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107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-449

======================================================================



 
           DOT KIDS IMPLEMENTATION AND EFFICIENCY ACT OF 2002

                                _______
                                

  May 8, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3833]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3833) to facilitate the creation of a new, 
second-level Internet domain within the United States country 
code domain that will be a haven for material that promotes 
positive experiences for children and families using the 
Internet, provides a safe online environment for children, and 
helps to prevent children from being exposed to harmful 
material on the Internet, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     8
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................     9
Statement of General Performance Goals and Objectives............     9
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    10
Constitutional Authority Statement...............................    10
Applicability to Legislative Branch..............................    10
Section-by-Section Analysis of the Legislation...................    10
Changes in Existing Law Made by the Bill, as Reported............    16

                               Amendment


    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Dot Kids Implementation and Efficiency 
Act of 2002''.

SEC. 2. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds that--
          (1) the World Wide Web presents a stimulating and 
        entertaining opportunity for children to learn, grow, and 
        develop educationally and intellectually;
          (2) Internet technology also makes available an extensive 
        amount of information that is harmful to children, as studies 
        indicate that a significant portion of all material available 
        on the Internet is related to pornography;
          (3) young children, when trying to use the World Wide Web for 
        positive purposes, are often presented--either mistakenly or 
        intentionally--with material that is inappropriate for their 
        age, which can be extremely frustrating for children, parents, 
        and educators;
          (4) exposure of children to material that is inappropriate 
        for them, including pornography, can distort the education and 
        development of the Nation's youth and represents a serious harm 
        to American families that can lead to a host of other problems 
        for children, including inappropriate use of chat rooms, 
        physical molestation, harassment, and legal and financial 
        difficulties;
          (5) young boys and girls, older teens, troubled youth, 
        frequent Internet users, chat room participants, online risk 
        takers, and those who communicate online with strangers are at 
        greater risk for receiving unwanted sexual solicitation on the 
        Internet;
          (6) studies have shown that 19 percent of youth (ages 10 to 
        17) who used the Internet regularly were the targets of 
        unwanted sexual solicitation, but less than 10 percent of the 
        solicitations were reported to the police;
          (7) children who come across illegal content should report it 
        to the congressionally authorized CyberTipline, an online 
        mechanism developed by the National Center for Missing and 
        Exploited Children, for citizens to report sexual crimes 
        against children;
          (8) the CyberTipline has received more than 64,400 reports, 
        including reports of child pornography, online enticement for 
        sexual acts, child molestation (outside the family), and child 
        prostitution;
          (9) although the computer software and hardware industries, 
        and other related industries, have developed innovative ways to 
        help parents and educators restrict material that is harmful to 
        minors through parental control protections and self-
        regulation, to date such efforts have not provided a national 
        solution to the problem of minors accessing harmful material on 
        the World Wide Web;
          (10) the creation of a ``green-light'' area within the United 
        States country code Internet domain, that will contain only 
        content that is appropriate for children under the age of 13, 
        is analogous to the creation of a children's section within a 
        library and will promote the positive experiences of children 
        and families in the United States; and
          (11) while custody, care, and nurture of the child reside 
        first with the parent, the protection of the physical and 
        psychological well-being of minors by shielding them from 
        material that is harmful to them is a compelling governmental 
        interest.
  (b) Purposes.--The purposes of this Act are--
          (1) to facilitate the creation of a second-level domain 
        within the United States country code domain for the location 
        of material that is suitable for minors and not harmful to 
        minors; and
          (2) to ensure that the National Telecommunications and 
        Information Administration oversees the creation of such a 
        second-level domain and ensures the effective and efficient 
        establishment and operation of the new domain.

SEC. 3. NTIA AUTHORITY.

  Section 103(b)(3) of the National Telecommunications and Information 
Administration Organization Act (47 U.S.C. 902(b)(3)) is amended--
          (1) in subparagraph (A), by striking ``and'' at the end;
          (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; and''; and
          (3) by adding at the end the following new subparagraph:
                  ``(C) shall assign to the NTIA responsibility for 
                providing for the establishment, and overseeing 
                operation, of a second-level Internet domain within the 
                United States country code domain in accordance with 
                section 157.''.

SEC. 4. CHILD-FRIENDLY SECOND-LEVEL INTERNET DOMAIN.

  The National Telecommunications and Information Administration 
Organization Act (47 U.S.C. 901 et seq.) is amended in part C by adding 
at the end the following new section:

``SEC. 157. CHILD-FRIENDLY SECOND-LEVEL INTERNET DOMAIN.

