[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 442 Referred in House (RFH)]

  2d Session
                                 S. 442


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 21, 1998

  Referred to the Committee on the Judiciary, and in addition to the 
   Committees on Commerce, Government Reform and Oversight, Ways and 
Means, and Education and the Workforce, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 AN ACT


 
   To establish a national policy against State and local government 
 interference with interstate commerce on the Internet or interactive 
  computer services, and to exercise congressional jurisdiction over 
 interstate commerce by establishing a moratorium on the imposition of 
 exactions that would interfere with the free flow of commerce via the 
                   Internet, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Tax Freedom Act''.

                  TITLE I--MORATORIUM ON CERTAIN TAXES

SEC. 101. MORATORIUM.

    (a) Moratorium.--No State or political subdivision thereof shall 
impose any of the following taxes during the period beginning on 
October 1, 1998, and ending 3 years after the date of the enactment of 
this Act--
            (1) taxes on Internet access, unless such tax was generally 
        imposed and actually enforced prior to October 1, 1998; and
            (2) multiple or discriminatory taxes on electronic 
        commerce.
    (b) Preservation of State and Local Taxing Authority.--Except as 
provided in this section, nothing in this Act shall be construed to 
modify, impair, or supersede, or authorize the modification, 
impairment, or superseding of, any State or local law pertaining to 
taxation that is otherwise permissible by or under the Constitution of 
the United States or other Federal law and in effect on the date of 
enactment of this Act.
    (c) Liabilities and Pending Cases.--Nothing in this Act affects 
liability for taxes accrued and enforced before the date of enactment 
of this Act, nor does this Act affect ongoing litigation relating to 
such taxes.
    (d) Definition of Generally Imposed and Actually Enforced.--For 
purposes of this section, a tax has been generally imposed and actually 
enforced prior to October 1, 1998, if, before that date, the tax was 
authorized by statute and either--
            (1) a provider of Internet access services had a reasonable 
        opportunity to know by virtue of a rule or other public 
        proclamation made by the appropriate administrative agency of 
        the State or political subdivision thereof, that such agency 
        has interpreted and applied such tax to Internet access 
        services; or
            (2) a State or political subdivision thereof generally 
        collected such tax on charges for Internet access.
    (e) Exception to Moratorium.--
            (1) In general.--Subsection (a) shall also not apply in the 
        case of any person or entity who in interstate or foreign 
        commerce is knowingly engaged in the business of selling or 
        transferring, by means of the World Wide Web, material that is 
        harmful to minors unless such person or entity requires the use 
        of a verified credit card, debit account, adult access code, or 
        adult personal identification number, or such other procedures 
        as the Federal Communications Commission may prescribe, in 
        order to restrict access to such material by persons under 17 
        years of age.
            (2) Scope of exception.--For purposes of paragraph (1), a 
        person shall not be considered to engaged in the business of 
        selling or transferring material by means of the World Wide Web 
        to the extent that the person is--
                    (A) a telecommunications carrier engaged in the 
                provision of a telecommunications service;
                    (B) a person engaged in the business of providing 
                an Internet access service;
                    (C) a person engaged in the business of providing 
                an Internet information location tool; or
                    (D) similarly engaged in the transmission, storage, 
                retrieval, hosting, formatting, or translation (or any 
                combination thereof) of a communication made by another 
                person, without selection or alteration of the 
                communication.
            (3) Definitions.--In this subsection:
                    (A) By means of the world wide web.--The term ``by 
                means of the World Wide Web'' means by placement of 
                material in a computer server-based file archive so 
                that it is publicly accessible, over the Internet, 
                using hypertext transfer protocol, file transfer 
                protocol, or other similar protocols.
                    (B) Engaged in the business.--The term ``engaged in 
                the business'' means that the person who sells or 
                transfers or offers to sell or transfer, by means of 
                the World Wide Web, material that is harmful to minors 
                devotes time, attention, or labor to such activities, 
                as a regular course of trade or business, with the 
                objective of earning a profit, although it is not 
                necessary that the person make a profit or that the 
                selling or transferring or offering to sell or transfer 
                such material be the person's sole or principal 
                business or source of income.
                    (C) Internet.--The term ``Internet'' means 
                collectively the myriad of computer and 
                telecommunications facilities, including equipment and 
                operating software, which comprise the interconnected 
                world-wide network of networks that employ the 
                Transmission Control Protocol/Internet Protocol, or any 
                predecessor or successor protocols to such protocol, to 
                communicate information of all kinds by wire or radio.
                    (D) Internet access service.--The term ``Internet 
                access service'' means a service that enables users to 
                access content, information, electronic mail, or other 
                services offered over the Internet and may also include 
                access to proprietary content, information, and other 
                services as part of a package of services offered to 
                consumers. Such term does not include 
                telecommunications services.
                    (E) Internet information location tool.--The term 
                ``Internet information location tool'' means a service 
                that refers or links users to an online location on the 
                World Wide Web. Such term includes directories, 
                indices, references, pointers, and hypertext links.
                    (F) Material that is harmful to minors.--The term 
                ``material that is harmful to minors'' means any 
                communication, picture, image, graphic image file, 
                article, recording, writing, or other matter of any 
                kind that--
                            (i) taken as a whole and with respect to 
                        minors, appeals to a prurient interest in 
                        nudity, sex, or excretion;
                            (ii) depicts, describes, or represents, in 
                        a patently offensive way with respect to what 
                        is suitable for minors, an actual or simulated 
                        sexual act or sexual contact, actual or 
                        simulated normal or perverted sexual acts, or a 
                        lewd exhibition of the genitals; and
                            (iii) taken as a whole, lacks serious 
                        literary, artistic, political, or scientific 
                        value for minors.
                    (G) Sexual act; sexual contact.--The terms ``sexual 
                act'' and ``sexual contact'' have the meanings given 
                such terms in section 2246 of title 18, United States 
                Code.
                    (H) Telecommunications carrier; telecommunications 
                service.--The terms ``telecommunications carrier'' and 
                ``telecommunications service'' have the meanings given 
                such terms in section 3 of the Communications Act of 
                1934 (47 U.S.C. 153).
    (f) Additional Exception to Moratorium.--
            (1) In general.--Subsection (a) shall also not apply with 
        respect to an Internet access provider, unless, at the time of 
        entering into an agreement with a customer for the provision of 
        Internet access services, such provider offers such customer 
        (either for a fee or at no charge) screening software that is 
        designed to permit the customer to limit access to material on 
        the Internet that is harmful to minors.
            (2) Definitions.--In this subsection:
                    (A) Internet access provider.--The term `Internet 
                access provider' means a person engaged in the business 
                of providing a computer and communications facility 
                through which a customer may obtain access to the 
                Internet, but does not include a common carrier to the 
                extent that it provides only telecommunications 
                services.
                    (B) Internet access services.--The term `Internet 
                access services' means the provision of computer and 
                communications services through which a customer using 
                a computer and a modem or other communications device 
                may obtain access to the Internet, but does not include 
                telecommunications services provided by a common 
                carrier.
                    (C) Screening software.--The term ``screening 
                software'' means software that is designed to permit a 
                person to limit access to material on the Internet that 
                is harmful to minors.
            (3) Applicability.--Paragraph (1) shall apply to agreements 
        for the provision of Internet access services entered into on 
        or after the date that is 6 months after the date of enactment 
        of this Act.

SEC. 102. ADVISORY COMMISSION ON ELECTRONIC COMMERCE.

