[Congressional Record Volume 140, Number 27 (Friday, March 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                                 AIRBUS

  Mr. DANFORTH. Mr. President, I would like to address the Senate on 
the question of the aerospace industry and particularly the matter of 
Airbus, because the Airbus situation has been so egregious and such a 
clear example of unfair trade practices against a major industry in the 
United States.
  The aerospace industry has truly been one of the flagship industries 
of our country. The aerospace industry has been one of the leaders with 
respect to export sales by the United States. We have been the premier 
aerospace manufacturer, and the only real competitor in the manufacture 
of commercial aircraft has been Airbus.
  Airbus is a consortium of European countries that have created a 
company, the Airbus company, Airbus industry, which has gotten into the 
business of commercial aircraft. It has gotten into the business of 
commercial aircraft with very, very heavy subsidies, production 
subsidies, research subsidies, development subsidies.
  As a matter of fact, the Airbus industry in its history--which I 
believe is certainly several decades old now, something like three 
decades--the Airbus industry has never made a profit.
  No private business can succeed without making a profit. No private 
business can stay alive without making a profit.
  The Airbus industry has never ever made a profit, but Airbus industry 
has been very heavily subsidized by European governments, subsidized, 
as of 1990 or 1991, whenever the latest computation I have seen was 
made, subsidized to the tune of $26 billion. And, as a result of those 
subsidies, the Airbus industry, which has never made a profit, has 
captured approximately one-third of the market in commercial aircraft.

  This, in turn, has had a very dramatic effect on the U.S. aircraft 
manufacturing companies, and there are two major ones, Boeing and 
McDonnell Douglas. McDonnell Douglas, of course, is headquartered in 
St. Louis, although most, if not all, of the work on commercial 
aircraft is not done in St. Louis but is done in California.
  In any event, it has been very tough on the American commercial 
aircraft industry. From time to time, there have been discussions and 
speculation, and I believe even possibly negotiations between U.S. 
aircraft manufacturers and Airbus. If we cannot beat them, maybe we 
should join them; maybe we should have some sort of relationship with 
them.
  Also, there have been efforts to sell in the European market, and 
because of the relationship between Airbus and the governments of the 
European countries, and between the governments and the airlines of the 
European countries, there has been some reluctance on the part of our 
aerospace industry to press, as far as they might have, the 
countervailing duty statute that would otherwise be available to 
counteract subsidies.
  So against all of that background, a special agreement was negotiated 
between the United States and the European Community with respect to 
the subsidies of Airbus for the manufacturing of aircraft. And that 
special agreement green-lighted or permitted certain subsidies to 
continue. I thought that agreement was a very bad precedent. I thought 
that it was bad enough that Airbus was conducting all of these 
subsidies, but that it was even worse to officially recognize and 
condone the existence of the subsidies. So I felt very, very strongly 
about the Airbus agreement that was reached between the United States 
and the European Community.
  In response to that negotiation, I took the position that, well, the 
United States now has to decide what it wants to do. My preferred 
response was that, despite the agreement, we initiate a countervailing 
duty case against Airbus.
  A countervailing duty case can be initiated either by the affected 
industry or it can be initiated by the Government of our country. And 
because, under our Constitution, matters pertaining to foreign commerce 
are within the powers of the legislative branch of our Government, I 
believe that the thing to do is the legislative branch should speak out 
and mandate the initiation of a countervailing duty case against 
Airbus. I still believe that would have been the preferred course.
  But I recognize that if we are not going to have a countervailing 
duty case and we are faced with foreign subsidies, with foreign unfair 
trade practices, the United States has only two options available to 
it. One option is to lose out and the other option is to meet subsidy 
with subsidy.
  The idea of meeting subsidy with subsidy is not something that I 
prefer. It is not something that I think is good policy. It is not 
something that I would like to welcome. But when it comes to a question 
of necessity, if we are not going to use the remedies under the trade 
laws, if we are not going to bring countervailing duty cases, then it 
seems to me that what we should do is to get into the subsidy business 
ourselves, or at least open up that possibility.
  So after the agreement was reached between the United States and the 
European Community, I introduced two bills. They were meant to be bills 
in the alternative. One bill was to compel the initiation of a 
countervailing duty case against Airbus. And the second bill was to 
form our own consortium, which would be called Aerotech. It was modeled 
after Sematech. Sematech was, itself, a U.S. response to unfair trade 
practices abroad.
  I am not a fan of subsidies. I do think that there are times, 
especially when whole industries are going down the drain, like 
Chrysler, or times when other countries are doing something, when we 
have to react in some fashion, that the purity of a philosophical 
position is abandoned in the face of necessity.
  That is the origin of my position with respect to Aerotech and my 
position with respect to Airbus.
  Now, I am very concerned that what has been a singular case in the 
aerospace industry is going to become the model for the future. That is 
my concern. I think it is going to be the model for the future because 
under the trade agreement that has been negotiated between the United 
States and the rest of the world, we have agreed to the green-lighting 
of major subsidies for research and development--50 percent of 
development, 75 percent of research--which combines both basic research 
and applied research. This is a major change in U.S. trade policy and a 
major change in the subsidies code.
  My fear is--and I hope I am wrong--that Airbus is going to be 
something of a model; what was done with Airbus and the Europeans is 
now going to be permitted. And it is not going to be a matter, anymore, 
of having a countervailing duties remedy and not using it; the remedy 
will not even be available. We will, in effect, have condoned and 
agreed to a system of subsidies which I believe is a very, very serious 
matter.
  What has particularly concerned me is that the change in the position 
of our Government with respect to subsidies has been the moving force 
in achieving this change in the subsidies code. The change in the 
subsidies code and the green-lighting of certain subsidies has not been 
foisted upon the United States by the negotiating power of other 
countries. Instead, it has been something that has been advanced by our 
own Government as a matter of policy. I just think it is a serious 
policy and I think it deserves attention. And to the extent possible, 
it has to be remedied.
  S. 4 is a major increase in Government subsidies for our private 
sector for research and development. It is a very dramatic increase in 
the so-called ATP Program, Advanced Technology Program, from $199 
million to an authorization--which is this year--to an authorization of 
$575 million for 1996. This is a program which was zero about 4 years 
ago. There was not any such thing. It was zero. And it had a big burst 
forward just in this year to $199 million. It was way below that 
before. I do not have the numbers with me. They are somewhere in the 
back of the Chamber.
  But in any event, it has gone from zero to $199 million in a few 
years, and now we are authorizing the ATP Program to go up to $575 
million. That is a big change. And this is a program to provide direct 
subsidies to selected R&D companies.
  Then we have something called the SBA Pilot Program. This is a 
program by which the Department of Commerce and the Small Business 
Administration licenses venture capital companies and then makes $50 
million in 1995 and $50 million in 1996 available to venture capital 
companies for the purpose of who knows what.
  It is a Government initiative into venture capital. I have attempted 
to point out the problem with the Government getting into venture 
capital is that there really is not any risk. Venture capitalists put a 
lot at risk. Venture capitalists can win or venture capitalists can 
lose their shirts, and there is a certain discipline that is imposed by 
knowing you are going to lose money. One thing you can do is you can 
pull the plug on a program that is not going very well. Government, 
when it is backing a program, does not like to pull the plug. Why? 
Because there are constituents out there; hey, there are real voters 
out there who are dependent on the subsidy.
  So that is the so-called SBA pilot program. It is a venture capital 
program.
  In a nutshell, Mr. President, I am concerned that Airbus is going to 
be the wave of the future. I am concerned that Airbus is something that 
is going to be practiced by our trading partners, or the Airbus scheme 
is going to be practiced by our trading partners in all kinds of very 
promising industries. I do not know what they are: High-definition 
television, pharmaceuticals, whatever. Some of the most promising 
future-oriented industries will be involved in some kind of a race 
worldwide on what governments are going to provide the greatest 
subsidies.
  I am concerned that S. 4 dovetails with that problem in that it 
provides a substantial increase in funds and a substantial change in 
policy with respect to the Government entanglement with the private 
sector.
  That is the nature of my concern, but I did want to speak with the 
Senate about the question of Airbus and the question of the so-called 
Aerotech proposal because it has been repeatedly mentioned on the other 
side of the aisle, countless times, really. I believed that it was 
important to clear that up.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HOLLINGS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HOLLINGS. Mr. President, I was trying to listen to two at one 
time. The 1994 figure, this fiscal year, is $526 million. We added 
thereto $50 million for the small business technology loans. That was 
worked out with Chairman Bumpers, the chairman of the committee; it was 
worked out by the ranking member, Senator Pressler, who is also top 
ranking on our Committee of Commerce. That is one add-on.
  I am trying to get an explanation and an understanding why we got up 
to the higher figure because we hear we have come from nothing to $2.8 
billion. Let us talk in terms of years. When you say $2.8 billion, you 
are really going to 2 years rather than 1 year. What I want to do is 
take the 1 year and show how we proceeded.
  We did not come from nothing to $2.8 billion. By the way, the 
Competitiveness Council said you ought to go up from $4 to $8 billion. 
That was their recommendation last year and again this year because we 
are transferring all of this from DARPA to Commerce, and, yes, there is 
an increase from $199 to $475 million, not $109 million and $575 
million respectively out in 1996.
  We can only talk in one vocabulary and one understanding, and I am 
talking about where we are in this fiscal year, right this minute, 
already signed into law and where we are going next year. The 
references to where President Bush was, it is a given President Bush 
tried to redline this one. He absolutely opposed it, and the only way 
we got it signed into law back at that time by President Reagan was on 
a trade bill where he would have had to veto the entire trade bill.
  So they have been shouting industrial policy at us for quite a while 
whenever they really resist going in to try to develop jobs, to try to 
develop our technology, and to become competitive. There is no question 
about that. Do not use those figures; let us use the figure we have 
right now that the Congress approved--well, I daresay, I guess we will 
have to admit it--without a single Republican vote. Yes, we had to. We 
had to get all of the Democrats almost, plus the Vice President to get 
this amount. My memory is jarred. The economy is doing good on account 
of the budget that we passed last year that the distinguished Chair and 
I finally voted for. We had grave misgivings, but we had to get the 
country moving and it is moving.
  With respect then to the 1994 figure, $526 million, the small 
business loans worked out to $50 million. I alluded to the fact that we 
had the advance technology programs go from $199 to $475 million, not 
$575 million 2 years out, but next year, $475 million. That is where 
instead of seven technology centers, we are going to try to add another 
seven centers and ultimately get more. We had testimony before 
concerning the business leadership, the Competitiveness Council before 
the Committee of Commerce 2 years ago. They said we ought to have 70 
centers. On the centers, we only go from $30 million up to $70 million. 
So there is an increase there of $40 million.
  All right. Summing up, again, we have the small business at $50 
million; we have the advance technology programs being increased by 
$258 million; we have the centers at $40 million. The laboratory itself 
goes up $94 million. There has been some construction and, again, on 
that same construction contract almost $100 million added there.
  With respect to the National Science Foundation, that is an add-on of 
$75 million. It is not in there this year.
  They can go from zero to all of this. Yes, President Clinton's 
program in the light of $70 billion being used for research and health 
research and $40 billion in defense research and energy research of 
over $6.8 billion and these other things with the national labs. We are 
trying to get more into the private sector and under the National 
Science Foundation, so we add there another--National Science 
Foundation--$75 million.
  The information superhighway of Vice President Gore goes up $209 
million, and the manufacturing technology centers, $48 million. So you 
can see at a glance that we have added up now, instead of the $526 
million, we are already to $1.2 billion. The amount overall is $1.3 
billion. There is a little bit in there for the wind tunnel. There is a 
small increase here, there and yon. It is not just we have a zero 
program and let us go to $2.8 billion and start spending $3 billion 
without thought and without support and without bipartisan support.
  Now, bipartisan support, once again--and we have been doing this 5 
days this week--our Republicans colleagues and Democratic colleagues 
all on the Committee of Commerce reported out unanimously $1.5 billion 
for 1 year, or if it stayed the same as a freeze, it would be $3 
billion, not $2.8 billion, for the $2.8 billion figure comparable. They 
continue to jump and make it just way out of line and keep talking 
about the amounts. So they jump it up to $2.8 billion from nothing. 
Only 10 times nothing is 10 times. Absolutely, I know. That is not the 
case at all. We have not come with 10 times. We have taken over 
programs from DARPA. We continue to explain it and it is less, Mr. 
President, than what the distinguished Senator from Missouri supported 
when we reported this bill last June.
  That is on the figures.
  With respect to the aerospace industry, because therein is where I 
see that I have agreed with the Senator from Missouri on philosophy. We 
have the letter on the GATT agreement--it is addressed to each one of 
us; we each have a copy--from the Assistant to the President for 
Science and Technology, J.H. Gibbons who was confirmed unanimously, 
incidentally, the former Director of our Office of Technology 
Assessment.
  I worked on that particular board since its commencement back in the 
seventies with Senator Kennedy and Senator Humphrey. We got together 
and instituted it, and I guess I am the remaining old-timer still on 
the Office of Technology Assessment. There has been nothing more of a 
delight than working with the expertise of John H. Gibbons, and Jack, 
as we call him, writes this letter from the White House dated March 7--

       I am writing to express my full support for the GATT 
     agreement that has emerged from 8 years of international 
     negotiations in the Uruguay round. It is an excellent 
     document that will promote freer and fairer trade and enrich 
     the nations of the world including our own. I am particularly 
     pleased with the outcome of the subsidies code in the GATT 
     agreement.