  ``(a) Responsibilities.--The NTIA shall require the registry selected 
to operate and maintain the United States country code Internet domain 
to establish, operate, and maintain a second-level domain within the 
United States country code domain that provides access only to material 
that is suitable for minors and not harmful to minors (in this section 
referred to as the `new domain').
  ``(b) Conditions of Contract Renewal.--The NTIA may not renew any 
contract to operate and maintain the domain with the initial registry, 
or enter into or renew any such contract with any successor registry, 
unless such registry enters into an agreement with the NTIA, during the 
90-day period beginning upon the date of the enactment of the Dot Kids 
Implementation and Efficiency Act of 2002 in the case of the initial 
registry or during the 90-day period after selection in the case of any 
successor registry, as applicable, which provides for the registry to 
carry out, and the new domain operates pursuant to, the following 
requirements:
          ``(1) Written content standards for the new domain, except 
        that the NTIA shall not have any authority to establish such 
        standards.
          ``(2) Written agreements with each registrar for the new 
        domain that ensure use of the new domain is in accordance with 
        the standards and requirements of the registry.
          ``(3) Written agreements with registrars, which shall require 
        registrars to enter into written agreements with registrants, 
        to use the new domain in accordance with the standards and 
        requirements of the registry.
          ``(4) Rules and procedures for enforcement and oversight that 
        minimize the possibility that the new domain provides access to 
        content that is not in accordance with the standards and 
        requirements of the registry.
          ``(5) A process for removing from the new domain any content 
        that is not in accordance with the standards and requirements 
        of the registry.
          ``(6) A process to provide registrants to the new domain with 
        an opportunity for a prompt, expeditious, and impartial dispute 
        resolution process regarding any material of the registrant 
        excluded from the new domain.
          ``(7) Continuous and uninterrupted service for the new domain 
        during any transition to a new registry selected to operate and 
        maintain the United States country code domain.
          ``(8) Procedures and mechanisms to promote the accuracy of 
        contact information submitted by registrants and retained by 
        registrars in the new domain.
          ``(9) Operationality of the new domain not later than one 
        year after the date of the enactment of the Dot Kids 
        Implementation and Efficiency Act of 2002.
          ``(10) Written agreements with registrars, which shall 
        require registrars to enter into written agreements with 
        registrants, to prohibit two-way and multiuser interactive 
        services in the new domain, unless the registrant certifies to 
        the registrar that such service will be offered in compliance 
        with the content standards established pursuant to paragraph 
        (1) and does not compromise the safety or security of minors.
          ``(11) Written agreements with registrars, which shall 
        require registrars to enter into written agreements with 
        registrants, to prohibit hyperlinks in the new domain that take 
        new domain users outside of the new domain.
          ``(12) Any other action that the NTIA considers necessary to 
        establish, operate, or maintain the new domain in accordance 
        with the purposes of this section.
  ``(c) Treatment of Registry and Other Entities.--
          ``(1) In general.--Only to the extent that such entities 
        carry out functions under this section, the following entities 
        are deemed to be interactive computer services for purposes of 
        section 230(c) of the Communications Act of 1934 (47 U.S.C. 
        230(c)):
                  ``(A) The registry that operates and maintains the 
                new domain.
                  ``(B) Any entity that contracts with such registry to 
                carry out functions to ensure that content accessed 
                through the new domain complies with the limitations 
                applicable to the new domain.
                  ``(C) Any registrar for the registry of the new 
                domain that is operating in compliance with its 
                agreement with the registry.
          ``(2) Savings provision.--Nothing in paragraph (1) shall be 
        construed to affect the applicability of any other provision of 
        title II of the Communications Act of 1934 to the entities 
        covered by subparagraph (A), (B), or (C) of paragraph (1).
  ``(d) Education.--The NTIA shall carry out a program to publicize the 
availability of the new domain and to educate the parents of minors 
regarding the process for utilizing the new domain in combination and 
coordination with hardware and software technologies that provide for 
filtering or blocking. The program under this subsection shall be 
commenced not later than 30 days after the date that the new domain 
first becomes operational and accessible by the public.
  ``(e) Coordination With Federal Government.--The registry selected to 
operate and maintain the new domain shall--
          ``(1) consult with appropriate agencies of the Federal 
        Government regarding procedures and actions to prevent minors 
        and families who use the new domain from being targeted by 
        adults and other children for predatory behavior, exploitation, 
        or illegal actions; and
          ``(2) establish such procedures and take such actions as may 
        be necessary to prevent such targeting.
The consultations, procedures, and actions required under this 
subsection shall be commenced not later than 30 days after the date 
that the new domain first becomes operational and accessible by the 
public.
  ``(f) Compliance Report.--The registry shall prepare, on an annual 
basis, a report on the registry's monitoring and enforcement 
procedures. The registry shall submit each such report, setting forth 
the results of the review of its monitoring and enforcement procedures, 
to the Committee on Energy and Commerce of the House of Representatives 
and the Committee on Commerce, Science, and Transportation of the 
Senate.
  ``(g) Selection of Registry.--
          ``(1) Withdrawal of registry.--
                  ``(A) In general.--Upon a good faith showing by the 
                registry of the new domain to the NTIA of extreme 
                financial hardship in the operation of the new domain, 
                the registry may elect to relinquish the right to 
                operate and maintain the new domain. If the registry 
                elects to relinquish such right, the NTIA shall select 
                a subcontractor to operate and maintain the new domain 
                under the competitive bidding process established 
                pursuant to paragraph (2). The subcontractor shall have 
                all of the rights and duties specified under this Act, 
                except that such duties shall not include the technical 
                maintenance of the new domain.
                  ``(B) Extreme financial hardship.--For purposes of 
                this paragraph, the term `extreme financial hardship' 
                means that the costs of operating and maintaining the 
                new domain exceed the revenues generated from 
                registrants by more than 25 percent for a period of 
                more than 6 consecutive quarters, following the first 
                year of operation.
          ``(2) Competitive bid selection process.--The NTIA shall 
        establish a process for soliciting applications and choosing a 
        subcontractor to operate and maintain the new domain pursuant 
        to paragraph (1), which process shall comply with the following 
        requirements:
                  ``(A) Timing.--The selection process shall commence 
                and complete not later than 120 days after the registry 
                elects to relinquish the new domain for extreme 
                financial hardship.
                  ``(B) Notice.--The selection process shall provide 
                adequate notice to prospective applicants of--
                          ``(i) the opportunity to submit such an 
                        application; and
                          ``(ii) the criteria for selection under 
                        subparagraph (C).
                  ``(C) Criteria.--The selection shall be made pursuant 
                to written, objective criteria designed to ensure--
                          ``(i) that the new domain is operated and 
                        maintained in accordance with the requirements 
                        under subsection (b); and
                          ``(ii) that the subcontractor selected to 
                        operate and maintain the new domain is the 
                        applicant most capable and qualified to do so.
                  ``(D) Review.--Not more than 60 days after the 
                conclusion of the period established for submission of 
                applications, the NTIA shall--
                          ``(i) review and apply the selection criteria 
                        established under subparagraph (C) to each 
                        application submitted; and
                          ``(ii) based upon such criteria and subject 
                        to submission of an application meeting such 
                        criteria, select an application and award to 
                        the applicant a subcontract for the operation 
                        and maintenance of the new domain.
                  ``(E) Failure to find subcontractor.--If the NTIA 
                fails to find a suitable subcontractor pursuant to the 
                process under this paragraph, the NTIA shall permit the 
                registry to cease operation of the new domain.
  ``(h) Suspension of New Domain.--If the NTIA finds, pursuant to its 
own review or upon a good faith petition by the registry, that the new 
domain is not serving its intended purpose, the NTIA shall instruct the 
registry to suspend operation of the new domain until such time as the 
NTIA determines that the new domain can be operated as intended.
  ``(i) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Harmful to minors.--The term `harmful to minors' means, 
        with respect to material, that--
                  ``(A) the average person, applying contemporary 
                community standards, would find, taking the material as 
                a whole and with respect to minors, that it is designed 
                to appeal to, or is designed to pander to, the prurient 
                interest;
                  ``(B) the material depicts, describes, or represents, 
                in a manner patently offensive with respect to minors, 
                an actual or simulated sexual act or sexual contact, an 
                actual or simulated normal or perverted sexual act, or 
                a lewd exhibition of the genitals or post-pubescent 
                female breast; and
                  ``(C) taken as a whole, the material lacks serious, 
                literary, artistic, political, or scientific value for 
                minors.
          ``(2) Minor.--the term `minor' means any person under 13 
        years of age.
          ``(3) Suitable for minors.--The term `suitable for minors' 
        means, with respect to material, that it--
                  ``(A) is not psychologically or intellectually 
                inappropriate for minors; and
                  ``(B) serves--
                          ``(i) the educational, informational, 
                        intellectual, or cognitive needs of minors; or
                          ``(ii) the social, emotional, or 
                        entertainment needs of minors.''.