    (a) Establishment of Commission.--There is established a commission 
to be known as the Advisory Commission on Electronic Commerce (in this 
title referred to as the ``Commission''). The Commission shall--
            (1) be composed of 19 members appointed in accordance with 
        subsection (b), including the chairperson who shall be selected 
        by the members of the Commission from among themselves; and
            (2) conduct its business in accordance with the provisions 
        of this title.
    (b) Membership.--
            (1) In general.--The Commissioners shall serve for the life 
        of the Commission. The membership of the Commission shall be as 
        follows:
                    (A) 3 representatives from the Federal Government, 
                comprised of the Secretary of Commerce, the Secretary 
                of the Treasury, and the United States Trade 
                Representative (or their respective delegates).
                    (B) 8 representatives from State and local 
                governments (one such representative shall be from a 
                State or local government that does not impose a sales 
                tax and one representative shall be from a State that 
                does not impose an income tax).
                    (C) 8 representatives of the electronic commerce 
                industry (including small business), telecommunications 
                carriers, local retail businesses, and consumer groups, 
                comprised of--
                            (i) 5 individuals appointed by the Majority 
                        Leader of the Senate;
                            (ii) 3 individuals appointed by the 
                        Minority Leader of the Senate;
                            (iii) 5 individuals appointed by the 
                        Speaker of the House of Representatives; and
                            (iv) 3 individuals appointed by the 
                        Minority Leader of the House of 
                        Representatives.
            (2) Appointments.--Appointments to the Commission shall be 
        made not later than 45 days after the date of the enactment of 
        this Act. The chairperson shall be selected not later than 60 
        days after the date of the enactment of this Act.
            (3) Vacancies.--Any vacancy in the Commission shall not 
        affect its powers, but shall be filled in the same manner as 
        the original appointment.
    (c) Acceptance of Gifts and Grants.--The Commission may accept, 
use, and dispose of gifts or grants of services or property, both real 
and personal, for purposes of aiding or facilitating the work of the 
Commission. Gifts or grants not used at the expiration of the 
Commission shall be returned to the donor or grantor.
    (d) Other Resources.--The Commission shall have reasonable access 
to materials, resources, data, and other information from the 
Department of Justice, the Department of Commerce, the Department of 
State, the Department of the Treasury, and the Office of the United 
States Trade Representative. The Commission shall also have reasonable 
access to use the facilities of any such Department or Office for 
purposes of conducting meetings.
    (e) Sunset.--The Commission shall terminate 18 months after the 
date of the enactment of this Act.
    (f) Rules of the Commission.--
            (1) Quorum.--Nine members of the Commission shall 
        constitute a quorum for conducting the business of the 
        Commission.
            (2) Meetings.--Any meetings held by the Commission shall be 
        duly noticed at least 14 days in advance and shall be open to 
        the public.
            (3) Opportunities to testify.--The Commission shall provide 
        opportunities for representatives of the general public, 
        taxpayer groups, consumer groups, and State and local 
        government officials to testify.
            (4) Additional rules.--The Commission may adopt other rules 
        as needed.
    (g) Duties of the Commission.--
            (1) In general.--The Commission shall conduct a thorough 
        study of Federal, State and local, and international taxation 
        and tariff treatment of transactions using the Internet and 
        Internet access and other comparable intrastate, interstate or 
        international sales activities.
            (2) Issues to be studied.--The Commission may include in 
        the study under subsection (a)--
                    (A) an examination of--
                            (i) barriers imposed in foreign markets on 
                        United States providers of property, goods, 
                        services, or information engaged in electronic 
                        commerce and on United States providers of 
                        telecommunications services; and
                            (ii) how the imposition of such barriers 
                        will affect United States consumers, the 
                        competitiveness of United States citizens 
                        providing property, goods, services, or 
                        information in foreign markets, and the growth 
                        and maturing of the Internet;
                    (B) an examination of the collection and 
                administration of consumption taxes on electronic 
                commerce in other countries and the United States, and 
                the impact of such collection on the global economy, 
                including an examination of the relationship between 
                the collection and administration of such taxes when 
                the transaction uses the Internet and when it does not;
                    (C) an examination of the impact of the Internet 
                and Internet access (particularly voice transmission) 
                on the revenue base for taxes imposed under section 
                4251 of the Internal Revenue Code of 1986;
                    (D) an examination of model State legislation 
                that--
                            (i) would provide uniform definitions of 
                        categories of property, goods, service, or 
                        information subject to or exempt from sales and 
                        use taxes; and
                            (ii) would ensure that Internet access 
                        services, online services, and communications 
                        and transactions using the Internet, Internet 
                        access service, or online services would be 
                        treated in a tax and technologically neutral 
                        manner relative to other forms of remote sales;
                    (E) an examination of the effects of taxation, 
                including the absence of taxation, on all interstate 
                sales transactions, including transactions using the 
                Internet, on retail businesses and on State and local 
                governments, which examination may include a review of 
                the efforts of State and local governments to collect 
                sales and use taxes owed on in-State purchases from 
                out-of-State sellers; and
                    (F) the examination of ways to simplify Federal and 
                State and local taxes imposed on the provision of 
                telecommunications services.
            (3) Effect on the communications act of 1934.--Nothing in 
        this section shall include an examination of any fees or 
        charges imposed by the Federal Communications Commission or 
        States related to--
                    (A) obligations under the Communications Act of 
                1934 (47 U.S.C. 151 et seq.); or
                    (B) the implementation of the Telecommunications 
                Act of 1996 (or of amendments made by that Act).
    (h) National Tax Association Communications and Electronic Commerce 
Tax Project.--The Commission shall, to the extent possible, ensure that 
its work does not undermine the efforts of the National Tax Association 
Communications and Electronic Commerce Tax Project.

SEC. 103. REPORT.

    Not later than 18 months after the date of the enactment of this 
Act, the Commission shall transmit to Congress for its consideration a 
report reflecting the results, including such legislative 
recommendations as required to address the findings of the Commission's 
study under this title. Any recommendation agreed to by the Commission 
shall be tax and technologically neutral and apply to all forms of 
remote commerce. No finding or recommendation shall be included in the 
report unless agreed to by at least two-thirds of the members of the 
Commission serving at the time the finding or recommendation is made.

SEC. 104. DEFINITIONS.

    For the purposes of this title:
            (1) Bit tax.--The term ``bit tax'' means any tax on 
        electronic commerce expressly imposed on or measured by the 
        volume of digital information transmitted electronically, or 
        the volume of digital information per unit of time transmitted 
        electronically, but does not include taxes imposed on the 
        provision of telecommunications services.
            (2) Discriminatory tax.--The term ``discriminatory tax'' 
        means--
                    (A) any tax imposed by a State or political 
                subdivision thereof on electronic commerce that--
                            (i) is not generally imposed and legally 
                        collectible by such State or such political 
                        subdivision on transactions involving similar 
                        property, goods, services, or information 
                        accomplished through other means;
                            (ii) is not generally imposed and legally 
                        collectible at the same rate by such State or 
                        such political subdivision on transactions 
                        involving similar property, goods, services, or 
                        information accomplished through other means, 
                        unless the rate is lower as part of a phase-out 
                        of the tax over not more than a 5-year period;
                            (iii) imposes an obligation to collect or 
                        pay the tax on a different person or entity 
                        than in the case of transactions involving 
                        similar property, goods, services, or 
                        information accomplished through other means;
                            (iv) establishes a classification of 
                        Internet access service providers or online 
                        service providers for purposes of establishing 
                        a higher tax rate to be imposed on such 
                        providers than the tax rate generally applied 
                        to providers of similar information services 
                        delivered through other means; or
                    (B) any tax imposed by a State or political 
                subdivision thereof, if--
                            (i) except with respect to a tax (on 
                        Internet access) that was generally imposed and 
                        actually enforced prior to October 1, 1998, the 
                        sole ability to access a site on a remote 
                        seller's out-of-State computer server is 
                        considered a factor in determining a remote 
                        seller's tax collection obligation; or
                            (ii) a provider of Internet access service 
                        or online services is deemed to be the agent of 
                        a remote seller for determining tax collection 
                        obligations solely as a result of--
                                    (I) the display of a remote 
                                seller's information or content on the 
                                out-of-State computer server of a 
                                provider of Internet access service or 
                                online services; or
                                    (II) the processing of orders 
                                through the out-of-State computer 
                                server of a provider of Internet access 
                                service or online services.
            (3) Electronic commerce.--The term ``electronic commerce'' 
        means any transaction conducted over the Internet or through 
        Internet access, comprising the sale, lease, license, offer, or 
        delivery of property, goods, services, or information, whether 
        or not for consideration, and includes the provision of 
        Internet access.
            (4) Internet.--The term ``Internet'' means collectively the 
        myriad of computer and telecommunications facilities, including 
        equipment and operating software, which comprise the 
        interconnected world-wide network of networks that employ the 
        Transmission Control Protocol/Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio.
            (5) Internet access.--The term ``Internet access'' means a 
        service that enables users to access content, information, 
        electronic mail, or other services offered over the Internet, 
        and may also include access to proprietary content, 
        information, and other services as part of a package of 
        services offered to users. Such term does not include 
        telecommunications services.
            (6) Multiple tax.--
                    (A) In general.--The term ``multiple tax'' means 
                any tax that is imposed by one State or political 
                subdivision thereof on the same or essentially the same 
                electronic commerce that is also subject to another tax 
                imposed by another State or political subdivision 
                thereof (whether or not at the same rate or on the same 
                basis), without a credit (for example, a resale 
                exemption certificate) for taxes paid in other 
                jurisdictions.
                    (B) Exception.--Such term shall not include a sales 
                or use tax imposed by a State and 1 or more political 
                subdivisions thereof on the same electronic commerce or 
                a tax on persons engaged in electronic commerce which 
                also may have been subject to a sales or use tax 
                thereon.
                    (C) Sales or use tax.--For purposes of subparagraph 
                (B), the term ``sales or use tax'' means a tax that is 
                imposed on or incident to the sale, purchase, storage, 
                consumption, distribution, or other use of tangible 
                personal property or services as may be defined by laws 
                imposing such tax and which is measured by the amount 
                of the sales price or other charge for such property or 
                service.
            (7) State.--The term ``State'' means any of the several 
        States, the District of Columbia, or any commonwealth, 
        territory, or possession of the United States.
            (8) Tax.--
                    (A) In general.-- The term ``tax'' means--
                            (i) any charge imposed by any governmental 
                        entity for the purpose of generating revenues 
                        for governmental purposes, and is not a fee 
                        imposed for a specific privilege, service, or 
                        benefit conferred; or
                            (ii) the imposition on a seller of an 
                        obligation to collect and to remit to a 
                        governmental entity any sales or use tax 
                        imposed on a buyer by a governmental entity.
                    (B) Exception.--Such term does not include any 
                franchise fee or similar fee imposed by a State or 
                local franchising authority, pursuant to section 622 or 
                653 of the Communications Act of 1934 (47 U.S.C. 542, 
                573), or any other fee related to obligations or 
                telecommunications carriers under the Communications 
                Act of 1934 (47 U.S.C. 151 et seq.).
            (9) Telecommunications service.--The term 
        ``telecommunications service'' has the meaning given such term 
        in section 3(46) of the Communications Act of 1934 (47 U.S.C. 
        153(46)) and includes communications services (as defined in 
        section 4251 of the Internal Revenue Code of 1986).
            (10) Tax on internet access.--The term ``tax on Internet 
        access'' means a tax on Internet access, including the 
        enforcement or application of any new or preexisting tax on the 
        sale or use of Internet services unless such tax was generally 
        imposed and actually enforced prior to October 1, 1998.