  Let me read that again for the attention of the Members--

       I am particularly pleased with the outcome of the subsidies 
     code in the GATT agreement. It puts real teeth in 
     disciplining unfair trade distorting production and export 
     subsidies. At the same time, it protects economically 
     desirable U.S. Government investment in research and 
     development from potential challenge by foreign countries.
       I applaud the successful efforts by our trade negotiators 
     in Geneva to improve the language in the subsidies code 
     relating to government research and development investments. 
     The agreement as negotiated protects from challenge or threat 
     U.S. Government programs that have long had widespread 
     bipartisan support. Among them are--

  And he goes down a list here but the important one addressing the 
particular subject addressed by the distinguished Senator from Missouri 
is, and I quote, ``Support for aeronautical and space research dating 
back to 1915 for aeronautics from NASA.''
  Mr. President, I ask unanimous consent the letter in its entirety be 
printed in the Record.
  There being no objection, the letter us ordered to be printed in the 
Record, as follows:

                                              The White House,

                                    Washington, DC, March 7, 1994.
     Senator George J. Mitchell,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Mitchell: I am writing to express my full 
     support for the GATT agreement that has emerged from eight 
     years' international negotiations in the Uruguay Round. It is 
     an excellent document that will promote freer and fairer 
     trade, and enrich the nations of the world, including our 
     own.
       I am particularly pleased with the outcome of the subsidies 
     code in the GATT agreement. It puts real teeth in 
     disciplining unfair, trade-distorting production and export 
     subsidies. At the same time, it protects economically 
     desirable U.S. Government investment in research and 
     development from potential challenge by foreign countries.
       I applaud the successful efforts by our trade negotiators 
     in Geneva to improve the language in the subsidies code 
     relating to government research and development investments. 
     The agreement as negotiated protects from challenge or threat 
     U.S. Government programs that have long had widespread 
     bipartisan support. Among them are:
       Research at the National Institutes of Health that leads to 
     commercial pharmaceutical or biotechnology products;
       Support for aeronautical and space research (dating back to 
     1915 for aeronautics) from NASA;
       Sematech, the government-industry consortium to improve 
     semiconductor manufacturing technology that is widely 
     credited with helping to restore the U.S. industry's position 
     as world leader;
       The Technology Reinvestment Program, a cornerstone of our 
     defense conversion program;
       The Commerce Department's Advanced Technology Program, 
     designed to promote the growth of knowledge-intensive, 
     wealth-creating industries that generate good new jobs;
       The thousands of Cooperative Research and Development 
     Agreements that industry has signed with our National 
     Laboratories, to turn government research into 
     technologically advanced commercial products.
       We must not put these excellent programs in jeopardy.
       I am proud and grateful that our trade negotiators achieved 
     an agreement that reflects American values and the American 
     approach to R&D partnerships between industry and government, 
     while putting the brakes on free-for-all subsidies.
           With kindest regards,

                                              John H. Gibbons,

                                        Assistant to the President
                                       for Science and Technology.

  Mr. HOLLINGS. I thank the Chair. The concluding paragraph:

       I am proud and grateful that our trade negotiators achieved 
     an agreement that reflects American values and the American 
     approach to R&D partnerships between industry and Government 
     while putting the brakes on free-for-all subsidies.
       With kindest regards,
                                                             Jack.

  He just sent that here the beginning of the week.
  So, yes, there is a difference on the subsidies with respect to the 
distinguished Senator from Missouri and the White House and the 
administration. The White House is saying, the administration is 
saying, look, we think that the subsidies code in GATT puts real teeth 
into unfair trade distorting production and export subsidies and 
protects what we have been doing.
  I read that specifically:

       It protects economically desirable U.S. Government 
     investment in research and development from potential 
     challenge by foreign countries.

  Now what happens? Let us bring us right up to date. Bringing us right 
up to date, Mr. President, with respect to those subsidies which have 
potential challenge from foreign countries, we find that there is such 
a one right in the aerospace industry that was not referred to, as I 
remember, by the distinguished Senator's comments, but that is the 
recent sale on February 16, Mr. President, of 6 billion dollars' worth 
of commercial aircraft to Saudi Arabia from United States manufacturers 
to replace its civilian fleet of about 50 airplanes. Now, Airbus, the 
four-nation European aircraft manufacturer, was quite surprised, and it 
goes on. I am not reading the entire amount, but it says:

       The consortium, made up of France, Germany, Spain and the 
     United Kingdom, is looking at the possibility that the order 
     was linked to the rescheduling of $9.2 billion in Saudi debt 
     for U.S. defense equipment which would mean it violated 
     article 4 of the GATT code. The official said article 4 bans 
     inducements related to defense supplies.

  The Senator from South Carolina knows not the truth or falsity of 
that particular provision of the code, but you can see the concern, 
because it goes on to state:

       The transaction was facilitated by $6.2 billion in export 
     financing provided by the Export-Import Bank, an independent 
     government agency that helps finance and promote exports 
     sales of U.S. goods and services.

  Now, Mr. President, there is a dispute. There is a dispute as to what 
is contained in the Uruguay round, the subsidies code, and whether or 
not it is good or bad. There is a definite difference. S. 4 does not 
deal with that except for the fact by way of allusion we can say we 
provided that our particular program is not subsidized in the context 
of cash money for the actual sale from Export-Import Bank, does not 
subsidize in the amounts otherwise for any forgiveness of any debt of 
that kind. We do not deal with any $9 billion. They talk about this 
bill here just to get all of America's technology going, and they use 
the 2-year figure but the 1-year figure is $1.3 billion. Yet they have 
no misgiving about using $9 billion to be rescheduled. They prefer to 
refer to this bill as an exorbitant thing for all of industry. The 
latter is exactly the point: It is for all of industry, not the 
aircraft technology.
  Now, we have all agreed--and the distinguished Senator said he 
believed in Chrysler. He believed in semiconductor. And he says if you 
are not going to have countervailing duties, he believes in aerospace 
subsidies. So we know of those things. So we know when we look and say 
we put it in, in nominal peer reviewed amounts, instituted by industry 
and not government, we know we are really being on the conservative 
side of this particular approach, both of them being industrial policy. 
This is an industrial policy that we all should support, and I say so 
with pride.
  What happens here is the Senator referred, of course, to Airbus and 
how the production, research, and development was subsidized, they 
never made a profit, and as a result they have got a third of the 
market. I know the feeling. I have been in a similar situation with 
respect to the textile industry. I remember attesting back in the 
1950's before the old International Tariff Commission when we were 
alarmed in that the consumption of clothing and textiles in America was 
represented in 10 percent imports of its consumption, and that if we 
did not do something at that time, it could double to maybe 20 percent, 
and that was just going to be devastating.
  Mr. President, not one-third of the market, two-thirds of the 
clothing within the view of this audience and in this Chamber is 
imported. We have lost two-thirds of the market and more of the 
apparel, and this is the employer of women and minorities. The largest 
employer of women and minorities in America is U.S. textiles.
  Moreover, the GATT agreement--now the Senator from Missouri and I 
come back in lockstep with respect to opposing GATT. And I would like 
to see it renegotiated. They would not even let us in the door in 
Geneva. We had representatives there. We had letters of promise of what 
they intended to do. But what they did, namely the phaseout of what we 
called the multifiber arrangement, has been studied by Wharton. And the 
Wharton School says we are going to lose 1.3 million jobs for that 
phaseout. So we know this has been studied. It has been contested. As a 
result of the contest, we have been promised, and the promise has been 
broken. We are on course now with this GATT to lose 1.3 million jobs.

  If the distinguished Senator can get aerospace subsidies and Airbus 
renegotiated, I am giving notice right now that I am going to join on 
and try to get the devastation of my textile industry repaired.
  By the way, let me emphasize this. They had a hearing on this 
Tuesday. My distinguished ranking member said that he had to be off the 
floor as a member of the Finance Committee, and he attended that 
hearing. The Finance Committee brought up GATT. They brought up the 
matter of subsidies, and the head of Boeing Aircraft which supported 
that subsidy, supported the GATT agreement.
  I am also told that both McDonnell Douglas and Boeing oppose bringing 
a countervailing duty. I read from the Council on Competitiveness in 
June of last year. It states on page 36, and I am just taking this up 
by advice of counsel:

       There has been industry and government consensus behind the 
     pursuit of a negotiated solution to the trade-distorting 
     effects of Airbus subsidies. There has, however, been little 
     consensus behind the aggressive use of U.S. trade law to 
     counter these subsidies. The gap between the tough talk on 
     Airbus and the lack of trade action against it has at times 
     been glaring.
       In December 1985 and in February 1987, U.S. trade officials 
     prepared section 301 cases against Airbus for Cabinet-level 
     decision. Both times no decisive trade action was taken. The 
     1985 decision even followed a highly publicized Presidential 
     speech, and section 301 was supported. An Airbus subsidy was 
     singled out as a violation of trade agreements. 
     Countervailing duty investigations were also considered 
     several times from 1978 through 1992, and not one was 
     initiated. A likely consequence of that inconsistency was the 
     weakening of the credibility of the U.S. trade policy.
       In lieu of trade action, negotiated solutions were sought 
     with the objective of limiting the trade distortions 
     associated with Airbus subsidies.
       Three factors block U.S. industry-government consensus on 
     trade action against Airbus. One, the desire of U.S. airlines 
     for access to subsidize cheaper Airbus products; two, U.S. 
     government's linking of trade policy goals to foreign policy 
     priorities; three, concern of U.S. and aircraft parts 
     producers over jeopardizing relations with their European 
     airline customers.
       In 1978, Eastern Airlines strongly opposed the Treasury 
     Department self-initiated CBD case against Airbus. No action 
     was taken. In 1985 the State Department blocked trade action 
     on the grounds that it would damage U.S.-West European 
     relations, particularly U.S.-French ties. And in 1987 
     McDonnell Douglas opposed Section 301 action out of fear that 
     retaliation by Airbus governments would cost it important 
     European airline customers.
       Consequently, the action was dropped. Government officials 
     were unwilling to take trade measures opposed by the U.S. 
     industry, lacking full industry support and sometimes inter-
     government consensus. Trade policy was paralyzed.

  I had a similar experience, Mr. President, with the automobile 
industry. I will never forget the excitement in the early part of the 
year when we had the three big auto companies coming here, the heads of 
General Motors, Ford, and Chrysler. They were going to appear for the 
first time before the committee. I heard a couple of days before the 
hearing that they intended to come and support a dumping case, 
initiating a joining of hands, initiating a dumping case. We know over 
2 years ago--and I am just citing from memory with round figures--that 
the Japanese automobile industry lost about $3.2 billion on overseas 
sales, but back home in the domestic market they made it up with $11.1 
billion in profits.
  So there is an assault. Do not ask about losing any money, as has 
been pointed out by Airbus and not making any money. The strategy with 
Airbus is market share. The strategy with Japanese is market share.
  We are not going to turn to that strategy here in the United States 
and put in a MITI and put in an Airbus and start subsidizing. But we 
have to do something to boost the commercialization of our technology, 
and that is what S. 4 is all about.
  So there we are. We are back on S. 4 now. We have heard about the 
aerospace, and there is one point of agreement: the legitimacy of a 
philosophy that supports industry. That is the philosophy we have in 
this particular bill. We ought to assist with the research, definitely 
do that. That is the bare minimum, and we have been doing that over the 
years. We have done it in agriculture. That is the land grant colleges. 
The distinguished Senator knows agriculture better than any. And we at 
the land grant colleges conducted the research with Federal grants. We 
had the experimental stations to put new new ideas to the test. Then we 
had the extension centers to conduct outreach.
  This is exactly what we have now for industry, and particularly small 
business industry on the industrial side, on the technology side, on 
the production side.
  These programs are industry initiative and largely industry financed, 
with the National Academy of Engineering conducting peer review. We go 
about it in that very deliberate fashion and in a very modest way. I 
cannot find a business entity that opposes this. All of them have 
written in, all the coalitions: National Association of Manufacturers, 
the Competitive Technology Coalition, and all the others. So we have a 
good measure.
  If we can move forward, I want to yield to see if we can get some 
amendments up and get some votes.
  Mr. BROWN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.
  Mr. BROWN. Mr. President, I have heard the chairman. I respond.
  Mr. President, I rise to send an amendment to the desk, but I ask 
unanimous consent that the pending amendment be set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 1496

  (Purpose: To amend rule 11 of the Federal Rules of Civil Procedure)

  Mr. BROWN. Mr. President, I send an amendment to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Colorado [Mr. Brown] proposes an amendment 
     numbered 1496.