                          Purpose and Summary

    The purpose of H.R. 3833 is to facilitate the creation of a 
new, second-level Internet domain within the United States 
country code domain that will be a haven for material that 
promotes positive experiences for children and families using 
the Internet, provides a safe online environment for children, 
and helps to prevent children from being exposed to harmful 
material on the Internet, and for other purposes.

                  Background and Need for Legislation

    For all of the benefits the Internet and the World Wide Web 
have brought to business, communication, and information 
sharing, one of the biggest complaints the Internet faces is 
the easy accessibility of ``adult'' content by children. 
Increasingly, children find themselves in front of a computer 
screen bombarded with images and other content that are totally 
inappropriate for their years, and parents feel increasingly 
powerless to prevent it.
    By just navigating the World Wide Web, children can 
intentionally, or unintentionally, access sexually explicit, 
excessively violent, and other inappropriate material. There 
are innumerous pornographic sites on the Internet using 
``copycat URLs'' to take advantage of innocent typographical 
mistakes of young Internet users.
    Similarly, many children and adults are surprised when a 
domain name registration has expired or if a website owner 
forgets to renew. Often these domain names are quickly snapped 
up by speculators who make a living trafficking in expired 
domain names. These names, owned by church groups, nonprofit 
organizations, and municipalities, are then sold by speculators 
to pornographers who use the innocent sounding names for 
explicit material.
    However, the harm to which children can be exposed on the 
Internet goes far beyond just stumbling upon inappropriate 
images. A June 2000 study done by the National Center for 
Missing and Exploited Children, the Crimes Against Children 
Research Center, and the Department of Justice's Office of 
Juvenile Justice and Delinquency Prevention, shows the harm 
posed to minors online also can involve predation and sexual 
solicitation. Based on interviews with a nationally 
representative sample of 1,501 youth ages 10 to 17 who use the 
Internet on a regular basis, approximately one in five received 
a sexual solicitation or approach over the Internet in the last 
year, one in 33 received an aggressive sexual solicitation 
(i.e., a solicitor who asked to meet them somewhere, called 
them on the telephone, sent them regular mail, money or gifts), 
one in four had an unwanted exposure to pictures of naked 
people or people having sex in the last year, and one in 17 was 
threatened or harassed. In homes with Internet access, only one 
third of parents said they had filtering or blocking software 
on their computers.
    The technology industry and the federal government have 
tried to respond to the concerns of parents, educators and 
children. Software companies continue to offer new and improved 
Internet filters to help sift through harmful content. However, 
as noted above, parental acceptance of such filtering and 
blocking technologies is not widespread, and Internet filters 
are not completely effective.
    Congress has also undertaken a number of efforts to protect 
children from harmful material on the Internet. As part of the 
Telecommunications Act of 1996, Congress passed the 
Communications Decency Act (CDA) that prohibited Internet users 
from using the Internet to communicate material that, under 
contemporary community standards, would be deemed patently 
offensive to minors under 18. The U.S. Supreme Court found the 
CDA to be unconstitutional and in violation to the First 
Amendment of the U.S. Constitution.
    In 1998, Congress passed the Child Online Protection Act 
(COPA). COPA requires web publishers that distribute material 
deemed ``harmful to minors'' to ensure that minors do not 
access such material. COPA has been subject to litigation since 
enactment and, in November 2001, the case was heard by the U.S. 
Supreme Court and a decision should be forthcoming. During the 
106th Congress, Congress enacted the Children's Internet 
Protection Act (CIPA), which requires entities that receive 
federal funding under the section 254(h) of the Communications 
Act of 1934 (known as the ``E-rate program'') and two other 
federal programs to annually certify that they are employing an 
Internet safety policy and employing a technology protection 
measure (defined to include filtering and blocking 
technologies). Parts of CIPA are currently being challenged in 
the court system. The Committee's efforts to pass H.R. 3833 
should not be interpreted to undermine the efforts undertaken 
by previous Congresses or as a response to previous efforts.
    On November 1, 2001, the Subcommittee on Telecommunications 
and the Internet held a hearing on H.R. 2417, the Dot Kids 
Domain Act of 2001. H.R. 2417 would have established a 
``.kids'' generic top-level domain (similar to a .com or .org) 
through the Internet Corporation for Assigned Names and Numbers 
(ICANN), the organization that coordinates the domain name 
system internationally. Because ICANN had continually been 
unwilling to adopt a ``.kids'' generic top-level domain, the 
private sector took matters into its own hands. Although 
outside the authoritative Internet root, businesses such as 
KIDS Domain, operated through New.net, entered the market to 
provide child-friendly content to children. These pioneers were 
some of the first to recognize the importance and value of 
giving children a way to find content on the Internet that is 
specifically geared toward children and their interests. These 
sites with ``.kids'' names currently reach over 100 million 
Internet users. The Committee encourages these type of private 
sector initiatives and hopes that such companies will continue 
to create more Internet sites and content for children.
    During the hearing, some witnesses expressed concerns about 
creating a new ``.kids'' generic top level-domain through 
ICANN. To assuage those concerns, H.R. 3833 was introduced. 
Instead of creating a generic top-level domain through ICANN, 
H.R. 3833 utilizes the ``.us'' country-code to create 
``.kids.us''.
    Every nation has a two-letter country code top-level domain 
(ccTLD) for use by that country. The ccTLD for the United 
States is ``.us''. However, the ``.us'' ccTLD was originally 
organized with a locality-based structure, used primarily by 
states, localities and municipalities (i.e., 
``washington.dc.us''). Because of this cumbersome and 
hierarchical structure, the usTLD has not been widely used.
    On October 29, 2001, the U.S. Department of Commerce's 
National Telecommunications and Information Administration 
(NTIA) announced that it had entered into a contract with 
NeuStar, Inc. (NeuStar) to act as the registry, or operator, of 
the ``.us'' ccTLD. The term of the contract runs four years 
with two optional one-year extensions that are to be exercised 
at the sole discretion of the NTIA. NeuStar received this 
contract at no cost, and is allowed to finance the operation of 
the domain by establishing and collecting fees for registration 
in the ``.us'' space. The contract obligated NeuStar to enhance 
and improve the ``.us'' space and reserved the exclusive right 
to--but did not obligate--NeuStar to use the second-level 
domain ``.kids'' within the ``.us'' space (i.e., ``.kids.us''). 
Moreover, the contract offered no detail as to how NeuStar 
would establish, operate, or maintain ``.kids.us'', if it chose 
to do so.
    Notwithstanding the fact that the NTIA contract does not 
obligate NeuStar to launch a ``.kids.us'', recognizing the 
interest the Committee has in creating a safe space on the 
Internet for children, both NTIA and NeuStar committed to 
Members of the Committee to expeditiously launch ``.kids.us''. 
H.R. 3833 is the enabling legislation to effectuate that 
commitment.
    Under the bill, the domain will be filled only with 
material that is appropriate for children under 13 years of 
age. Specifically, the content on ``.kids.us'' must be 
``suitable for minors'' and ``not harmful to minors.'' These 
two standards represent the range of child-friendly content 
that will be allowed in the new domain. On one side of the 
content spectrum, the domain should house material that is 
``suitable for minors,'' meaning wholesome, educational, 
informational and entertaining material. On the other side of 
the content spectrum, the domain should not lodge material that 
is ``harmful to minors,'' as that phrase is defined in the bill 
and interpreted by the courts.
    Although the new domain is a content-based restriction, the 
Committee believes, based on current Supreme Court precedent, 
that H.R. 3833 is Constitutionally sound. This bill is narrowly 
tailored to meet a compelling government interest and is the 
least restrictive of protected speech. Supreme Court precedent 
is clear in establishing the government's compelling interest 
in protecting children from exposure to sexually explicit 
material (See Ginsberg v. New York, 390 U.S. 629 (1968); FCC v. 
Pacifica Foundation, 438 U.S. 726 (1978); and Sable 
Communications of Cal. v. FCC, 492 U.S. 115 (1989)). For 
instance, laws that require pornography to be sold behind the 
counter or in shrink wrap at a newsstand, or laws and 
regulations that limit the broadcast of certain content between 
certain hours of the night, are in place in order to protect 
children from material that is not appropriate for their age.
    Importantly, H.R. 3833 recognizes and protects the First 
Amendment rights of adults and is carefully drafted not to 
impose any unnecessary burden on those rights. Indeed, the bill 
is no different than creating a children's section of a public 
library. The use of this child-friendly domain is completely 
voluntary--parents may chose to use it, and website operators 
may opt to be located within it. Should adults want to express 
certain views that are not ``suitable for minors'' or are 
deemed ``harmful to minors,'' the bill does nothing to prevent 
an adult from utilizing the vast remainder of the ``.us'' 
domain or the entirety of the World Wide Web to express and 
share those views.