                       TITLE II--OTHER PROVISIONS

SEC. 201. DECLARATION THAT INTERNET SHOULD BE FREE OF NEW FEDERAL 
              TAXES.

    It is the sense of Congress that no new Federal taxes similar to 
the taxes described in section 101(a) should be enacted with respect to 
the Internet and Internet access during the moratorium provided in such 
section.

SEC. 202. NATIONAL TRADE ESTIMATE.

    Section 181 of the Trade Act of 1974 (19 U.S.C. 2241) is amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``and'' at the end of 
                        clause (i);
                            (ii) by inserting ``and'' at the end of 
                        clause (ii); and
                            (iii) by inserting after clause (ii) the 
                        following new clause:
                            ``(iii) United States electronic 
                        commerce,''; and
                    (B) in subparagraph (C)--
                            (i) by striking ``and'' at the end of 
                        clause (i);
                            (ii) by inserting ``and'' at the end of 
                        clause (ii);
                            (iii) by inserting after clause (ii) the 
                        following new clause:
                            ``(iii) the value of additional United 
                        States electronic commerce,''; and
                            (iv) by inserting ``or transacted with,'' 
                        after ``or invested in'';
            (2) in subsection (a)(2)(E)--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) by inserting ``and'' at the end of clause (ii); 
                and
                    (C) by inserting after clause (ii) the following 
                new clause:
                            ``(iii) the value of electronic commerce 
                        transacted with,''; and
            (3) by adding at the end the following new subsection:
    ``(d) Electronic Commerce.--For purposes of this section, the term 
`electronic commerce' has the meaning given that term in section 104(3) 
of the Internet Tax Freedom Act.''.

SEC. 203. DECLARATION THAT THE INTERNET SHOULD BE FREE OF FOREIGN 
              TARIFFS, TRADE BARRIERS, AND OTHER RESTRICTIONS.

    (a) In General.-- It is the sense of Congress that the President 
should seek bilateral, regional, and multilateral agreements to remove 
barriers to global electronic commerce through the World Trade 
Organization, the Organization for Economic Cooperation and 
Development, the Trans-Atlantic Economic Partnership, the Asia Pacific 
Economic Cooperation forum, the Free Trade Area of the America, the 
North American Free Trade Agreement, and other appropriate venues.
    (b) Negotiating Objectives.--The negotiating objectives of the 
United States shall be--
            (1) to assure that electronic commerce is free from--
                    (A) tariff and nontariff barriers;
                    (B) burdensome and discriminatory regulation and 
                standards; and
                    (C) discriminatory taxation; and
            (2) to accelerate the growth of electronic commerce by 
        expanding market access opportunities for--
                    (A) the development of telecommunications 
                infrastructure;
                    (B) the procurement of telecommunications 
                equipment;
                    (C) the provision of Internet access and 
                telecommunications services; and
                    (D) the exchange of goods, services, and 
                digitalized information.
    (c) Electronic Commerce.--For purposes of this section, the term 
``electronic commerce'' has the meaning given that term in section 
104(3).

SEC. 204. NO EXPANSION OF TAX AUTHORITY.

    Nothing in this Act shall be construed to expand the duty of any 
person to collect or pay taxes beyond that which existed immediately 
before the date of the enactment of this Act.

SEC. 205. PRESERVATION OF AUTHORITY.

    Nothing in this Act shall limit or otherwise affect the 
implementation of the Telecommunications Act of 1996 (Public Law 104-
104) or the amendments made by such Act.

SEC. 206. SEVERABILITY.

    If any provision of this Act, or any amendment made by this Act, or 
the application of that provision to any person or circumstance, is 
held by a court of competent jurisdiction to violate any provision of 
the Constitution of the United States, then the other provisions of 
that section, and the application of that provision to other persons 
and circumstances, shall not be affected.

            TITLE III--GOVERNMENT PAPERWORK ELIMINATION ACT

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Government Paperwork Elimination 
Act''.

SEC. 302. AUTHORITY OF OMB TO PROVIDE FOR ACQUISITION AND USE OF 
              ALTERNATIVE INFORMATION TECHNOLOGIES BY EXECUTIVE 
              AGENCIES.

    Section 3504(a)(1)(B)(vi) of title 44, United States Code, is 
amended to read as follows:
                            ``(vi) the acquisition and use of 
                        information technology, including alternative 
                        information technologies that provide for 
                        electronic submission, maintenance, or 
                        disclosure of information as a substitute for 
                        paper and for the use and acceptance of 
                        electronic signatures.''.

SEC. 303. PROCEDURES FOR USE AND ACCEPTANCE OF ELECTRONIC SIGNATURES BY 
              EXECUTIVE AGENCIES.

    (a) In General.--In order to fulfill the responsibility to 
administer the functions assigned under chapter 35 of title 44, United 
States Code, the provisions of the Clinger-Cohen Act of 1996 (divisions 
D and E of Public Law 104-106) and the amendments made by that Act, and 
the provisions of this title, the Director of the Office of Management 
and Budget shall, in consultation with the National Telecommunications 
and Information Administration and not later than 18 months after the 
date of enactment of this Act, develop procedures for the use and 
acceptance of electronic signatures by Executive agencies.
    (b) Requirements for Procedures.--(1) The procedures developed 
under subsection (a)--
            (A) shall be compatible with standards and technology for 
        electronic signatures that are generally used in commerce and 
        industry and by State governments;
            (B) may not inappropriately favor one industry or 
        technology;
            (C) shall ensure that electronic signatures are as reliable 
        as is appropriate for the purpose in question and keep intact 
        the information submitted;
            (D) shall provide for the electronic acknowledgment of 
        electronic forms that are successfully submitted; and
            (E) shall, to the extent feasible and appropriate, require 
        an Executive agency that anticipates receipt by electronic 
        means of 50,000 or more submittals of a particular form to take 
        all steps necessary to ensure that multiple methods of 
        electronic signatures are available for the submittal of such 
        form.
    (2) The Director shall ensure the compatibility of the procedures 
under paragraph (1)(A) in consultation with appropriate private bodies 
and State government entities that set standards for the use and 
acceptance of electronic signatures.

SEC. 304. DEADLINE FOR IMPLEMENTATION BY EXECUTIVE AGENCIES OF 
              PROCEDURES FOR USE AND ACCEPTANCE OF ELECTRONIC 
              SIGNATURES.

    In order to fulfill the responsibility to administer the functions 
assigned under chapter 35 of title 44, United States Code, the 
provisions of the Clinger-Cohen Act of 1996 (divisions D and E of 
Public Law 104-106) and the amendments made by that Act, and the 
provisions of this title, the Director of the Office of Management and 
Budget shall ensure that, commencing not later than five years after 
the date of enactment of this Act, Executive agencies provide--
            (1) for the option of the electronic maintenance, 
        submission, or disclosure of information, when practicable as a 
        substitute for paper; and
            (2) for the use and acceptance of electronic signatures, 
        when practicable.

