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10/15/99 Report Drafting Subcommittee Conference Call Meeting





















19 Arlington, Virginia

20 Friday, October 15, 1999













1 P R O C E E D I N G S

2 (4:34 p.m.)

3 GOVERNOR GILMORE: Welcome to this

4 first meeting, such as it is, on this

5 conference call of the Report Drafting

6 Subcommittee. Now, this Subcommittee was

7 created by the Commission, pursuant to

8 Operating Rule 6 of the last meeting in New

9 York City, so that we can continue to move

10 ahead and keep the momentum going as we move

11 towards San Francisco and get a document down

12 in writing that we can use as a debate

13 point and a discussion point in San

14 Francisco.

15 I hasten to say, of course, that a

16 refined document, I anticipate, will be

17 coming out of San Francisco which will move

18 towards Texas, and there will no doubt be

19 significant discussion in Texas as well for

20 the final report to go to the Congress.

21 Now, the members of the

22 Subcommittee are myself, Dean Andal, Governor











1 Locke, Bob Pittman, Dave Pottruck, Stan

2 Sokul, Dick Parsons, Andrew Pincus, and Delna

3 Jones. We just heard a beep, so it's

4 possible someone else may have joined us at

5 this point, and we'll see where we are.

6 I'm going to ask that the roll be

7 called in just a minute so we can see, but

8 let me go through some preliminaries. Just a

9 reminder that this is not a meeting of the

10 Commission. Only members of the Drafting

11 Subcommittee may actually participate in the

12 call. Quite frankly, I think we have too

13 many already, but we're trying to keep it at

14 least in some way orderly so that we can keep

15 moving and not have things break down into

16 constant melee, but we do have nine already.

17 Others, naturally, are welcome to

18 listen in, and I assume that they are

19 listening in. Where a member, however, is

20 unable to attend because this is a

21 Subcommittee, a staff representative

22 designated by the absent member, it's okay











1 for them to participate in his place, and I

2 think there will be at least two, if not

3 three, such representatives on the conference

4 call.

5 The Commission's referred to the

6 Subcommittee the task of developing a

7 policies and options paper, reviewing the

8 proposals that we have requested from the

9 public, and drafting of the final report of

10 the Commission, and I just heard a second

11 beep.

12 So, for the people who have joined

13 us, once again, this is a preliminary

14 discussion that I am having, just laying the

15 groundwork for where we are, on our way to

16 San Francisco, a more permanent document

17 after that in Texas, the listing, naturally,

18 of the Committee members, and once again

19 reminding that this is not a meeting of the

20 full Commission, but it is the Drafting

21 Subcommittee, and we will ask them to

22 actually participate only in the call.











1 The Commission has, as I said,

2 referred to the Subcommittee the task of

3 developing a policies and options paper,

4 reviewing the proposals that we have

5 requested from the public, and the drafting

6 of the final report. The Committee has

7 determined that today's deliberations should

8 be made as widely available as possible,

9 consistent with the use of the Commission's

10 resources, so a transcript of today's

11 discussions will be posted on the

12 Commission's Web site by close of business on

13 Wednesday, October 20, 1999.

14 Heather, that gives you time, I

15 believe, to prepare that and get it on the

16 Web site; is that correct?

17 MS. ROSENKER: That's correct. It

18 may even be sooner than that, Governor, but

19 that will be the outset date.

20 GOVERNOR GILMORE: Now, secondly,

21 since we're going to have this transcribed, I

22 would ask the Commission members, if you











1 would please, make a note. Everybody's got a

2 pencil and paper there, so write down a

3 little note. Please say your name before

4 making comments because this allows the

5 transcriber to capture your name and the

6 information and everybody on the conference

7 call to understand who you are. That, I

8 think, would help this somewhat imperfect

9 system of a conference call.

10 So let's begin by having the

11 Subcommittee members and their representative

12 staff announce themselves. Heather, do you

13 have a roll? Actually, I have the names

14 there. If you'd keep the roll of the people

15 who answer, I will go ahead and call the

16 roll.

17 Dean Andal, has he joined us? He

18 is not present yet.

19 Richard Parsons?

20 MR. SACKLER: It's Art Sackler for

21 Mr. Parsons, Governor.












1 David Pottruck?

2 MR. WEINBERGER: Mark Weinberger

3 for David Pottruck, Governor.

4 GOVERNOR GILMORE: Mark Weinberger?


6 GOVERNOR GILMORE: Mark Weinberger.

7 GOVERNOR GILMORE: Mr. Weinberger.

8 Let's see here. Governor Locke?

9 MR. KIGA: Fred Kiga, representing

10 Governor Locke.

11 GOVERNOR GILMORE: Fred, how are

12 you?