                                Hearings

    The Subcommittee on Telecommunications and the Internet 
held a legislative hearing on November 1, 2001 on H.R. 2417, 
the ``Dot Kids Domain Name Act of 2001'' and an amendment in 
the nature of a substitute which would have created a ``.kids'' 
space within the ``.us'' ccTLD. The Committee received 
testimony from: Nancy Victory, Administrator, National 
Telecommunications and Information Administration; David 
Hernand, Chief Executive Officer, New.net; Page Howe, President 
and Chief Executive Officer, KIDS Domain, Inc.; Bruce A. 
Taylor, President and Chief Counsel, The National Law Center 
for Children and Families; and Donna Rice Hughes, Children's 
Internet Advocate.

                        Committee Consideration

    On Thursday, March 7, 2002, the Subcommittee on 
Telecommunications and the Internet met in open markup session 
and approved H.R. 3833 for Full Committee consideration, 
without amendment, by a voice vote. On Wednesday, April 10, 
2002, the Committee on Energy and Commerce met in open markup 
session and favorably ordered reported H.R. 3833, as amended, 
by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 3833 reported. A motion by Mr. Tauzin to order H.R. 3833 
reported to the House, with an amendment, was agreed to by a 
voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The goal of H.R. 3833 is to create a safe space for 
children on the Internet within the United States country code.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3833, the Dot Kids Implementation and Efficiency Act, would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 23, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3833, the Dot Kids 
Implementation and Efficiency Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contracts are Ken 
Johnson (for federal costs), and Jean Talarcio (for the 
private-sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3833--Dot Kids Implementation and Efficiency Act of 2002

    H.R. 3833 would require that the contractor that 
administers the U.S. Internet domain establish a second-level 
domain that would contain only material suitable for minors. 
The bill also would require the National Telecommunications and 
Information Administration (NTIA) within the Department of 
Commerce to publicize the new domain and educate parents on its 
use.
    Based on information from the Department of Commerce, CBO 
estimates that launching a publicity and education campaign for 
the new domain would cost less than $500,000 per year, subject 
to the availability of appropriated funds. H.R. 3833 would not 
affect direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    H.R. 3833 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments. 
H.R. 3833 would outline conditions of a new agreement between 
the NTIA and the registry currently under contract with the 
NTIA to manage the U.S. country code Internet domain. The new 
agreement would require the registry to establish, operate, and 
maintain a second level domain that provides access only to 
material that is suitable for and not harmful to children under 
13 years of age. Any costs resulting from the agreement would 
be incurred voluntarily by the registry as a party to that 
agreement.
    The CBO staff contacts for this estimate are Ken Johnson 
(for federal costs), and Jean Talarico (for the private-sector 
impact). This estimate was approved by Peter H. Fontaine, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 establishes the short title of the bill as the 
``Dot Kids Implementation and Efficiency Act of 2002.''

Section 2. Findings and purposes

    Section 2 makes certain Congressional findings and 
describes the purposes of the bill.