SEC. 305. ELECTRONIC STORAGE AND FILING OF EMPLOYMENT FORMS.

    In order to fulfill the responsibility to administer the functions 
assigned under chapter 35 of title 44, United States Code, the 
provisions of the Clinger-Cohen Act of 1996 (divisions D and E of 
Public Law 104-106) and the amendments made by that Act, and the 
provisions of this title, the Director of the Office of Management and 
Budget shall, not later than 18 months after the date of enactment of 
this Act, develop procedures to permit private employers to store and 
file electronically with Executive agencies forms containing 
information pertaining to the employees of such employers.

SEC. 306. STUDY ON USE OF ELECTRONIC SIGNATURES.

    (a) Ongoing Study Required.--In order to fulfill the responsibility 
to administer the functions assigned under chapter 35 of title 44, 
United States Code, the provisions of the Clinger-Cohen Act of 1996 
(divisions D and E of Public Law 104-106) and the amendments made by 
that Act, and the provisions of this title, the Director of the Office 
of Management and Budget shall, in cooperation with the National 
Telecommunications and Information Administration, conduct an ongoing 
study of the use of electronic signatures under this title on--
            (1) paperwork reduction and electronic commerce;
            (2) individual privacy; and
            (3) the security and authenticity of transactions.
    (b) Reports.--The Director shall submit to Congress on a periodic 
basis a report describing the results of the study carried out under 
subsection (a).

SEC. 307. ENFORCEABILITY AND LEGAL EFFECT OF ELECTRONIC RECORDS.

    Electronic records submitted or maintained in accordance with 
procedures developed under this title, or electronic signatures or 
other forms of electronic authentication used in accordance with such 
procedures, shall not be denied legal effect, validity, or 
enforceability because such records are in electronic form.

SEC. 308. DISCLOSURE OF INFORMATION.

    Except as provided by law, information collected in the provision 
of electronic signature services for communications with an executive 
agency, as provided by this title, shall only be used or disclosed by 
persons who obtain, collect, or maintain such information as a business 
or government practice, for the purpose of facilitating such 
communications, or with the prior affirmative consent of the person 
about whom the information pertains.

SEC. 309. APPLICATION WITH INTERNAL REVENUE LAWS.

    No provision of this title shall apply to the Department of the 
Treasury or the Internal Revenue Service to the extent that such 
provision--
            (1) involves the administration of the internal revenue 
        laws; or
            (2) conflicts with any provision of the Internal Revenue 
        Service Restructuring and Reform Act of 1998 or the Internal 
        Revenue Code of 1986.

SEC. 310. DEFINITIONS.

    For purposes of this title:
            (1) Electronic signature.--The term ``electronic 
        signature'' means a method of signing an electronic message 
        that--
                    (A) identifies and authenticates a particular 
                person as the source of the electronic message; and
                    (B) indicates such person's approval of the 
                information contained in the electronic message.
            (2) Executive agency.--The term ``Executive agency'' has 
        the meaning given that term in section 105 of title 5, United 
        States Code.

             TITLE IV--CHILDREN'S ONLINE PRIVACY PROTECTION

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Children's Online Privacy 
Protection Act of 1998''.

SEC. 402. DEFINITIONS.

    In this title:
            (1) Child.--The term ``child'' means an individual under 
        the age of 13.
            (2) Operator.--The term ``operator''--
                    (A) means any person who operates a website located 
                on the Internet or an online service and who collects 
                or maintains personal information from or about the 
                users of or visitors to such website or online service, 
                or on whose behalf such information is collected or 
                maintained, where such website or online service is 
                operated for commercial purposes, including any person 
                offering products or services for sale through that 
                website or online service, involving commerce--
                            (i) among the several States or with 1 or 
                        more foreign nations;
                            (ii) in any territory of the United States 
                        or in the District of Columbia, or between any 
                        such territory and--
                                    (I) another such territory; or
                                    (II) any State or foreign nation; 
                                or
                            (iii) between the District of Columbia and 
                        any State, territory, or foreign nation; but
                    (B) does not include any nonprofit entity that 
                would otherwise be exempt from coverage under section 5 
                of the Federal Trade Commission Act (15 U.S.C. 45).
            (3) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (4) Disclosure.--The term ``disclosure'' means, with 
        respect to personal information--
                    (A) the release of personal information collected 
                from a child in identifiable form by an operator for 
                any purpose, except where such information is provided 
                to a person other than the operator who provides 
                support for the internal operations of the website and 
                does not disclose or use that information for any other 
                purpose; and
                    (B) making personal information collected from a 
                child by a website or online service directed to 
                children or with actual knowledge that such information 
                was collected from a child, publicly available in 
                identifiable form, by any means including by a public 
                posting, through the Internet, or through--
                            (i) a home page of a website;
                            (ii) a pen pal service;
                            (iii) an electronic mail service;
                            (iv) a message board; or
                            (v) a chat room.
            (5) Federal agency.--The term ``Federal agency'' means an 
        agency, as that term is defined in section 551(1) of title 5, 
        United States Code.
            (6) Internet.--The term ``Internet'' means collectively the 
        myriad of computer and telecommunications facilities, including 
        equipment and operating software, which comprise the 
        interconnected world-wide network of networks that employ the 
        Transmission Control Protocol/Internet Protocol, or any 
        predecessor or successor protocols to such protocol, to 
        communicate information of all kinds by wire or radio.
            (7) Parent.--The term ``parent'' includes a legal guardian.
            (8) Personal information.--The term ``personal 
        information'' means individually identifiable information about 
        an individual collected online, including--
                    (A) a first and last name;
                    (B) a home or other physical address including 
                street name and name of a city or town;
                    (C) an e-mail address;
                    (D) a telephone number;
                    (E) a Social Security number;
                    (F) any other identifier that the Commission 
                determines permits the physical or online contacting of 
                a specific individual; or
                    (G) information concerning the child or the parents 
                of that child that the website collects online from the 
                child and combines with an identifier described in this 
                paragraph.
            (9) Verifiable parental consent.--The term ``verifiable 
        parental consent'' means any reasonable effort (taking into 
        consideration available technology), including a request for 
        authorization for future collection, use, and disclosure 
        described in the notice, to ensure that a parent of a child 
        receives notice of the operator's personal information 
        collection, use, and disclosure practices, and authorizes the 
        collection, use, and disclosure, as applicable, of personal 
        information and the subsequent use of that information before 
        that information is collected from that child.
            (10) Website or online service directed to children.--
                    (A) In general.--The term ``website or online 
                service directed to children'' means--
                            (i) a commercial website or online service 
                        that is targeted to children; or
                            (ii) that portion of a commercial website 
                        or online service that is targeted to children.
                    (B) Limitation.--A commercial website or online 
                service, or a portion of a commercial website or online 
                service, shall not be deemed directed to children 
                solely for referring or linking to a commercial website 
                or online service directed to children by using 
                information location tools, including a directory, 
                index, reference, pointer, or hypertext link.
            (11) Person.--The term ``person'' means any individual, 
        partnership, corporation, trust, estate, cooperative, 
        association, or other entity.
            (12) Online contact information.--The term ``online contact 
        information'' means an e-mail address or another substantially 
        similar identifier that permits direct contact with a person 
        online.

SEC. 403. REGULATION OF UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN 
              CONNECTION WITH THE COLLECTION AND USE OF PERSONAL 
              INFORMATION FROM AND ABOUT CHILDREN ON THE INTERNET.

