Is there a second?

        24             MR. NORQUIST:  Second.

        25             MR. CHAIRMAN:  There is a second.  All in

                               COOK & WILEY, INC.


         1        favor of that?

         2             I'm sorry, discussion?  Mike Leavitt?

         3             GOVERNOR LEAVITT:  One discussion.  I would

         4        like to just be candid about this.  I don't know

         5        Heather.  I think we will all come to be very

         6        fond of her.

         7             I think it's important that we acknowledge

         8        there has been a certain tension around the

         9        creation of this Commission that has delayed our

        10        launch and made it awkward for us.

        11             I would also like to say, Jim, I think the

        12        work you have done in propelling this forward is

        13        heroic.  I'm very supportive of it.

        14             However, I think the role of Executive

        15        Director is going to be a very important part of

        16        being able to get this group working together in

        17        a cohesive, collegial way.

        18             There will be not just an Executive

        19        Director hired, but be research assistants,

        20        communication directors, research analysts.  All

        21        of those things will be very substantive parts

        22        of our work.

        23             Because we're only meeting three times --

        24        four times, it's very likely that much of the

        25        substance will be written by those people.

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         1             I think it is very important that everyone

         2        at this table, no matter what their interest,

         3        and, hopefully, all of our interests are the

         4        same, that we are confident that the person

         5        driving that process 365 days comes to it

         6        without any conflicts, comes to it without

         7        any -- with the skill set we're interested in.

         8             And, Heather, I hope you understand, this

         9        is not intended in any way to be personal.

        10             I would like to suggest that it would be of

        11        great value in terms of the long-term operation

        12        of this Commission if there was, in the same way

        13        we have a budget committee, a group that was

        14        designated to determine what kind of a criteria

        15        we need.  Then bring a recommendation back to

        16        us.

        17             I feel fine about making the motion that

        18        Heather continue to serve as Interim Director,

        19        and maybe this is pro forma.  I do think it's an

        20        important part of the process of making this

        21        launch with a sense of comfort on the part of

        22        everyone.

        23             MR. CHAIRMAN:  Other discussion?

        24             MR. NORQUIST:  The Executive Director

        25        serves at the will of the Commission at all

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         1        times?  So I don't see the difference between

         2        hiring Heather now and hiring her temporarily.

         3        If for some reason we find ourselves unhappy, we

         4        could do something about it.

         5             GOVERNOR LEAVITT:  The difference is we are

         6        making a conclusion right now that would not be

         7        fair to Heather if we chose somebody else,

         8        because it would be -- raise the conclusion that

         9        somehow we weren't happy.

        10             In fact, I think we all have to be very

        11        happy with the work she has done so far, and I

        12        salute it.

        13             MR. NORQUIST:  She is listening in, so she

        14        wouldn't be surprised if there is some problem

        15        down the road.  Whether we hire her permanently

        16        now or temporarily now, if three months down the

        17        road we didn't like Heather, we could change it.

        18             GOVERNOR LEAVITT:  Grover, the problem we

        19        have is the presumption.  I would like to start

        20        without presumptions and make this analysis so

        21        as to assure that we're all moving forward

        22        together as a Commission and not just for

        23        expedience's sake using a course.

        24             MR. NORQUIST:  My point is, she heard that

        25        conversation.  She knows there isn't that

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         1        presumption.  It shouldn't be a problem.

         2             GOVERNOR LEAVITT:  It shouldn't be a

         3        problem either way, I guess.

         4             MR. CHAIRMAN:  Other discussion?

         5             Joe?

         6             MR. GUTTENTAG:   Mr. Chairman, you said

         7        before, and I think wisely, we should not be

         8        spending money that we don't have.  What kind of

         9        financial commitment are we undertaking by

        10        hiring her, and do we have the funds that we can

        11        hire her for any period of time, or does it have

        12        to be on an interim basis?

        13             MS. ROSENKER:  The Commonwealth of Virginia

        14        has already contributed the funds from which I

        15        am currently being compensated.

        16             MR. CHAIRMAN:  Other questions?

        17             MR. ARMSTRONG:  I was going to make the

        18        same point that Joe did.  Until this five-man

        19        Task Force meets, we don't know how we're going

        20        to raise the money, and until we have this

        21        meeting before dinner in order to determine how

        22        much interim financing we have, I think Governor

        23        Leavitt's observation is, in fact, the way the

        24        place is going to operate.

        25             Second, I do think, though, that the point

                               COOK & WILEY, INC.


         1        he makes, that it would be in our best interests

         2        to define the purpose --  I think it's a big

         3        difference between David's chief administration

         4        officer and Mike's chief executive officer.  We

         5        ought to, I think, as a Commission, define what

         6        we're paying for and what we expect.

         7             So I do support that.  I think it's fine,

         8        whether it's voted frankly that she is the

         9        director or interim director, because until we

        10        come up with how we're going to pay for the

        11        director, unless you are into being part of this

        12        given arrangement, we're not going to have you

        13        permanently until we figure out how to pay for

        14        you.

        15             MR. ANDAL:  Perhaps I could amend that

        16        motion.  That is to approve the choice of

        17        Heather as our Executive Director subject to

        18        available funds.