Section 3. NTIA authority

    Section 3 amends the National Telecommunications and 
Information Administration Organization Act (47 U.S.C. Sec. 901 
et seq.) (NTIA Act) to specifically provide NTIA with 
responsibility to establish and oversee the ``.kids.us'' domain 
consistent with the requirements of the new section 157 of the 
NTIA Act, as added by this bill.

Section 4. Child-friendly second-level internet domain

    Section 4 of the bill adds a new section 157 to the NTIA 
Organization Act. New section 157(a) mandates NTIA to require 
the registry, or operator, selected to operate and maintain the 
United States country code (``.us'') to establish, operate, and 
maintain a second-level domain (``.kids.us'' or ``new domain'') 
that provides access only to material that is ``suitable for 
minors'' and ``not harmful to minors.''
    New section 157(b) provides that the NTIA shall not renew 
the ``.us'' registry contract with the initial registry unless 
the initial registry enters into an agreement with the NTIA, 
within 90 days of enactment of the bill, to provide the 
``.kids.us'' domain consistent with the duties in new section 
157(b)(1)-(12). Additionally, new section 157(b) makes the same 
requirement of any successor registry within 90 days of 
selection by NTIA. Under the terms of the current contract 
between NeuStar and the NTIA, after the four-year term of the 
contract, the NTIA has the sole discretion to exercise two one-
year options. These duties outlined in new section 157(b)(1)-
(12) are not requirements the registry must perform pursuant to 
the terms of the contract. However, should NeuStar, or any 
successor registry, opt not to enter into an agreement with the 
NTIA to undertake the duties outlined in new section 157(b)(1)-
(12), then the NTIA shall exercise its existing contractual 
right not to renew the registry of the ``.us'' contract for the 
two one-year options.
    Pursuant to new section 157(b)(1), the registry must draft 
written content standards for the new domain (NTIA has no 
authority to establish such standards). These content standards 
must be consistent with the ``suitable for minors'' and ``not 
harmful to minors'' standards in the bill. Under new section 
157(b)(2), the registry must enter into written agreements with 
registrars to ensure that use of the new domain is in 
accordance with the standards of the registry and require 
registrars to enter into written agreements with registrants to 
use the domain in accordance with the standards of the 
registry. New section 157(b)(3) requires agreements with 
registrars that require them to contractually obligate 
registrants to use the new domain in accordance with the 
standards of the registry. New section 157(b)(4) requires the 
registry to create rules for oversight and enforcement that 
minimize the chance the new domain will allow access to 
material that is not in accordance with the standards of the 
registry. The Committee understands that no system can 
guarantee 100% effectiveness in finding and keeping 
inappropriate images from the eyes of children. Even the 
technology industry has found it difficult to keep pace with 
Internet hackers. However, this bill is drafted to encourage 
the maximum effectiveness that the Committee acknowledges is 
significantly better than the current Internet environment.
    Under new section 157(b)(5), the registry must create a 
process for removing content not in accordance with the 
standards of the registry. New section 157(b)(6) provides that 
the registry must create a process allowing prompt, expeditious 
and impartial dispute resolution for material excluded from the 
new domain. While this process need not provide a formal and 
protracted hearing, it should accord registrants with the basic 
protections of due process. Under new section 157(b)(7), the 
registry must provide for continuous and uninterrupted service 
of the new domain during any transition to a new registry.
    New section 157(b)(8) requires the registry to promote the 
accuracy of the registrant contact data maintained by the 
registrars so it may locate registrants who act contrary to the 
standards of the registry or in violation of the law. The 
Committee recognizes the so-called ``who-is'' database contact 
information may assist individuals and companies to locate 
website owners. With respect to a subdomain specifically 
dedicated to children, however, where children themselves may 
have individual websites, the public listing of home address, 
phone, and contact information may be information that many 
parents elect or desire not to publicly post in order to 
protect the safety of their children. That is why an increased 
emphasis on non-public contact data held by registrars is of 
particular importance and usefulness. New section 157(b)(9) 
mandates that the registry must be operational within one year 
of enactment. ``Operational'' is intended to mean that the new 
domain is available to, and accessible by, the public.
    Pursuant to new section 157(b)(10), the registry must enter 
into written agreements with registrars that require registrars 
to contract with registrants to prohibit two-way and multiuser 
interactive services, unless the registrant can certify that 
such services can be offered in compliance with the content 
standards created by the registry and will not compromise the 
safety or security of the minors. The Committee is aware of 
some organizations, such as the I-SAFE Foundation, that are 
working on models to make such interactive services safe for 
children. This language is intended to cover communications 
with an upstream and downstream transmission, such as chat, 
instant messaging and e-mail. Since most child predators 
utilize these kind of communication mediums to lure or harass 
children, special care should be taken in the new domain to 
protect minors from the dangers inherent in such interactive 
communications. This language is not meant to prohibit such 
things as interactive games, assuming there is no transfer of 
personally identifiable information or the users do not have 
the ability to pursue or stalk children. Although physical harm 
can occur when a predator uses the Internet to meet a child, 
emotional and psychological harm can also result from harassing 
and inappropriate communications. The language in new section 
157(b)(10) is intended to cover both such communications. 
Moreover, any communications on the new domain, whether it be 
static content, advertising, or interactive communications, 
must also be consistent with the Child Online Privacy 
Protection Act (15 U.S.C. Sec. 6501 et seq.) and other 
applicable law.
    Under new section 157(b)(11) the registry must enter into 
agreements with registrars that require registrars to contract 
with registrants to prohibit hyperlinks that take users of 
``.kids.us'' outside of ``.kids.us'' domain. The new domain is 
meant to be a safe space for children and such safety cannot be 
assured if only a few clicks of the mouse can transport minors 
to material that may not be ``suitable for minors'' or may be 
``harmful to minors.'' Finally, new section 157(b)(12) allows 
the NTIA to take any other action that may be necessary to 
establish, operate or maintain the new domain consistent with 
the bill.
    In order to provide incentives for rigorous and thorough 
content control, new section 157(c) provides limited liability 
protection for the actions taken by certain entities on the 
``.kids.us'' domain. This provision utilizes existing section 
230(c) of the Communications Act of 1934 (47 U.S.C. 
Sec. 230(c)), otherwise known as the ``Good Samaritan'' 
protections. New section 157(c) expands the definition of 
``interactive computer services'' in section 230(c) to include 
those functions undertaken by the ``.kids.us'' registry, 
registrars, and any company contracted with the registry, such 
as independent monitoring companies, only to the extent that 
such entities carry out the functions under this bill. These 
entities will have the current protections afforded to Internet 
Service Providers (ISPs) for any actions voluntarily taken in 
good faith to restrict access to or availability of material 
that the provider considers to be obscene, lewd, lascivious, 
filthy, excessively violent, harassing, or otherwise 
objectionable, whether or not such material is constitutionally 
protected. Additionally under section 230(c), neither the 
``.kids.us'' registry, registrars, nor parties contracted to 
operate the new domain, shall be treated as the publisher or 
speaker of any information provided by another information 
content provider.
    As noted in new section 157(c)(2), nothing in this section 
shall be construed to affect the application of any other 
provision of title II of the Communications Act of 1934 (47 
U.S.C. Sec. 201 et seq.) to the parties protected in this bill. 