    (a) Acts Prohibited.--
            (1) In general.--It is unlawful for an operator of a 
        website or online service directed to children, or any operator 
        that has actual knowledge that it is collecting personal 
        information from a child, to collect personal information from 
        a child in a manner that violates the regulations prescribed 
        under subsection (b).
            (2) Disclosure to parent protected.--Notwithstanding 
        paragraph (1), neither an operator of such a website or online 
        service nor the operator's agent shall be held to be liable 
        under any Federal or State law for any disclosure made in good 
        faith and following reasonable procedures in responding to a 
        request for disclosure of personal information under subsection 
        (b)(1)(B)(iii) to the parent of a child.
    (b) Regulations.--
            (1) In general.--Not later than 1 year after the date of 
        the enactment of this Act, the Commission shall promulgate 
        under section 553 of title 5, United States Code, regulations 
        that--
                    (A) require the operator of any website or online 
                service directed to children that collects personal 
                information from children or the operator of a website 
                or online service that has actual knowledge that it is 
                collecting personal information from a child--
                            (i) to provide notice on the website of 
                        what information is collected from children by 
                        the operator, how the operator uses such 
                        information, and the operator's disclosure 
                        practices for such information; and
                            (ii) to obtain verifiable parental consent 
                        for the collection, use, or disclosure of 
                        personal information from children;
                    (B) require the operator to provide, upon request 
                of a parent under this subparagraph whose child has 
                provided personal information to that website or online 
                service, upon proper identification of that parent, to 
                such parent--
                            (i) a description of the specific types of 
                        personal information collected from the child 
                        by that operator;
                            (ii) the opportunity at any time to refuse 
                        to permit the operator's further use or 
                        maintenance in retrievable form, or future 
                        online collection, of personal information from 
                        that child; and
                            (iii) notwithstanding any other provision 
                        of law, a means that is reasonable under the 
                        circumstances for the parent to obtain any 
                        personal information collected from that child;
                    (C) prohibit conditioning a child's participation 
                in a game, the offering of a prize, or another activity 
                on the child disclosing more personal information than 
                is reasonably necessary to participate in such 
                activity; and
                    (D) require the operator of such a website or 
                online service to establish and maintain reasonable 
                procedures to protect the confidentiality, security, 
                and integrity of personal information collected from 
                children.
            (2) When consent not required.--The regulations shall 
        provide that verifiable parental consent under paragraph 
        (1)(A)(ii) is not required in the case of--
                    (A) online contact information collected from a 
                child that is used only to respond directly on a one-
                time basis to a specific request from the child and is 
                not used to recontact the child and is not maintained 
                in retrievable form by the operator;
                    (B) a request for the name or online contact 
                information of a parent or child that is used for the 
                sole purpose of obtaining parental consent or providing 
                notice under this section and where such information is 
                not maintained in retrievable form by the operator if 
                parental consent is not obtained after a reasonable 
                time;
                    (C) online contact information collected from a 
                child that is used only to respond more than once 
                directly to a specific request from the child and is 
                not used to recontact the child beyond the scope of 
                that request--
                            (i) if, before any additional response 
                        after the initial response to the child, the 
                        operator uses reasonable efforts to provide a 
                        parent notice of the online contact information 
                        collected from the child, the purposes for 
                        which it is to be used, and an opportunity for 
                        the parent to request that the operator make no 
                        further use of the information and that it not 
                        be maintained in retrievable form; or
                            (ii) without notice to the parent in such 
                        circumstances as the Commission may determine 
                        are appropriate, taking into consideration the 
                        benefits to the child of access to information 
                        and services, and risks to the security and 
                        privacy of the child, in regulations 
                        promulgated under this subsection;
                    (D) the name of the child and online contact 
                information (to the extent reasonably necessary to 
                protect the safety of a child participant on the 
                site)--
                            (i) used only for the purpose of protecting 
                        such safety;
                            (ii) not used to recontact the child or for 
                        any other purpose; and
                            (iii) not disclosed on the site,
                if the operator uses reasonable efforts to provide a 
                parent notice of the name and online contact 
                information collected from the child, the purposes for 
                which it is to be used, and an opportunity for the 
                parent to request that the operator make no further use 
                of the information and that it not be maintained in 
                retrievable form; or
                    (E) the collection, use, or dissemination of such 
                information by the operator of such a website or online 
                service necessary--
                            (i) to protect the security or integrity of 
                        its website;
                            (ii) to take precautions against liability;
                            (iii) to respond to judicial process; or
                            (iv) to the extent permitted under other 
                        provisions of law, to provide information to 
                        law enforcement agencies or for an 
                        investigation on a matter related to public 
                        safety.
            (3) Termination of service.--The regulations shall permit 
        the operator of a website or an online service to terminate 
        service provided to a child whose parent has refused, under the 
        regulations prescribed under paragraph (1)(B)(ii), to permit 
        the operator's further use or maintenance in retrievable form, 
        or future online collection, of personal information from that 
        child.
    (c) Enforcement.--Subject to sections 404 and 406, a violation of a 
regulation prescribed under subsection (a) shall be treated as a 
violation of a rule defining an unfair or deceptive act or practice 
prescribed under section 18(a)(1)(B) of the Federal Trade Commission 
Act (15 U.S.C. 57a(a)(1)(B)).
    (d) Inconsistent State Law.--No State or local government may 
impose any liability for commercial activities or actions by operators 
in interstate or foreign commerce in connection with an activity or 
action described in this title that is inconsistent with the treatment 
of those activities or actions under this section.

SEC. 404. SAFE HARBORS.

    (a) Guidelines.--An operator may satisfy the requirements of 
regulations issued under section 403(b) by following a set of self-
regulatory guidelines, issued by representatives of the marketing or 
online industries, or by other persons, approved under subsection (b).
    (b) Incentives.--
            (1) Self-regulatory incentives.--In prescribing regulations 
        under section 403, the Commission shall provide incentives for 
        self-regulation by operators to implement the protections 
        afforded children under the regulatory requirements described 
        in subsection (b) of that section.
            (2) Deemed compliance.--Such incentives shall include 
        provisions for ensuring that a person will be deemed to be in 
        compliance with the requirements of the regulations under 
        section 403 if that person complies with guidelines that, after 
        notice and comment, are approved by the Commission upon making 
        a determination that the guidelines meet the requirements of 
        the regulations issued under section 403.
            (3) Expedited response to requests.--The Commission shall 
        act upon requests for safe harbor treatment within 180 days of 
        the filing of the request, and shall set forth in writing its 
        conclusions with regard to such requests.
    (c) Appeals.--Final action by the Commission on a request for 
approval of guidelines, or the failure to act within 180 days on a 
request for approval of guidelines, submitted under subsection (b) may 
be appealed to a district court of the United States of appropriate 
jurisdiction as provided for in section 706 of title 5, United States 
Code.

SEC. 405. ACTIONS BY STATES.

    (a) In General.--
            (1) Civil actions.--In any case in which the attorney 
        general of a State has reason to believe that an interest of 
        the residents of that State has been or is threatened or 
        adversely affected by the engagement of any person in a 
        practice that violates any regulation of the Commission 
        prescribed under section 403(b), the State, as parens patriae, 
        may bring a civil action on behalf of the residents of the 
        State in a district court of the United States of appropriate 
        jurisdiction to--
                    (A) enjoin that practice;
                    (B) enforce compliance with the regulation;
                    (C) obtain damage, restitution, or other 
                compensation on behalf of residents of the State; or
                    (D) obtain such other relief as the court may 
                consider to be appropriate.
            (2) Notice.--
                    (A) In general.--Before filing an action under 
                paragraph (1), the attorney general of the State 
                involved shall provide to the Commission--
                            (i) written notice of that action; and
                            (ii) a copy of the complaint for that 
                        action.
                    (B) Exemption.--
                            (i) In general.--Subparagraph (A) shall not 
                        apply with respect to the filing of an action 
                        by an attorney general of a State under this 
                        subsection, if the attorney general determines 
                        that it is not feasible to provide the notice 
                        described in that subparagraph before the 
                        filing of the action.
                            (ii) Notification.--In an action described 
                        in clause (i), the attorney general of a State 
                        shall provide notice and a copy of the 
                        complaint to the Commission at the same time as 
                        the attorney general files the action.
    (b) Intervention.--
            (1) In general.--On receiving notice under subsection 
        (a)(2), the Commission shall have the right to intervene in the 
        action that is the subject of the notice.
            (2) Effect of intervention.--If the Commission intervenes 
        in an action under subsection (a), it shall have the right--
                    (A) to be heard with respect to any matter that 
                arises in that action; and
                    (B) to file a petition for appeal.
            (3) Amicus curiae.--Upon application to the court, a person 
        whose self-regulatory guidelines have been approved by the 
        Commission and are relied upon as a defense by any defendant to 
        a proceeding under this section may file amicus curiae in that 
        proceeding.
    (c) Construction.--For purposes of bringing any civil action under 
subsection (a), nothing in this title shall be construed to prevent an 
attorney general of a State from exercising the powers conferred on the 
attorney general by the laws of that State to--
            (1) conduct investigations;
            (2) administer oaths or affirmations; or
            (3) compel the attendance of witnesses or the production of 
        documentary and other evidence.
    (d) Actions by the Commission.--In any case in which an action is 
instituted by or on behalf of the Commission for violation of any 
regulation prescribed under section 403, no State may, during the 
pendency of that action, institute an action under subsection (a) 
against any defendant named in the complaint in that action for 
violation of that regulation.
    (e) Venue; Service of Process.--
            (1) Venue.--Any action brought under subsection (a) may be 
        brought in the district court of the United States that meets 
        applicable requirements relating to venue under section 1391 of 
        title 28, United States Code.
            (2) Service of process.--In an action brought under 
        subsection (a), process may be served in any district in which 
        the defendant--
                    (A) is an inhabitant; or
                    (B) may be found.