  Mr. BROWN. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the end of the bill add the following new title:

               TITLE   --FEDERAL RULES OF CIVIL PROCEDURE

     SEC.   . RULE 11 FEDERAL RULES OF CIVIL PROCEDURE.

       (a) In General.--Rule 11 of the Federal Rules of Civil 
     Procedure is amended--
       (1) in subsection (b)(3) by striking out ``or, if 
     specifically so identified, are likely to have evidentiary 
     support after a reasonable opportunity for further 
     investigation or discovery'' and inserting ``or are well 
     grounded in fact''; and
       (2) in subsection (c)--
       (A) in the first sentence by striking out ``may, subject to 
     the conditions stated below,'' and inserting in lieu thereof 
     ``shall'';
       (B) in paragraph (2) by striking out the first and second 
     sentences and inserting in lieu thereof ``A sanction imposed 
     for violation of this rule may consist of reasonable 
     attorneys' fees and other expenses incurred as a result of 
     the violation, directives of a nonmonetary nature, or an 
     order to pay penalty into court or to a party.''; and
       (C) in paragraph (2)(A) by inserting before the period ``, 
     although such sanctions may be awarded against a party's 
     attorneys''.
       (b) Effective Date.--The provisions of this section shall 
     take effect 30 days after the date of the enactment of this 
     Act.

  Mr. BROWN. Mr. President, I know this bill has become somewhat 
controversial, that strong words have been exchanged. But I want to pay 
my respects to the distinguished work of the two Senators who are on 
the floor right now, the distinguished chairman who has brought this 
forward and the distinguished Senator from Missouri, who has worked so 
hard and long on this bill.
  I know that both of them are genuinely and sincerely committed to 
improving the competitiveness of this country. I particularly 
appreciate the commitment of the chairman of the committee to work 
toward that end. While we may have some disagreements as to the funding 
level of this measure, I have no doubt that his purpose is sincere and 
that his commitment is to making this Nation much more competitive and 
to improving job opportunities for Americans.
  Mr. President, in that regard, I want to offer an amendment to the 
Chamber that I hope will merit inclusion in the bill. It is one that I 
think deals with the fundamental question of competitiveness. Included 
in all of the factors that go to our competitiveness is the question of 
what has happened to our legal system and the potential for frivolous 
lawsuits.
  In that regard, there has recently been a change in the rules of 
Federal Rules of Civil Procedure that I believe has a major impact on 
the potential competitiveness of this Nation. Those Rules of Civil 
Procedure were recently amended. I know many Members are familiar with 
the change. For those who are not, I might outline very briefly what 
has happened.
  The Judicial Conference of the United States recommended to the 
Supreme Court that some changes to the Federal Rules of Civil Procedure 
be made. Their advisory committee has come up with some suggestions, 
many of them by trial attorneys that deal in this area, many of them by 
judges. Those changes have been accepted in a process that I will 
outline later. Many of the changes to the Federal Rules of Civil 
Procedure are very good and, I think, will help in the judicial 
process. But one particular set of changes I think presents an enormous 
problem for our country. And I feel that the overwhelming Members of 
this Chamber will be concerned about changes in the rules and will want 
to make some modifications in those changes in the rules.

  What we are literally talking about is a change in the Rules of Civil 
Procedure--specifically, those changes to rule 11. We are particularly 
concerned about the changes in rule 11 that address the sanctions 
imposed for filing frivolous lawsuits. These are lawsuits that are 
brought without a solid basis in fact, or a solid basis in law.
  In the past under rule 11, when those claims, those cases, those 
representations are made, we had an ability to bring meaningful 
sanctions against the party. The thinking was--and I believe it is 
valid--that bringing sanctions against a party who brings a groundless 
claim, one, discourages people from cluttering up our courts with those 
groundless claims and, two, provides appropriate compensation to the 
injured party. That is, if someone has a groundless claim made against 
them and they are injured not only by that, but by the attorney's 
costs, and other fees to defend themselves, they are entitled to some 
reasonable form of compensation.
  I believe that not only do the Members of this Chamber feel that is 
fair, but the vast majority of American people feel that is fair. 
Frankly, Mr. President, this amendment only deal with a portion of the 
rule 11 changes regarding sanctions.
  The December 1 changes to rule 11 were submitted to the Supreme 
Court, and the Supreme Court referred them on to Congress.
  Let me read into the Record the language used by the Chief Justice of 
the United States when they referred those changes to this Congress. I 
am quoting a letter from the Chief Justice addressed to the Speaker of 
the House:

       This transmittal does not necessarily indicate that the 
     Court itself would have proposed these amendments in the form 
     submitted.
       Thus, it would be a mistake to believe that the changes to 
     rule 11 have received a formal review and endorsement of the 
     Supreme Court.

  It has been referred to us, but the Chief Justice makes it clear that 
this does not necessarily represent the thinking of the Court, nor the 
wording the Court would have submitted.
  One of the Justices wrote in dissent specifically about the changes 
to rule 11. That Justice--joined by others--felt that it was 
inappropriate and harmful to change rule 11 they way the Judicial 
Conference suggested. I want to share with the Members the comments of 
Justices Scalia, Thomas, and Souter from a dissent that they filed.
  Quoting in part:

       In my view, the sanctions proposal will eliminate a 
     significant and necessary deterrent to frivolous litigation.

  I will repeat that. The rules as revised under the changes ``will 
eliminate a significant and necessary deterrent to frivolous 
litigation.'' That is the issue, and that is the subject of the 
amendment.
  The amendment attempts to address the changes in the Rules of Civil 
Procedure and address what I believe would be a tragic mistake: 
Changing our rules in a way that reduces or eliminates sanctions 
against frivolous lawsuits. If this Chamber closes its eyes to those 
rule changes, we will have had a direct hand in encouraging frivolous 
litigation and eliminating reasonable deterrence to frivolous 
litigation. I think that is a competitive issue. I think it makes a 
difference in whether we keep jobs in the United States or not, and it 
makes a difference as to the cost of goods produced in America versus 
the rest of the world.
  To continue with the remarks of the Justices:

       The proposed revision would render the rule toothless, by 
     allowing judges to dispense with sanctions, by disfavoring 
     compensation for litigation expenses, and by providing 21-day 
     safe harbor within which, if a party is accused of a 
     frivolous filing withdraws a filing, he is entitled to escape 
     with no sanctions at all.

  The amendment before the body deals with those changes in rule 11. It 
does not eliminate one of the changes. One of the changes was the safe 
harbor provision. The testimony before the Judiciary Committee by a 
number of attorneys indicated a feeling on the part of some that the 
safe-harbor provision could well be a plus in eliminating frivolous 
actions.
  The Justice of the Court that wrote this dissent did not feel so. I 
must confess that I have doubts as to whether the safe-harbor provision 
that has been added to the rules will be helpful or not. I suspect it 
will not. But I have not chosen to include it in this amendment. The 
safe-harbor provision will remain part of rule 11 even if this 
amendment passes. I have done that reluctantly, but I have done it 
because I wanted to retain the changes to rule 11 that even had a 
modicum of argument in favor of improving the situation.
  The amendment before the body only focuses on four parts of the 
changes of rule 11 and basically, in those four areas, restores the 
impact and value of the old rule 11. I will go through them 
specifically, but I want to finish the comments of the Justices, 
because I think they address the case very well.
  Here are their conclusions on the changes relating to rule 11:

       Finally, the likelihood that frivolousness will even be 
     challenged is diminished by the proposed rule, which 
     restricts the award of compensation to ``unusual 
     circumstances,'' with monetary sanctions ``ordinarily'' to be 
     payable to the court.

  I will interrupt the Justices' dialog to describe that.
  In the past, if somebody files a frivolous lawsuit against you, it 
was possible--not required, but possible--for you to get your ordinary, 
necessary attorney's fees refunded to you. One of the changes in rule 
11 says that sanctions go to the court, not to the injured party.
  What kind of incentive is that to even raise the issue? If the 
injured party does not get compensated, why would they even point it 
out or bring it up? It is just more attorney costs. The changes in rule 
11 gut the deterrence to a frivolous lawsuit. This is a terribly 
important measure. We cannot afford to gut the Rules of Civil Procedure 
sanctions against frivolous actions. That is what the Justices are 
talking about in this quote.
  I continue:

       Under proposed rule 11(c)(2), a court may order payment for 
     ``some or all of the reasonable attorneys' fees and other 
     expenses incurred as a direct result of the violation'' only 
     when that is ``warranted for effective deterrence.'' And the 
     commentary makes it clear that even when compensation is 
     granted, it should be granted sparingly--for costs 
     ``directly and unavoidably caused by the violation.'' As 
     seen from the viewpoint of the victim of an abusive 
     litigator, these revisions convert rule 11 from a means of 
     obtaining compensation for damages resulting from 
     frivolous litigation to an invitation to file frivolous 
     lawsuits.

  Mr. President, I think these changes in rule 11 will eliminate the 
incentive of the injured party to alert the Court of these violations 
and will eliminate the deterrent value of sanctioning frivolous 
actions.
  As Justice Scalia said:

       I would not have registered this dissent if there were 
     convincing indication that the current rule 11 regime is 
     ineffective, or encourages excessive satellite litigation. 
     But there appears to be general agreement, reflected in a 
     recent report of the advisory committee itself, that rule 11, 
     as written, basically works. According to that report, a 
     Federal Judicial Center survey showed that 80 percent of 
     district judges believe rule 11 has had an overall positive 
     effect and should be retained in its present form.

  Mr. President, that is 80 percent of the district judges did not 
favor--or at least according to this survey do not favor--those changes 
in rule 11.
  The report continues:

       Ninety-five percent believed the Rule had not impeded 
     development of the law, and about 75% said the benefits 
     justify the expenditure of judicial time.

  True, many lawyers do not like rule 11. It may cause them financial 
liability, it may damage their professional reputation in front of 
important clients and the cost-of-litigation savings it produces are 
savings not to lawyers but to litigants. But the overwhelming approval 
of the rule by the Federal district judges who daily grapple with the 
problem of litigation abuse is enough to persuade me that it should not 
be gutted as the proposed revision suggests.
  Mr. President, let me repeat Justice Scalia's comments, because I 
think it is very important. He refers to the feeling of the district 
judges that dealt with rule 11 before it was revised:

       The overwhelming approval of the rule by the Federal 
     district judges who daily grapple with the problem of 
     litigation abuse is enough to persuade me that it should not 
     be gutted as the proposed revision suggests.