The section 230(c) protections will continue to apply to 
entities that clearly fall within the definition of 
``interactive computer service'' in section 230(f)(2), such as 
the entity hosting the third party's web site. New section 
157(c) is only intended to clarify that the new domain 
registry, registrars, and entities under contract to the 
registry would also fall within the scope of section 230(c) 
protections.
    New section 157(c) is intended to shield the ``.kids.us'' 
registry, registrars, and parties who contract with the 
registry, from liability based on self-policing efforts to 
intercept and take down material that is not ``suitable for 
minors'' or is ``harmful to minors.'' The Committee notes that 
ISPs have successfully defended many lawsuits using section 
230(c). The courts have correctly interpreted section 230(c), 
which was aimed at protecting against liability for such claims 
as negligence (See, e.g., Doe v. America Online, 783 So.2d 1010 
(Fla. 2001)) and defamation (Ben Ezra, Weinstein, and Co. v. 
America Online, 206 F.3d 980 (2000); Zeran v. America Online, 
129 F.3d 327 (1997)). The Committee intends these 
interpretations of section 230(c) to be equally applicable to 
those entities covered by H.R. 3833.
    New section 157(d) requires the NTIA to carry out a program 
to publicize the availability of the ``.kids.us'' domain and to 
educate parents about filtering and blocking technologies that 
can be used in conjunction with the new domain to provide a 
safe environment for children on the Internet. The Committee 
expects that the NTIA will fulfill this obligation by 
advertising the new domain on its website, incorporating the 
availability of the website into speeches, and drafting and 
distributing pamphlets to schools, libraries, and parents.
    New section 157(e) requires the new domain registry to, 
within 30 days of the new domain becoming publicly accessible, 
consult with appropriate federal government agencies regarding 
steps that can be taken to prevent minors from being targeted 
for predatory behavior, exploitation, or other illegal actions. 
The Committee expects the new domain registry will also 
communicate with children's organizations, including the 
National Center for Missing and Exploited Children, among 
others, to make the new domain as safe as possible for minors. 
Under new section 157(e), the new domain registry must take 
such actions as may be necessary to prevent the targeting of 
minors for illegal purposes.
    New section 157(f) requires the new domain registry to 
prepare an annual compliance report, detailing the registry's 
monitoring and enforcement procedures, to be submitted to the 
Committee on Energy and Commerce of the U.S. House of 
Representatives and the Committee on Commerce, Science, and 
Transportation of the U.S. Senate.
    New section 157(g)(1)(A) deals with consumer acceptance of 
the new domain. The Committee expects that the ``.us'' country 
code will be remarkably profitable, and also expects the 
``.kids.us'' domain to be successful. The Committee recognizes, 
however, that the ``.kids.us'' domain could pose a potential 
financial drain on the registry should consumer acceptance be 
slow. If the new domain registry can make a good faith showing 
to the NTIA that it suffers ``extreme financial hardship'' in 
the operation of the new domain, the registry may relinquish 
the right to operate and maintain the new domain. Should the 
``.kids.us'' registry elect to relinquish the new domain, the 
NTIA shall select a subcontractor to operate and maintain the 
new domain under a competitive bidding process. For purposes of 
this bill, a subcontractor of the ``.kids.us'' domain will have 
all of the rights and duties of the registry under the bill, 
but shall not include the technical maintenance of the new 
domain. ``Extreme financial hardship'' is defined in new 
section 157(g)(1)(B) as the costs of operating and maintaining 
the new domain exceeding the revenues generated by registrants 
by more than 25 percent for a period of more than six (6) 
consecutive quarters, following the first year of operation.
    New section 157(g)(2) sets forth the competitive bid 
process for the NTIA's selection of a subcontractor for the new 
domain. The selection process shall begin and end not later 
than 120 days after the new domain registry elects to 
relinquish the ``.kids.us'' domain for ``extreme financial 
hardship.'' The NTIA must provide adequate notice to 
prospective applicants of the opportunity to submit an 
application and the criteria used to select the subcontractor. 
The selection criteria must be written and objective and must 
ensure that the new domain is operated and maintained under the 
requirements of new section 157(b) and that the subcontractor 
selected is the most capable and qualified to operate and 
maintain the new domain. Not more than 60 days after the 
conclusion of the period for submission of applications, the 
NTIA must review and apply the selection criteria to each 
application and, based on that criteria, select an application 
and award to the applicant a subcontract to operate and 
maintain the new domain. If the NTIA fails to find a 
subcontractor pursuant to this process, the NTIA shall permit 
the registry to cease operation of the ``.kids.us'' domain.
    New section 157(h) allows the NTIA, upon its own review or 
a good faith petition by the registry, to suspend operation of 
the ``.kids.us'' domain if the new domain cannot be operated as 
it was intended. The Committee intends the new domain to be a 
safe space on the Internet for children. However, there is no 
guarantee that ``.kids.us'' will prevent all inappropriate and 
harmful content. Although some seepage of inappropriate content 
into the new domain may be inevitable, H.R. 3833 is designed to 
ensure that such harmful content is removed as soon as 
practicable. This provision is not applicable for such 
occasional occurrences. New section 157(h) is designed to 
suspend the operation of the new domain should it become so 
populated with harmful and inappropriate content that it no 
longer is a place suitable for children under the age of 13. 
The Committee expects this to be used sparingly, as an effort 
of last resort.
    New section 157(i) contains the definitions for the bill. 
New section 157(i)(1) defines ``harmful to minors'' as material 
that (A) the average person, applying contemporary community 
standards, would find, taking the material as a whole and with 
respect to minors, that it is designed to appeal to, or is 
designed to pander to, the prurient interest; (B) the material 
depicts, describes, or represents, in a manner patently 
offensive with respect to minors, an actual or simulated normal 
or perverted sexual act, or a lewd exhibition of the genitals 
or post-pubescent female breast; and (c) taken as a whole, the 
material lacks serious, literary, artistic, political, or 
scientific value for minors.
    This definition of ``harmful to minors'' was taken from the 
``harmful to minors'' test set forth by the U.S. Supreme Court 
in Ginsberg v. New York, 390 U.S. 629 (1968), as modified by 
Miller v. California, 413 U.S. 15 (1973) in identifying 
``patently offensive'' material. H.R. 3833 mirrors many of the 
state laws already in place that have been upheld by the 
Supreme Court. The Committee intends for the definition of 
harmful to minors to parallel the Ginsberg and Miller 
definitions of obscenity and harmful to minors, as those 
definitions were later refined in Smith v. U.S., 431 U.S. 291 
(1977) and Pope v. Illinois, 481 U.S. 497 (1987).
    The Committee further recognizes that the applicability of 
community standards in the context of the World Wide Web is 
difficult. However, it is an ``adult'' standard, rather than a 
``geographic'' standard, and one that is reasonably constant 
among adults in America with respect to what is inappropriate 
for children under 13 years of age.
    New section 157(i)(2) defines ``minor'' as any person under 
13 years of age.
    New section 157(i)(3) defines ``suitable for minors'' as 
material that (A) is not psychologically or intellectually 
inappropriate for minors, and (B) serves (i) the educational, 
informational, intellectual, or cognitive needs of minors; or 
(ii) the social, emotional, or entertainment needs of minors. 
This definition is a combination of language from the Supreme 
Court case of Board of Education v. Pico, 457 U.S. 853 (1982) 
and the Children's Television Act of 1990 (47 U.S.C. Sec. 303 
et seq.) and its regulations (47 CFR part 73.671). The 
Committee believes that this definition of ``suitable for 
minors'' is broad enough to include programming that is healthy 
for children and is attractive to children. Moreover, this 
definition is narrowly tailored to preclude Constitutional 
vagueness concerns.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

      NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION 
                           ORGANIZATION ACT

           *       *       *       *       *       *       *



  TITLE I--NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

                  PART A--ORGANIZATION AND FUNCTIONS

           *       *       *       *       *       *       *


SEC. 103. ESTABLISHMENT; ASSIGNED FUNCTIONS.

  (a) * * *
  (b) Assigned Functions.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Additional communications and information 
        functions.--In addition to the functions described in 
        paragraph (2), the Secretary under paragraph (1)--
                  (A) may assign to the NTIA the performance of 
                functions under section 504(a) of the 
                Communications Satellite Act of 1962 (47 U.S.C. 
                753(a)); [and]
                  (B) shall assign to the NTIA the 
                administration of the Public Telecommunications 
                Facilities Program under sections 390 through 
                393 of the Communications Act of 1934 (47 
                U.S.C. 390-393), and the National Endowment for 
                Children's Educational Television under section 
                394 of the Communications Act of 1934 (47 
                U.S.C. 394)[.]; and
                  (C) shall assign to the NTIA responsibility 
                for providing for the establishment, and 
                overseeing operation, of a second-level 
                Internet domain within the United States 
                country code domain in accordance with section 
                157.

           *       *       *       *       *       *       *


                PART C--SPECIAL AND TEMPORARY PROVISIONS

           *       *       *       *       *       *       *


SEC. 157. CHILD-FRIENDLY SECOND-LEVEL INTERNET DOMAIN.