SEC. 406. ADMINISTRATION AND APPLICABILITY OF ACT.

    (a) In General.--Except as otherwise provided, this title shall be 
enforced by the Commission under the Federal Trade Commission Act (15 
U.S.C. 41 et seq.).
    (b) Provisions.--Compliance with the requirements imposed under 
this title shall be enforced under--
            (1) section 8 of the Federal Deposit Insurance Act (12 
        U.S.C. 1818), in the case of--
                    (A) national banks, and Federal branches and 
                Federal agencies of foreign banks, by the Office of the 
                Comptroller of the Currency;
                    (B) member banks of the Federal Reserve System 
                (other than national banks), branches and agencies of 
                foreign banks (other than Federal branches, Federal 
                agencies, and insured State branches of foreign banks), 
                commercial lending companies owned or controlled by 
                foreign banks, and organizations operating under 
                section 25 or 25(a) of the Federal Reserve Act (12 
                U.S.C. 601 et seq. and 611 et. seq.), by the Board; and
                    (C) banks insured by the Federal Deposit Insurance 
                Corporation (other than members of the Federal Reserve 
                System) and insured State branches of foreign banks, by 
                the Board of Directors of the Federal Deposit Insurance 
                Corporation;
            (2) section 8 of the Federal Deposit Insurance Act (12 
        U.S.C. 1818), by the Director of the Office of Thrift 
        Supervision, in the case of a savings association the deposits 
        of which are insured by the Federal Deposit Insurance 
        Corporation;
            (3) the Federal Credit Union Act (12 U.S.C. 1751 et seq.) 
        by the National Credit Union Administration Board with respect 
        to any Federal credit union;
            (4) part A of subtitle VII of title 49, United States Code, 
        by the Secretary of Transportation with respect to any air 
        carrier or foreign air carrier subject to that part;
            (5) the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et. 
        seq.) (except as provided in section 406 of that Act (7 U.S.C. 
        226, 227)), by the Secretary of Agriculture with respect to any 
        activities subject to that Act; and
            (6) the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) by 
        the Farm Credit Administration with respect to any Federal land 
        bank, Federal land bank association, Federal intermediate 
        credit bank, or production credit association.
    (c) Exercise of Certain Powers.--For the purpose of the exercise by 
any agency referred to in subsection (a) of its powers under any Act 
referred to in that subsection, a violation of any requirement imposed 
under this title shall be deemed to be a violation of a requirement 
imposed under that Act. In addition to its powers under any provision 
of law specifically referred to in subsection (a), each of the agencies 
referred to in that subsection may exercise, for the purpose of 
enforcing compliance with any requirement imposed under this title, any 
other authority conferred on it by law.
    (d) Actions by the Commission.--The Commission shall prevent any 
person from violating a rule of the Commission under section 403 in the 
same manner, by the same means, and with the same jurisdiction, powers, 
and duties as though all applicable terms and provisions of the Federal 
Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and 
made a part of this title. Any entity that violates such rule shall be 
subject to the penalties and entitled to the privileges and immunities 
provided in the Federal Trade Commission Act in the same manner, by the 
same means, and with the same jurisdiction, power, and duties as though 
all applicable terms and provisions of the Federal Trade Commission Act 
were incorporated into and made a part of this title.
    (e) Effect on Other Laws.--Nothing contained in the Act shall be 
construed to limit the authority of the Commission under any other 
provisions of law.

SEC. 407. REVIEW.

    Not later than 5 years after the effective date of the regulations 
initially issued under section 403, the Commission shall--
            (1) review the implementation of this title, including the 
        effect of the implementation of this title on practices 
        relating to the collection and disclosure of information 
        relating to children, children's ability to obtain access to 
        information of their choice online, and on the availability of 
        websites directed to children; and
            (2) prepare and submit to Congress a report on the results 
        of the review under paragraph (1).

SEC. 408. EFFECTIVE DATE.

    Sections 403(a), 405, and 406 of this title take effect on the 
later of--
            (1) the date that is 18 months after the date of enactment 
        of this Act; or
            (2) the date on which the Commission rules on the first 
        application filed for safe harbor treatment under section 404 
        if the Commission does not rule on the first such application 
        within one year after the date of enactment of this Act, but in 
        no case later than the date that is 30 months after the date of 
        enactment of this Act.

 TITLE V--OREGON INSTITUTE OF PUBLIC SERVICE AND CONSTITUTIONAL STUDIES

SEC. 501. DEFINITIONS.

    In this title:
            (1) Endowment fund.--The term ``endowment fund'' means a 
        fund established by Portland State University for the purpose 
        of generating income for the support of the Institute.
            (2) Institute.--The term ``Institute'' means the Oregon 
        Institute of Public Service and Constitutional Studies 
        established under this title.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.

SEC. 502. OREGON INSTITUTE OF PUBLIC SERVICE AND CONSTITUTIONAL 
              STUDIES.

    From the funds appropriated under section 506, the Secretary is 
authorized to award a grant to Portland State University at Portland, 
Oregon, for the establishment of an endowment fund to support the 
Oregon Institute of Public Service and Constitutional Studies at the 
Mark O. Hatfield School of Government at Portland State University.

SEC. 503. DUTIES.

    In order to receive a grant under this title the Portland State 
University shall establish the Institute. The Institute shall have the 
following duties:
            (1) To generate resources, improve teaching, enhance 
        curriculum development, and further the knowledge and 
        understanding of students of all ages about public service, the 
        United States Government, and the Constitution of the United 
        States of America.
            (2) To increase the awareness of the importance of public 
        service, to foster among the youth of the United States greater 
        recognition of the role of public service in the development of 
        the United States, and to promote public service as a career 
        choice.
            (3) To establish a Mark O. Hatfield Fellows program for 
        students of government, public policy, public health, 
        education, or law who have demonstrated a commitment to public 
        service through volunteer activities, research projects, or 
        employment.
            (4) To create library and research facilities for the 
        collection and compilation of research materials for use in 
        carrying out programs of the Institute.
            (5) To support the professional development of elected 
        officials at all levels of government.

SEC. 504. ADMINISTRATION.

    (a) Leadership Council.--
            (1) In general.--In order to receive a grant under this 
        title Portland State University shall ensure that the Institute 
        operates under the direction of a Leadership Council (in this 
        title referred to as the ``Leadership Council'') that--
                    ``(A) consists of 15 individuals appointed by the 
                President of Portland State University; and
                    ``(B) is established in accordance with this 
                section.
            (2) Appointments.--Of the individuals appointed under 
        paragraph (1)(A)--
                    (A) Portland State University, Willamette 
                University, the Constitution Project, George Fox 
                University, Warner Pacific University, and Oregon 
                Health Sciences University shall each have a 
                representative;
                    (B) at least 1 shall represent Mark O. Hatfield, 
                his family, or a designee thereof;
                    (C) at least 1 shall have expertise in elementary 
                and secondary school social sciences or governmental 
                studies;
                    (D) at least 2 shall be representative of business 
                or government and reside outside of Oregon;
                    (E) at least 1 shall be an elected official; and
                    (F) at least 3 shall be leaders in the private 
                sector.
            (3) Ex-officio member.--The Director of the Mark O. 
        Hatfield School of Government at Portland State University 
        shall serve as an ex officio member of the Leadership Council.
    (b) Chairperson.--
            (1) In general.--The President of Portland State University 
        shall designate 1 of the individuals first appointed to the 
        Leadership Council under subsection (a) as the Chairperson of 
        the Leadership Council. The individual so designated shall 
        serve as Chairperson for 1 year.
            (2) Requirement.--Upon the expiration of the term of the 
        Chairperson of the individual designated as Chairperson under 
        paragraph (1), or the term of the Chairperson elected under 
        this paragraph, the members of the Leadership Council shall 
        elect a Chairperson of the Leadership Council from among the 
        members of the Leadership Council.

SEC. 505. ENDOWMENT FUND.

