[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.
____________________