WASHINGTON, March 1 (Reuters) - U.S. lawmakers considering Internet privacy legislation heard from legal experts on Thursday who warned that Congress would have to tread carefully to avoid violating free-speech protections in the U.S. Constitution.
A separate congressional panel took a close look at some of the on-line tracking technologies that have drawn protests from privacy advocates, prompting one senator to call them ``frightening.''
At least a dozen bills protecting the privacy rights of Internet users have been introduced this year, and observers expect Congress to pass some sort of law before the 2002 election.
While most members of the House Energy and Commerce subcommittee on commerce, trade and consumer protection said they wanted to pass a law that balanced the privacy rights of citizens with the rights of businesses to exchange information freely, they left little doubt they thought such a law was necessary.
``The last thing we ought to do is turn this issue over to the regulators. We ought to do it here,'' said Louisiana Rep. Billy Tauzin, the Republican chairman of the full committee.
But a group of Senate Republicans said Congress should not rush to pass a privacy law if business can resolve concerns on their own.
``It's quite clear that excessive government intervention would inflict serious damage to the economic advance of the information age,'' said Sen. Robert Bennett of Utah, a member of the Senate Republican high-tech task force.
Business groups have opposed such a law in the past, but some now say they would prefer a single federal law to a patchwork of state laws.
LEGAL LIMITS EXAMINED
The subcommittee convened its first hearing on the issue to determine how broadly it could write a privacy law without running afoul of the Constitution.
Fred Cate, an Indiana University law professor, said privacy laws could result in fewer services for consumers. If banks were limited in their ability to share credit reports, for example, they would grant fewer loans and at higher interest rates, he said.
Efforts to control how people share information with each other could easily violate the First Amendment, said Eugene Volokh, a law professor at the University of California at Los Angeles.
``The right to control information about ourselves sounds appealing until you realize it's the right of others to speak about us,'' Volokh said.
But Marc Rotenberg, executive director of the Electronic Privacy Information Center, said laws protecting privacy had been part of the American legal system since the early 20th century, and Congress historically had not hesitated to establish privacy protections for users of new technologies such as cable television and videocassettes.
Rep. Lee Terry said that perhaps sensitive personal information, such as medical and financial records, should be subject to a higher degree of protection than commercial information such as consumer buying habits.
``I would say there should be laxer standards on my purchases of Bud Light and Pampers,'' the Nebraska Republican said.
Rep. Ed Markey, a Massachusetts Democrat, disagreed, saying, ``Most people would not care if people knew you were buying Pampers for your children, but your mother would care if people knew she was buying Pampers for herself.''
On the other side of Capitol Hill, Congressional Privacy Caucus co-chairs Markey and Sen. Richard Shelby, an Alabama Republican, watched a demonstration of software that can track the online movements of Web surfers, check if they have read their e-mail messages and examine the contents of their hard drives.
While most ``Web bugs'' were used for legal purposes such as tracking the habits of visitors to Web sites, they could be set up for more nefarious purposes, said Gary Clayton, chief executive of the Privacy Council Inc.
``This is frightening,'' Shelby said.