13 MR. KIGA: Fine, thank you.


15 Andrew Pincus?

16 MR. PINCUS: Hi, Governor. How are

17 you?


19 MR. PINCUS: Yeah.

20 GOVERNOR GILMORE: Andrew, good to

21 talk to you. Delna Jones?

22 MS. JONES: I'm here.











1 GOVERNOR GILMORE: You're here.

2 Robert Pittman?

3 MR. VRADENBURG: George Vradenburg

4 for Robert Pittman.

5 GOVERNOR GILMORE: George, thank

6 you. Welcome. Stan Sokul?

7 MR. SOKUL: I'm here.

8 GOVERNOR GILMORE: Stan is here.

9 Everyone then is present either personally or

10 by representative at this point except Dean

11 Andal.

12 MR. ANDAL: And I'm present,

13 Governor.

14 GOVERNOR GILMORE: Dean Andal is

15 now present. So we have everybody on the

16 Committee with us here at this time, so I'm

17 pleased about that.

18 Each of you should have received,

19 from Heather, a brief outline of today's

20 agenda. As you can see, the meeting is going

21 to focus on the three organizational topics

22 that have been discussed in New York and are











1 on the agenda for us.

2 First of all, though, I think that

3 the proper first order of business is the

4 formal designation of a chair for the

5 Subcommittee. I would advise the

6 Subcommittee members that I would like to

7 serve at the head of this as the Committee

8 chair, but I do think that it's probably

9 appropriate and smart to have a co-chairman

10 also. I'm going to suggest for purposes of

11 discussion that I be one of the co-chairs and

12 that a business representative, say, Bob

13 Pittman of America Online, I would propose be

14 the other, and we serve as co-chairmen.

15 I might mention in passing, by the

16 way, there's been a lot of jockeying about

17 all this. It's probably unnecessary because,

18 as everybody has seen from my chairmanship,

19 we're trying to keep this very open so

20 everybody has a chance. There haven't been

21 any power plays, at least not from my side,

22 and we want to continue that kind of











1 approach, but, just for the purposes of

2 getting going, I'm going to suggest myself

3 and Bob Pittman.

4 Now, does anyone have an opinion

5 about this?

6 MR. ANDAL: Governor, this is Dean

7 Andal and I'll second that motion.

8 GOVERNOR GILMORE: I guess I have put it in

9 the form of a motion, then, and Dean Andal

10 has seconded.

11 Now, is there anyone who feels like

12 that they need to change that? If so, please

13 speak up now. It's a wide-open world.

14 Any suggestions? Any other

15 suggestions? Is there a motion to go ahead

16 then and adopt that Gilmore-Pittman proposal?

17 All in favor please say aye.

18 All opposed say nay.

19 Thank you very much.

20 MR. VRADENBURG: Governor, I have

21 not been able to reach Bob, who is traveling

22 as well today, but I will get back to you











1 promptly to let you know whether he's

2 prepared to serve. Thank you very much.

3 GOVERNOR GILMORE: Well, very good.

4 I appreciate you doing that. I know that you

5 had once expressed some interest, I think, in

6 one of the previous conference calls, and I

7 wrote that down, which is why I've done this.


9 appreciate that, Governor. Just as a

10 courtesy to Bob, I think I ought to talk to

11 him.

12 GOVERNOR GILMORE: I think you

13 should.

14 MR. ANDAL: George, you have to

15 tell Bob that that's what he gets for not

16 being on the call.

17 GOVERNOR GILMORE: That's right.

18 You get designated. So that if the Good Gov

19 is someplace else Pittman has to drop what

20 he's doing and come on this, but we'll

21 proceed in that way. I don't think anybody

22 will be concerned about this as we go along.











1 It's a formality more than anything else. At

2 least somebody's got to run the meeting, and

3 I'm glad to be doing it right now.

4 The agenda today covers the

5 operating procedures for the Subcommittee, a

6 review of what transpired since New York, and

7 particularly focusing on the criteria and a

8 discussion of the issues and options paper.

9 I think that the cleanest thing would be to

10 go to this issue of criteria first. I don't

11 know in what order it's been discussed, but

12 I'd like to get that out of the way because I

13 think that was designated, and I think has

14 actually been sent over to the Federal

15 Register, after careful discussion between

16 staff.