  (a) Responsibilities.--The NTIA shall require the registry 
selected to operate and maintain the United States country code 
Internet domain to establish, operate, and maintain a second-
level domain within the United States country code domain that 
provides access only to material that is suitable for minors 
and not harmful to minors (in this section referred to as the 
``new domain'').
  (b) Conditions of Contract Renewal.--The NTIA may not renew 
any contract to operate and maintain the domain with the 
initial registry, or enter into or renew any such contract with 
any successor registry, unless such registry enters into an 
agreement with the NTIA, during the 90-day period beginning 
upon the date of the enactment of the Dot Kids Implementation 
and Efficiency Act of 2002 in the case of the initial registry 
or during the 90-day period after selection in the case of any 
successor registry, as applicable, which provides for the 
registry to carry out, and the new domain operates pursuant to, 
the following requirements:
          (1) Written content standards for the new domain, 
        except that the NTIA shall not have any authority to 
        establish such standards.
          (2) Written agreements with each registrar for the 
        new domain that ensure use of the new domain is in 
        accordance with the standards and requirements of the 
        registry.
          (3) Written agreements with registrars, which shall 
        require registrars to enter into written agreements 
        with registrants, to use the new domain in accordance 
        with the standards and requirements of the registry.
          (4) Rules and procedures for enforcement and 
        oversight that minimize the possibility that the new 
        domain provides access to content that is not in 
        accordance with the standards and requirements of the 
        registry.
          (5) A process for removing from the new domain any 
        content that is not in accordance with the standards 
        and requirements of the registry.
          (6) A process to provide registrants to the new 
        domain with an opportunity for a prompt, expeditious, 
        and impartial dispute resolution process regarding any 
        material of the registrant excluded from the new 
        domain.
          (7) Continuous and uninterrupted service for the new 
        domain during any transition to a new registry selected 
        to operate and maintain the United States country code 
        domain.
          (8) Procedures and mechanisms to promote the accuracy 
        of contact information submitted by registrants and 
        retained by registrars in the new domain.
          (9) Operationality of the new domain not later than 
        one year after the date of the enactment of the Dot 
        Kids Implementation and Efficiency Act of 2002.
          (10) Written agreements with registrars, which shall 
        require registrars to enter into written agreements 
        with registrants, to prohibit two-way and multiuser 
        interactive services in the new domain, unless the 
        registrant certifies to the registrar that such service 
        will be offered in compliance with the content 
        standards established pursuant to paragraph (1) and 
        does not compromise the safety or security of minors.
          (11) Written agreements with registrars, which shall 
        require registrars to enter into written agreements 
        with registrants, to prohibit hyperlinks in the new 
        domain that take new domain users outside of the new 
        domain.
          (12) Any other action that the NTIA considers 
        necessary to establish, operate, or maintain the new 
        domain in accordance with the purposes of this section.
  (c) Treatment of Registry and Other Entities.--
          (1) In general.--Only to the extent that such 
        entities carry out functions under this section, the 
        following entities are deemed to be interactive 
        computer services for purposes of section 230(c) of the 
        Communications Act of 1934 (47 U.S.C. 230(c)):
                  (A) The registry that operates and maintains 
                the new domain.
                  (B) Any entity that contracts with such 
                registry to carry out functions to ensure that 
                content accessed through the new domain 
                complies with the limitations applicable to the 
                new domain.
                  (C) Any registrar for the registry of the new 
                domain that is operating in compliance with its 
                agreement with the registry.
          (2) Savings provision.--Nothing in paragraph (1) 
        shall be construed to affect the applicability of any 
        other provision of title II of the Communications Act 
        of 1934 to the entities covered by subparagraph (A), 
        (B), or (C) of paragraph (1).
  (d) Education.--The NTIA shall carry out a program to 
publicize the availability of the new domain and to educate the 
parents of minors regarding the process for utilizing the new 
domain in combination and coordination with hardware and 
software technologies that provide for filtering or blocking. 
The program under this subsection shall be commenced not later 
than 30 days after the date that the new domain first becomes 
operational and accessible by the public.
  (e) Coordination With Federal Government.--The registry 
selected to operate and maintain the new domain shall--
          (1) consult with appropriate agencies of the Federal 
        Government regarding procedures and actions to prevent 
        minors and families who use the new domain from being 
        targeted by adults and other children for predatory 
        behavior, exploitation, or illegal actions; and
          (2) establish such procedures and take such actions 
        as may be necessary to prevent such targeting.
The consultations, procedures, and actions required under this 
subsection shall be commenced not later than 30 days after the 
date that the new domain first becomes operational and 
accessible by the public.
  (f) Compliance Report.--The registry shall prepare, on an 
annual basis, a report on the registry's monitoring and 
enforcement procedures. The registry shall submit each such 
report, setting forth the results of the review of its 
monitoring and enforcement procedures, to the Committee on 
Energy and Commerce of the House of Representatives and the 
Committee on Commerce, Science, and Transportation of the 
Senate.
  (g) Selection of Registry.--
          (1) Withdrawal of registry.--
                  (A) In general.--Upon a good faith showing by 
                the registry of the new domain to the NTIA of 
                extreme financial hardship in the operation of 
                the new domain, the registry may elect to 
                relinquish the right to operate and maintain 
                the new domain. If the registry elects to 
                relinquish such right, the NTIA shall select a 
                subcontractor to operate and maintain the new 
                domain under the competitive bidding process 
                established pursuant to paragraph (2). The 
                subcontractor shall have all of the rights and 
                duties specified under this Act, except that 
                such duties shall not include the technical 
                maintenance of the new domain.
                  (B) Extreme financial hardship.--For purposes 
                of this paragraph, the term ``extreme financial 
                hardship'' means that the costs of operating 
                and maintaining the new domain exceed the 
                revenues generated from registrants by more 
                than 25 percent for a period of more than 6 
                consecutive quarters, following the first year 
                of operation.
          (2) Competitive bid selection process.--The NTIA 
        shall establish a process for soliciting applications 
        and choosing a subcontractor to operate and maintain 
        the new domain pursuant to paragraph (1), which process 
        shall comply with the following requirements:
                  (A) Timing.--The selection process shall 
                commence and complete not later than 120 days 
                after the registry elects to relinquish the new 
                domain for extreme financial hardship.
                  (B) Notice.--The selection process shall 
                provide adequate notice to prospective 
                applicants of--
                          (i) the opportunity to submit such an 
                        application; and
                          (ii) the criteria for selection under 
                        subparagraph (C).
                  (C) Criteria.--The selection shall be made 
                pursuant to written, objective criteria 
                designed to ensure--
                          (i) that the new domain is operated 
                        and maintained in accordance with the 
                        requirements under subsection (b); and
                          (ii) that the subcontractor selected 
                        to operate and maintain the new domain 
                        is the applicant most capable and 
                        qualified to do so.
                  (D) Review.--Not more than 60 days after the 
                conclusion of the period established for 
                submission of applications, the NTIA shall--
                          (i) review and apply the selection 
                        criteria established under subparagraph 
                        (C) to each application submitted; and
                          (ii) based upon such criteria and 
                        subject to submission of an application 
                        meeting such criteria, select an 
                        application and award to the applicant 
                        a subcontract for the operation and 
                        maintenance of the new domain.
                  (E) Failure to find subcontractor.--If the 
                NTIA fails to find a suitable subcontractor 
                pursuant to the process under this paragraph, 
                the NTIA shall permit the registry to cease 
                operation of the new domain.
  (h) Suspension of New Domain.--If the NTIA finds, pursuant to 
its own review or upon a good faith petition by the registry, 
that the new domain is not serving its intended purpose, the 
NTIA shall instruct the registry to suspend operation of the 
new domain until such time as the NTIA determines that the new 
domain can be operated as intended.
  (i) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Harmful to minors.--The term ``harmful to 
        minors'' means, with respect to material, that--
                  (A) the average person, applying contemporary 
                community standards, would find, taking the 
                material as a whole and with respect to minors, 
                that it is designed to appeal to, or is 
                designed to pander to, the prurient interest;
                  (B) the material depicts, describes, or 
                represents, in a manner patently offensive with 
                respect to minors, an actual or simulated 
                sexual act or sexual contact, an actual or 
                simulated normal or perverted sexual act, or a 
                lewd exhibition of the genitals or post-
                pubescent female breast; and
                  (C) taken as a whole, the material lacks 
                serious, literary, artistic, political, or 
                scientific value for minors.
          (2) Minor.--the term ``minor'' means any person under 
        13 years of age.
          (3) Suitable for minors.--The term ``suitable for 
        minors'' means, with respect to material, that it--
                  (A) is not psychologically or intellectually 
                inappropriate for minors; and
                  (B) serves--
                          (i) the educational, informational, 
                        intellectual, or cognitive needs of 
                        minors; or
                          (ii) the social, emotional, or 
                        entertainment needs of minors.