  Mr. President, I have before me a variety of comments I would like to 
make, and I would like to go into the details of the amendment that I 
have offered to the Senate for consideration. But I see my colleague 
from Iowa here on the floor, and I know he wishes to make remarks with 
regard to this proposed amendment.
  I would like at this time to yield to the distinguished Senator from 
Iowa for the purposes of debate only.
  The PRESIDING OFFICER (Mr. Feingold). The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I thank the Senator from Colorado for 
not only yielding, but I also thank him for his leadership in this 
area. He may have said this before I got to the floor, but this was of 
some concern to us last year as we reviewed within our Judiciary 
Committee the work of the courts and finally the Supreme Court in 
changing the rules of civil procedure.
  So the Senator is not bringing up an issue that is new to the concern 
of our committee or the concern of this entire body. And he has spelled 
out very well the need for his amendment. But the amendment also 
expresses, over a long period of time, the concern that some of us have 
had on the Judiciary Committee, for the disregard that there is for 
rule 11.
  So I rise in support of the Brown amendment, and I do that because we 
need to make sure that Federal courts are open to all who have 
legitimate claims. That is not the case now, because there is such a 
big amount of cases coming, some without merit, clogging our courts.
  It seems to me that at the same time we are concerned that the 
Federal courts ought to be open to all legitimate claims, we also need 
to ensure that frivolous cases neither compete for attention with 
meritorious ones, nor that frivolous Federal litigation be used as a 
weapon.
  As Federal civil litigation has grown, the number of frivolous cases 
has also grown.
  Due to the general caseload increase, particularly in criminal cases, 
the time that passes before civil litigants can receive justice has 
lengthened tremendously. The rules of civil procedure had always had 
provisions against frivolous cases. But the original rule 11 was 
ineffective in preventing frivolous cases. So to take care of that 
problem, in 1983 sanctions were made mandatory.
  The provision finally became effective in deterring the filing of 
cases that had not been fully investigated.
  After 1983, rule 11 had teeth, and some lawyers who filed frivolous 
cases were bitten by those teeth. The provision was unfortunately 
weakened last year. No longer would sanctions be mandatory.
  Worse, attorneys would no longer have to certify that the case 
appeared meritorious after reasonable investigation. Instead, Mr. 
President, an attorney, without penalty, could file a case without 
knowing that the case was meritorious. The attorney could file first 
and face no penalty if he or she reasonably believed evidence might be 
found to support the case afterward.
  There would be no penalty under these circumstances, even if no 
evidence were ultimately found to support the frivolous claim. 
Moreover, no penalty could be imposed if the attorney agreed to dismiss 
the case. Even if a penalty were offered, it would be measured by its 
deterrent effect upon others, not upon the attorney who violated the 
rule by the award of attorney's fees.
  So these provisions soon turned rule 11 into a hollow shell. If the 
rule is not soon changed, we will face an increase in frivolous cases 
in our Federal courts, further adding to their burden. This will cause 
our people and our economy to suffer wasted resources in time and 
money, without any benefit to anyone and with the denial of justice to 
a lot of people, because frivolous lawsuits in litigation benefit no 
one. It will not be deterred or punished under the current rule 11.
  It certainly makes no sense to bring suit first and to determine that 
it is well grounded in fact later. Just think how long anyone would put 
up with this rule for criminal litigation--that a prosecutor could 
bring criminal charges first without any current belief that the law 
was broken and that the defendant violated it. That would be a regime 
that came right out of Alice in Wonderland, and of course there is no 
reason to implement such a system, then, in civil litigation, either.
  The Brown amendment will restore effective sanctions to rule 11--that 
is all we are trying to do--as when rule 11 worked. No lawyer who 
practices in good faith nor any client of such a lawyer would have any 
reason to fear the changes that Senator Brown is proposing. Moreover, 
the Brown amendment will not return rule 11 to its 1983 language in its 
entirety. Represented parties themselves will not be able to be 
sanctioned, and other changes that ensure the fairness of the rule will 
be maintained.
  Cases that are not known to have a basis in fact or law at the time 
they are filed should not be brought. The Brown amendment will then 
fairly require that such cases not be brought.
  I strongly support the amendment and I request that my colleagues 
support it, as well. It is something that will impact very positively 
upon our competitive position which the underlying bill is attempting 
to do. It will promote competitiveness from a point that is going to 
make a real impact because litigation, particularly litigation that is 
not legitimate, has economic consequences that are very negative.
  So I urge the adoption of this amendment, and I yield the floor, Mr. 
President.
  Mr. BROWN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. BROWN. Mr. President, I want to describe to the Chamber why it is 
this is offered on this amendment. We referred to that to some extent 
earlier.
  It is my feeling, and I believe most Senators will agree, that the 
millions of dollars lost in frivolous litigation has an impact on the 
cost of goods and services in this country and has a significant impact 
on our potential competitiveness around the world. That is why I think 
it is important that this amendment be addressed along with S. 4.
  But someone could, I think, fairly and reasonably raise the issue: 
Why offer it on this vehicle even though this is a competitiveness 
bill?
  Well, the answer lies in part on how the changes were made last 
December to the Rules of Civil Procedure. The procedures for the 
adoption of these changes in the rules are basically this: A 
recommendation comes out of a committee, the Supreme Court forward it 
to us, and then it becomes effective unless Congress takes some action; 
that is, the changes in rules become effective automatically without 
any legislative action unless we act to overturn them.
  The problem is this: We have had committee hearings in Judiciary, we 
have had discussions, but we have not had a bill referred out dealing 
with rule 11.
  In other words, this Chamber has not had an opportunity to go on 
record on rule 11. I would not burden the Chamber with this amendment, 
even though I feel very strongly about it and I think it is important 
to competitiveness, if this Chamber had acted on rule 11 prior. I would 
not presume to move to a vote on these items if the Chamber had due 
consideration and had considered this and made their feelings clear.
  But the reality is, the Rules of Civil Procedure are being changed 
without this body having a voice in that matter, without this body 
having a chance to vote on it. Thus, offering the amendment gives the 
body an opportunity to voice their concerns about it.
  If the majority wants to encourage frivolous litigation or adopt 
these rules which encourage frivolous litigation, that, of course, will 
be up to each Senator and their own view of what is appropriate. But I 
would think it would be a tragedy to have this kind of change in the 
basic fundamental Rules of Civil Procedure take place in this country 
and not have the Senate of the United States ever review the item or 
vote on it.
  I have chosen only four elements of the changes in rule 11 to address 
in this amendment. As I have already spelled out, a number of the other 
changes are not addressed by this amendment. The only ones that I have 
brought to the attention of the floor are the ones that I think are so 
egregious that I think they cry out for correction.
  I thought I would take a few moments and outline to the Senate, very 
briefly, the kind of changes that have taken place.
  The first I hope to draw to your attention to is the question of what 
kind of standards you ought to apply to the veracity of or support for 
allegations and claims filed in court. Should you be able to allege 
items in the pleadings, that is, representations of the law and facts, 
which you do not know to be true?
  Well, here is what the old rule 11 says, and I am quoting a portion, 
``that to the best of the signer's knowledge, information, and belief 
formed after reasonable inquiry it is well grounded in fact and it is 
warranted by existing law or a good faith argument.''
  That is an excerpt from it, but I think it gets to the heart of it.
  In other words, to make allegations in those pleadings, it has to be 
to the best of your knowledge and information and belief, formed after 
a reasonable inquiry. In other words, you have to do a reasonable check 
of the facts before you allege it and you have got to believe what you 
put down is true. I do not believe that is overly burdensome. It seems 
to me that is only reasonable.
  What do the new changes in this regard in rule 11 say? Well, we are 
quoting from subparagraph (b)(3). It says this: ``The allegations and 
other factual contentions have evidentiary support''--that seems 
reasonable, but here is the catch--``or, if specifically so identified, 
are likely to have evidentiary support after a reasonable opportunity 
for further investigation or discovery.''
  The new rule 11 says, in effect, that you do not need to know if your 
claim has a basis in fact, but you think they might if you have a 
chance to investigate it, it might be true.
  Let me use the exact language they use:

     * * * likely to have evidentiary support after a reasonable 
     opportunity for further investigation or discovery.

  In other words, you can bring charges against somebody and they have 
to hire a lawyer and they have to answer the pleadings and they have to 
go through enormous expense to answer charges that you do not even know 
are true.
  Mr. President, that is not right. That is just not right--to say you 
can bring a lawsuit when you do not know what you are alleging is true 
and have not taken reasonable measures to find out. That makes no 
sense.
  Now, I understand why some people might favor this change in the 
rule. Mr. President, I suspect that many of those people are ones who 
might be inclined to bring this kind of claim; that is, a claim that 
they do not know is accurate and have not taken the time to find out is 
accurate.
  But that is not the way I was taught law. That is not the way 
generations of American attorneys have been taught law. That is not in 
conformance with the standards of ethical behavior that decades and 
decades and decades of attorneys in this Nation have followed.
  This suggests a standard of behavior that is beneath what has been 
demanded by the Rules of Civil Procedure in the past.
  Should we be lowering the standard of conduct that we expect from 
attorneys? Should we be suggesting that you can bring a lawsuit without 
knowing the facts that you allege, without doing a reasonable inquiry? 
I do not think so.
  And that is why I felt so strongly about this that I brought this 
amendment before this body. We should have an opportunity to vote on 
whether or not you want to lower the standards for attorney's conduct, 
whether you want to lower the standards for bringing an action, whether 
you want to allow people to bring an action alleging things they do not 
even know are true.
  So that is the first part of the amendment. Allow me to read from the 
amendment so it will be clear. It is under subsection (1) on page 2 of 
our amendment. It says: ``In subsection (b)(3), by striking out 
`or,'''--and then they quote the following passage that I quoted. It 
would read this way: an attorney certifies that ``the allegation and 
other factual contentions have evidentiary support or are well grounded 
in fact.'' It is not as strong, even with my amendment, as I believe 
the previous rule was. It is meant to be a compromise. But it is meant 
to retain the very important requirement that there is evidentiary or 
factual support for what you allege in court. That is the first change. 
We simply say let us not denigrate the standards that attorneys have 
complied with over the years.

  The second amendment deals with a different area. Let me read the 
passage that it involves. This deals with the question of sanctions. 
The new rule reads in subsection (c):

       Sanctions. If, after notice and a reasonable opportunity to 
     respond, the court determines that subdivision (b) has been 
     violated, the court may, subject to the conditions stated 
     below, impose an appropriate sanction upon the attorneys, law 
     firms, or parties that have violated subsection (b) or are 
     responsible for the violation.

  The justices that we quoted earlier referred specifically to this 
section, pointing out that sanctions should be mandatory, not 
permissive, for rule 11 violations.
  The question is this: If someone has violated the rules, has brought 
a frivolous action, after notice and reasonable opportunity to respond, 
and the court determines that the rule is violated, should the court 
order sanctions?
  Put another way: If you violated rule 11 and it is pointed out that 
you violated rule 11 and you have time to respond and you do not 
correct your mistake, should you have to pay sanctions or not? The new 
rule says that you may or may not have to. I suggest if you violated 
the rules and it is pointed out to you and you still do not correct 
your mistake, that you ought to have to pay for the damage you caused. 
So our rule change is simple. We simply drop the word ``may'' and 
change it to ``shall.''
  I should point out in this regard that the degree of the sanctions is 
still discretionary. The degree of sanctions you will have to pay can 
vary. If it is not severe, if it is not serious, the judge has the 
ability to make it very small sanctions. But the primary issue of 
whether sanctions should be mandatory is a very clear. If you break the 
rules and you know you are breaking them and you do not correct it and 
you cause another party damage, this amendment says you have to be 
sanctioned. The new rules say not necessarily so.
  There is a third change in the new rule 11 that I thought was so 
severe that we ought to address it. The new rule reads as follows:

       A sanction imposed for violation of this rule shall be 
     limited to what is sufficient to deter repetition of such 
     conduct or comparable conduct by others similarly situated. 
     Subject to the limitations in subparagraphs (A) and (B) * * 
     *.

  They go on to spell out what the sanctions may be. That is a dramatic 
change. It says the only sanctions you are likely to get is that which 
would prevent you from doing it again. What is the better approach? In 
thinking about what is an appropriate sanction, one way of looking at 
it is to say if you have caused damage of $100, you ought to pay damage 
of $100. The new rule 11 says: No, no. Just enough so you will not do 
it again. It could be $1, not $100. It could be 10 cents, not $100. 
This does not say pay for your mistake; it does not remedy the damage 
caused the other party. It says we are only going to do what we think 
might prevent you from doing it again. That is not a sanction. That is 
not a deterrent.
  The new rule runs counter to our philosophy of tort law. It runs 
counter to our sense of justice, that you ought to pay for your 
mistakes. Only deterring the next action is not enough. Keep in mind 
here what has been imposed on an innocent party--the legal fees for 
defending a frivolous suit or claim can be thousands upon thousands of 
dollars.
  This Member does not feel that is right. This Member thinks the one 
who violates rule 11 ought to pay for the damage. So here is what our 
amendment does. We substitute that language that says only deter, with 
this:

       In paragraph (2), by striking out the first and second 
     sentences and inserting in lieu thereof ``A sanction imposed 
     for violation of this rule may consist of reasonable 
     attorneys' fees and other expenses incurred as a result of 
     the violation, directives of a nonmonetary nature, or an 
     order to pay penalty into court or to a party.''

  What does it change? It focuses on the damage done to the innocent 
party. It drops any reference to paying only part of the damage, and it 
shifts the focus away from deterrence and back to compensation for 
damage. It raises the possibility of paying a penalty to a party and to 
the court. It also preserves the possibility of using nonmonetary 
penalties. Does anybody think if you are guilty of bringing a frivolous 
action you ought not to have to cover the attorneys' fees of the other 
side? I hope if people object to this amendment they will address that.
  So the question on this portion of the amendment is pretty clear. Is 
rule 11 designed only for deterrence or do you allow the court to 
address the attorneys' fees and other costs imposed on the other party?
  The fourth change that we thought was so egregious that we had to 
address it, involves a slight modification in the changes proposed by 
the Judicial Conference. They proposed adding this language, and I will 
read it because it is pretty brief.

       (A) Monetary sanctions may not be awarded against a 
     represented party for a violation of subdivision (b)(2).

  What is subdivision (b)(2)? Well, (b)(2) reads as follows:

       [The party or attorney certifies that] the claims, 
     defenses, and other legal contentions therein are warranted 
     by existing or by a nonfrivolous argument for the extension, 
     modification, or reversal of existing law or establishment of 
     new law.