        19             MR. NORQUIST:  Second.

        20             MR. ANDAL:  So we can get on with it.

        21             MR. CHAIRMAN:  The amended proposal is that

        22        Heather is adopted subject to the funding.

        23             Let me, if I could, speak to this for just

        24        a moment, Ladies and Gentlemen.  This Commission

        25        was hard enough to get started as it is.  Its

                               COOK & WILEY, INC.


         1        challenge remains ahead of it on substantive

         2        issues that remain to be thrashed out.

         3             If the Commission hopes to get on to the

         4        substantive business instead of keeping

         5        housekeeping constantly on the table, some

         6        decisions have to be made, and quality of

         7        leadership is, in fact, to make decisions and to

         8        act.

         9             Heather has been secured certainly by me as

        10        Chairman in order to bring her forward and in

        11        order to, in good faith, do the work of this

        12        Commission.

        13             The assessment so far is that, to quote,

        14        the people are happy with the work she has done

        15        and salute her.  There is a Certain sense of

        16        reliance that a person has when they decide to

        17        come on board to do a job for the Commission.

        18        And furthermore, as Chairman, this thing would

        19        never go unless a decision was made to act, and

        20        that is what we have done.

        21             So my hope is that the Commission will, in

        22        fact, approve this lady, subject to funding, so

        23        that we can continue to move ahead to what the

        24        real issues are.

        25             MR. ANDAL:  Mr. Chairman, something else

                               COOK & WILEY, INC.


         1        that might help, by the time we meet tomorrow, a

         2        proposed duty statement could be put forward so

         3        we're not talking about two different things,

         4        everybody knows what she is going to do.

         5             That seems to be something the Chairman

         6        could do and circulate tomorrow so everybody

         7        knows exactly what it is we expect of her.

         8             GOVERNOR LEAVITT:  I make a substitute

         9        motion, that is, that we ask the Chair to create

        10        for the ratification of the Commission the job

        11        description of the Executive Director that would

        12        specify the duties and the skills that are

        13        necessary for a person to do those tasks, and

        14        the Commission have a chance to review that.  I

        15        make that as a form of substitute motion.

        16             I will go on to say, I personally believe

        17        and I may be the only person here at this table,

        18        and I'm willing to accept the Commission's

        19        point, there would be value in us not simply

        20        assuming that we have got a capable person and

        21        now we're going to draft a description of what

        22        we want.

        23             I'm not certain that that is the right

        24        order.  I'm prepared to accept it.  I think

        25        Heather is an able person.

                               COOK & WILEY, INC.


         1             MR. CHAIRMAN:  Now the full motion is to

         2        adopt Heather and to do a job description for

         3        the approval by the Commission tomorrow, and

         4        this is subject to the funding being made

         5        available.

         6             Mayor Kirk?

         7             MAYOR KIRK:  Governor Gilmore, I just want

         8        you to make sure I'm in full comport with what

         9        you said, particularly representing the cities

        10        and the counties and local government officials

        11        being that group that was most discomforted by

        12        this process.

        13             I also concurred that --  The hour is

        14        getting late.  We have a lot to do.  We can

        15        spend a lot of time getting the room right and

        16        the chairs, and I'm much more concerned about

        17        the substance of it.

        18             I can tell you, Governor Gilmore, I

        19        appreciate you taking the reins on this and

        20        going forth with it.  There are no biases in

        21        terms of staff.  I would only ask that your

        22        motion be amended.

        23             In terms of what we know they are being

        24        paid, at least in the broad budget I got, it

        25        said $750,000 for staff.  I didn't know if it

                               COOK & WILEY, INC.


         1        meant one person was getting half a million and

         2        everybody else was working for $50,000.  It

         3        didn't say.

         4             I would only just ask, within the context

         5        of that, we know exactly what the salaries are

         6        for whatever those staff people make.

         7             Governor, I wholeheartedly concur with you.

         8             GOVERNOR LEAVITT:  I accept that amendment.

         9             MAYOR KIRK:  I think we need to get going.

        10             MR. CHAIRMAN:  I think Mayor Kirk wants to

        11        know what she will be compensated.

        12             GOVERNOR LOCKE:  Mr. Chairman, I do want to

        13        also express my appreciation for all the efforts

        14        that you have made in organizing this.  I think

        15        it would be perhaps better if we just take this

        16        vote on Heather tomorrow when we have already

        17        had the benefit of the subcommittee meeting

        18        talking about exactly how we're going to raise

        19        the dollars so we have a better idea of the

        20        budget, the salary, the job description.

        21             I'm sure at that point I will be able to

        22        support Heather as director.  I think we're

        23        putting a little bit of the cart before the

        24        horse.

        25             If we're going to have deliberation tonight

                               COOK & WILEY, INC.


         1        by a subcommittee on both the job description in

         2        terms of the financing, the salary, and all that

         3        information, we ought to have all of that

         4        information ahead of us so when we make that

         5        vote, it doesn't look like we're simply voting

         6        first and then having all the information coming

         7        out afterwards.

