In a setback for privacy and civil liberties groups, the U.S. Senate on Tuesday voted to protect telephone and Internet companies from lawsuits alleging illegal cooperation with government spy agencies.

By a 31-67 vote, senators failed to approve a Democratic-sponsored amendment that would have allowed lawsuits against AT&T and other telecommunication companies accused of illegal activities to continue. Because the broader bill being considered currently includes retroactive immunity for those companies--something that President Bush had personally requested--scores of pending legal challenges, including high-profile cases against AT&T and Verizon, are likely to disappear if the entire Congress ultimately approves it.

No Republicans voted for the amendment, but 18 Democrats joined the body's Republicans and Independent Sen. Joe Lieberman to vote against it. Then, around 3pm PT, the entire Senate voted by a 68-29 margin to approve the legislation with retroactive immunity included.

Sen. Chris Dodd (D-Conn.), who cosponsored the unsuccessful amendment with Sen. Russ Feingold (D-Wisc.), said it's dangerous to "grant that retroactive immunity without insisting the courts, as they're designed to do, determine the legality or illegality of this program."

But Sen. Kit Bond (R-Mo.), ranking member of the Senate Intelligence Committee, argued the immunity is an "essential" part of the bill. "If we permit the carriers who may or may not have participated in this to be sued in court, then the most important partners the government has, the private sector, will be discouraged from assisting us in the future," he said just before the vote.

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