  What does all this deal with? It deals with the case where the 
attorneys argue for an extension or modification or reversal of 
existing law. In other words, someone brings an action knowing the law 
has not been read that way in the past, arguing it should be read that 
way in the future.
  The new rule 11 says that when you bring that action knowing the law 
does not support your position and you lose, sanctions cannot be 
brought against you.
  We do not strike that section. Although, Mr. President, I think it 
would make sense to strike it. But we do modify it slightly. We leave 
in the part that does not allow sanctions against the complaining 
party, but we do permit sanctions against the party's attorney. Our 
fourth change simply says: ``although such sanctions may be awarded 
against a party's attorney.''
  So we have retained the limitation on sanctions against the party 
whose attorney tries to reverse or extend the law, but, under our 
amendment, it would be possible to sanction the attorney.
  What is the logic for that? A client does not know or understand the 
law as the lawyer does. It is the lawyer who makes the recommendation 
or decision to attempt to reverse or extend existing law. So if the 
attorney engages in frivolous arguments--and that is what we are 
talking about here, a frivolous argument that costs the other party 
money to defend--at least the attorney ought to bear responsibility for 
that. Otherwise, there is no disincentive against every lawyer in every 
lawsuit from filing a frivolous attempt to reverse existing law.
  Mr. President, that is the body of the amendment. Those are four 
small, modest changes in the rules. It brings rule 11 partially back to 
what it was before the commission made its recommendation. It accepts 
those portions of the commission's recommendations that have some basis 
in logic.
  This issue is fundamental. It is much more significant than simply 
some technical procedures under our Federal rules. The question that is 
before the Senate with this amendment is simply this: Do we sanction 
frivolous actions, or do we close our eyes and do away with the ability 
to sanction frivolous legal actions? Some may say, ``Look, the new rule 
still has some restrictions in it.'' That would not be an unfair 
comment. But it is also quite clear that the heart and the soul and the 
guts of rule 11 have been torn out of it. It is also quite clear that 
rule 11's ability to deter frivolous actions has been abated.
  Ultimately, the question we must answer on this amendment is whether 
it is in the Nation's interest to encourage attorneys and parties to 
bring frivolous actions, to misstate the law, to allege facts that they 
do not believe or do not know to be true or have not investigated. It 
seems to this Senator that it is only reasonable to ask somebody to 
investigate what they are going to allege in court. It seems to this 
Senator that parties should know some of the facts underlying what they 
charge in the pleadings. It seems reasonable to ask them to have some 
knowledge of it. It seems reasonable to ask that frivolous arguments 
not be made.
  The question is whether or not we address the need for improved 
competitiveness in this Nation by making sure we do not gut the rules 
that protect us against frivolous lawsuits.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. HOLLINGS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HEFLIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HEFLIN. Mr. President, that amendment has no place on this bill. 
It obviously deals with a matter pertaining to the operation of courts. 
I do not know why it is even being brought here.
  But let me explain a little bit about the procedure which happens 
regarding the Federal Rules of Civil Procedure, which include rule 11.
  There has been controversy as to how courts ought to take care of its 
rulemaking authority, but the prevailing point of view is that the 
judiciary has the inherent power to determine its own rules. Congress 
felt it had a role, so it adopted the Rules Enabling Act by which the 
Rules of Procedure would be changed by first having a committee 
appointed by the Judicial Conference of the United States to study any 
proposed changes.
  After the committee made its report to the Judicial Conference, which 
is a body composed of judges from all levels of the judiciary, the 
Judicial Conference would study any proposals and then make 
recommendations to the Supreme Court of the United States. Then the 
Supreme Court of the United States would consider the issue and make 
recommendations to Congress. Under the Rules Enabling Act, Congress has 
6 months to either adopt the recommendations, to modify them, or to 
delete them.
  This particular rule 11 that came up was submitted to the Congress 
and the 6-month time period expired prior to Congress' taking any 
action, and so all of the proposed Rules of Civil Procedure, including 
rule 11, went into effect on December 1. We knew toward the end of the 
Congress last year that if any changes had to be made, they had to be 
made before December 1.
  If a Senator is interested in making a change to a rule, he or she 
could introduce a bill, but no bill was introduced proposing to change 
rule 11.
  During that 6-month period last year in the House or in the Senate, 
if there were reasons for change, a bill could have been introduced in 
the House or the Senate.
  In all fairness to Senator Brown, he said that he did not like rule 
11, but he never took the steps to modify the proposed changes, and now 
he is now belatedly taking steps on this particular bill, which is 
unrelated and not germane to Senator Hollings' technology bill.
  My colleague from Colorado raises issues about frivolous lawsuits and 
let me say that this has been considered by many concerned groups of 
people. The Brown amendment is completely opposed by the civil rights 
community. The Brown amendment is opposed by the Department of Justice. 
Six members of the Supreme Court approve rule 11 that is now in effect. 
Senator Brown quoted from Justice Scalia's dissent. There are always 
going to be dissents over at the Supreme Court, but if you have a 6 to 
3 vote in the Supreme Court of the United States, that is a pretty good 
vote.
  As I listened to the criticisms of the new rule 11 from Senator Brown 
and Senator Grassley, I do not agree with them. I have before me a 
memorandum from the Administrative Office of the U.S. Courts which 
says:

       I am writing to address criticism raised during the markup 
     of H.R. 2814 that the amendments to Rule 11 of the Federal 
     Rules of Civil Procedure will eviscerate the rule's effect on 
     parties filing frivolous proceedings and papers.
       The amendments to Rule 11 retain the rule's core principle 
     to ``stop and think'' before filing. By broadening the scope 
     of Rule 11 coverage and tightening its application, the 
     amendments reinforce the rule's deterrent effect and also 
     eliminate abuses that have arisen in the interpretation of 
     the rule. Although the amendments strike a balance between 
     competing interests, the changes strengthening the rule have 
     been neglected by those critical of the amendments and need 
     to be highlighted.
       First, the amendments expand the reach of the rule by 
     imposing a continuing obligation on a party to stop 
     advocating a position once it becomes aware that that 
     position is no longer tenable.

  What they would like to go back to under the old rule, as I interpret 
it, would be to allow ``a party to continue advocating a frivolous 
position with impunity so long as it can claim ignorance at the time 
the pleading was signed, which could have been months or years ago.''

       Second, the amendments specifically extend liability to a 
     law firm rather than limiting the liability to the junior 
     associate who actually signs the filing.
       Third, the amendments specifically extend the reach of Rule 
     11 sanctions to individual claims, defenses, and positions, 
     rather than solely to a case in which the ``pleading-as-a-
     whole'' is frivolous. Some court decisions have construed the 
     rule to apply only to the whole pleading, relieving a party 
     of the responsibility for maintaining a single or several 
     individual frivolous positions.

  So rule 11 that went into effect on December 1 was designed to 
strengthen this matter.

       Fourth, the amendments equalize the obligation between the 
     parties by imposing a continuing obligation on the defendant 
     to stop insisting on a denial contained in the initial 
     answer. Frequently, answers are general denials based on a 
     lack of information at the time of the reply. The amendments 
     impose a significant responsibility on the defendant to act 
     accordingly after relevant information is later obtained.
       It is also important to highlight the provisions of the 
     rule that the amendments retain. A party must continue to 
     undertake ``an inquiry reasonable under the circumstances'' 
     before filing under the amendments. In those cases where a 
     party believes that a fact is true or false but needs 
     additional discovery to confirm it, the amendments allow 
     filing but only if such ``fact'' is specifically identified. 
     The provision does not relieve a party of its initial duty to 
     undertake a reasonable prefiling investigation. In cases of 
     abuse, the court retains the power to sanction sua sponte and 
     the aggrieved party can seek other remedies, e.g., lawsuit 
     for malicious prosecution.
       The existing rule does not require a court to impose a 
     monetary sanction payable to the other party. Instead, the 
     rule does provide a court with the discretion to impose an 
     appropriate sanction, including an order requiring monetary 
     payments to the opposing party and to the court.

  Now, as to the hearings that we had in the Judiciary Committee, the 
old rule 11--that is one that was in effect before December 1 of 1993--
had language that said that signature to a pleading demonstrated that 
the pleading ``is well grounded in fact.''
  Senator Brown at the subcommittee hearings on July 28, 1993, grilled 
the chairman of the Rules Advisory Committee that had proposed to the 
Judicial Conference this aspect of the rule change.
  Senator Brown claimed that under the new rule 11, a party ``no longer 
has to research a claim and know that it is true.'' He feels that a 
party ``no longer has to know his facts'' before bringing a lawsuit.
  Well, what Senator Brown ignores from the testimony and the response 
the chairman of the committee, Judge Sam Pointer, gave is that the new 
rule 11 ``still calls for and demands that attorneys have made a 
reasonable investigation under the circumstances.''
  As Judge Pointer demonstrated, oftentimes a party does not get all 
the facts until the discovery is finished, and the new rule does, 
indeed, require high standards and is not an egregious loosening of 
standards.
  The point is that under this new rule 11, ``if a plaintiff is going 
to make an allegation that he does not have hard support for, the 
plaintiff should say, I do this on information and belief, and be under 
a responsibility to withdraw that or not continue to assert it, if 
after reasonable opportunity for discovery, it turns out there is no 
basis for it.''
  Now, the new rule 11 has changes from the old rule in that if a 
violation regarding a pleading is found, then the court may impose 
sanctions.
  Under the old rule, the language was that a court must impose a 
sanction if it found a violation of the rule.
  As Judge Pointer demonstrated in his testimony, a court needs the 
flexibility or discretion to impose sanctions because a complaint, or 
for that fact an answer or motion to dismiss may contain a technical 
violation, but the rest of that pleading could be perfectly acceptable. 
Why, then, should a court be required to impose a sanction? Such 
discretion would not, in my judgment, giveaway to mass, irresponsible 
pleading.
  Obviously, those who are purporting to change rule 11 raise the 
possibility that a party could intentionally bring a frivolous action 
and, upon a finding of such by the court, might escape a penalty. The 
response to that concern is that well, yes, there could be no penalty, 
but in that type of egregious intentionally frivolous pleading a court 
will most likely impose a sanction.
  Under the new rule--

       [I]f warranted, the court may award to the party prevailing 
     on the motion the reasonable expenses and attorney's fees 
     incurred in presenting or opposing the motion.