         8             I'm more than prepared to move forward as

         9        the Mayor of Dallas indicated.  We have got so

        10        many things to go.  I think you have been able

        11        to organize this thing fantastically.  I think

        12        it's a more proper forum to have this

        13        information before us and then vote.

        14             MR. CHAIRMAN:  The issue on the table is

        15        whether to adopt the Chairman's appointment of

        16        an Executive Director subject to funding and

        17        also with a job description being approved by

        18        the Commission at tomorrow's meeting.  That is

        19        the motion that is on the floor.  What is the

        20        will of the Commission?

        21             If the Commission is, in fact, to defer the

        22        entire matter, then vote no.  If it is, in fact,

        23        to, as Mayor Kirk suggested, to make this

        24        appointment, get some of the business behind us,

        25        and move forward, then vote yes.

                               COOK & WILEY, INC.


         1             All those in favor of the motion --

         2             GOVERNOR LEAVITT:  I have one more piece of

         3        discussion.

         4             MR. CHAIRMAN:  Governor Leavitt.

         5             GOVERNOR LEAVITT:  I am very comfortable

         6        with your motion.  I would suggest if we're

         7        going to vote for Executive Director, we ought

         8        to do it tomorrow after we know what the job

         9        description is and if we have a budget for it.

        10             MR. CHAIRMAN:  That concurs with Governor

        11        Locke's statement.

        12             MR. LEBRUN:  I would move to table the

        13        motion until tomorrow morning.

        14             MR. CHAIRMAN:  There is a motion to table

        15        the motion until tomorrow morning.

        16             MR. ARMSTRONG:  Second it.

        17             MR. CHAIRMAN:  All those in favor of

        18        tabling it say aye.

        19             COMMISSION MEMBERS:  Aye.

        20             MR. CHAIRMAN:  All those opposed?

        21             COMMISSION MEMBERS:  No.

        22             MR. CHAIRMAN:  All those in favor of the

        23        motion, please raise your hand.

        24             I count 10, being an absolute majority.

        25        The motion is tabled until tomorrow morning.

                               COOK & WILEY, INC.


         1             Heather, with some trepidation, I'm not

         2        sure why I'm asking you to do this, I will now

         3        ask you to discuss with the members of the

         4        Commission the other arrangements that are being

         5        made.

         6             MS. ROSENKER:  Obviously, there are lots of

         7        logistics that go together in pulling a meeting

         8        like this together.  At the last minute this

         9        morning, we had an additional change to the

        10        agenda.  I will pass out new agendas for this

        11        evening as well as tomorrow.

        12             Just an addition to the agenda, just so

        13        that everyone knows, number one, Mr. Sidgmore is

        14        going to do a vision of the Internet for us

        15        first thing in the morning.

        16             Secondly, we have added a good hour for

        17        discussion at the end of the day.  As the

        18        Governor wants, when we finish with these

        19        logistics, we will discuss a work plan that he

        20        would like you and your staff to discuss between

        21        now and then so we can have some discussion.

        22             Additionally, tonight transportation will

        23        be leaving and picking you and your guests up at

        24        6:00 from the Inn, as well as those folks

        25        leaving from the Lodge for your dinner.  There

                               COOK & WILEY, INC.


         1        will be staff at the doors to direct you where

         2        you need to go.  There are pins in front of you

         3        on the table.  We're using those tomorrow, so we

         4        don't have name tags.  That is for the security

         5        folks.

         6             There is a special entrance for you at the

         7        Commission hearing.  Please wear those.  It will

         8        be helpful.

         9             One last thing.  Mayor Kirk, Mr. Pottruck,

        10        Governor Locke, I believe that there are

        11        affidavits in front of you that we need you to

        12        sign, please, for your oath.  If you would do

        13        that before you leave and make sure that Carol

        14        Comstock gets that.  She is our notary public.

        15             Governor, that's all.

        16             MR. POTTRUCK:  Just given the fact that

        17        we're a little bit behind plan on meeting time,

        18        are there going to be several buses if you miss

        19        the first bus?

        20             MS. ROSENKER:  We'll come back to pick you

        21        up.

        22             MR. CHAIRMAN:  I think that concludes what

        23        we're able to accomplish for today.  We will be

        24        meeting in the morning, beginning the

        25        substantive work of the Commission.

                               COOK & WILEY, INC.


         1             Is there a motion to adjourn?  All in

         2        favor?

         3             COMMISSION MEMBERS:  Aye.

         4             MR. CHAIRMAN:  Stand in adjournment.


         6             (Meeting adjourned at 6:00 p.m.)




















                               COOK & WILEY, INC.



         2  CITY OF RICHMOND, to wit:


         4        I, Carol Hill, a Notary Public for the State of

         5  Virginia at Large, do hereby certify that the

         6  foregoing meeting was duly taken at the time and place

         7  set out in the caption hereto.  Further, that the

         8  transcript of the meeting is true and correct.

         9        Given under my hand this 28th day of June, 1999.


        11                            _____________________________
                                      Carol Hill, RPR-CM
        12                            Notary Public for the
                                      State of Virginia at Large

        14  My Commission expires:

        15  January 31, 2002











                               COOK & WILEY, INC.

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