17 But let me turn this over to

18 Heather. Heather, would you review the

19 criteria situation and where we are on that,

20 and then we can open the floor for any

21 further discussion necessary. Heather, go

22 ahead, if you would please.











1 MS. ROSENKER: Thank you, Governor.

2 I just wanted to remind everyone the process

3 that we used to get consensus on the list of

4 criteria that in fact was published today in

5 the Federal Register. In addition, it is

6 located on the Commission's Web site for all

7 in the public to see and/or respond to, if

8 they so choose. We had sent out an original

9 memo about the criteria on the 24th of

10 September. We got responses back on the

11 30th. We went through various changes and

12 negotiating and finally, based on the 11th of

13 October, came up with a final list of

14 criteria.

15 As you all know, these criteria are

16 asking folks to submit proposals to the

17 Commission to look at the current sales and

18 use tax system and check out simplification

19 as well as applying it, if possible, to

20 electronic commerce and is there the

21 technology available today to do that.

22 The proposals are due to us at the











1 Commission office on the 15th of November.

2 Should we receive proposals before that date,

3 we will post them on our virtual office for

4 all Commissioners to review. Should we only

5 get them all on the 15th, we will obviously

6 post them as closely as possible to the end

7 of the day on the 16th so that everyone will

8 have a chance to review those as quickly as

9 possible.

10 And that's really it, Governor,

11 unless there are other questions, because the

12 rest of the discussion about criteria moves

13 into the discussion on the work plan for this

14 Subcommittee, the Drafting Subcommittee.

15 GOVERNOR GILMORE: We will move on

16 in just a moment. These criteria are

17 designed to give some sense of agreement as

18 to what the proposals that would be coming

19 before the Commission are designed to do. Is

20 that about right, Heather, my recollection

21 from New York?

22 MS. ROSENKER: That's correct,











1 Governor.

2 GOVERNOR GILMORE: So this gives

3 them an idea of what types of things we're

4 trying to accomplish with the criteria. I

5 suppose they would be applicable to any of

6 the issues that have been raised including

7 the sales tax issue.


9 GOVERNOR GILMORE: Let me ask then

10 the Subcommittee members, generally, are

11 there any questions about the process so far

12 on the proposals and those criteria, even

13 though the full Commission of course

14 addressed them in New York? But I think

15 we've now laid them down, and they're in the

16 Federal Register by, I think, agreement of

17 all staff people.

18 Does anybody on the Commission wish

19 to make any statement about it or ask any

20 questions or have any further discussion

21 about this? Any of the others?

22 It sounds silent to me, so I think











1 that's fairly businesslike, and, if anybody

2 has any questions, never hesitate to pipe in.

3 There are several things that we, as a

4 Subcommittee, want to do now. I think we

5 should move now to the question of the

6 operating procedures for the Subcommittee.

7 This is the Subcommittee that will

8 act between now and San Francisco, create a

9 working document that we can begin to address

10 some of the issues, crystallize the issues if

11 you will, and then, of course, after that the

12 Commission will do some more work between San

13 Francisco and New York. In terms of its

14 operating procedures, there are several

15 things that we as a Subcommittee need to

16 settle on with regard to these operating

17 procedures.

18 First, we need to establish what

19 the Subcommittee is actually tasked with

20 undertaking. I would suggest that we should

21 be developing and formulating a policy and

22 options paper, what the full Commission











1 anticipated, for review and discussion by all

2 the Commissioners in San Francisco and

3 ultimately, of course, at the end of the day

4 after Texas, the full presentation of the

5 document to Congress.

6 This is a process, of course, that

7 was outlined in the work plan of the

8 Commission that Mr. Pottruck's Subcommittee

9 worked on so well, and it was voted to be

10 accepted in New York last month. Also, we're

11 charged with reviewing and recommending, to

12 the full Commission, those proposals that

13 will be presented in San Francisco.

14 Third, as a result of the policy

15 and issues paper, we'll be responsible for

16 preparing ultimately the final report of the

17 Commission. Now, everybody should have a

18 copy of the memo that I asked to be

19 distributed yesterday. In the memo, I've

20 outlined procedures that I recommend that we

21 follow to establish the creation of the

22 issues and options paper. I want to go











1 through these and entertain any kinds of

2 questions or suggestions.

3 Now, obviously, we have some very

4 tight time constraints to work with. The

5 deadlines that I have suggested would meet

6 these criteria, would meet these deadlines.