    (a) Management.--The endowment fund shall be managed in accordance 
with the standard endowment policies established by the Oregon 
University System.
    (b) Use of Interest and Investment Income.--Interest and other 
investment income earned (on or after the date of enactment of this 
subsection) from the endowment fund may be used to carry out the duties 
of the Institute under section 503.
    (c) Distribution of Interest and Investment Income.--Funds realized 
from interest and other investment income earned (on or after the date 
of enactment of this subsection) shall be spent by Portland State 
University in collaboration with Willamette University, George Fox 
University, the Constitution Project, Warner Pacific University, Oregon 
Health Sciences University, and other appropriate educational 
institutions or community-based organizations. In expending such funds, 
the Leadership Council shall encourage programs to establish 
partnerships, to leverage private funds, and to match expenditures from 
the endowment fund.

SEC. 506. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title 
$3,000,000 for fiscal year 1999.

              TITLE VI--PAUL SIMON PUBLIC POLICY INSTITUTE

SEC. 601. DEFINITIONS.

    In this title:
            (1) Endowment fund.--The term ``endowment fund'' means a 
        fund established by the University for the purpose of 
        generating income for the support of the Institute.
            (2) Endowment fund corpus.--The term ``endowment fund 
        corpus'' means an amount equal to the grant or grants awarded 
        under this title plus an amount equal to the matching funds 
        required under section 602(d).
            (3) Endowment fund income.--The term ``endowment fund 
        income'' means an amount equal to the total value of the 
        endowment fund minus the endowment fund corpus.
            (4) Institute.--The term ``Institute'' means the Paul Simon 
        Public Policy Institute described in section 602.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (6) University.--The term ``University'' means Southern 
        Illinois University at Carbondale, Illinois.

SEC. 602. PROGRAM AUTHORIZED.

    (a) Grants.--From the funds appropriated under section 606, the 
Secretary is authorized to award a grant to Southern Illinois 
University for the establishment of an endowment fund to support the 
Paul Simon Public Policy Institute. The Secretary may enter into 
agreements with the University and include in any agreement made 
pursuant to this title such provisions as are determined necessary by 
the Secretary to carry out this title.
    (b) Duties.--In order to receive a grant under this title, the 
University shall establish the Institute. The Institute, in addition to 
recognizing more than 40 years of public service to Illinois, to the 
Nation, and to the world, shall engage in research, analysis, debate, 
and policy recommendations affecting world hunger, mass media, foreign 
policy, education, and employment.
    (c) Deposit Into Endowment Fund.--The University shall deposit the 
proceeds of any grant received under this section into the endowment 
fund.
    (d) Matching Funds Requirement.--The University may receive a grant 
under this section only if the University has deposited in the 
endowment fund established under this title an amount equal to one-
third of such grant and has provided adequate assurances to the 
Secretary that the University will administer the endowment fund in 
accordance with the requirements of this title. The source of the funds 
for the University match shall be derived from State, private 
foundation, corporate, or individual gifts or bequests, but may not 
include Federal funds or funds derived from any other federally 
supported fund.
    (e) Duration; Corpus Rule.--The period of any grant awarded under 
this section shall not exceed 20 years, and during such period the 
University shall not withdraw or expend any of the endowment fund 
corpus. Upon expiration of the grant period, the University may use the 
endowment fund corpus, plus any endowment fund income for any 
educational purpose of the University.

SEC. 603. INVESTMENTS.

    (a) In General.--The University shall invest the endowment fund 
corpus and endowment fund income in those low-risk instruments and 
securities in which a regulated insurance company may invest under the 
laws of the State of Illinois, such as federally insured bank savings 
accounts or comparable interest bearing accounts, certificates of 
deposit, money market funds, or obligations of the United States.
    (b) Judgment and Care.--The University, in investing the endowment 
fund corpus and endowment fund income, shall exercise the judgment and 
care, under circumstances then prevailing, which a person of prudence, 
discretion, and intelligence would exercise in the management of the 
person's own business affairs.

SEC. 604. WITHDRAWALS AND EXPENDITURES.

    (a) In General.--The University may withdraw and expend the 
endowment fund income to defray any expenses necessary to the operation 
of the Institute, including expenses of operations and maintenance, 
administration, academic and support personnel, construction and 
renovation, community and student services programs, technical 
assistance, and research. No endowment fund income or endowment fund 
corpus may be used for any type of support of the executive officers of 
the University or for any commercial enterprise or endeavor. Except as 
provided in subsection (b), the University shall not, in the aggregate, 
withdraw or expend more than 50 percent of the total aggregate 
endowment fund income earned prior to the time of withdrawal or 
expenditure.
    (b) Special Rule.--The Secretary is authorized to permit the 
University to withdraw or expend more than 50 percent of the total 
aggregate endowment fund income whenever the University demonstrates 
such withdrawal or expenditure is necessary because of--
            (1) a financial emergency, such as a pending insolvency or 
        temporary liquidity problem;
            (2) a life-threatening situation occasioned by a natural 
        disaster or arson; or
            (3) another unusual occurrence or exigent circumstance.
    (c) Repayment.--
            (1) Income.--If the University withdraws or expends more 
        than the endowment fund income authorized by this section, the 
        University shall repay the Secretary an amount equal to one-
        third of the amount improperly expended (representing the 
        Federal share thereof).
            (2) Corpus.--Except as provided in section 602(e)--
                    (A) the University shall not withdraw or expend any 
                endowment fund corpus; and
                    (B) if the University withdraws or expends any 
                endowment fund corpus, the University shall repay the 
                Secretary an amount equal to one-third of the amount 
                withdrawn or expended (representing the Federal share 
                thereof) plus any endowment fund income earned thereon.

SEC. 605. ENFORCEMENT.

    (a) In General.--After notice and an opportunity for a hearing, the 
Secretary is authorized to terminate a grant and recover any grant 
funds awarded under this section if the University--
            (1) withdraws or expends any endowment fund corpus, or any 
        endowment fund income in excess of the amount authorized by 
        section 604, except as provided in section 602(e);
            (2) fails to invest the endowment fund corpus or endowment 
        fund income in accordance with the investment requirements 
        described in section 603; or
            (3) fails to account properly to the Secretary, or the 
        General Accounting Office if properly designated by the 
        Secretary to conduct an audit of funds made available under 
        this title, pursuant to such rules and regulations as may be 
        proscribed by the Comptroller General of the United States, 
        concerning investments and expenditures of the endowment fund 
        corpus or endowment fund income.
    (b) Termination.--If the Secretary terminates a grant under 
subsection (a), the University shall return to the Treasury of the 
United States an amount equal to the sum of the original grant or 
grants under this title, plus any endowment fund income earned thereon. 
The Secretary may direct the University to take such other appropriate 
measures to remedy any violation of this title and to protect the 
financial interest of the United States.

SEC. 606. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title 
$3,000,000 for fiscal year 1999. Funds appropriated under this section 
shall remain available until expended.

              TITLE VII--HOWARD BAKER SCHOOL OF GOVERNMENT

SEC. 701. DEFINITIONS.

    In this title:
            (1) Board.--The term ``Board'' means the Board of Advisors 
        established under section 704.
            (2) Endowment fund.--The term ``endowment fund'' means a 
        fund established by the University of Tennessee in Knoxville, 
        Tennessee, for the purpose of generating income for the support 
        of the School.
            (3) School.--The term ``School'' means the Howard Baker 
        School of Government established under this title.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (5) University.--The term ``University'' means the 
        University of Tennessee in Knoxville, Tennessee.

SEC. 702. HOWARD BAKER SCHOOL OF GOVERNMENT.

    From the funds authorized to be appropriated under section 706, the 
Secretary is authorized to award a grant to the University for the 
establishment of an endowment fund to support the Howard Baker School 
of Government at the University of Tennessee in Knoxville, Tennessee.

SEC. 703. DUTIES.

    In order to receive a grant under this title, the University shall 
establish the School. The School shall have the following duties:
            (1) To establish a professorship to improve teaching and 
        research related to, enhance the curriculum of, and further the 
        knowledge and understanding of, the study of democratic 
        institutions, including aspects of regional planning, public 
        administration, and public policy.
            (2) To establish a lecture series to increase the knowledge 
        and awareness of the major public issues of the day in order to 
        enhance informed citizen participation in public affairs.
            (3) To establish a fellowship program for students of 
        government, planning, public administration, or public policy 
        who have demonstrated a commitment and an interest in pursuing 
        a career in public affairs.
            (4) To provide appropriate library materials and 
        appropriate research and instructional equipment for use in 
        carrying out academic and public service programs, and to 
        enhance the existing United States Presidential and public 
        official manuscript collections.
            (5) To support the professional development of elected 
        officials at all levels of government.

SEC. 704. ADMINISTRATION.