  Also, a court on its own initiative may begin a show-cause proceeding 
as to whether a party has violated the rule. This should take care of 
concerns by Senator Brown that plaintiffs could irresponsibly plead, 
claim, et cetera. The court has its own power to initiate an inquiry as 
to whether rule 11 has been violated.
  As the Senate can clearly see, this is a highly technical matter that 
we are being called upon to consider, and it is attempting to be 
amended onto an unrelated bill without the Members of this body having 
an adequate opportunity to study the issues. For us here in Congress on 
Friday afternoon to have to consider this amendment on an unrelated 
bill seems to me to be an irresponsible way of legislating.
  So it is my opinion that we ought not to be involved in this at this 
time. The Judiciary Committee had hearings, and there was ample 
opportunity for action to be taken. But no action was brought forth 
through the form of a bill being introduced to make any changes to rule 
11.
  There was some effort to make some changes to rule 26(a)(1), which 
deals with discovery, and rule 30(b)(2) relating to the taking of 
depositions. The House did make some changes in those areas, but it was 
not passed here in the Senate.
  There is still some effort being made to try to reach some sort of an 
agreement with the Department of Justice, the civil rights groups, and 
others pertaining to those matters, but that has not proceeded to the 
point where anything has been finalized.
  It seems to me that it is just improper and an inappropriate time to 
bring this matter up at such a late stage as this. If there had been a 
real sincere effort, it could have been done within the 6-month time 
period allowed pursuant to the Rules Enabling Act. It seems to me that 
we ought not to be dealing with this amendment at this time on this 
unrelated technology bill.
  It may be that a bill could be introduced, referred to the Judiciary 
Committee, hearings could be held, and then its merits could adequately 
be considered.
  In closing, I do feel that the new rule 11 is a flexible rule, and it 
has provisions that strengthen, not weaken, efforts to prevent 
frivolous lawsuits. The new rule is expected to reduce the number of 
inappropriate motions requesting sanctions, thereby allowing courts to 
focus more attention to legitimate sanction requests.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mrs. Feinstein). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KERRY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Madam President, I would like to say a few words about S. 
4. I would like to compliment the Senator from South Carolina on what 
he is trying to accomplish with this bill. I hope that we in the Senate 
can move beyond some of the divisions of the last few days and try to 
focus on what this bill does.
  We have had an extraordinary amount of debate in the U.S. Senate 
about jobs and the economy. During the NAFTA debate, there was a lot of 
discussion on the floor about the problems of the American workplace. 
There are, as you know, major problems in the American workplace. 
Raytheon Corp. in Massachusetts just announced that it will have to lay 
off some 4,400 more people over the course of the next couple of 
years--over 1,000 of them in Massachusetts itself.
  Most of the companies in the country are downsizing in one way or the 
other. There are enormous numbers of jobs that are moving to low-skill, 
low-wage countries. There have been a series of articles in the 
newspapers recently commenting on the fact that--notwithstanding the 
improvements in the economy--there has not been an improvement in wages 
in America.
  Americans are working longer, they are working harder, and they are 
taking home less. In the 1950's, most Americans could look forward to a 
major increase in income in the course of just a couple of years. Well, 
in the 1980's, it took the average American 10 years to achieve in 
income growth what it took only 2 years to achieve back then. In 1989 
and 1990, American workers lost in each year what it had taken them 
those entire 10 years to get. That is the predicament of the American 
worker.
  And it is that predicament that S. 4 seeks to address.
  S. 4 has received support from a wide variety of technology 
businesses who recognize that America has a competitiveness problem, 
and who know there is nothing in this bill that smacks of industrial 
policy or the Government making decisions.
  S. 4 is an effort to facilitate our ability to take products from the 
laboratory out into the workplace. It will help us avoid the situation 
we have faced in the past when Americans have developed technology--for 
the VCR, the fax machine--only to see it developed and manufactured by 
the Japanese, the Europeans, and others.
  The fact is this bill will help create jobs.
  Maybe this seems abstract to some. Let me cite a couple of examples 
of the tangible results the programs of the National Institute of 
Technology produce. In Massachusetts, Teradyne, Inc., is now marketing 
a new software package that was developed in conjunction with NIST. 
That package allows manufacturers of analog and analog/digital 
electronic components to actually test the components of these devices 
without compromising test accuracy.
  This is a technique which would not have been developed, marketed, or 
produced without the NIST effort. And, without NIST, Americans would 
not be employed in this activity.
  Studies by NIST researchers have pointed the way to significant 
processing improvements adopted by Ibis Technology, Inc., which is a 
company in Danvers, MA, the sole U.S. supplier of an experimental 
material. The NIST assistance can reduce by a hundredfold the number of 
defects in this material, making Ibis more competitive and allowing it 
to be a more secure employer of American workers.
  I sincerely hope we can understand what is at stake here. We need to 
be able to commercialize ideas faster--better--and this bill permits 
industry to make choices about how to do that. It is an important bill 
for creating jobs and making this country more competitive.
  I hope we can look a little harder at the ways in which S. 4 helps 
America to be competitive and helps us to create jobs and move away 
from a partisanship that seems to characterize so much of what happens 
in Washington.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. Madam President, the distinguished Senator from 
Massachusetts is right on target. There is no question that our dilemma 
was foreseen by many over the past 10 years, specifically the U.S. 
Council on Competitiveness, headed up by John Young of Hewlett-Packard, 
George Fisher, then with Motorola and now Kodak, and other business 
leaders, certainly a nonpartisan group, which issued a document 
entitled ``Gaining New Ground, Technology Priorities for America's 
Future'' back in 1992, 2 years ago, and it says:

       The U.S. position in many critical technologies is slipping 
     and, in some cases, has been lost altogether. Future trends 
     are not encouraging.

  I ask unanimous consent to print the entire document in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     Gaining New Ground: Technology Priorities for America's Future


                           EXECUTIVE SUMMARY

       Throughout America's history, technology has been a major 
     driver of economic growth. It has carried the nation to 
     victory in two world wars, created millions of jobs, spawned 
     entire new industries and opened the prospect of a brighter 
     future. In many respects, technology has been America's 
     ultimate comparative advantage. Because of our great 
     technological strength, U.S. manufacturing and service 
     industries stood head and shoulders above other nations in 
     world markets.
       That comforting view is under assault. As a result of 
     intense international competition, America's technology edge 
     has eroded in one industry after another. The U.S.-owned 
     consumer electronics and factory automation industries have 
     been practically eliminated by foreign competition; the U.S. 
     share of the world machine tool market has slipped from about 
     50 percent to 10 percent; and the U.S. merchant semiconductor 
     industry has shifted from dominance to a distant second in 
     world markets. Even such American success stories as 
     chemicals, computers and aerospace have foreign competitors 
     close on their heels.
       Blame for the problems has been laid at many doorsteps: 
     sluggish domestic productivity growth, closed foreign 
     markets, the deteriorating U.S. education and training 
     system, poor management and misguided government policies in 
     areas ranging from capital formation to product liability 
     laws. Some fear the United States is too preoccupied with 
     national prestige technology projects to worry about 
     investing in the generic enabling technologies that are 
     critical to the competitiveness of many industries. Others 
     charge that the United States is increasingly turning over 
     the difficult job of commercialization and manufacturing 
     technology to foreign companies. Unfortunately, in turning 
     over technology to its competitors, America is turning over 
     the keys to economic growth and prosperity.
       The American people and its leaders have too readily 
     assumed that preeminence in science automatically confers 
     technological leadership and commercial success as well. It 
     does not. America assumed that government support for science 
     would be adequate to provide for technology. It is not. In 
     too many sectors, America took technology for granted. Today, 
     the nation is paying the price for that complacency.
       This report examines the U.S. position in critical 
     technologies and the actions the nation must take to 
     strengthen it.


                              KEY FINDINGS

  1. There is a broad domestic and international consensus about the 
       critical generic technologies driving economic growth and 
                            competitiveness

       The U.S. Office of Science and Technology Policy, the U.S. 
     Department of Commerce, the U.S. Department of Defense, 
     Japan's Ministry of International Trade and Industry, the 
     European Community and many individual industry groups have 
     all compiled similar lists of critical technologies. This 
     project examined critical technologies from the point of view 
     of a cross section of U.S. industry and confirmed the overlap 
     of critical technologies that appears in these other studies. 
     Given the broad consensus about critical technologies, it is 
     time to move beyond making lists and begin implementing 
     programs that will strengthen U.S. technological leadership.

2. The U.S. position in many critical technologies is slipping and, in 
some cases, has been lost altogether. Future trends are not encouraging

       America pioneered such technologies as numerically 
     controlled machine tools, robotics, optoelectronics and 
     integrated circuits only to lose leadership in them to 
     foreign competitors. Moreover, in many critical technologies, 
     ranging from leading-edge scientific equipment to precision 
     bearings, trends are running against U.S. industry. (See 
     lists on pages 7 to 11.) The erosion of the U.S. position in 
     critical technologies has helped to highlight an important 
     lesson about industrial competition in the late 20th century: 
     a lead in science is not sufficient to sustain technological 
     leadership. Scientific excellence also must be supplemented 
     by a strong position in critical technologies and by the 
     ability to convert these technologies into manufactured 
     products, processes and services that can compete 
     successfully in the marketplace. Otherwise, America's jobs, 
     standard of living and national security will be in jeopardy 
     and, because technology is increasingly driving new 
     scientific advances, so will America's future lead in 
     science.

   3. Foreign governments are systematically pursuing leadership in 
                         critical technologies.

       Governments in other major industrialized countries have 
     used R&D incentives, public-private technology consortia, 
     infrastructure programs, tax policy, trade policy and 
     regulations to improve the technological competitiveness of 
     their industries. The most successful efforts combine funding 
     with extensive public-private collaboration. Partly as a 
     result of these programs, U.S. industry has lost extensive 
     market share in many technology-intensive products (such as 
     memory chips and machine tools) and, in some cases, entire 
     industries (such as consumer electronics). Problems arising 
     from foreign government actions have been compounded by the 
     lack of a timely, coordinated and effective U.S. industry and 
     government response.

 4. U.S. public policy does not adequately support American leadership 
     in critical technologies, and U.S. national priorities do not 
 sufficiently address issues related to the role of technology in U.S. 
                            competitiveness.

       Other nations already spend more on non-defense R&D as a 
     percent of GDP than the United States, and they are steadily 
     increasing these levels. The United States needs to increase 
     support for R&D and focus more resources on non-defense R&D 
     that is commercially relevant. In 1990, only a relatively 
     small fraction of the $67 billion federal R&D budget was 
     directly relevant to the real technology needs of American 
     industry. The low priority given to technology and 
     competitiveness in the federal R&D budget is reflected in 
     America's tax, trade and regulatory policies. It is also 
     reflected in the decline of public investment in 
     infrastructure, which fell from 5.8 percent of GNP in the 
     mid-1950s to 3.9 percent in the mid-1980s. Unless R&D 
     programs are reinforced by policies in these other areas that 
     encourage private-sector investment in technology, they will 
     have a limited impact on U.S. competitiveness. The most 
     effective programs are those that encourage sharing of the 
     cost and results of precompetitive research and that 
     stimulate private-sector proprietary R&D and 
     commercialization.

 5. Most of the technologies that will drive economic growth over the 
next decade already exist, and industry needs to improve its ability to 
           convert them into marketable products and services

       Many of the competitiveness problems facing U.S. industry 
     stem from industry's failure to commercialize technology 
     effectively. Although it is important to discover 
     breakthrough technologies that create entire new industries, 
     it is equally important to develop existing technologies that 
     improve industry's performance in large, established markets. 
     In addition to research, market success depends on management 
     systems that encourage the development and application of 
     technology, education and training programs that build work 
     force skills, and world-class commercialization systems. 
     Unlike companies have strengths in these areas, they will not 
     be able to translate their technical advantages into 
     technological leadership.

 6. America's research universities constitute a great national asset, 
      but their focus on technology and competitiveness is limited

       U.S. universities produce first-rate scientists and 
     engineers and conduct pioneering research that lays the 
     foundation for many advances in technology. However, their 
     focus on undergraduate education and on preparing future 
     scientists and engineers for the needs of industry, 
     especially in the manufacturing sector, has been inadequate. 
     A closer relationship with industry would help university 
     faculty broaden their understanding of industry's education 
     requirements, develop appropriate curriculums and motivate 
     students. It would also help university researchers focus on 
     challenging leading-edge technology and manufacturing 
     research that is relevant to the private sector. In reaching 
     out to industry, however, universities should be careful not 
     to jeopardize their basic research programs, which have 
     served the nation well.


                          key recommendations

       The recommendations highlighted below stem from one 
     overriding conclusion: In order to create quality jobs, 
     generate strong economic growth and safeguard national 
     security, the U.S. Government and private sector should work 
     together to develop coherent policies to ensure U.S. 
     leadership in the development, use and commercialization of 
     technology.
       The first two recommendations focus on actions that the 
     federal government should undertake; the second two on U.S. 
     industry's responsibilities; and the last on what American 
     universities can do. Taken together, they would make a major 
     contribution to America's technological competitiveness. An 
     in-depth discussion of these recommendations can be found in 
     Chapter IV.

     1. To enhance U.S. competitiveness, the President should act 
    immediately to make technological leadership a national priority

       The United States is already losing badly in many critical 
     technologies. Unless the nation acts today to promote the 
     development of generic industrial technology, its 
     technological position will erode further, with disastrous 
     consequences for American jobs, economic growth and national 
     security. The federal government should view support of 
     generic industrial technologies as a priority mission. It 
     is important to note that this mission would not require 
     major new federal funding. If additional funds for generic 
     technology programs are required, other federal R&D 
     programs, such as national prestige projects, should be 
     redirected or phased in more slowly to allow more 
     resources to be focused on generic technology. The 
     President should move quickly to take the following 
     actions:
       Announce his intention to increase dramatically the 
     percentage of federal R&D expenditures allocated to support 
     for critical generic technologies and present a five-year 
     implementation plan as part of his FY1993 budget.
       Direct the Office of Science and Technology Policy and the 
     newly created Critical Technologies Institute to work with 
     industry to set priorities in critical generic technologies, 
     translate these priorities into specific action plans and 
     implement these programs.
       Direct key technology agencies--such as the National 
     Science Foundation, the National Institutes of Health, the 
     National Institute of Standards and Technology, and the 
     Defense Advanced Research Projects Agency--to work with 
     industry to advance U.S. leadership in critical generic 
     technologies.
       Implement decisions to ensure that the federal 
     laboratories' contribution to U.S. technological leadership 
     and competitiveness is commensurate with the national 
     investment in them.
       Make the cost of capital for the development of priority 
     technologies competitive with that of America's major 
     competitors by accelerating depreciation schedules for 
     manufacturing equipment, making the R&D tax credit permanent 
     and broadening it to include manufacturing engineering and 
     process R&D, and placing a permanent moratorium on Treasury 
     Regulation 1.861-8.
       Promote capital formation, antitrust reforms, regulatory 
     guidelines, export policies and foreign market-opening 
     measures that are conducive to U.S. manufacturing, investment 
     in technology and quality of life.
       Make technological leadership a central theme in the 
     Administration's public communications efforts and highlight 
     it in the President's annual State of the Union address, 
     budget submissions and other messages on national priorities.
       Ensure that key policymaking bodies, such as the National 
     Security Council and relevant agencies and departments, are 
     more closely involved in issues related to technology and 
     competitiveness.