7 I think we can certainly entertain discussion

8 as to time frames. But you will notice, in

9 the documentation, the proposals and the

10 suggestions that we have, first being a

11 November the 8th date for members of the

12 Subcommittee to submit original policy issues

13 and options. Then we give the members of the

14 Subcommittee some time to review and propose

15 edits to the policies and options papers. I

16 would suggest to you that members ought not

17 to have a veto over other members' policy

18 options. I don't know how you operate a

19 Subcommittee with nine people and satisfy the

20 first needs of the full 19 members in any

21 other way.

22 Because, after all, in the end,











1 we'll be voting in San Francisco or Dallas,

2 but this gives each member the opportunity to

3 revise or compromise the wording and

4 narrative policy issues and offer some

5 alternatives. Where members are

6 diametrically opposed to the wording of

7 certain narratives, the paper could reflect

8 the alternative perspectives.

9 I suggest that the staff can hold a

10 conference call during the week of November

11 the 8th and iron out some of these problems.

12 A revised draft will be made available to all

13 members of the Subcommittee on Friday,

14 November the 12th. Sunday, November 15 would

15 be a deadline for submission of all sales tax

16 proposals submitted to the Commission. This

17 I think is in accord with motions adopted in

18 New York to be included in the policy and

19 options papers. That buys, by the way,

20 additional time for people to continue to

21 work on these proposals. I know that they're

22 in fact doing it and have been doing it since











1 New York.

2 During the week of November 15, the

3 drafting Subcommittee would hold a subsequent

4 conference call to resolve any outstanding

5 disagreements on the policies and options

6 paper and accept or reject sales tax

7 proposals and further revisions. Then we

8 have staff work to be submitted, conference

9 calls as necessary, and during the week of

10 November 22, the Drafting Committee to hold one last

11 conference call to approve the final policies

12 and options paper, and the paper would then

13 be available to the Commission on the virtual

14 Web site.

15 I'm not sure who's out there with

16 phone calls and things like that. Please try

17 to minimize the background noise.

18 We'll move on in a moment to a

19 further discussion of the issues and options

20 paper itself. First of all, people having

21 reviewed the options that I have just gone

22 over and the timetable that we're working











1 towards the utilization of staff and the

2 conduct of the direction we're going, does

3 anyone have any comments or discussions?

4 MS. JONES: Governor, this is Delna

5 Jones. I do not have anything in front of me

6 because I was gone and was on the road before

7 that arrived, and I do not have it here, but

8 my only concern, as I hear this, is to be

9 sure that we maximize the staff time, because

10 I think one of the criteria problems was in

11 not getting that staff to work on that early

12 enough because it took more time I think

13 because of that.

14 So my recommendation would be,

15 without having something in front of me but

16 what I hear, is to be sure we maximize our

17 staff time to put together what they can to

18 make it as concise as possible before we are

19 in the position of taking positions.


21 think to get this down into the document

22 format and utilize the staff in the interim











1 periods is essential, and I think that we can

2 get a refined document for each of our

3 conference calls. This would follow very

4 much I think the procedures we set down in

5 the very successful Work Plan Subcommittee.

6 Any other discussion?

7 MR. KIGA: Governor, Fred Kiga,

8 from Governor Locke's staff. With respect to

9 each of the nine members potentially

10 submitting seven options and issues papers,

11 ostensibly, we can end up with maybe 63

12 different policy and options papers.

13 Is it, perhaps as an alternative,

14 to maybe assign staff in each of these seven

15 areas maybe with a minimum of two or three

16 staff members from various Commission members

17 and attempt to have them arrive at some early

18 consensus as to, in an objective and fair

19 fashion, what the policy issues are?

20 GOVERNOR GILMORE: Fred, certainly

21 the other members are open to further

22 discussion on this subject, but we've got a











1 virtual office program that will allow all

2 the staff to make a contribution to all the

3 areas that are proposed. I would hate to

4 tell some staff person that they ought to

5 focus in one place and not on another.

6 I would invite staff people, if

7 they wish to focus on any particular area, to

8 go ahead and do that, but if there's a staff

9 person or a Commission member that wishes to

10 make a contribution to the different areas, I

11 think they should be invited to do that too.

12 I don't want to leave anybody out.

13 I don't guess that's what you want to do,

14 Fred, is it?

15 MR. KIGA: No, rather than create a

16 free-for-all and having 63 different option

17 papers out there, maybe we can draw some

18 consensus such that when the Commission

19 discusses these in San Francisco, that we

20 have perhaps no more than 7 to 14, perhaps,

21 if there is a minority view rather than the

22 consensus opinion.