    (a) Board of Advisors.--
            (1) In general.--The School shall operate with the advice 
        and guidance of a Board of Advisors consisting of 13 
        individuals appointed by the Vice Chancellor for Academic 
        Affairs of the University.
            (2) Appointments.--Of the individuals appointed under 
        paragraph (1)--
                    (A) 5 shall represent the University;
                    (B) 2 shall represent Howard Baker, his family, or 
                a designee thereof;
                    (C) 5 shall be representative of business or 
                government; and
                    (D) 1 shall be the Governor of Tennessee, or the 
                Governor's designee.
            (3) Ex officio members.--The Vice Chancellor for Academic 
        Affairs and the Dean of the College of Arts and Sciences at the 
        University shall serve as an ex officio member of the Board.
    (b) Chairperson.--
            (1) In general.--The Chancellor, with the concurrence of 
        the Vice Chancellor for Academic Affairs, of the University 
        shall designate 1 of the individuals first appointed to the 
        Board under subsection (a) as the Chairperson of the Board. The 
        individual so designated shall serve as Chairperson for 1 year.
            (2) Requirements.--Upon the expiration of the term of the 
        Chairperson of the individual designated as Chairperson under 
        paragraph (1) or the term of the Chairperson elected under this 
        paragraph, the members of the Board shall elect a Chairperson 
        of the Board from among the members of the Board.

SEC. 705. ENDOWMENT FUND.

    (a) Management.--The endowment fund shall be managed in accordance 
with the standard endowment policies established by the University of 
Tennessee System.
    (b) Use of Interest and Investment Income.--Interest and other 
investment income earned (on or after the date of enactment of this 
subsection) from the endowment fund may be used to carry out the duties 
of the School under section 703.
    (c) Distribution of Interest and Investment Income.--Funds realized 
from interest and other investment income earned (on or after the date 
of enactment of this subsection) shall be available for expenditure by 
the University for purposes consistent with section 703, as recommended 
by the Board. The Board shall encourage programs to establish 
partnerships, to leverage private funds, and to match expenditures from 
the endowment fund.

SEC. 706. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title 
$10,000,000 for fiscal year 2000.

 TITLE VIII--JOHN GLENN INSTITUTE FOR PUBLIC SERVICE AND PUBLIC POLICY

SEC. 801. DEFINITIONS.

    In this title:
            (1) Endowment fund.--The term ``endowment fund'' means a 
        fund established by the University for the purpose of 
        generating income for the support of the Institute.
            (2) Endowment fund corpus.--The term ``endowment fund 
        corpus'' means an amount equal to the grant or grants awarded 
        under this title plus an amount equal to the matching funds 
        required under section 802(d).
            (3) Endowment fund income.--The term ``endowment fund 
        income'' means an amount equal to the total value of the 
        endowment fund minus the endowment fund corpus.
            (4) Institute.--The term ``Institute'' means the John Glenn 
        Institute for Public Service and Public Policy described in 
        section 802.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.
            (6) University.--The term ``University'' means the Ohio 
        State University at Columbus, Ohio.

SEC. 802. PROGRAM AUTHORIZED.

    (a) Grants.--From the funds appropriated under section 806, the 
Secretary is authorized to award a grant to the Ohio State University 
for the establishment of an endowment fund to support the John Glenn 
Institute for Public Service and Public Policy. The Secretary may enter 
into agreements with the University and include in any agreement made 
pursuant to this title such provisions as are determined necessary by 
the Secretary to carry out this title.
    (b) Purposes.--The Institute shall have the following purposes:
            (1) To sponsor classes, internships, community service 
        activities, and research projects to stimulate student 
        participation in public service, in order to foster America's 
        next generation of leaders.
            (2) To conduct scholarly research in conjunction with 
        public officials on significant issues facing society and to 
        share the results of such research with decisionmakers and 
        legislators as the decisionmakers and legislators address such 
        issues.
            (3) To offer opportunities to attend seminars on such 
        topics as budgeting and finance, ethics, personnel management, 
        policy evaluations, and regulatory issues that are designed to 
        assist public officials in learning more about the political 
        process and to expand the organizational skills and policy-
        making abilities of such officials.
            (4) To educate the general public by sponsoring national 
        conferences, seminars, publications, and forums on important 
        public issues.
            (5) To provide access to Senator John Glenn's extensive 
        collection of papers, policy decisions, and memorabilia, 
        enabling scholars at all levels to study the Senator's work.
    (c) Deposit Into Endowment Fund.--The University shall deposit the 
proceeds of any grant received under this section into the endowment 
fund.
    (d) Matching Funds Requirement.--The University may receive a grant 
under this section only if the University has deposited in the 
endowment fund established under this title an amount equal to one-
third of such grant and has provided adequate assurances to the 
Secretary that the University will administer the endowment fund in 
accordance with the requirements of this title. The source of the funds 
for the University match shall be derived from State, private 
foundation, corporate, or individual gifts or bequests, but may not 
include Federal funds or funds derived from any other federally 
supported fund.
    (e) Duration; Corpus Rule.--The period of any grant awarded under 
this section shall not exceed 20 years, and during such period the 
University shall not withdraw or expend any of the endowment fund 
corpus. Upon expiration of the grant period, the University may use the 
endowment fund corpus, plus any endowment fund income for any 
educational purpose of the University.

SEC. 803. INVESTMENTS.

    (a) In General.--The University shall invest the endowment fund 
corpus and endowment fund income in accordance with the University's 
investment policy approved by the Ohio State University Board of 
Trustees.
    (b) Judgment and Care.--The University, in investing the endowment 
fund corpus and endowment fund income, shall exercise the judgment and 
care, under circumstances then prevailing, which a person of prudence, 
discretion, and intelligence would exercise in the management of the 
person's own business affairs.

SEC. 804. WITHDRAWALS AND EXPENDITURES.

    (a) In General.--The University may withdraw and expend the 
endowment fund income to defray any expenses necessary to the operation 
of the Institute, including expenses of operations and maintenance, 
administration, academic and support personnel, construction and 
renovation, community and student services programs, technical 
assistance, and research. No endowment fund income or endowment fund 
corpus may be used for any type of support of the executive officers of 
the University or for any commercial enterprise or endeavor. Except as 
provided in subsection (b), the University shall not, in the aggregate, 
withdraw or expend more than 50 percent of the total aggregate 
endowment fund income earned prior to the time of withdrawal or 
expenditure.
    (b) Special Rule.--The Secretary is authorized to permit the 
University to withdraw or expend more than 50 percent of the total 
aggregate endowment fund income whenever the University demonstrates 
such withdrawal or expenditure is necessary because of--
            (1) a financial emergency, such as a pending insolvency or 
        temporary liquidity problem;
            (2) a life-threatening situation occasioned by a natural 
        disaster or arson; or
            (3) another unusual occurrence or exigent circumstance.
    (c) Repayment.--
            (1) Income.--If the University withdraws or expends more 
        than the endowment fund income authorized by this section, the 
        University shall repay the Secretary an amount equal to one-
        third of the amount improperly expended (representing the 
        Federal share thereof).
            (2) Corpus.--Except as provided in section 802(e)--
                    (A) the University shall not withdraw or expend any 
                endowment fund corpus; and
                    (B) if the University withdraws or expends any 
                endowment fund corpus, the University shall repay the 
                Secretary an amount equal to one-third of the amount 
                withdrawn or expended (representing the Federal share 
                thereof) plus any endowment fund income earned thereon.

SEC. 805. ENFORCEMENT.

    (a) In General.--After notice and an opportunity for a hearing, the 
Secretary is authorized to terminate a grant and recover any grant 
funds awarded under this section if the University--
            (1) withdraws or expends any endowment fund corpus, or any 
        endowment fund income in excess of the amount authorized by 
        section 804, except as provided in section 802(e);
            (2) fails to invest the endowment fund corpus or endowment 
        fund income in accordance with the investment requirements 
        described in section 803; or
            (3) fails to account properly to the Secretary, or the 
        General Accounting Office if properly designated by the 
        Secretary to conduct an audit of funds made available under 
        this title, pursuant to such rules and regulations as may be 
        prescribed by the Comptroller General of the United States, 
        concerning investments and expenditures of the endowment fund 
        corpus or endowment fund income.
    (b) Termination.--If the Secretary terminates a grant under 
subsection (a), the University shall return to the Treasury of the 
United States an amount equal to the sum of the original grant or 
grants under this title, plus any endowment fund income earned thereon. 
The Secretary may direct the University to take such other appropriate 
measures to remedy any violation of this title and to protect the 
financial interest of the United States.

SEC. 806. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to carry out this title 
$6,000,000 for fiscal year 2000. Funds appropriated under this section 
shall remain available until expended.

            Passed the Senate October 8 (legislative day, October 2), 
      1998.

            Attest:

                                                    GARY SISCO,

                                                             Secretary.