   2. The Federal and State Governments should develop policies and 
implement programs to ensure that America has a world-class technology 
                             infrastructure

       The nation's technology infrastructure is critical to its 
     international competitiveness, national defense and world 
     leadership. Technology infrastructure consists of physical 
     assets, such as equipment, facilities and networks, and human 
     capital, such as skilled scientists, engineers and other 
     personnel. Infrastructure programs traditionally have been a 
     responsibility of the federal and state governments. The 
     federal government should assess the nation's technology 
     infrastructure needs, benchmark what foreign governments are 
     doing and develop strategies, programs and implementation 
     plans to make sure that the United States has a world-class 
     technology infrastructure. The Administration's 1989 report 
     on high performance computing and networking, as well as 
     related Congressional legislation, represent an 
     infrastructure program that should be fully implemented. The 
     following are essential aspects of a successful technology 
     infrastructure program:
       Broad relevance to many sectors of the U.S. economy.
       Close links with public- and private-sector efforts to 
     develop relevant critical generic technologies.
       Support for education at all levels.
       Investment in related university research, education, 
     facilities and equipment.
       Measures that make it easy for industry to invest in, 
     deploy and use infrastructure to enhance its competitiveness.

3. U.S. Industry should establish more effective technology networks to 
           help it compete in the international marketplace.

       U.S. industry associations, professional societies, R&D 
     consortia, universities and research institutes should all 
     play more substantial roles promoting technological 
     collaboration and in diffusing technology and information 
     that promote America's technological competitiveness. 
     Although there is an understandable sensitivity to sharing 
     proprietary technology, the United States can, and must, do a 
     better job of diffusing new ideas throughout industry and of 
     sharing the cost and risk of developing technology. The 
     Council on Competitiveness will take a leading responsibility 
     to work with these organizations to promote technology 
     networks. Industry groups and associations should take the 
     following actions:
       Strengthen their competence in technology issues.
       Promote antitrust reforms that enable them to establish 
     technology networks and share information about international 
     market developments.
       Identify and disseminate information about key generic 
     technologies and world-class commercialization practices 
     throughout the U.S. private sector.
       Jointly assess critical generic technologies and develop 
     technology road maps to boost U.S. competitiveness.
       Build cooperative supplier networks that help set standards 
     and share information in critical technologies.

     4. U.S. firms should set a goal to meet and surpass the best 
           commercialization practices of their competitors.

       American management needs to improve its ability to 
     commercialize technology. U.S. companies should understand 
     and build on the successful commercialization practices of 
     their domestic and foreign competitors. To achieve this goal, 
     U.S. firms should benchmark their competitors. They should 
     set appropriate goals and allocate the necessary resources. 
     They should motivate, train and empower their employees to 
     take responsibility for achieving these goals. And they 
     should develop the external relationships necessary to 
     accelerate the commercialization process. The Council on 
     Competitiveness will play a role in encouraging industry to 
     take these steps. Action in the following areas is especially 
     important:
       Match the Administration's goal to increase dramatically 
     the R&D allocated to critical generic technologies and 
     develop a five-year implementation plan (see recommendation 
     1).
       Institute total quality management and continuous 
     improvement.
       Strengthen process engineering.
       Accelerate time-to-market to competitive levels.
       Improve the ability to share risks and spread costs for 
     developing technology across a broad base.
       Continuously upgrade the skills of the work force.
       Encourage corporate executives and general managers to give 
     strategic factors equal weight with financial projections in 
     technology-based businesses.

  5. While keeping their basic research programs strong, universities 
 should develop closer ties to industry so that education and research 
 programs contribute more effectively to the real technology needs of 
                 the manufacturing and service sectors

       America's research universities are one of its great 
     technological assets and should be strengthened. In pursuit 
     of new knowledge, however, many universities have lost sight 
     of issues related to technology and manufacturing that affect 
     U.S. competitiveness. Universities should strengthen their 
     focus on the manufacture, use and commercialization of 
     technology. In the process, however, it is important not to 
     jeopardize the basic research contributions of universities. 
     Universities should focus on the following actions:
       Develop close ties with U.S. industry and make efforts to 
     ensure that important technological advances are communicated 
     to potential U.S. user on a priority, expedited basis.
       Make efforts, in cooperation with employers, to ensure that 
     education programs in engineering and management reflect the 
     real needs of industry.
       Keep basic science and engineering programs strong and 
     strengthen research capabilities so that they can adequately 
     address fundamental, long-term technology issues that are 
     relevant to industry.


                         critical technologies

       The following list of critical generic technologies 
     represents the private sector's assessment of the 
     technologies that will drive U.S. productivity, economic 
     growth and competitiveness during the decade ahead. These 
     technologies span different sectors of the U.S. economy. They 
     are divided into five categories: 1) materials and associated 
     processing technologies, 2) engineering and production 
     technologies, 3) electronic components, 4) information 
     technologies and 5) powertrain and propulsion technologies.
       The list also includes an assessment of the U.S. 
     competitive position in each technology. The assessment is 
     based on extensive analysis and reflects the judgment of 
     experts in industry who understand both the critical 
     technologies and the relevant markets. In general, the 
     competitive position shows the status of technologies that 
     are incorporated in products or processes in the marketplace, 
     rather than technologies in the laboratory. The U.S. position 
     in each of the technologies is categorized in one of four 
     ways.
       Strong--U.S. industry is in a leading world position and is 
     not in danger of losing this position in the next five years.
       Competitive--U.S. industry is roughly even with world-best. 
     This category includes technologies where the United States 
     is leading but the leadership is unlikely to be sustained 
     over the next five years, technologies where the United 
     States is staying even and technologies where different 
     countries lead in different niches.
       Weak--U.S. industry is behind in technology or likely to 
     fall behind in the next five years. Changes are needed if the 
     United States is to remain in the businesses related to this 
     technology.
       Losing Badly or Lost--U.S. industry is no longer a factor 
     or is not likely to have a presence in the next five years. 
     It will take considerable effort or a major change in 
     technology for the United States to become competitive.

  Mr. HOLLINGS. Madam President, this is quoting from section 4, and I 
read it because this is exactly what the Senator from Massachusetts is 
saying now:

       U.S. public policy does not adequately support American 
     leadership in critical technologies, and U.S. national 
     priorities do not sufficiently address issues related to the 
     role of technology in U.S. competitiveness.
       Other nations already spend more on nondefense R&D as a 
     percent of GDP than the United States, and they are steadily 
     increasing these levels. The United States needs to increase 
     support for R&D and focus more resources on nondefense R&D 
     that is commercially relevant. In 1990, only a relatively 
     small fraction of the $67 billion Federal R&D budget was 
     directly relevant to the real technology needs of American 
     industry. The low priority given to technology and 
     competitiveness in the Federal R&D budget is reflected in 
     America's tax, trade and regulatory policies. It is also 
     reflected in the decline of public investment in 
     infrastructure, which fell from 5.8 percent of GNP in the 
     mid-1950's to 3.9 percent in the mid-1980's. Unless R&D 
     programs are reinforced by policies in these other areas that 
     encourage private-sector investment in technology, they will 
     have a limited impact on U.S. competitiveness. The most 
     effective programs are those that encourage sharing of the 
     costs and results of precompetitive research and that 
     stimulate private-sector propriety R&D and commercialization.

  I want to thank the Senator from Massachusetts because he is right in 
lockstep with the heads of American industry, the philosophy behind S. 
4 and the actual provisions of S. 4, industry-initiated, industry-
financed at least by half and in the main by our experience and peer 
reviewed, and you cannot do it better than that. We do it in a very 
modest fashion. The amounts have always come in question but when you 
are starting in with the National Science Foundation in this which had 
not been provided for before, $75 million when you start in with the 
computer superhighway of information, when you go in for the actual 
construction costs out there at the old Bureau of Standards these other 
add-ons and everything else, plus the DARPA Programs to be administered 
by the Department of Commerce, some 85 programs we put in the Record in 
31 different States, yes, it is more and it is intended to be more, and 
incidentally according to this council not near enough, but I do thank 
the Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Madam President, I would like to add to what the Senator 
from South Carolina is saying. I do not think a lot of us on this side 
of the aisle have too often been accused of being the mouthpieces of 
big business, but I have a letter received recently from Paul Allaire, 
the president of the Council on Competitiveness, which says:

       Dear Senator Kerry: On behalf of the Council on 
     Competitiveness--a coalition of chief executives from U.S. 
     industry, higher education and labor--I would like to express 
     my support for S. 4, the National Competitiveness Act.
  He specifically points to what the ATP and the diffusion of 
technology for small- and medium-sized manufacturers will do. Mr. 
Allaire points particularly to stimulating investment in high 
performance computing and communications and says, ``These applications 
will help translate the potential of a 21st century information 
infrastructure into tangible economic and social benefits for the 
American people.''
  Who is the Council on Competitiveness? Well, it is the Xerox Corp., 
Cummins Engine Co., the Amalgamated Clothing and Textile Workers Union, 
Rockwell International, BellSouth Corp., Eastman Kodak Co., National 
Association of Manufacturers, the Chase Manhattan Corp., The Ameritech 
Corp., the Boeing Co., Hewlett-Packard Co., and a number of educational 
institutions.
  S. 4 is an effort to try to make the United States competitive. It 
deserves bipartisan support.
  Mr. HATCH. Mr. President, it is a pleasure for me to join Senator 
Brown today in support of his amendment to restore crucial provisions 
of rule 11 of the Federal Rules of Civil Procedure.
  I support this amendment which will restore a very effective tool 
used by Federal judges to deter frivolous litigation. Certain of the 
recent rule changes which I opposed, have merely added to the delay and 
expense in our civil justice system. Trial lawyers who file baseless 
lawsuits are one group in our society that needs no relief, at least 
not the kind embodied in the recent changes to Federal rule 11. The 
American public will ultimately pay the high price for these frivolous 
litigation tactics.
  I offer my support for this amendment because it discourages, not 
rewards, shoddy litigation practices. It requires that sanctions be 
imposed where there is a violation of rule 11 and eliminates the 
protection offered to those filing frivolous lawsuits. Our experience 
with former rule 11 has demonstrated its effectiveness in reducing 
frivolous litigation and should be restored.
  Trial attorneys who file frivolous pleadings, in my opinion, do not 
deserve the court's protection or the benefit of a warning by opposing 
counsel to withdraw or correct their improper pleadings. This amendment 
will require judges to impose sanctions on irresponsible litigants who 
file frivolous suits. I urge my colleagues to join me in support of 
this amendment.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. KEMPTHORNE. Thank you. I ask unanimous consent that the pending 
Brown amendment be laid aside.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.


                           Amendment No. 1497

  (Purpose: To provide an exemption from citation by the Secretary of 
  Labor under the Occupational Safety and Health Act to employers of 
individuals who perform rescues of individuals in imminent danger as a 
     result of a life threatening accident, and for other purposes)

  Mr. KEMPTHORNE. Madam President, I send to the desk then this 
amendment and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Idaho [Mr. Kempthorne] proposes amendment 
     numbered 1497.

  Mr. KEMPTHORNE. Madam President, I ask unanimous consent that the 
reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
   The amendment is as follows:
       At the end of the amendment add the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Heroic Efforts to Rescue 
     Others Act'' (HERO Act).

     SEC. 2 FINDINGS.

       Congress finds that--
       (1) existing Occupational Safety and Health Administration 
     regulations require the issuance of a citation to an employer 
     in a circumstance in which an employee of such employer has 
     voluntarily acted in a heroic manner to rescue individuals 
     from imminent harm during work hours;
       (2) application of such regulations to employers in such 
     circumstance causes hardships to those employers who are 
     responsible for employees who perform heroic acts to save 
     individuals from imminent harm;
       (3) strict application of such regulations in such 
     circumstance penalizes employers as a result of the time lost 
     and legal fees incurred to defend against such citations; and
       (4) in order to save employers the cost of unnecessary 
     enforcement an exemption from the issuance of a citation to 
     an employer under certain situations related to such 
     circumstance is appropriate.

     SEC. 3. CITATIONS.