1 MR. VRADENBURG: George Vradenburg

2 for Robert Pittman. I do think, perhaps,

3 Governor, we can remit this to the staff to

4 sort out their own working process to make

5 sure that this is manageable. I think trying

6 to now decide at this level exactly how many

7 issues from how many people with the kind of

8 page limits that we can work this out at the

9 staff level to make sure this works.

10 MR. PINCUS: Governor Gilmore?

11 GOVERNOR GILMORE: Who's speaking

12 now? Identify yourself.

13 MR. PINCUS: It's Andy Pincus. One

14 question that I have about this is it seems

15 to me this could be a very good process for

16 zeroing in on the policy issues that we have

17 to discuss, but I'm a little concerned about

18 the options part because really we're going

19 to be hearing a lot about options at the

20 meeting in San Francisco.

21 So from my perspective I think it

22 makes a lot of sense to try and zero in and











1 to develop consensus as much as we can

2 through this process about exactly what

3 issues we want to talk about, but I'm a

4 little nervous about whether it's going to be

5 a productive exercise to talk about options.

6 Partially because of the hurricane at the

7 last meeting, we really haven't had much

8 chance to talk about the substance of a lot

9 of these things.

10 As I say, I think we could really

11 zero in on what we want to address, but, as

12 to how to address it, I think that's going to

13 be really hard to do.

14 MR. SOKUL: Governor Gilmore, this

15 is Stan Sokul.


17 MR. SOKUL: Maybe somewhat in

18 response to that I always thought that this

19 issues and options paper was almost to some

20 extent consensus, like Andy just said, but

21 also to the extent necessary a laundry list

22 type of process based upon our discussions











1 thus far to be discussed in San Francisco,

2 not necessarily a narrowing of policy options

3 right now, but that's what would take place

4 in San Francisco.

5 And I think that one way to respond

6 to Andy and to Governor Locke as well is that

7 as long as everyone respects what's going on

8 and be fair here and realize that what we're

9 trying to produce for the Commission is an

10 objective document, not an advocacy piece.

11 This is an objective document to be submitted

12 for discussion in San Francisco. I don't

13 know how much of a problem there's going to

14 be, as long as everyone has a healthy respect

15 for the process we're in here.



18 MR. WEINBERGER: Governor Gilmore,

19 this is Mark Weinberger for Mr. Pottruck.

20 Obviously, there's a lot of interpretation

21 with respect to the work plan, but I know

22 when we were discussing and putting the work











1 plan together, the hope and expectation of

2 this document was going to be to try and

3 advance the ball and try and at least set

4 some a consensus as opposed to being a

5 laundry list.

6 Now, whether we decide to do that

7 as a group is obviously open for discussion

8 amongst all the Commissioners, but this

9 Subcommittee is a good representation of the

10 Commission at large; there are nine of us.

11 If we can do anything at all to try and put

12 together a document that we think is at least

13 a nucleus of consensus as opposed to just

14 another laundry list similar to like the

15 criteria, I think that would help us a lot to

16 focus our discussion in San Francisco and

17 then prepare for the ultimate vote in Dallas.

18 GOVERNOR GILMORE: Other comments?

19 MR. SACKLER: Governor, it's Art

20 Sackler for Mr. Parsons. I'd like to agree

21 -- was that Mark who just spoke? -- with his

22 evaluation. I think the criteria document











1 illustrated the pitfalls with just having a

2 laundry list, and maybe if we could go back

3 to something I think maybe George suggested

4 before that the staff be tasked with coming

5 up with some way of producing a more

6 rationalizing result, whether or not it heads

7 us toward consensus on the way into San

8 Francisco, that at least would hold the list

9 down to some sort of manageable proportion

10 and, in a very organized way, that maybe that

11 might be the best way to proceed.

12 MR. ANDAL: Governor, this is Dean

13 Andal. I agree with much that has been said

14 here, and I disagree with one other part of

15 it. The part that I agree with is that we

16 want to avoid the chaotic listing that we had

17 on the criteria and that we want it to make

18 sense, and I think that's perfectly

19 reasonable. I don't think that all nine of

20 us are going to have a proposal on every

21 issue, and I don't think it's then likely

22 that we're going to have over 60 different











1 items there.

2 The part that I disagree with and I

3 think that will end in disaster is if we try

4 to forge a consensus on every issue and in

5 every category. I think that the better way

6 to go would be to try to forge as much

7 consensus as possible, which would be a great

8 value to find out what this Committee agrees

9 on and therefore what the Commission might

10 agree on, and then, in as clear a way as

11 possible, to set up the hard choices where

12 Commissioners disagree.

13 In other words, not trying to fudge

14 the disagreements, but to lay them out

15 clearly so we know what we need to tackle at

16 the meeting. Let's face it. We're going to

17 agree on a lot, but we're also going to

18 disagree on a few things, and it doesn't help

19 us to fudge it with mushy language,

20 consensuses that don't really exist.

21 MR. WEINBERGER: This is Mark

22 Weinberger in for Mr. Pottruck. Governor, I











1 agree wholeheartedly with Dean's comments. I

2 wasn't suggesting that we would be able to

3 reach consensus on everything, but only to

4 try and sort out, from the record we have so

5 far and what we believe the Commissioners

6 have indicated to us, that where we can reach

7 consensus and get that behind us, I think

8 that would move the ball greatly forward,

9 and, equally, setting up the issues that we

10 have disagreement on for debate, would

11 equally move the ball forward.

12 I was just talking about as opposed

13 to just a laundry list where there was no

14 attempt to try and reach a consensus

15 document.

16 MR. ANDAL: This is Dean Andal

17 again. In that case, I agree fully.

18 GOVERNOR GILMORE: Other comments

19 from members of the Commission? Any others?

20 As chairman, and I'll talk to Bob

21 about this if he's in a position to agree,

22 but I certainly don't want to get in a











1 position where someone suggests that I'm

2 trying to exclude some ideas to the detriment

3 of some people's point of view, nor do I

4 want to be excluded, but I certainly, as

5 chairman, don't want to get accused of trying

6 to stamp down somebody's ideas.

7 I think I would agree that there

8 will be some of the areas that are under

9 discussion that will be a consensus position.

10 I'm pretty happy about that. I think the

11 sales tax position is going to be tougher to

12 do.

13 I think that George Vradenburg's

14 right, that we can focus to the staff people,

15 let them argue about it a little bit. The

16 proposals I've got in place at this point, if

17 everybody will agree, is going to have

18 periodic discussions between staff and the

19 full Subcommittee people. So we can begin to

20 narrow these perhaps in our discussions, but

21 I would not think it is acceptable for staff

22 people to try to exclude any ideas of anybody











1 that they want to put forward, and I would

2 hope that, if any member feels that his ideas

3 are not getting a fair hearing, that they

4 will come to me or Bob Pittman and tell us

5 that.

6 With that being said, we agree that

7 we will proceed and see whether any of these

8 issues in fact can be narrowed down.

9 Everybody agree?

10 MS. JONES: Agree.


12 GOVERNOR GILMORE: Let's move on

13 then to agenda item 3, and the last --

14 MR. PINCUS: Governor, this is Andy

15 Pincus. I'm sorry to interrupt, but I'm out

16 of the country, and, unfortunately, I have to

17 go do something now. So my colleague, Dawn

18 Friedkin, is on the phone, and I'm just going

19 to ask her to take over, and I apologize for

20 having to get off the call.

21 GOVERNOR GILMORE: Andy, thank you

22 for being on the call. I hope you're











1 successful wherever you are, and we will look

2 forward to having Dawn participate.

3 Dawn, welcome to the discussion.

4 MS. FRIEDKIN: Thank you, Governor.

5 GOVERNOR GILMORE: You're there,

6 right?


8 GOVERNOR GILMORE: Andy, thank you.

9 All right. All of our people are still with

10 us. Agenda item 3, the issues and options

11 paper, this is the paper that the

12 Commission's going to ultimately produce.

13 Included in the memo that I sent yesterday

14 was a rough outline that gives a framework

15 for us to begin to assemble the issues and

16 options. This fairly well, I think,

17 parallels the discussions that we have had

18 both in Williamsburg and also specifically

19 narrowed by the work plan as we had the

20 discussions in New York.

21 I think what we ought to be

22 striving for is a toneless document as we go











1 towards San Francisco so that the Commission

2 members will have a fair chance to discuss

3 their viewpoint as opposed to trying to steer

4 this thing at this point in time. The

5 outline affords the Subcommittee the chance

6 to make a fair presentation of all sides and

7 the issues that are involved.

8 Now remember what we've done here

9 in the last meeting. We put together a

10 virtual office site. In fact, I believe that

11 was donated, as a matter of fact. Did

12 Virginia donate that? Maybe I'll be charging

13 for that.

14 MR. VRADENBURG: We thank you for

15 your donation, Governor.