       Section 9 of the Occupational Safety and Health Act (29 
     U.S.C. 658) is amended by adding at the end the following new 
     subsection:
       ``(d)(1) No citation may be issued under this section for a 
     rescue activity by an employer's employee of an individual in 
     imminent harm unless--
       ``(A)(i) such employee is designated or assigned by the 
     employee's employer with responsibility to perform or assist 
     in rescue operations; and
       ``(ii) the employer fails to provide protection of the 
     safety and health of such employee, including failing to 
     provide appropriate training and rescue equipment;
       ``(B)(i) such employee is directed by the employee's 
     employer to perform rescue activities in the course of 
     carrying out the employee's job duties; and
       ``(ii) the employer fails to provide protection of the 
     safety and health of such employee, including failing to 
     provide appropriate training and rescue equipment; or
       ``(C)(i) such employee--
       ``(I) is employed in a workplace that requires such 
     employee to carry out duties that are directly related to a 
     workplace operation where the likelihood of life-threatening 
     accidents is foreseeable, such as a workplace operation where 
     employees are located in confined spaces or trenches, handle 
     hazardous waste, respond to emergency situations, perform 
     excavations, or perform construction over water;
       ``(II) has not been designated or assigned to perform or 
     assist in rescue operations; and
       ``(III) voluntarily elects to rescue such an individual; 
     and
       (ii) the employer has failed to instruct employees not 
     designated or assigned to perform or assist in rescue 
     operations--
       (I) of the arrangements for rescue;
       (II) not to attempt rescue; and
       (III) of the hazards of attempting rescue without adequate 
     training or equipment.
       ``(2) For purposes of this subsection, the term `imminent 
     harm' means the existence of any condition or practice that 
     could reasonably be expected to cause death or serious 
     physical harm before such condition or practice can be 
     abated.''.

  Mr. KEMPTHORNE. Madam President, we discussed this issue yesterday so 
I am going to merely recap some of the high points of this whole issue. 
This is something that many Americans are very well aware of this 
particular situation because Paul Harvey carried it on his news 
commentary. It has been an article that was written in the Reader's 
Digest. Dave Barry did a very good article about this. It has to do 
with a situation that occurred in Garden City, ID.
  There was a construction site and at this construction site a trench 
caved in and it buried one of the workers. Hearing muffled screams and 
cries, other workers that happened to be going by that were not 
affiliated with this construction site ran to see what the commotion 
was and found that this worker had been buried alive. You could only 
see about one inch of the back of his head. He was covered with debris 
and dirt. These workers that happened to be coming by immediately began 
to remove the debris and dirt around the trapped worker's head so he 
could breathe. The trench then began to fill with water. So they 
rerouted the water so that he would not drown until the emergency 
medical people could come with the appropriate tools that allowed them 
to extricate him from that trench.
  For their efforts these workers received from the mayor of that 
particular community a proclamation that declared them heroes. Indeed 
they were heroes for their quick thinking and their action. They saved 
this trapped worker's life.
  Unfortunately, the Federal Government issued them citations from OSHA 
that equalled nearly $8,000 for the actions that they took.
  Madam President, I ask unanimous consent that the Reader's Digest 
article and Dave Barry's article be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           [From Dave Barry's column in the Chicago Tribune]

       There are times when, as a taxpayer, I just have to put my 
     head between my legs and weep with joy at the benefits I am 
     receiving from the federal government (``Official Motto: This 
     Motto Alone Cost $13.2 Billion'').
       But before we do anything, let's salute the Occupational 
     Safety and Health Administration (OSHA) office in Idaho for 
     its prompt action regarding improperly attired rescue 
     personnel.
       Here's what happened, according to an article in The Idaho 
     Statesman written by Martin S. Johncox and sent in by Joe 
     Auvil:
       On May 11 two employees of DeBest Inc., a plumbing company, 
     were working at a construction site in Garden City, Idaho, 
     when they heard a backhoe operator yell for help. They ran 
     over and found that the wall of a trench--which was not dug 
     by DeBest--had collapsed on a worker, pinning him under dirt 
     and covering his head.
       ``We could hear muffled screams,'' one of the DeBest 
     employees said. So the men jumped into the trench and dug the 
     victim out, quite possibly saving his life.
       What do you think OSHA did about this? Do you think it gave 
     the rescuers a medal? If so, I can see why you are a mere 
     lowlife taxpayer, as opposed to an OSHA executive. What OSHA 
     did--remember, I am not making this up--was fine DeBest Inc. 
     $7,875. Yes, OSHA said that the two men should not have gone 
     into the trench without (1) putting on approved hard hats, 
     and (2) taking steps to insure that other trench walls did 
     not collapse and water did not seep in. Of course, this might 
     have resulted in some discomfort for the suffocating victim. 
     (``Hang in there! We should have the OSHA trench-seepage-
     prevention guidelines here within hours!'') But that is the 
     price you pay for occupational health and safety.
       Unfortunately, after DeBest Inc. complained to Idaho Sen. 
     Dirk Kempthorne, OSHA backed off on the fines. Nevertheless 
     this incident should serve as a warning to would-be rescuers 
     out there to comply with all federal regulations, including 
     those that are not yet in existence, before attempting to 
     rescue people. Especially if these people are in, say, a 
     burning OSHA office.
                                  ____


        [From That's Outrageous, Reader's Digest, January 1994]

                           Fined for Heroism

       Kavin Gill and another employee of DeBest Plumbing, Inc. 
     had to act quickly to rescue 21-year-old Dwight Kaufman after 
     a dirt trench wall collapsed on him at a construction site 
     near Boise, Idaho. Using their hands as tools, they dug the 
     dirt from around his head before a rescue crew arrived and 
     pulled him out of the ditch.
       ``We could hear muffled screams. You could just see about 
     one inch of the back of his head,'' Gill said. His shoulders 
     were pinned from the collapsed piece. With his head covered, 
     I think he would have died.''
       But the federal Occupational Safety and Health 
     Administration didn't see it that way. It fined the Boise 
     plumbing company nearly $7875 because the good Samaritans 
     failed to put on hard hats and took no precautions against 
     other trench walls falling on them during the rescue.
       Idaho OSHA Director Ryan Kuemichel said that ``rescues must 
     only be attempted after taking proper precautions to ensure 
     that victims are not injured in secondary cave-ins.''
       But Gill said he, fellow worker Myron Jones and a bystander 
     didn't have the time to find their hats, remove water from 
     the trench and shield the walls.
       Sen. Dirk Kempthorne (R., Idaho) asked the Labor Department 
     to review the case, and the fines were dismissed. Kempthorne 
     says he will draft legislation that exempts acts of heroism 
     from OSHA fines. ``Thank goodness there are still people in 
     this world who are willing to help their neighbors--despite 
     an absurd bureaucratic mind-set in the federal government 
     that would seem to discourage saving a life,'' Kempthorne 
     said.
  Mr. KEMPTHORNE. Just to give you a sense of this let me tell you what 
these citations were for. The first citation for $2,250 was cited 
because the two employees were not properly trained in recognizing and 
avoiding unsafe conditions. Remember, they just happened to be coming 
by.
  The second citation imposed a fee of over $1,000 because the workers 
did not first run to their vehicles and retrieve hard hats before 
performing the rescue.
  And, as Dave Barry said, ``This might have resulted in some 
discomfort for the suffocating victim.''
  The third citation, $2,250, because the employees were working in an 
excavation where water had accumulated. They rerouted the water so that 
this individual would not suffocate.
  And the fourth citation, $2,250, that the employees should have 
shored up the walls of the trench before attempting to rescue the 
victim.
  Again, it has been determined that, had that happened, in all 
likelihood the individual would have died.
  To quote Readers' Digest:

       It is outrageous for OSHA to suggest that when someone's 
     life is in jeopardy that any would-be rescuers might first 
     take a refresher course in safety, run to their truck and put 
     on a hard hat, and then make a trip to the hardware store to 
     get materials to shore up the trench walls before saving a 
     life.

  I asked the OSHA office in Idaho to suspend these citations. They 
refused to do so. They said their preferred strategy in these matters 
was to cite everyone for any possible violation and then let them 
appeal the decision.
  Well, that means that heroes are going to find that they have to then 
go and defend themselves and probably pay for an attorney and lose 
hours at their job site because they are now defending themselves. And 
what are they defending themselves for? They are defending the act of 
saving a life.
  After the Idaho office would not suspend this, I then called the 
Department of Labor here in Washington. Within 24 hours, they called 
and said, ``There has been a real mistake. We are tearing up those 
citations.''
  Well, Madam President, I think we all can agree that heroes deserve 
commendations, not citations. Heroes need to be honored, not punished.
  This legislation that I am now proposing allows an exemption that, 
when a heroic act takes place and is done to save a life, we do not 
have to abide strictly by the letter of the law, but that we can 
interpret the spirit of the law, because that is how we ought to treat 
heroes.
  So we are embarking upon something perhaps new and novel, because I 
am suggesting that we are going to now legislate common sense into the 
Federal Government. But I think this example clearly demonstrates that, 
at least with regard to OSHA, they did not use common sense.
  So, Madam President, that is the essence of this amendment. I 
appreciated the comments yesterday by the distinguished Senator from 
South Carolina, who really, I think, understood the intent of this.
  When this is considered, Madam President, I ask for the yeas and 
nays.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second
  The yeas and nays were ordered.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina
  Mr. HOLLINGS. The amendment of the Senator from Idaho is well 
conceived. At my suggestion, the distinguished Senator has coordinated 
with the leadership in our Labor, Health and Human Resources Committee, 
the pertinent committee on this side of the aisle, and made some 
suggested changes.
  I think we should be prepared to vote. I think it was checked on both 
sides of the aisle.
  I ask unanimous consent that the vote on Senator Kempthorne's 
amendment occur at 2:45, with no other amendments in order prior to the 
disposition of that amendment, with the time for the debate equally 
divided in the usual form.
  The PRESIDING OFFICER. Is there objection?
  Mr. SPECTER. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. I had thought that the Brown amendment was still subject 
to debate. I have no objection to the thrust of what the distinguished 
Senator from South Carolina has in mind, but I would like to have leave 
to speak on the Brown amendment for 5 minutes before the vote.
  Mr. HOLLINGS. I will amend my request in order for the Senator from 
Pennsylvania to speak for an additional 5 minutes.
  The PRESIDING OFFICER. Without objection, that is the order.
  The Senator from Pennsylvania is recognized.


                           Amendment No. 1496

  Mr. SPECTER. I thank the Senator from South Carolina and I thank the 
Chair.
  Debate has occurred today on the Brown amendment, which would seek to 
change the recommendations of the advisory committee on Federal Rule of 
Civil Procedure 11.
  It is my thought that the appropriate way to take up this issue would 
be on a report from the Judiciary Committee, where the matter arises in 
the normal course of business, with a report from the Subcommittee on 
Courts to the full Judiciary Committee and then to the Senate so that 
we could have a fuller record.
  There had been some reference to a survey of judges wanting the rule 
to remain as it is today. I believe that we need more information on 
that, and that would be accomplished by having regular order followed 
through the Judiciary Committee.
  The principal change in the rule, as recommended by the advisory 
committee, is to have sanctions paid to the court where there are 
frivolous lawsuits brought.
  By way of brief explanation, rule 11 now provides that if a party 
brings a suit in Federal court which is frivolous, then the court has 
the authority to impose sanctions. The rule in its prior form had those 
money awards payable to the party who was on the other side. The new 
rule would have that monetary award or sanction paid to the court.
  The Supreme Court has reviewed this rule and has said, on a 6 to 3 
vote, three judges dissenting, that the new rule should take effect. So 
the majority of the Court says that it is the preferable form to have 
the sanction, or the money award, paid to the court instead of the to 
the opposite party.
  My own view, Madam President, is that it is preferable to have this 
kind of a determination made in the judicial proceeding, as opposed to 
the legislative branch. The courts have traditionally structured the 
Rules of Civil Procedure and have made recommendations for changes. The 
courts are in the best position to know exactly what is happening with 
respect to the nature of the lawsuits which are brought, because the 
judge sees and hears the entire proceeding. The judge reads the 
pleadings. The judge sees what is developed by way of evidence on 
discovery through depositions and interrogatories.
  The judges hear the arguments presented and have a much better feel 
for when a lawsuit is frivolous. And the courts, with this experience, 
it seems to me, are in the best position to know whether the interests 
of justice are best served by having the sanction paid to the court or 
by having the sanction paid to the opposing party.
  The thrust of the rule change, obviously, is that there is more of an 
objective determination if the court or the U.S. Government is the 
beneficiary of the sanctions. Customarily in our society, when a fine 
is imposed or a sanction is imposed in an analogous criminal 
proceeding, that money is paid to the U.S. Government; it is not paid 
to the injured party.
  It is my view, therefore, that the committee advising the court is in 
the best position. The Supreme Court itself, on a 6 to 3 vote, is in a 
better position than the Congress, certainly at this stage when an 
amendment is offered on a bill which does not take up this matter 
directly.
  So, at least until we have action by the Judiciary Committee, it is 
my thought that Congress should not intervene at this stage on an 
amendment to a bill which deals with national competitiveness.
  So, with respect to my colleague from Colorado, who has proposed a 
number of worthwhile amendments which I have supported on this bill, it 
seems to me that this amendment ought to be rejected.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. HOLLINGS. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. SIMON. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SIMON. Madam President, I ask unanimous consent to speak for 3 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________