16 GOVERNOR GILMORE: That's right.

17 It was a donation. The virtual office site

18 will give the staff the chance to work

19 together. But I would propose that no

20 Commissioner on this Commission have

21 veto authority over the ideas of

22 any other. That I think is something that











1 rests with the full Commission when they have

2 to begin to operate and vote under the rules

3 that have been set down and set down by the

4 Congress and by our own procedures.

5 This is going to allow us at least

6 to produce a document that's fair and that

7 respects the legitimacy of everybody else's

8 opinion. So now everybody should have seen

9 this document. Since we're operating under a

10 phone call here rather than a face-to-face,

11 Roman Numeral 1 is international tax

12 policies, and I might say, by the way, these

13 international issues everyone has agreed will

14 have some presentation at San Francisco.

15 Roman Numeral II being the

16 international tariff issues; III, the tax

17 treatment of Internet access,

18 telecommunications, cable and the Internet

19 backbone; IV is income, gross receipts,

20 franchise, and tax treatment of companies in

21 the cyber economy; V is tax treatment of

22 tangible goods; VI is tax treatment of sales











1 and provision of services; and, VII, tax

2 treatment of transfer of information and

3 digital goods over the Internet.

4 This is intended to be

5 comprehensive and to give us a good framework

6 for discussion. I presume everybody has had

7 copies of that, and, naturally, I just

8 recited it and can again if it's necessary

9 for the members of the Subcommittee.

10 Any further discussion? Members of

11 the Commission feel like this is broad enough

12 to encompass everybody's points of view on

13 the issues?

14 MR. ANDAL: Governor, this is Dean

15 Andal. I'm fully supportive of the approach.

16 I wanted to suggest one other item. It

17 doesn't have to be accomplished here, but

18 it's just looking ahead a step.

19 On item II on the memo, you refer

20 to, "Because the purpose is to have a final

21 vote in San Francisco or Dallas." I think it

22 would be much more clear and provide the











1 maximum flexibility to all Commission members

2 to have the final votes scheduled in Dallas

3 and make it clear that that would be the

4 case, and then at the San Francisco meeting

5 it could be that additions would be made.

6 In other words, Commissioners who

7 didn't agree with the policies and options

8 that have been presented by the Drafting

9 Subcommittee could offer further options for

10 a final vote in Dallas, and that would take

11 away maybe some of the anxiety for some that

12 there was going to be a showdown

13 unnecessarily in San Francisco over various

14 options, but it also will make it clear that

15 Commissioners that weren't happy with

16 whatever we come up with, could offer

17 amendments at the San Francisco meeting, but

18 the final vote would be in Dallas.

19 GOVERNOR GILMORE: I'm going to

20 call for additional comment, but let me point

21 out a couple of things. You know, we may be

22 going, the Commission ultimately, in the











1 direction in fact where we do have a showdown

2 vote, and somebody sees whether they can get

3 two-thirds for a position or whether they

4 can't. On the other hand, we may go to a

5 situation where you can't get two-thirds

6 unless you include a lot of different ideas

7 for the Congress. I don't know yet what's

8 going to happen. I'm not trying to direct it

9 any particular way. I'm just being realistic

10 about this.

11 I think that what we have discussed

12 so far is that, when we get to San Francisco,

13 we are going to argue through much of this

14 but that we would anticipate the right of

15 amendment in San Francisco, and I remember

16 specifically that even when we begin to hone

17 down the document, the right of amendment

18 will also exist in Dallas.

19 I try to be tentative on a lot of

20 things, but I think I remember that

21 specifically that we're trying to give the

22 maximum freedom for Commissioners to get











1 their ideas up there at least for a vote

2 ultimately. I think a narrowing process is

3 certainly what's been under discussion up to

4 this point, but I don't think anybody any

5 time is going to be cut off from an

6 opportunity to offer their ideas.

7 I'll reopen the floor for

8 discussion about that and Dean's comments as

9 well.

10 MR. VRADENBURG: George Vradenburg

11 for Bob Pittman with deep apologies; I have

12 to get off to get on a plane. And this is a

13 bit off topic, but the one comment I have on

14 the work plan is to charge staff and then

15 ourselves with coming up with an agenda and

16 schedule the presentation for the San

17 Francisco meeting during the weeks of

18 November 15 and November 22.

19 But I leave that to your

20 discretion, Governor, and with apologies I

21 have to get off, and in my absence Ellen

22 Fishbein will speak for AOL.











1 GOVERNOR GILMORE: George, I'll be

2 happy to receive any suggestions from staff

3 or any Commission member as we move towards

4 the agenda in San Francisco, but I believe

5 we're going to be having plenty of things

6 from this --

7 MR. VRADENBURG: We are. Thank you

8 very much.


10 George.



13 MR. ANDAL: Governor, this is Dean

14 Andal again. I'm specifically commenting on

15 the memorandum that's before us, and it lists

16 eight items that involve procedure and

17 deadlines, and I'm talking about paragraph

18 No. 2.


20 MR. ANDAL: And it's the second

21 sentence. It says, "Members will not have a

22 veto over members' policy options in the











1 policies and option paper," which I fully

2 approve of, and it says, "because that is the

3 purpose of a final vote in San Francisco or

4 Dallas." I think, if you're talking about a

5 final vote, they should make sure that those

6 will occur in Dallas, not leave that open.

7 And, of, course, that would allow any

8 amendments to whatever we do here, in San

9 Francisco.

10 I think it's confusing to say

11 there's a final vote in San Francisco or

12 Dallas, because it leaves the impression that

13 we'll be going through the list and throwing

14 ideas off in San Francisco, and I think that

15 would cause unnecessary anxiety.

16 GOVERNOR GILMORE: Well, my thought

17 is this, Dean. I had not focused on the

18 language that you are focusing on. I think

19 that there is full agreement in the work plan

20 and all discussions we've had up to this

21 point that there's going to be a final vote

22 in Dallas but that there will be some effort











1 to discuss these issues in San Francisco so

2 that we can go to a more narrow document in

3 Dallas.

4 But I don't think there's authority

5 to do a final vote in San Francisco. I think

6 you're probably right about that, but the

7 floor is open for further discussion. Any

8 other members want to talk about this?

9 MS. JONES: This is Delna. Without

10 it in front of me, I believe that there may

11 be some areas that we will all comfortably

12 agree and have a final vote on some parts, so

13 it might be that we will be voting in both

14 places and maybe the final vote on the full

15 document will be obviously in Dallas, but

16 there may be pieces that we will all come to

17 agreement very quickly.

18 GOVERNOR GILMORE: Very sensible.

19 MR. ANDAL: Yeah, I agree with

20 Delna. This is Dean Andal. I'm sorry. I

21 agree with Delna on the issue of whether we

22 can come to some consensus in San Francisco,











1 but the language in this memo indicates

2 "final vote," and I think that might mislead

3 some.


5 discussion? If not, I would summarize this

6 by saying that I think you all may be

7 agreeing with each other. I suspect that

8 when the staff people go over some of these

9 areas, in fact, they may see some consensus.

10 To the extent that we can reach some

11 agreement on consensus in San Francisco, I

12 don't think there's any desire to exclude

13 that, just as Delna has suggested. I would

14 agree, however, that the final vote,

15 particularly on the sales tax issue, we would

16 anticipate in Dallas.

17 Anybody disagree with what I just

18 said?

19 MR. SACKLER: Governor, it's Art

20 Sackler with Dick Parsons again. I certainly

21 don't disagree with what you just said, and I

22 doubt anybody else does. I think it makes











1 perfect sense. But maybe the best way to

2 approach it is make clear, either in the

3 agenda or some other document, exactly what

4 the process is that the final votes will

5 occur in Dallas, but, to the extent the

6 Commission may find consensus on particular

7 items in San Francisco, there certainly can

8 be votes on those.

9 GOVERNOR GILMORE: I think that's a

10 consensus position. I think once we see how

11 the process here is going along, then the

12 clarification you have suggested in the

13 agenda will emerge. I agree.

14 Any other comments on this? That,

15 ladies and gentlemen, is the agenda for

16 today, and I think that that helps us a great

17 deal to get started and to get moving and

18 still keeps us, I think, moving in the right

19 direction.

20 Is there any other business that

21 anyone would bring before the Subcommittee?

22 If not, let me remind everybody











1 that the issues and options paper is on the

2 virtual work site, and the input should be

3 posted by everyone on this no later than

4 November the 8th. Heather will contact

5 everybody to get available dates for the next

6 two conference calls. One is the week of the

7 15th of November and the other is the week of

8 the 22nd.

9 I would ask everybody on the

10 Subcommittee here and their representatives

11 to make note of the fact that we will have a

12 Subcommittee conference call in the week of

13 the 15th and the 22nd and to please be as

14 cooperative and flexible as possible to make

15 that happen.

16 Ladies and gentlemen, that then

17 concludes the Subcommittee meeting for the

18 day. Thank you very much.

19 (Whereupon, at 5:15 p.m., the

20 PROCEEDINGS were adjourned.)

21 * * * * *


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